(NewsUSA) – It’s time to stop worrying that your adult, out-of-work kid may never find a job that lets him move back out of your house, and instead think of him the way the IRS potentially does: as a big, fat tax deduction.
That’s right, one consequence of the sputtering economy is that it’s turned otherwise distressing family circumstances — those “boomerang kids,” for instance — into windfalls for deduction hunters. Another bonanza, via the tax code? So many senior citizens have seen their nest eggs battered over the past few years that an estimated 9.7 million adults over age 50 are now providing some level of potentially deductible care for their own parents.
“In many cases, you’re looking at three generations living under one roof,” says Elaine Smith, master tax advisor at H&R Block. “And those caregivers — the so-called ‘sandwich generation’ — are seeing their expenses rise as a result of their increased responsibilities.”
Just how much of a windfall are we talking? And who’s eligible? Read on for some tips:
* The $3,700 exemption. That’s the reduction to your taxable income you’ll realize for each qualifying child or relative. The IRS is quite specific about the definition of “qualifying,” but — in the case of returning adult children — one thing you definitely need to keep in mind is that their total annual income must be less than $3,700.
* Aging parents. Unlike your child, your mom and dad needn’t live with you to qualify as dependents. If they’re in a nursing home or assisted living facility, say, the IRS feels your pain if you’re footing more than half their bills. In which case, the medical expenses you pay are deductible on your return. “You could easily be looking at about $40,000 in expenses racked up at one of those facilities,” says Smith, “which translates into thousands of dollars in savings on your tax bill.”
* Adult children. Staying on the subject of medical expenses, don’t forget any extra after-tax premiums you may be paying to keep qualifying offspring on your insurance plan.
The IRS says the average taxpayer needed 23 hours to do their 2010 tax return. If that sounds too torturous, you might want to consider using a professional preparer like H&R Block (www.hrblock.com), which offers guaranteed in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM.
Oh, and don’t feel too smug if your adult kid hasn’t boomeranged on you yet. According to a Twentysomething Inc. poll, 85 percent of 2011 college graduates surveyed said they planned on moving back home with their parents.
How to Soothe Coughs For the Whole Family
Tax Relief for the Sandwich Generation
(NewsUSA) – It’s time to stop worrying that your adult, out-of-work kid may never find a job that lets him move back out of your house, and instead think of him the way the IRS potentially does: as a big, fat tax deduction.
That’s right, one consequence of the sputtering economy is that it’s turned otherwise distressing family circumstances — those “boomerang kids,” for instance — into windfalls for deduction hunters. Another bonanza, via the tax code? So many senior citizens have seen their nest eggs battered over the past few years that an estimated 9.7 million adults over age 50 are now providing some level of potentially deductible care for their own parents.
“In many cases, you’re looking at three generations living under one roof,” says Elaine Smith, master tax advisor at H&R Block. “And those caregivers — the so-called ‘sandwich generation’ — are seeing their expenses rise as a result of their increased responsibilities.”
Just how much of a windfall are we talking? And who’s eligible? Read on for some tips:
* The $3,700 exemption. That’s the reduction to your taxable income you’ll realize for each qualifying child or relative. The IRS is quite specific about the definition of “qualifying,” but — in the case of returning adult children — one thing you definitely need to keep in mind is that their total annual income must be less than $3,700.
* Aging parents. Unlike your child, your mom and dad needn’t live with you to qualify as dependents. If they’re in a nursing home or assisted living facility, say, the IRS feels your pain if you’re footing more than half their bills. In which case, the medical expenses you pay are deductible on your return. “You could easily be looking at about $40,000 in expenses racked up at one of those facilities,” says Smith, “which translates into thousands of dollars in savings on your tax bill.”
* Adult children. Staying on the subject of medical expenses, don’t forget any extra after-tax premiums you may be paying to keep qualifying offspring on your insurance plan.
The IRS says the average taxpayer needed 23 hours to do their 2010 tax return. If that sounds too torturous, you might want to consider using a professional preparer like H&R Block (www.hrblock.com), which offers guaranteed in-person services at its retail offices nationwide as well as the only face-to-face online preparation through Block LiveSM.
Oh, and don’t feel too smug if your adult kid hasn’t boomeranged on you yet. According to a Twentysomething Inc. poll, 85 percent of 2011 college graduates surveyed said they planned on moving back home with their parents.
How to Successfully Start an IRA
 NewsUSA) – Maybe your company offers a 401(k) plan. But even if it doesn’t, you need to get an IRA now. Because IRAs use compound interest and are not taxed by the IRS, contributing even a few thousand dollars a year can create a sizable nest egg.
And yet, according to the IRS, only 10 percent of the people eligible to create and contribute to IRAs actually do so. If you think you can’t afford an IRA, you’re wrong. Consider that Social Security typically pays $13,000 a year — unless you can live on that miniscule income, you’ll need to find an additional way to pay for retirement. How do you know if you’re eligible for an IRA? “Anyone who earns a taxable income or files a joint return with a spouse who earns an income can contribute to an IRA,” explains David Bach, the author of nine national bestsellers, including “Start Late,” “Finish Rich” and “The Automatic Millionaire.” Bach recently shared his insights about IRAs with the readers of SUCCESS Magazine, where he offered the following advice: - Start Early and Save Until Retirement. Thanks to the miracle of compound interest, those who start saving early end up with the largest nest eggs. “If you were to start at age 55, you’d contribute a total of $50,000 in the 10 years before you retire, at which point your account would be worth $72,433,” says Bach. “By contrast, if you started at 25, you’d contribute $200,000 over the next 40 years, and by the time you retired, your account would be worth $1.3 million.” - Invest Wisely. You can invest the proceeds from your IRA any way that you want, but some moves are wiser than others. Bach recommends “target date” or life cycle funds, which are specially designed for retirement savings. The fund automatically makes sure that you have investments appropriate for your age, acting more aggressively in your younger years and becoming more conservative as you near retirement. - Know When to Start Withdrawing. Legally, you can begin withdrawing funds from your IRA when you’re 59 and a half, but if you’re in a high tax bracket, you should put off withdrawals for as long as possible. SUCCESS magazine offers a balanced approach to successful living by covering topics on business, wealth, well-being and philanthropy. Visit www.SUCCESS.com and search the August issue to read the rest of Bach’s advice. |
Improving the Value of Your Dollar
 NewsUSA) – Americans across the country have noticed that when it comes to groceries and gas, their money purchases less.
The amount of money that used to purchase two gallons of milk now purchases one. Gas prices have almost doubled, increasing costs for those workers with long commutes. Americans find themselves rebudgeting, though their income remains stable. But with a little financial savvy, Americans can stretch their dollars. Simple changes, like purchasing generic puffed rice instead of name-brand cereals, clipping coupons or buying dried goods in bulk can save money at the grocery store. Keeping tires properly inflated and driving the speed limit can help increase vehicles’ fuel efficiency, leading to lower costs at the gas pump. The best way to make a dollar more valuable? Save it. In planning for retirement and future expenses, Americans can turn their dollars into considerable nest eggs. Financial advisors and columnists agree -; saving small amounts of money sooner results in larger net yields than saving more later in life. At age 25, someone saving 2,500 dollars a year in an individual retirement account (IRA) with 6 percent interest will save $437,376 by age 65. Someone starting to save at age 35 will have to put away $4,865 each year to make the same amount by age 65. It’s never too early -; or late -; to begin saving. One company, Save252, allows customers to contribute as little as a dollar a day, 265 days a year, towards their retirement. Users specify the amount of money they want to contribute to a regular account or Roth IRA. Save252 automatically withdraws that amount from users’ checking accounts, then transfers the funds. Customers remain in complete control of their savings -; they can, at any time, change the amount of money they want to save, or they can stop payments. Even people living in lower tax brackets can afford to save for retirement with Save252. For more information and more money-saving options, go www.save252.com. |
