Are your Social Security Benefits Taxable?

social-security5-with-caption_large

Social security benefits include monthly retirement, survivor, and disability benefits. If you received Social security benefits in 2015, you should receive a Form SSA-1099, Social Security Benefit Statement, showing the amount.

Note: Supplemental Security Income (SSI) payments are not taxable.

If Social Security was your only source of income in 2015 your benefits might not be taxable. You also may not need to file a federal income tax return this year; however, if you receive income from other sources, then you may have to pay taxes on some of your benefits.

Your income and filing status affect whether you must pay taxes on your Social Security. An easy method of determining whether any of your benefits might be taxable is to add one-half of your Social Security benefits to all of your other income, including any tax-exempt interest.

Continue reading

Advertisements

Five Ways to Improve Your Financial Situation

If you are having trouble paying your debts, it is important to take action sooner rather than later. Doing nothing leads to much larger problems in the future, whether it’s a bad credit record or bankruptcy resulting in the loss of assets and even your home. If you’re in financial trouble, then here are some steps to take to avoid financial ruin in the future.

If you’ve accumulated a large amount of debt and are having difficulty paying your bills each month, now is the time to take action–before the bill collectors start calling.

Continue reading

Roth IRAs: The Basics

Roth IRA Nest Egg
A Roth IRA is an individual retirement plan that with certain exceptions, is similar to a traditional IRA and subject to the rules that apply to a traditional IRA. For example, to be considered a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened. A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA.

Roth IRAs differ from other tax-favored retirement plans such as traditional IRAs in that you cannot deduct contributions to a Roth IRA. With most tax-favored retirement plans, the contribution to (i.e., investment in) the plan is deductible, the investment compounds tax-free until distributed, and distributions are taxable as received.

With a Roth IRA, there’s never an up-front deduction for contributions. Funds contributed compound tax-free until distributed (standard for all tax-favored plans) and distributions are completely exempt from income tax–as long as those distributions are considered qualified in the eyes of the IRS. In addition, contributions can be made to your Roth IRA after you reach age 70 1/2, and you can leave amounts in your Roth IRA as long as you live. There are other important differences as well, and many tax rules governing their use.

Continue reading

Three Most Common Budgeting Errors

When it comes to creating a budget, it’s essential to estimate your spending as realistically as possible. Here are three budget-related errors commonly made by small businesses and some tips for avoiding them.
budget

  1. Not Setting Goals. It’s almost impossible to set spending priorities without clear goals for the coming year. It’s important to identify, in detail, your business and financial goals and what you want or need to achieve in your business.
  2. Underestimating Costs. Every business has ancillary or incidental costs that don’t always make it into the budget–for whatever reason. A good example of this is buying a new piece of equipment or software. While you probably accounted for the cost of the equipment in your budget, you might not have remembered to budget time and money needed to train staff or for equipment maintenance.
  3. Failing to Adjust Your Budget. Don’t be afraid to update your forecasted expenditures whenever new circumstances affect your business. Several times a year you should set aside time to compare budget estimates against the amount you actually spent, and then adjust your budget accordingly.

Sign up for our newsletter to receive tax tips and timely articles delivered right to your inbox.    Read more articles from our February 2016 newsletter here.

Missing Your Form W-2?

You should receive a Form W-2, Wage and Tax Statement, from each of your employers for use in preparing your federal tax return. Employers must furnish this record of 2015 earnings and withheld taxes no later than February 1, 2016 (if mailed, allow a few days for delivery).

If you do not receive your Form W-2, contact your employer to find out if and when the W-2 was mailed. If it was mailed, it may have been returned to your employer because of an incorrect address. After contacting your employer, allow a reasonable amount of time for your employer to resend or to issue the W-2.

If you still do not receive your W-2 by February 15th, contact the IRS for assistance at 1-800-829-1040. When you call, have the following information handy:

Continue reading

Updated Withholding Tables for 2016

Updated income-tax withholding tables for 2016 have been released. The newly revised version contains percentage method income-tax withholding tables and related information that employers need to implement these changes.

In addition, employers should continue withholding Social Security tax at the rate of 6.2 percent of wages paid. The Social Security wage base limit remains at $118,500. The Medicare tax rate remains at 1.45 percent each for the employee and employer.

Continue reading

Reduce Your Taxes with the Child Care Tax Credit

Childcare

If you paid someone to care for a person in your household last year while you worked or looked for work, then you may be able to take the Child and Dependent Care Tax Credit and reduce the amount of tax owed.

Here are 12 facts you should know about this important tax credit:

Continue reading