401 (k) and IRA 2015

401(k) and IRA changes coming in 2015

 

By Emily Brandon10 hours ago

• 
• 
• 
• 

Retirement savers will have a new retirement account option in 2015. Investors will also be eligible to contribute $500 more to a 401(k) next year. Here's a look at how retirement accounts will change in 2015.

Related Stories

1. What are the Roth IRA limits for 2014?Investopedia
2. You can put up to $18,000 in your 401(k) next year CNNMoney.com
3. Can an individual contribute to both a Roth IRA and a Traditional IRA in the same year? Investopedia
4. Which Retirement Plan Is Best?Investopedia
5. How are IRA withdrawals taxed?Investopedia

Introducing the myRA. The Treasury will offer a new type of retirement account,the myRA, beginning in late 2014 that is guaranteed by the government to never lose value. Deposits will be made via payroll deduction, and accounts can be opened with an initial deposit of as little as $25 and then direct deposits of $5 or more each payday. But these accounts are not tied to your job and are portable if you change jobs. Savers with an annual income of less than $129,000 for individuals and $191,000 for couples will be eligible to participate. These new accounts "target low- and middle-income Americans who don't currently have access to an employer-sponsored plan," says Mikio Thomas, a senior tax analyst for the Internal Revenue Service.

The myRA is a Roth account, which means contributions can bewithdrawn tax-free at any time, and earnings can be distributed without triggering an additional tax once the account is five years old and the account owner is at least age 59½. However, myRAs differ from Roth IRAs in that myRAs will hold a new retirement savings bond backed by the U.S. Treasury that is guaranteed not to lose value, and there are no fees. Savers can use the accounts for up to 30 years or until their balance grows to $15,000, at which point the balance will transfer to a private-sector retirement account.

Higher 401(k) contribution limits. Taxpayers will be able to contribute up to $18,000 to their 401(k), 403(b), most 457 plans and the federal government's Thrift Savings Plan in 2015, which is $500 more than in 2014. "You can increase your contribution percentage at the start of the year," says Andrew Jamison, a certified financial planner for Main Avenue Financial Services in Beaverton, Oregon. The catch-up contribution limit for employees age 50 and older will also grow by $500 to $6,000 in 2015.

IRA contribution limits unchanged. The IRA contribution limit will remain $5,500 in 2015. Investors age 50 and older can contribute anadditional $1,000 to an IRA, an amount that is not eligible for an annual cost-of-living adjustment.

Bigger IRA income limits. The tax deduction for making a traditional IRA contribution is phased out for investors who have a workplace retirement plan and a modified adjusted gross income between $61,000 and $71,000 for individuals and $98,000 to $118,000 for couples in 2015, up $1,000 and $2,000, respectively, from 2014. For individuals who don't have a workplace retirement plan but are married to someone who does, the tax deduction for an IRA contribution is phased out if the couple's income is between $183,000 and $193,000 in 2015.

Increased Roth IRA income cutoffs. The income limits for contributing to a Roth IRA will increase by $2,000 in 2015 to between $116,000 and $131,000 for individuals and $183,000 to $193,000 for married couples. "If you are eligible for a Roth, I would put the full amount in a Roth IRA," says Ann Coulson, a certified financial planner and personal financial planning professor at Kansas State University. "Then you can pull out tax-free income so you have money to live on in retirement." Individuals who earn more than these income cutoffs may still be able to convert traditional IRA assets to a Roth IRA.

Larger saver's credit threshold. Low- and moderate-income workers who contribute to a 401(k) or IRA are eligible for the saver's credit, a tax credit that can be worth as much as $1,000 for individuals and $2,000 for couples. Workers are eligible for the saver's credit until their AGI reaches $30,500 for singles, $45,750 for heads of household and $61,000 for married couples in 2015. These limits are between $500 and $1,000 higher than in 2014.

IRA one rollover rule. Beginning on Jan. 1, 2015, investors can make only one rollover from one IRA to another in any 12-month period. A second IRA-to-IRA rollover in a single year could result in income tax becoming due on the rollover, a 10 percent early withdrawal penalty and a 6 percent per year excess contributions tax as long as that rollover remains in the IRA. "Individuals can only make one IRA rollover during any one-year period, but there is no limit on trustee-to-trustee transfers," Thomas says. Multiple trustee-to-trustee transfers between IRAs and conversions from traditional IRAs to Roth IRAs will continue to be allowed in the same year.

Social Security Benefits at 62

Why You Shouldn't Regret Taking Social Security Benefits at 62

 

Financial analysts and commentators have established a cottage industry out of making retirees feel guilty about taking Social Security benefits early. But not only are these so-called experts lacking in empathy; they may also be wrong.
Consider this headline from a recent survey of retirees: "Many Regret Decision to Take Social Security Early."
Sounds ominous, right?
Well, the problem is that the title isn't entirely supported by the survey's actual results, which found that only 38% of respondents "say they wish they would have waited" longer before taking benefits. According to this, in other words, somewhere along the lines of 62% of respondents, or a large majority, evidently don't regret the decision.
And why should you? As Motley Fool contributor John Maxfield explains in the following video, the Social Security Administration has designed the benefit formula to pay the same amount of total benefits over the life of a typical person irrespective of when they elect to take them.
Additionally, as John goes on to discuss, taking benefits sooner rather than later can facilitate an earlier retirement, which allows retirees to escape the physical and psychological wear and tear associated with many jobs.
The net result, John concludes, is that "the only person who's qualified to determine when the best time for you to take benefits is you." By:  John Maxfield

Save with Shopping Secret Codes

Learn the secret codes to shopping success

By Lou Carlozo9 hours ago

 

View photo

NEW YORK, April 16 (Reuters) - As superstore pricing mysteries go,  it's not the equivalent

 of "The Da Vinci Code," but there's still something deliciously elusive about the so-called "Costco Code" .

 At least the plot line is direct enough: If you can interpret what the various sequences of digits and 

asterisks mean on Costco Wholesale Club price signs, you're on your way to scoring serious bargains.

Here's how it works, according to Costco shoppers spreading the word online: If a price at Costco ends in .99, you're paying full price. But if it ends in, say, a .97, it represents a deal with a special price decided by the manager. And if you happen to see an asterisk in the upper right corner of the sign, then the item is on its way out of the store-and probably at the lowest price you're going to see.

"That asterisk, that's the holy grail," says Kyle James, who runs the shopping blog Rather-Be-Shopping.com (http://www.rather-be-shopping.com/). He has shopped at Costco for 20 years now, and the Redding, California resident has studied the matter of the Costco Code well. By his count, he and his wife have saved at least $300 using the Costco Code over the last seven months.

For the record, he doesn't claim to have discovered it; he says there's been Internet chatter about Costco and its pricing system going back about five years before he took up the topic on his blog.

So is the Costco Code really so much of a pricing potboiler as it seems? No one would know as well as Costco's Richard Galanti, who's the company's executive vice president and chief financial officer.

Indeed he confirms that the codes do exist, though "It's more for efficiency, for the employees," Galanti says. "It's not any sort of secret agent stuff. But you see it on a blog and people think it's a secret. It's just a way of moving some merchandise, to help the fork lift operators and the stocking clerks."

Galanti says that "when a price ends in a '7,' usually it's a buyer designated markdown." And as for those asterisks, "That's what we call a pending delete. Sometimes an item's not selling well and we want to move it out, or it could be the end of the season. Let's say we've got three TV models and the latest and greatest comes out; we might want to bring the newest one in."

But Galanti cautions against reading too much into the price codes, as Costco's margins are low enough (in the 10-11 percent range) that a shopper might have more advantage buying a newer item at the ".99" full price. "The question is, do you want something at the end of its season or at the beginning of a new season?" he asks.

Retail experts say that such pricing codes and systems are common. At his website, James lists price tag codes that he's found for retailers under the juicy heading "Retailer's Big Secret: Crack the Price Tag Code."

Paula Rosenblum, managing partner of RSR Research, a retail technology research and advisory firm says Home Depot indicator is a green tag, while at Office Depot, anything with a price other than 00, 50 or 99 is a markdown.

As for why, chalk it up to something not quite as old as the human desire to crack secret codes, though it does predate computers and the digital age.

"It all goes back to the retail method of accounting, and it's a very old story," Rosenblum says. "Before the days of price scanners, and when there was no technology in the store at all, a seven at the end of a price let associates know where they were with the item. If they couldn't move it in three weeks, it was gone."

Still, she can't help throwing in an observation for consumers who choose to make note of the code, and where asterisks are most likely to appear: "Costco's non-food items don't always move fast enough, so those might be good items to add to the treasure hunt."

Much of James' information from comes from chatting up employees (many of whom have requested anonymity). At Target , for example, he says that the discounting system on clearance items, as told to him by a sales associate, goes like this: "They mark something down every 10 to 15 days. And the upper right hand corner of the clearance tag, which is red and white, has the numbers 15, 30, 50, 75 or 90 on it. And that number indicates the percentage off the original price."

Target would not confirm it uses such a mechanism. "It is not possible to determine the final markdown or timing of the price change from the item's current price," Target spokesman Evan Lapiska said.

But Lewis says his key advice for fellow shoppers on the hunt for price tag secrets is this: "Talk to the employees on the floor. I've found they're pretty open about it."

10 Common Tax Mistakes to Avoid

Just because the calendar has officially turned the page doesn’t mean you can forget about last year just yet: Now’s the time to start thinking about and preparing your 2013 tax returns, which the IRS will begin accepting at the end of this month.

No one enjoys doing taxes, but it’s an important financial task. As you sit down to do it this year, be sure to avoid these common tax mistakes.

1. Using a pen and paper. It’s amazing that in 2013, some 20 percent of filers still fill out their returns the old fashioned way: by hand. Doing so makes you much more likely to introduce math errors or simple mistakes - like forgetting to sign and date a form - that a computer (yours, or your tax preparer’s) would catch. In addition, e-filers get their returns more quickly and are less likely to be victims of ID theft. “You’d have to be a fool not to e-file,” says Mark Steber, chief tax officer at Jaskon Hewitt Tax Service.

2. Choosing the wrong tax preparer. Software like TurboTax is fine if you’re comfortable doing your taxes solo. If you decide to bring in professional help, remember that there’s no licensing requirement for someone to call herself a tax preparer. “We have 800,000 people in this country who prepare returns, and the vast majority of them are unregulated,” says Robert McKenzie, a tax lawyer with Arnstein & Lehr in Chicago.

To be safe, look for someone who’s either a certified public accountant (CPA) or an enrolled agent (EA); both must take ongoing exams to prove their knowledge of the tax code.

3. Waiting too long to get started. Missing the April 15 deadline would obviously be a huge mistake, but experts say you should start preparing your documents well before the end of March. Early filers get their refunds more quickly than laggards; plus, starting early gives you a time cushion if you discover missing documents or need to verify information.

4. Selecting the incorrect filing status. It’s not uncommon for filers to opt for the wrong filing status. “Particularly for single parents, filing as ‘head of household’ instead of single will give you a higher standard deduction and lower your taxes,” says John Vento, a CPA and author of Financial Independence: Getting to Point X.

If you’re married, divorced, or had a child in the past year, don’t forget to update your status as well.

5. Assuming you shouldn’t itemize. Often mortgage-free homeowners or renters assume that since they don’t have a home loan, it’s not worth itemizing. Simply taking the standard deduction, however, can be a costly mistake. 

Before making that your default, tally up potential deductions such as state and local taxes, charitable contributions, and medical expenses that exceed 10 percent of your income to see if they’re worth more than that deduction. “There might be some rare cases where itemizing wouldn’t be the best move, but for most people, it’s better to itemize,” says Jackie Perlman, a principal tax researcher for H&R Block.

6. Failing to double-check your work. Computer programs are great at catching math errors, but they won’t know if you’ve transposed the digits on your Social Security number or incorrectly transferred numbers from your W-2. Print out your returns before pressing the “send” button and double-check all of your numbers for human error.

7. Not properly safeguarding your private information. ID thieves loves tax season, and tax-related identity theft is a growing problem. In the first half of this year the IRS reported that identity theft affected 1.6 million taxpayers, more than the number affected in all of 2012. Protect yourself by avoiding shared computers for filing; not emailing your returns to anyone, including your preparer; and filing as early as possible.

8. Forgetting to keep a copy of your returns. If you’ve lost your copies, the IRS will send one to you for $50, so it’s worth holding onto your own copy. You’ll need to keep one on hand for at least three years in case of an audit, but you may also have to produce a copy to a potential mortgage lender or someone else examining your financials. Plus, having last year’s returns on hand makes it much easier to prepare your taxes the following year. “Looking at old returns might jog your memory about an account that you closed this year, or deductions you might be missing,” says Greg Rosica, tax partner with Ernst & Young in the firm’s Tampa, Fla., office.

9. Keeping inadequate records throughout the year. It’s a lot harder to reconstruct deductible expenses at the end of the year than it is to organize your receipts as they come in. Plus, you’ll need documentation supporting any deductions if the IRS ever decides to audit your returns. Mobile apps like Expensify can make keeping receipts a paperless breeze. 

In addition to business and medical expenses, keep detailed records of any charitable donations you make. Any donations worth more than $250 requires a letter from the organization that includes a description of the item or the amount of cash, and whether you received anything in return for the contribution. (If you did receive a gift or service, you’ll need to subtract its value from the amount you contributed.) “The IRS is really focused on charitable contributions lately, so you definitely want to have that documentation in order,” says Julius Green, the tax practice leader for the Philadelphia office of accounting firm ParenteBeard. 

10. Leaving money on the table at work. Not all important tax decisions get made during filing time. It’s equally important to make sure that you’re withholding the proper amount for taxes at the office, and fully taking advantage of any tax-advantaged benefits, such as 401(k) contributions and flexible spending accounts (for health care, transportation, and dependents). Properly using such benefits can lower your taxable income, save you money, and - in some cases - even move you into a lower tax bracket. By: Beth Braverman

Smart Spending

10 things you're likely to spend too much on

Tradition and emotion often cause people to overspend. Who says you should pay 3 months' salary for an engagement ring? Here's how to anticipate and cut the costs.

By MSN Money Partner Aug 21, 2013 

This post comes from Michael Koretzky at partner site Money Talks News. 

All too often, we buy things we think we're supposed to, and whenever there's an emotional component involved, our tendency to overspend is enhanced even more. Think funerals, weddings and engagement rings, just for starters.

Here are some of the purchases that people routinely spend too much on, plus solid suggestions for cutting those costs.

1. Funerals

The worst time to shop for a funeral is after a loved one dies, when grief can affect judgment. That suggests this is a purchase you should arrange yourself long before your demise. According to the National Funeral Directors Association, Americans paid an average of $6,560 for a funeral in 2009, the latest year for which cost is available, and that doesn't include a burial plot, marker or stone, flowers and obituary.

Here's how to significantly reduce that cost:

• Consult the government. The Federal Trade Commission regulates "funeral providers." Here's a list of the rules they must follow, plus some excellent advice, including:

o    "The law requires funeral homes to give you written price lists."

o    "You have the right to buy goods and services separately."

• Shop around. Because the law allows you to BYOC (bring your own casket), shop around. Where? Try Costco. While the NFDA says a casket averages $2,295, you can get a beautiful Costco casket for $950 -- delivery included. But there are many other discount options online.
• Get cremated. More Americans are opting for ashes. In 1960, only 3.6% did, but that had risen to 42% by 2011, says the NFDA. The Neptune Society, one of the largest cremation services, says its costs vary by "local market factors" but insists it's "a fraction" of burial costs.

2. Weddings

Who doesn't enjoy reading about "The 12 most expensive weddings in history"? No. 1 is Princess Diana's wedding ($110 million adjusted for inflation). While the average American wedding costs a fraction of that, it's still $28,427,according to a survey by wedding website The Knot.

While everyone from Martha Stewart to Bank of America offers advice for saving on weddings, the truth is plain: Many brides refuse to skimp on their big day. So while buying from websites likePreOwnedWeddingDress​es.com and limiting the floral arrangements and guest list can save thousands, many are going to eschew those steps.

Maybe these other cost-cutting suggestions will appeal:

• DIY the DJing. The Knot survey says a reception band will cost about $3,084, while a disc jockey will run almost $1,000. But many couples, especially younger ones, are programming their own music on iPods and simply hiring someone (or even asking a friend) to push the right buttons at the right time. Search online for "DJing your wedding" and you'll find all kinds of detailed advice.
• Skimp on the cake. How many weddings have you been to where everyone exclaimed, "That cake was delicious!" Most attendees don't care, and they only get a sliver, anyway. So don't buy your wedding cake from a specialty baker. Buy it from your local grocery chain. Since the average cake runs $560, you can easily cut that cake price in half.

3. Diamond rings,

You'll notice we didn't mention engagement and wedding rings in the Weddings section. That's because jewelry is an overspending category unto itself -- and diamonds may be the most marked-up item on this list. But like spending on funerals and weddings, buying diamonds is fraught with danger because it's yet another emotional purchase. If we try too hard to save money, we feel like we're being cheap.

But here's a secret: Diamond prices are often negotiable, even at major chains like Zales and Kay Jewelers. So while it's important to know the four C's of diamonds -- carat, color, clarity and cut -- the biggest lesson you can learn is to haggle. If your local jeweler or national retailer won't come down on price, they'll often be willing to upgrade the setting for a discount or even free.

4. New cars

Money Talks News founder Stacy Johnson lives in a beautiful house on the water, and there's a 30-foot boat docked out back. But he's never, ever bought a new car. This is what he says:

When it comes to buying cars, the vast majority of people I've known over the years approach the subject with no imagination at all. They simply do what the commercials tell them to and what their friends do: trudge down to the nearest dealer and buy a new car.

Instead, he's bought used cars for as little as $5,000. How? He avoids car lots. "A few years ago I bought a 1994 Cadillac Fleetwood Brougham from a 91-year-old lady," he recalls. He suggests asking around -- friends of friends seem to value a fair price and honesty. He also consults websites like Kelley Blue Book or Edmunds.com to establish a value. And finally, he gets the car inspected by a local mechanic. It might cost $50, but it can "save a ton of headaches and bills down the road," he says.

But if you're dead-set on a new car, consider more than the price. Also take into account resale value, fuel efficiency, repair record and the cost of insurance.

5. Food

So you don't cook much or well, and you don't have the time or space to grow your own fruits and vegetables. Since that sums up the advice in many saving-on-food articles, now what? Here are three quick and easy suggestions:

• Eat smart when eating out. Of course, the unhealthiest food is often the cheapest. So if you're both healthy and price-conscious, skip the soup and salad -- they're not only expensive for what you get, they're not nearly as good for you as you think.
• Buy smart when eating in. If you don't like to cook, at least make meals with healthy ingredients that are easy to manipulate, such as beans, brown rice and eggs.
• Don't be bored/scared of cooking. You can save big and still eat well. .

6. Clothes

Kanye West made headlines recently not just for releasing his new album, but also for selling his own clothing line that featured a $120 white T-shirt. Guess what? He sold a lot of them, says The Huffington Post. While maybe you weren't among those who purchased one, the fact is that we've all overpaid for clothes because we liked the label.

Perhaps the most crucial advice on buying clothes is about what not to do: Don't buy brands. Five years ago, in a study of online clothes shopping, Consumer Reports determined that its readers rated Sears clothes "excellent" 29% of the time -- and "Victoria’s Secret, the Gap, J.C. Penney, and Kohl's fared about the same."

7. Private school

Of all the items on this list, none is harder for scoring a deal. First, you need to find one close to home. Then you need to figure out the best way to compare prices and services. Finally, you want to pursue financial aid. Here are three good places to start:

• The National Association of Independent Schools. It represents 1,700 institutions nationwide -- including religious and boarding schools -- and it has a Parents' Guide   with tips for everything from visiting the school to landing financial aid.
• PrivateSchools.com. This simple-looking website is about financial aid, plus details on scholarships, loans and vouchers. It also has a search function for nearly 30,000 schools.
• Time magazine and The Week. Six years ago, Time published a controversial story about a controversial study that disputed whether private schools are really any better than pubic schools. A few months ago, The Week did the same. Read them before you decide to spend thousands a year in tuition for something you can get for free.

8. College

While experts offer all kinds of conflicting college advice, they seem to agree on one thing: Spending more than you can afford to attend a big-name school isn't smart. As with buying clothes, you need to look beyond the pricey labels. As Money Talks News reported last month, "Forbes has released its list of top colleges for 2013 and for the first time, the top two aren't in the Ivy League." Start by checking out the U.S. Department of Education's College Affordability and Transparency Center.

9. Insurance and warranties

We've all heard the expression "Better safe than sorry." But we also know about "Nothing ventured, nothing gained." You can spend a lot of money insuring yourself against any probability, and insurers prey on those fears. But many things that can go wrong can be fixed for cheaper than the premiums. Take cellphone insurance, for example. Personal finance blogger Len Penzo did the math and determined it wasn't worth the cost.

The same goes for extended warranties. Consumer Reports has always been skeptical of them, pointing out that your credit card may already provide an extended warranty.

10. Credit cards

This item has the potential to rack up big savings with just a few minutes of your time. But too many of us sign up for a few credit cards and never look back, paying high interest on a balance or a large annual fee. Or we cut them up because we think those pieces of plastic got us mired in debt.

But credit cards, wisely used, can help you claw your way out of debt. Reward points are like free money, and balance transfer offers can reduce your interest rate to zero for many months.

Have you overspent in one of these areas because tradition or emotion or other people's expectations got the best of you?

10 Often-Overlooked Tax Break

The goal of every taxpayer is to make sure the Internal Revenue Service gets as little as possible. For that to happen, you need to take every tax deduction, credit or other income adjustment you can.

Here are 10 tax breaks -- some for itemizers only, others that any filer can claim -- that often get overlooked but could save you some tax dollars.

And yes, even though you got an extension until Oct. 15 to file your 2012 tax year Form 1040, you can still claim any of these tax deductions or credits that apply to your situation.

1. Additional charitable gifts

Everyone remembers to count the monetary gifts they make to their favorite charities. But expenses incurred while doing charitable work often aren't counted on tax returns.

You can't deduct the value of your time spent volunteering, but if you buy supplies for a group, the cost of that material is deductible. Similarly, if you wear a uniform in doing your good deeds, for example as a hospital volunteer or youth group leader, the costs of that apparel and any cleaning bills also can be counted as charitable donations.

So can the use of your vehicle for charitable purposes, such as delivering meals to the homebound in your community or taking the Boy Scouts or Girls Scouts troop on an outing. The IRS will let you deduct that travel at 14 cents per mile.

2. Moving expenses

Most taxpayers know they can write off many moving expenses when they relocate to take another job. But what about your first job? Yes, the IRS allows this write-off then, too. A recent college graduate who gets a first job at a distance from where he or she has been living is eligible for this tax break.

3. Job hunting costs

While college students can't deduct the costs of hunting for that new job across the country, already-employed workers can. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies, are deductible as long as you itemize. The one downside here is that these costs, along with other miscellaneous itemized expenses, must exceed 2 percent of your adjusted gross income before they produce any tax savings. But the phone calls, employment agency fees and resume printing costs might be enough to get you over that income threshold.

4. Military reservists' travel expenses

Members of the military reserve forces and National Guard who travel more than 100 miles and stay overnight for the training exercises can deduct related expenses. This includes the cost of lodging and half the cost of meals. If you drive to the training, be sure to track your miles. You can deduct them on your 2012 return at 55.5 cents per mile, along with any parking or toll fees for driving your own car. You get this deduction whether or not you itemize, but you will have to fill outForm 2106.

5. Child, and more, care credit

Millions of parents claim the child and dependent care credit each year to help cover the costs of after-school day care while Mom and Dad work. But some parents overlook claiming the tax credit for child care costs during the summer. This tax break also applies to summer day camp costs. The key here is that the camp is a day-only getaway that supervises the child while the parents work. You can't claim overnight camp costs.

Remember, too, the dual nature of the credit's name: child and dependent. If you have an adult dependent who needs care so that you can work, those expenses can be claimed under this tax credit.

6. Mortgage refinance points

When you buy a house, you get to deduct the points paid on the loan on your tax return for that year of purchase. But if you refinance your home loan, you might be able to deduct those points, too, as long as you use refinanced mortgage proceeds to improve your principal residence.

7. Many medical costs

Taxpayers who itemize deductions know how difficult it often is to reach the 7.5 percent of adjusted gross income threshold required before you can claim any medical expenses. It might be easier to clear that earnings hurdle if you look at miscellaneous medical costs. Some of these include travel expenses to and from medical treatments, insurance premiums you pay for from already-taxed income and even alcohol- or drug-abuse treatments.

These added medical expenses will be even more valuable on your 2013 tax return. Beginning this tax year, a health care reform act provision now requires you have medical expenses of more than 10 percent of your adjusted gross income before you can deduct them.

Self-employed taxpayers who are not covered by any other employer-paid plan, for example, one carried by a spouse, can deduct 100 percent of health insurance premiums as an adjustment to income in the section at the bottom of Page 1 of Form 1040.

8. Retirement tax savings

The retirement savings contribution credit was created to give moderate- and low-income taxpayers an incentive to save. When you contribute to a retirement account, either an individual retirement account (traditional or Roth) or a workplace plan, you can get a tax savings for up to 50 percent of the first $2,000 you put into such accounts. This means you get a $1,000 tax credit, which is a tax break that directly reduces dollar for dollar any tax you owe.

9. Educational expenses

The Internal Revenue Code offers many tax-saving options for individuals who want to further their education. The tuition and fees deduction can help you take up to $4,000 off your taxable income and is available without having to itemize.

The lifetime learning credit could provide some students (or their parents) up to a $2,000 credit.

Don't forget the American opportunity tax credit, which offers a dollar-for-dollar tax break of up to $2,500. This education tax break was created as part of the 2009 stimulus package as a short-term replacement for the Hope tax credit, and was extended through tax year 2017 as part of the American Taxpayer Relief Act of 2012, also known as the "fiscal cliff" tax bill.

10. Energy-efficient home improvements

Generous tax breaks for energy-efficient home improvements expired at the end of 2010, but some homeowners still might be able to pocket a tax credit of up to $500 on their 2012 and 2013 returns, again thanks to a provision in the fiscal cliff bill, for a few common residential energy upgrades.

The bad news is that the tax credit is just a third of what was previously available. You also now must pay attention to specific spending limits, such as $150 for high-efficiency furnaces and boilers, $300 for air conditioners and heat pumps and $200 for replacement windows. And the overall $500 tax credit cap applies to anyone who received any previous energy tax credit since Jan. 1, 2005.

But if you qualify, the tax break is a tax credit, giving you a dollar-for-dollar reduction of your tax bill. And when it comes to taxes, every dollar saved helps. By:  Kay Bell

SHUTDOWN: Federal Workers and Annuitants

How the Shutdown May Affect Federal Workers and Annuitants

September 24, 2013

Federal Employee Pay: According to the Office of Personnel Management (OPM), approximately 1. 3 million federal employees will be kept on the job - so called “excepted” employees - while about 800,000 federal employees will be sent home for the duration of the government shutdown.

Those who are asked to keep working during a shutdown will be paid once a budget deal to resume government operations is passed. For those who are not excepted and are not working during the shutdown, Congress will determine whether they receive pay for the furlough period. Congress did so after the 1995 and 1996 shutdowns, but may not this time, particularly given the demonization of federal workers by some lawmakers.

Annuity Benefits: Federal retirees under the CSRS and FERS retirement systems will still receive their scheduled annuity payments on the first business day of the month. Federal retirement payments, like payments such as Social Security benefits, fall under the “mandatory” budget category not funded through annual appropriations and thus, would not affected by a government shutdown.

Health, Life and Long-Term Care Benefits:  Federal Employees’ Health Benefits Program, Federal Employees’ Group Life Insurance, FEDVIP (dental/vision insurance), and Federal Long Term Care Insurance Program premiums will continue to be withheld and paid by OPM. There will be no interruption in insurance coverage.

Thrift Savings Plan: The Federal Retirement Thrift Investment Board has stated that a federal government shutdown would not affect the Thrift Savings Plan (TSP) since it does not receive annual appropriations from Congress. The TSP would operate during such a period as usual.

Retirement Processing: For those newly retired employees, a government shutdown may delay the processing of your paperwork by your agency, prior to your records being sent to OPM. For those recent retirees whose retirement OPM has already begun to process, there should be no additional delay caused by a government shutdown as OPM Retirement Services employees will still be working normal operating hours.

Retirement and Benefits Information: OPM staff responsible for answering the retirement and health benefits questions asked by federal workers and annuitants will be available during the shutdown. If there is a shutdown, NARFE members will continue to have access to this information by calling or emailing the NARFE Federal Benefits Service Department. NARFE members can call 703-838-7760 and ask for the Federal Benefits Service Department or send an email to fedbenefits@narfe.org.

Other Federal Benefits: Programs like Social Security, Medicare and Medicaid fall under the “mandatory” budget category not funded through annual appropriations and thus, would not be affected by a government shutdown. 

Safe Deposit Box: What to keep & What not to keep!

Safe deposit boxes can be handy tools, providing a safe place away from your home or office to store valuables. When renting a safe deposit box, there are many things to consider:

• Make sure you choose the right size. Many people start by renting a small box, only to discover that it quickly becomes filled.
• You also need to determine who is allowed to access the box.
• Your bank will provide a key (or keys) that must be kept in a safe place, but also a place you will remember. If you lose or misplace your key, you may have to pay a fee for changing the lock on your box.
• The contents of a safe deposit box are not insured by the FDIC.
• Use your safe deposit box regularly and keep a list at home or in your office of what it contains.

What to Keep in Your Safe Deposit Box

Safe deposit boxes can be the best places to keep items that are valuable. This includes jewelry, stamp and coin collections, and negotiable instruments like stock certificates and bonds. They are also good places to keep items that are not replaceable or that have sentimental value. A household inventory (digital or written), appraisals, listings of insurance policies and credit card numbers may also be kept in a safe deposit box.

Examples of items that are not easily replaced

• Birth certificates and adoption papers
• Citizenship papers
• Military documents
• Divorce papers
• Photos and videos (make a digital copy for safekeeping)
• Family heirlooms or historical records

Examples of items that should be kept safe

• Important contracts and business agreements
• Real estate deeds and mortgages
• Vital backup data files from your PC
• Passports, if they are seldom used
• Confidential records
• Copies of important financial records that you keep at home
• Copies of wills, living trust documents, powers of attorney

What Not to Keep in Your Safe Deposit Box

It is important to remember that only the person or persons listed on the bank’s signature card can open your safe deposit box without a court order. Items that others may need to obtain if you are not present should not be kept in your box. Original wills, powers of attorney, living trust documents and other trust documents should not be kept in your safe deposit box because other people may need to access them if anything happens to you. For the same reason, original insurance policies should usually not be kept in the box. By: Nevada State Bank

Savings Bonds Reminder

Do you have Savings Bonds that you have been keeping for thirty years?

 

GO TO: Savings Bonds Information