August 2007 Archives
Regardless of the month showing on your calendar, anytime is a good time to takes steps to lower your tax bill.
Take the “Saver’s Credit” for example.
One way for low and moderate income Americans to save on taxes and prepare for a more comfortable retirement is by saving for retirement. Voluntary contributions you make to an employer-sponsored retirement plan or to an individual retirement arrangement (IRA), make you eligible for this particular tax credit.
Formally known as “The Retirement Savings Contributions Credit”, the Saver’s Credit applies to:
1. Individuals with incomes up to $25,000 ($37,500 for a head of household)
2. Married couples, filing jointly, with incomes up to $50,000
3. Persons who are at least age 18, not a full-time student and who cannot be claimed as a dependent on another person’s return
You may be able to take the credit of up to $1,000 (up to $2,000 if filing jointly) if you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans. The amount of the credit is determined by your filing status, your adjusted gross income (AGI), and your other retirement contributions.
The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.
When figuring this credit, you must subtract the amount of distributions you have received from your retirement plans from the contributions you have made. This rule applies for distributions starting two years before the year the credit is claimed and ending with the filing deadline for that tax return.
The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a 401(k) plan are not subject to income tax until withdrawn from the plan.
For more information, review IRS Publication 590, Individual Retirement Arrangements and Form 8880, Credit for Qualified Retirement Savings Contributions which include the instructions. The publication and form can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).
Source: IRS Office of Communications Summertime Tax Tip 2007-17
I consider my home, be it ever so humble, as my castle. When I arrive there after work, I want to relax and enjoy myself. For me, opening a mailbox devoid of junk mail and credit card offers and not receiveing phone solicitations are two joys that I savor. Unfortunately, as consumers, in order to have this happen, we need to be proactive. Five years ago Pennsylvania established the Do Not Call list. Consumers must re-register every five years to continue to enjoy dinners uninterrupted by phone solicitors. It's time to log on to http://dnc.attorneygeneral.gov/ to renew your entry in the do-not-call list or join it for the first time. It may take up to a month to reduce the number of calls you receive, but you'll be amazed at how much more time you have to enjoy your castle.
These four attributes in combination will help you achieve your financial goals. Actually, this was the topic of a sermon I heard in church some years ago and to me it fit perfectly as a mechanism to achieve financial sucess.
Attitude - Do you have the right attitude? Are you willing to make changes to achieve your goals? Or are you happy in maintaining your current situation? Most change takes place with having an attitude or willingness to move beyond your comfort zone and work toward a goal.
Action - Do your actions align with your attitude and your goal. For example, you can't SPEND your way to wealth, it can only be achieved thorugh SAVING.
Adjustment - You may find that you make a few misteps along the way. That doen's mean that your goal is unachieveable, you just need to tweak what you are doing or adapt as life throws you curveballs in order to get where you want to be.
Attainment - By aligning the previous 3 A's toward your goal, ultimately you will attain it. It may take longer than you planned at first or you may end up with a modified goal but by following these 4 A's of financial success you will have improved your financial standing.
"If you continue to do, what you've always done... you'll get the same results."
The definition of insanity is "continuing to do, what you've always done and expecting different results."
August 2, 2007
Welcome to my beginning attempts at using a blog to educate people on various aspects of their personal finances. I welcome your comments and critiques as well as suggestions on topics for future entries.