How to Manage a Windfall

What do you do when you get a large sum of money? Do you spend it? Do you stash it? Most of us won’t ever win the lottery in our lifetimes, but almost everyone from time to time finds themselves with a handful of cash, whether expected or unexpected, that is above and beyond their typical income stream. This could come in the form of a tax refund, an inheritance, or a work bonus.

What do experts recommend you do with a cash windfall? Here are a few suggestions: Continue reading

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Reduce Certain Summertime Costs with the Child and Dependent Care Tax Credit

The following article was published by the IRS.

strollerMany parents send their children to summer day camps while they work or look for work. The IRS urges those who do to save their paperwork for the Child and Dependent Care Tax Credit. Eligible taxpayers may be able claim it on their taxes in 2018 if they paid for day camp or for someone to care for a child, dependent or spouse during 2017.

Here are a few key facts to know about this credit: Continue reading

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Top 7 Benefits of 529 Plans

There are many benefit to 529 College Plans. These college savings vehicles offer excellent benefits for anyone looking to save money for college.

Here are 7 reasons to open an account if you haven’t already:

  1. Federal Tax Benefits. While you don’t get a front-end tax break on your contributions, all your earnings are tax-free, and are not taxed when they are used to pay expenses.
  2. State Tax Benefits. Depending on the state you live in, you also may qualify for a state tax break. Currently, over 30 states offer residents either a tax credit or a tax deduction for 529 contributions.
  3. Owner Has Control. The owner has full control of the funds throughout the life of the account. This differs from custodial accounts in that the beneficiary has no legal rights to the funds in the plan.
  4. Low Maintenance. 529 Plans are also extremely easy to open and manage. Setup is a breeze as is investing funds. One such option to invest is through an automatic investing plan. Each plan also offers several options to invest in, many of which are professionally managed.
  5. Simple Tax Reporting. Tax reporting couldn’t be easier. You have nothing to report on any of your contributions. The only time the IRS needs you to report activity is once you start withdrawing funds.
  6. Flexible. 529 Plans are very flexible, allowing investment options to be changed twice a year. In addition, one tax-free rollover can be made every 12 months.
  7. Everyone is eligible. These plans are designed with people of all financial backgrounds in mind. There are no income limits, no age limits, and no annual contribution limits.
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Plan Ahead for Tax Time When Renting Out Residential or Vacation Property

The following article was published by the IRS.

Beach HouseSummertime is a time of year when people rent out their property. In addition to the standard clean up and maintenance, owners need to be aware of the tax implications of residential and vacation home rentals.

Receiving money for the use of a dwelling also used as a taxpayer’s personal residence generally requires reporting the rental income on a tax return. It also means certain expenses become deductible to reduce the total amount of rental income that’s subject to tax. Continue reading

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Does carrying a balance hurt your credit score?

Does carrying a balance on your credit card lower your credit score? It can, but it all depends on several factors. These factors most often extend beyond the specific credit card that may have a balance. In fact, your credit score is determined by several factors which apply to the totality of your credit picture.

In regards to the credit card in question, carrying a balance only hurts you if it, along with other credit balances you may have, takes up more than 30% of your available credit. This applies to all your revolving accounts such credit cards and lines of credit, as well as your installment loans like your mortgage and other loans.

Continue reading

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Tips to Know for Deducting Losses from a Disaster

The following article was published by the IRS.

floodThe IRS wants taxpayers to know it stands ready to help in the event of a disaster. If a taxpayer suffers damage to their home or personal property, they may be able to deduct the loss they incur on their federal income tax return. If their area receives a federal disaster designation, they may be able to claim the loss sooner.

Ordinarily, a deduction is available only if the loss is major and not covered by insurance or other reimbursement.

Here are 10 tips taxpayers should know about deducting casualty losses: Continue reading

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