- - Page 5 of 12 The Finance Gourmet

IRA Yearly Fee

November 2, 2021July 14, 2021 by Finance Gourmet

Update: You can easily get a free IRA account almost anywhere these days. If you are paying a custodial or maintenance fee, consider switching IRA custodians. Free IRA Companies: Fidelity Charles Schwab E-Trade SoFi Betterment Ameritrade Vanguard And tons of banks… If you do still have an annual IRA fee… Here it comes, the annual fee on your IRA account. Many brokerages charge their yearly IRA fee, or custodial fee, on their customer’s IRA account during the third quarter. If you take a positive view of the industry, they do it then because there are many other things that have to happen during the fourth quarter, tax reporting is at the top of that list, so the third quarter is less busy. If you take a less a less charitable view of the financial industry, then they do it in the third quarter because that is when financial clients are the least likely to be paying attention. It’s summer, you aren’t really thinking about rebalancing your investments, or closely reviewing your paperwork for taxes, and so on. In other words, the third quarter is the best time to slip in an annual fee unnoticed. Why Is There an Annual Fee …

529 Contribution Limits 2021

September 29, 2021May 3, 2021 by Finance Gourmet

The 529 plan is a tax-advantaged college savings plan. Of course, like all plans that offer IRS sanctioned tax savings, there are rules and regulations regarding just how and when a 529 plan may be used. One of these limitations involves how much money you can contribute to a 529 plan in 2021. 529 contribution limits tend to be pretty stable, based mostly on the federal gift tax exclusion amount. Head over here if you are looking for how a 529 plan works. If you want to know how to open a 529 plan account then head here. 2021 529 Contribution Limits Unlike IRA plans, where there are new IRA contribution limits, or other child tax credits, there are no income limits for 529 plans. That means that you can contribute to a 529 plan regardless of whether you are a high-income taxpayer or not. There are, however, still a few kinds of contribution limitations for 529 savings accounts that you want to be aware of. The first 529 plan contribution limit comes from the 529 plan rules established by each individual plan. Since 529 plans are administered by each of the 50 states, there can be 50 different plan rules. For …

Biden’s Capital Gains Tax Increase No Big Deal

April 29, 2021 by Finance Gourmet

President Biden proposed increasing the capital gains tax and while that makes great headlines, it probably isn’t as big of deal as it sounds like. First off, the higher tax would only apply to those with income above $1 million. That takes out most taxpayers right there. Avoiding Capital Gains Taxes Also, capital gains is one of the easiest to avoid taxes. Most people hope to never lose that much money, but there are plenty of losses to be had even by the best investors. Matching those losses up to gains is called tax-loss harvesting and is frequently used by those with large enough investment portfolios to eliminate some or all of their capital gains taxes. Imagine a scenario where a wealthy investor purchases ABC stock and XYZ stock. A clever investor would make sure that ABC stock and XYZ stock pay an acceptable dividend based on their risk and expected return. So, over a couple of years, our investor collects his dividends. Since the only way this new tax applies is if the investor has $1 million in income, they will pay the highest dividend tax bracket of 20% tax on the dividends, still far lower than the 39% …

Tax Deadline 2021 Moved To May

April 12, 2021April 11, 2021 by Finance Gourmet

The IRS is moving the tax-filing deadline to May 17 from April 15. Update: Colorado tax deadline date has officially been moved to May 17. Turns out the new Biden Covid Relief package has pushed the IRS over the edge to moving the tax due date for 2021. Tax day 2021 will now be May 17. There are just enough changes to tax law in the new package that the IRS figures implementing the changes, publishing the updated tax forms and guidance, and then getting filed is going to be too tight for many taxpayers this year. The new tax deadline 2021 on May 17 is basically a one-month extension from the standard April 15th deadline, except May 15 is on a Saturday, so the new tax deadline for 2021 is Monday, May 15, 2021. Tax Deadline 2021 Of course, the IRS is spinning this as them helping taxpaying Americans. It helps the IRS too, but either way, many taxpayers will take it. The new tax deadline for 2021 is forth both filing and paying federal income taxes, unlike a typical tax extension. As always, taxpayers can get a free, no-questions asked, extension to October 15 by filing Form 4688, …

Stimulus Deposits Start Showing Up

March 17, 2021 by Finance Gourmet

There has been some grumbling about the way banks handled the new $1,400 stimulus payments, but the reality is that the treasury did not fund those deposits until today (Wednesday). We can talk all you want about how guaranteed the money was, and that big banks like Wells Fargo and Chase Bank could have easily floated their customers the $1400, but that is never how full-size grown up banks work. Some smaller banks use faster deposits, or even pre-deposits as a way to distinguish them from bigger banks. One article noted that mobile-only, startup, Current put the stimulus payments in their customer’s accounts early. Of course, that’s one of Current’s offers, “Get paid up to 2 days faster.” Doing so requires the bank to use it’s own money to cover the payment until it actually shows up. You can see why big “safe” banks don’t play that. For the record, the ACH deposits into accounts were funded by the IRS as of Wednesday, March, 17, 2021. That means that if your bank put the money in your account before then, they used their own money to do that, then paid themselves back when the IRS money showed up. If your …

Capital Loss Tax Deduction

March 1, 2023March 1, 2021 by Finance Gourmet

When you sell certain assets or investments that have appreciated in value, you may owe taxes on the increased value. The difference between what you paid for the investment and the amount you sold the investment is a capital gain and it is subject to capital gains taxes. However, if you lose money on an investment, you can deduct the capital loss. Capital Loss Deduction When it comes to taxes, the more tax deductions the better. And, when you lose money on an investment, a tax deduction can take out a little of the sting. However, deducting capital losses can be tricky. Get the rules straight to save on taxes and avoid making mistakes taking your investment loss tax deduction. Just like with capital gains, there are two kinds of capital losses, short-term capital loss and long-term capital loss. Generally, a long-term capital loss occurs when you have a loss on an investment that you have held for at least one year. Conversely, a short-term capital loss occurs when there is a loss on an investment held for less than a full year. The tax deduction for capital losses is limited to $3,000 per year against your regular income. That …

What Is The Difference Between FSA and HSA?

April 28, 2021February 26, 2021 by Finance Gourmet

There is a lot of confusion around the difference between an HSA and a FSA. HSA stands for Health Savings Account. FSA stands for Flexible Spending Account, or sometimes, Flexible Spending Arrangement. Both types of medical savings accounts are tax-advantaged ways to save and pay for various medical expenses, but there are some very big differences. These accounts are very important for tax planning because otherwise, there is a very high threshold before you can deduct any medical expenses you might have. For many people, an HSA will be better than a Flexible Spending Account, but only if your health insurance plan qualifies. What Is a Flexible Spending Account or FSA? The FSA has been around longer, and so most people are more familiar with it. A flexible spending account is a benefit offered by your employer. You defer a certain amount of your paycheck into the FSA. Any funds contributed to an FSA are pre-tax contributions, just like a 401(k) contribution, which means you not only don’t pay taxes on that money, it doesn’t count as income for things like IRA contribution thresholds, or the child tax credit, or deducting student loan interest. That makes these contributions a very …

What Is Education Tax Credit

February 3, 2021 by Finance Gourmet

What is education tax credit on taxes? How to qualify for education tax credit? What are the income limits for the education tax credit? Claiming the education tax credit is easy, as long as you are one of the people who qualifies for education tax credit. Education Tax Credit Taxes The 2020 Education Tax Credit is the name for two separate education tax credits, the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). American Opportunity Tax Credit 2020 The American Opportunity Tax Credit for 2020 is $2,500 maximum. The American Opportunity Tax Credit allows you to claim all of the first $2,000 you spent on tuition, fees and equipment. Most full-time students hit $2,000 on tuition and fees alone. You also get to claim 25% of the next $2,000. That means you need to spend $4,000 to get the full credit. You get $2,000 credit for the first $2,000 and then $500 (25% of $2,000) for the next $2,000. Again, many full-time students will hit the $4,000 just with their bill from the university. You cannot claim living expenses like dorm room fees, but you can claim equipment you buy including laptop computers, tablets, and iPads that …

Business Tax ID Number – FEIN and EIN Explained

November 18, 2021January 19, 2021 by Finance Gourmet

There is an unfortunate amount of confusion surrounding the concept of the Federal Tax Identification Number. It is ironic, because the whole Tax ID, FEIN, and EIN thing is actually very simple, mostly because they are generally all the same thing. However, it isn’t surprising that this concept confused many personal finance students because when it comes to things like laws and taxes, tiny variations in terms usually mean very different things. What is a Tax ID Number? Tax ID Number, or Tax Identification Number (TID), and the like, all refer to the same thing. When taxes are filed, whether they are personal income taxes, or business income taxes, there must be a unique identifier used on the tax return. Likewise, if income is reported, that income must be reported to the IRS with a unique number identifying who it was paid to. In the case of Federal Income Taxes, the tax ID number is a Social Security Number. However, businesses do not have SSN, so they need a different unique number to use for identification purposes on tax documents. FEIN stands for Federal Employer Identification Number. It’s “brother” is the EIN which stands for Employer Identification Number. What Is …

HSA Contribution Limits 2020 and 2021

January 29, 2021June 12, 2020 by Finance Gourmet

A health savings account, or HSA, is a great way to save money for medical expenses. If you qualify for an HSA, you get to deduct every dollar in contributions up to the HSA contribution limit. If you pay your medical expenses with an HSA, it ends up that you can deduct every single dollar of medical expenses, instead of just the amount over 10% of your income. In addition, over time, your money grows tax-free inside of the account. HSA Contribution Limits 2020 The 2019 HSA Contribution limit is $3,550 for an individual, or up to $7,100 for a family. Remember to qualify for an HSA, you have to have a qualifying HDHP (High-Deductible High Health Plan). HSA Contribution Limits 2021 The IRS recently released the information regarding contributions to an HSA in 2021. Each year, the contribution limit for HSA accounts is adjusted for inflation. This year, inflation was slightly higher for the year, so there was a small increase in the contribution limits for HSA accounts. For 2021 HSA contributions, the limits will be $3,600 for an individual, or “self-only” high deductible health plan. For someone with family coverage, the limit rises to $7,200, up from $7,100 …