6 Life Events That Change Your Taxes / From birth to death, how you live your life will affect how you file.

Geoff Williams for US News World Report writes: Somewhere, in a drawer, or on your phone or computer, you have photos of birthday parties, holidays, vacations, weddings and births. A wave of nostalgia probably courses through you, as you marvel at how your life has changed over the years. In fact, you could likely experience those same emotions by perusing other evidence of your life’s milestones: your old tax returns.

To be clear, nobody is suggesting you do this, but it’s important to remember that as your life changes, so too will how you prepare your taxes. Before the April 15 deadline hits, make sure to ask yourself: How has my life changed in the last year? These six milestones can really make an impact on your taxes.

You're newly married. One of the first decisions to make after tying the knot is whether to file your taxes jointly or separately, says Mike Campbell, a San Francisco-based tax partner at BDO USA, a business services practice headquartered in Chicago.

"For the majority of couples, filing jointly is the easiest administratively, especially if you live in a state that taxes income on a community property basis," Campbell says.

But that decision may also come with a price: potentially higher taxes. Some couples discover their tax tab is higher "because of the withholding levels on salaries,” Campbell says. “While the withholding taxes paid through payroll may have been sufficient for each spouse when they were filing as single taxpayers, the combined income as a joint couple may lead to a combined higher tax bracket,” he adds.

To help avoid surprises come tax time, Campbell suggests consulting your company's human resources department, and taking advantage of withholding calculators offered on the Internal Revenue Service’s website.

Bonus tip: If you've changed your name, make sure to let the Social Security Administration know. That way, you will avoid a mismatch between the name on your tax return and the name associated with your Social Security number, says Keith Baker, a professor of mortgage banking at North Lake College in Irving, Texas. If you don’t take this step, your tax return could get delayed until the inconsistency is resolved.

If there simply isn't time to do that, you should be fine filing jointly, provided the names on your tax forms match what appears on your Social Security cards.

You just bought a house. Hopefully your new home has an office where you can do your taxes. But whatever its comforts, your new residence will offer opportunities for deductions.

"A homeowner's interest and real estate taxes are tax-deductible," Baker says. To take advantage of these deductions, homeowners must itemize them. Note: You'll only get the maximum tax benefit if the actual cost of the interest and real estate taxes are more than the standard deduction.

Baker says most homebuyers borrow the money for most of their purchase price and pay points on the loan. "These are tax-deductible," Baker explains, adding that you can determine the interest on IRS Form 1098 when you receive it from the IRS. SNIP, the article continues @ US News World Report, click here to continue reading....

DO YOU NEED AN ACCOUNTANT OR A TAX ATTORNEY?

Jennifer Dunn at GoDaddy.com writes: When it comes to taxes, you can never be too careful or too organized. And if you spend your time running a small business, you’re likely going to need help along the way to ensure you’re being careful and organized enough. A tax professional can help.

Commonly, businesses rely on accountants and tax attorneys. How do you know which type of professional is the best fit for your needs? Let’s take a look at the differences between the two tax pros.

ALL ABOUT ACCOUNTANTS

You’re probably most familiar with accountants during tax season. But the truth is a qualified accountant can help with much more than just filing your tax return. If you run a small business, it’s a good idea to form a relationship with an experienced accountant so you have someone to call on with tax or accounting questions. This is also true if for personal taxes if you have expenses, income and deductions beyond a simple return.

Accountants provide a wide range of general and advanced tax services, including:

• Financial planning
• General bookkeeping
• Prepare and file tax forms
• Tax planning
• Audit assistance
• Business budgeting, cost and asset management
• Can be a key team member for making business growth decisions

Accountants can pursue varying level of education, from tax preparer certification to the coveted Certified Public Accountant (CPA designation). If you’re looking for help preparing taxes and filing the correct forms, a general accountant may suit your needs. However, if you need help with financial planning, asset management or audit assistance, a CPA may suit better. There might be a cost difference between the type of accountant you choose; however, don’t let cost dissuade you from getting the help that you need to adhere to tax laws.

Keep in mind that accountants are not well-trained in the legal aspects of tax law. If you’ve become involved in legal proceedings with the IRS, your accountant may be able to help prepare necessary information, but a tax accountant will help you manage the court system.

GET TO KNOW A TAX ATTORNEY

Tax attorneys are lawyers with a Juris Doctor (JD) degree and admission to the state bar, who also have subsequent education in tax law. Some are also CPAs, which enables them to handle the duties of an accountant, as well as those of a legal tax advisor.

Tax attorneys understand the finer details of tax law — an extremely valuable skill if you’re ever involved in an IRS action. Commonly, tax attorneys can assist with:

• Estate planning or filing estate related tax returns
• Business start-ups that have a complicated entity or tax requirements
• Payroll/employee taxation issues for business with multiple employees
• International business and tax laws
• Filing a lawsuit against the IRS
• IRS lawsuits against you
• Criminal IRS investigations against you
• Representation for tax fraud accusations against you

A tax attorney can help resolve many tax-related problems. They negotiate on your behalf and are trained to analyze complicated tax information and formulate a plan for resolving your case. Because tax laws change every year, tax attorneys are also invested in constant learning to stay abreast with all the changes.

Need some tips for choosing the best tax professional to meet your small business’s needs? Stay tuned for need-to-know info before you hire an accountant or tax attorney.

"Why I'm switching away from TurboTax this year" - former customer explains...

Zee for Work-To-Not-Work.com writes: This year I lagged compared to my usual approach to taxes. It seems like every year the date that I receive all of my tax forms gets pushed back further and further. I swear that I remember getting my taxes done before January 15th once but now it seems like I can't even attempt to complete my taxes until mid February anymore.

This year I'm glad I waited on it though. Normally, every year I purchase TurboTax and plug away at it myself for a few hours and then "voilà!" I'm done, and hopefully a refund will be coming in a few weeks (except not last year) and not an audit. But this year I have to take a new approach, and if you are a TurboTax user then you might want to reconsider too! You see TurboTax did something sort of sneaky, they changed their software so that the deluxe version no longer includes the forms necessary to enter your schedule D forms for capital gains and losses.

Many loyal customers of TurboTax didn't read the fine print on the boxes about the changes that were made to the software so now when they are in the middle of their taxes find out that they have to upgrade to the next level up of the software. So instead of paying about $48 for the version they thought they needed they end up upgrading to the premier version which costs them $75 instead. The other option they could do is purchase another program from somewhere else and start the whole process over again which is also a bit absurd, no one really wants to go through that all again.

The response from Intuit (the owners of TurboTax) has been that they clearly labeled their packaging - which in all fairness they did. But for users like myself that have used TurboTax for the past decade or more it's like going to buy a Happy Meal and suddenly they say that the Happy Meal does not come with fries and a drink. Sure it may be labeled that way on the menu but when you have been ordering the same thing for forever you kind of just expect it to be the same.

So this year I'm making the switch. I've always wanted to try a different tax software... Well not really, but I did have a little curiosity of what would happen if I did a side by side comparison, not that I want to do my taxes twice in one year. So this year I'm switching to H&R Blocks software to give it a spin. It's actually cheaper than the usual version of TurboTax that I would use coming in at $42 and everyone online says that it's basically the same and that the only reason they never made the switch was because they were loyal to TurboTax. I should also be able to import last years version of my taxes from TurboTax into their software so getting my previous information should be just as easy as before.

So how are you doing your taxes this year? If you are a TurboTax user are you going to stick with it or are you going to jump ship like many others? Is now a good time to invest in H&R Block?

Visit Work-To-Not-Work by clicking here.

The Best Online Tools for Retirement Planning and Living / Apps and Websites Offer Help With Budgeting, Social Security, Lifestyle Planning and Other Essentials

ANNE TERGESEN for the wall st. journal writes: Planning for retirement? Look no further than your tablet or smartphone.

A growing array of apps and websites make it easier to complete many of the most basic—and most important—tasks, from saving money and creating legal documents to figuring out a second career and where to live.

There are tools for people nearing or in retirement, and for people just starting to think about it. There are apps that help couples set up budgets and stick to them, websites that rebalance 401(k) allocations, and calculators that offer a better-than-educated guess as to how long that nest egg is going to have to last.

Some financial programs take care of chores that are crucial for getting ready for retirement but that many financial advisers often don’t have the time or inclination to do for their clients, such as regularly sweeping cash into accounts that earn higher-than-average interest, or tracking monthly spending.

There also are tools for assisting with health care, as well as help with some difficult issues that people often have trouble navigating, such as the legal, health and practical considerations involved in end-of-life planning.

A few caveats: Some of the financial websites require consumers to enter the usernames and passwords of their investment and bank accounts. Look for sites that use TRUSTe, Norton Secured Seal, or SOC 3, which verify that companies have adequate cybersecurity and privacy procedures, says Brian Costello, a vice president of information security at Yodlee Inc., which sells technology that many sites use to import data from users’ accounts.

Be aware, too, that many free programs make money by recommending products.

What follows are free or mostly low-cost programs that can help individuals and families better prepare for and get more enjoyment out of retirement.

What Will You Do in Retirement?

As baby boomers near the end of their careers, more Web services are helping them think about how they want to spend their time in retirement.

Our favorite:LifePlanningForYou.com, which offers a free series of introspective exercises. The site also provides links to financial planners trained in “life planning,” which focuses on helping clients clarify their goals, values and priorities before planning their finances. (It receives no compensation for the referrals, says George Kinder, founder of the Kinder Institute of Life Planning, which developed the website and trains financial advisers in life planning.)

One exercise asks three questions: What would you do if you had all the time and money in the world? How would you live if you knew you had only five to 10 years left? And what would you most regret if you died tomorrow?  SNIP - the article continues @ The Wall St Journal - click here to continue reading....

Tax Updates for 2015

Greg Richardson for Dowling & Yahnke Wealth Management writes:

Standard deductions grow.

The standard deduction that you can take for yourself, a spouse and children when filing your federal taxes will be bigger in 2015.

The standard deduction is a dollar amount that reduces the income on which you are taxed. These deductions are automatically adjusted yearly for inflation. You can’t take the standard deduction if you itemize your deductions on your federal tax return.

 New tax brackets.

The new year also brought with it slight adjustments in the tax brackets that are adjusted for inflation.

College tax credit saved.

It seems like it’s a yearly occurrence that tax breaks on the verge of retiring get saved by Congress just in the nick of time.

This year Congress extended the ability to claim a valuable higher-ed tax credit – the American Opportunity Tax Credit – that can save families up to $2,500 per college student.

Health coverage penalty.

The penalty for not having approved health insurance will rise significantly this year. Thepenalty for failing to secure health insurance will be $325 for each adult and $162.50 for each child not to exceed $975 for the total family or 2% of the family’s taxable income.

IRA rollover restriction.

The Internal Revenue Service will now penalize you if you aren’t smart when moving a retirement account.

In the past, investors could withdraw money from a retirement account without penalty or taxes as long as the money was put into a different retirement account within 60 days. Now individuals can only make this so-called indirect rollover once a year. Investors, however, can move a retirement account anytime they wish as long as the money is moved directly to the next institution. This is called a trustee-to-trustee transfer.

Flexible spending accounts.

If you have a flexible spending account, you can shelter up to $2,550 from taxes, which represents a $50 increase over 2014. Until recently employees with a FSA would lose any money that wasn’t spent by year’s end, but you can now carry over an excess of $500. This year, however, there is a wrinkle in this ability to carry over an outstanding FSA balance. If you are using a Health Savings Account, you can’t take advantage of the FSA carryover.

A new savings plan has arrived.

The new year ushered in myRA, another way for Americans to save via the federal government. The account is intended to serve as a savings vehicle for the approximately 50% of American workers who don’t have access to an employer-sponsored retirement plan.

Individuals can get started with a minimum contribution of $25 through payroll deduction at their workplaces. The money is invested in Treasury securities. Savers can use the same account when changing jobs or can roll the balance over to a private-sector retirement account. The myRA contribution limits are the same for a traditional or Roth IRA. An employer must sign up for myRA before workers can participate.

Tax Efficiency Question - What to Put Where?

Over at Bogleheads we came across the following discussion: Tax Efficiency Question- What to Put Where?

by CJ_Punk » Mon Jan 19, 2015 7:14 pm

I'm just wondering how to prioritize what to put in my Roth IRA, and what to put in my taxable accounts.

Emergency funds: Check.

Debt: None

Tax Filing Status: Single

Tax Info: I'll probably be 15% or under federally, and I'm in Florida, so no state income tax (6.5% sales tax)

I'm looking at investing in:

VTSAX- Total Stock Market Index- 62%

VTIAX- International Market Index- 20%

BND- Total Bond Market ETF- 8%

BNDX- International Bond Market- 2%

VNQ- REIT Index ETF- 2%

VDE- Energy ETF- 2%

VHT- Health ETF- 2%

VBR, VBK or VB- Small cap ETF (still deciding)- 2%

My Roth IRA can hold ~37% of my portfolio, and the rest would need to go into my taxable account.

I know my bonds should go into my IRA, but in my head, the only reason I'm investing in bonds is for some stability just in case, so having that in my IRA would kind of defeat the purpose in a catastrophic event... I'm also thinking the last 4 investments (tilts I'm considering), I should put in my IRA, because I could see myself moving those assets around more than I would either of my major stock investments (VTSAX and VTIAX). But I'd love to get some feedback.

Last edited by CJ_Punk on Mon Jan 19, 2015 7:36 pm, edited 1 time in total.

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Re: Tax Efficiency Question- What to Put Where?

by livesoft » Mon Jan 19, 2015 7:17 pm

Put VTSAX and VTIAX in taxable. If you did that would you fill your taxable?

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Re: Tax Efficiency Question- What to Put Where?

by CJ_Punk » Mon Jan 19, 2015 7:35 pm

livesoft wrote:Put VTSAX and VTIAX in taxable. If you did that would you fill your taxable?

Do you mean would I fill my nontaxable Roth (I don't have a limit to my taxable... I don't think, anyway).

I haven't finalized the numbers yet, but I know that if I put everything except VTSAX and VTIAX in my Roth, I would be short of filling it (I think that would fill somewhere just under half).

But do you think there's that much of an advantage in being tax efficient to over rule my idea of keeping the stabler funds accessible? (I'll edit my original post, but I have emergency funds covered and no debit).

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Re: Tax Efficiency Question- What to Put Where?

by retiredjg » Mon Jan 19, 2015 7:37 pm

Is there no 401k, 403b, 457b, SEP IRA or SIMPLE IRA available at work?

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Re: Tax Efficiency Question- What to Put Where?

by livesoft » Mon Jan 19, 2015 7:37 pm

No, that is not what I meant.

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Re: Tax Efficiency Question- What to Put Where?

by mnvalue » Mon Jan 19, 2015 7:45 pm

CJ_Punk wrote:I don't have a limit to my taxable... I don't think, anyway

The limit is how much money you have. Do you have more money in taxable than your asset allocation days should be stocks?

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Re: Tax Efficiency Question- What to Put Where?

by Toons » Mon Jan 19, 2015 7:48 pm

Taxable

VTSAX- Total Stock Market Index- 62%

VTIAX- International Market Index- 20%

Roth

BND- Total Bond Market ETF- 8%

BNDX- International Bond Market- 2%

VNQ- REIT Index ETF- 2%

VDE- Energy ETF- 2%

VHT- Health ETF- 2%

VBR, VBK or VB- Small cap ETF (still deciding)- 2%

"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: Tax Efficiency Question- What to Put Where?

by RyeWhiskey » Mon Jan 19, 2015 7:54 pm

Your "tilts" (BNDX, VNQ, VDE, VHT, etc) are 2% a piece, too small to have a meaningful effect on your portfolio as a whole. Furthermore, you say "I could see myself moving those assets around more than I would either of my major stock investments." This leads me to believe that these are speculative assets and hence should be held in a separate account from your main investments as you may be inclined to put more money than necessary into them over time.

I suggest you hold the TSM and TISM in your taxable account and the rest in your tax shelter. This said, I think you should simplify your allocation.

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Re: Tax Efficiency Question- What to Put Where?

by CJ_Punk » Mon Jan 19, 2015 9:55 pm

retiredjg wrote:Is there no 401k, 403b, 457b, SEP IRA or SIMPLE IRA available at work?

No, I'm an independent contractor. I was recently informed of LLCing to start a solo 401k, which I will be looking into, but I feel like going to be a major time commitment, which I won't be able to fully look into for a while.

mnvalue wrote:The limit is how much money you have. Do you have more money in taxable than your asset allocation days should be stocks?

Ah. I'm sorry, livesoft, I misunderstood, then. Actually, I'd have almost exactly the right amount in my taxable to cover my VTSAX fund entirely.

RyeWhiskey, honestly, I think your right... I didn't really realize they were as speculative until someone broke down tilting to me in a different way in another thread and you just pointed out that. In my head, I wanted about 5% 'fun money,' and conceptually, I combined that concept with tilting. Looks like I'm going back to the drawing board (I'm thinking combine REITs and International bonds into one of those two, and and combine the remaining 3 into one of the options, maybe 2). As far as a separate account, I won't be tempted to add money to those smaller, non-simple funds... self control is my specialty. This was just a conceptual misunderstanding.

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Re: Tax Efficiency Question- What to Put Where?

by DSInvestor » Mon Jan 19, 2015 10:28 pm

CJ_Punk wrote:

retiredjg wrote:Is there no 401k, 403b, 457b, SEP IRA or SIMPLE IRA available at work?

No, I'm an independent contractor. I was recently informed of LLCing to start a solo 401k, which I will be looking into, but I feel like going to be a major time commitment, which I won't be able to fully look into for a while.

You don't need an LLC or other corporate structure to use a Solo 401k. Sole proprietors (Schedule C) can use Solo 401k, SEP-IRA or SIMPLE-IRA as small business retirement plans - Pick one. You may need to have an EIN (employer identification number) or Taxpayer Identification number to establish your small business retirement plan.

If you don't already have an EIN, IRS has a page where you can apply for one online:

http://www.irs.gov/Businesses/Small-Bus ... %29-Online

Give the small business folks at Vanguard or Fidelity a call. It won't take a lot of time and they'll be able to tell you what plans you can and cannot use with your current business structure and explain the plans to you.

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Re: Tax Efficiency Question- What to Put Where?

by grabiner » Mon Jan 19, 2015 11:35 pm

CJ_Punk wrote:In my head, I wanted about 5% 'fun money,' and conceptually, I combined that concept with tilting.

Your "fun money" needs to be in your IRA. Even if a fund you hold is itself tax-efficient (such as a sector index ETF), it isn't tax-efficient in your portfolio if you sell it before you need to spend the money. In an IRA, you don't have to worry about this, as you may trade with no tax consequences.

REITs should be in your IRA for different reasons; unlike most ETFs and index funds, REIT Index is tax-inefficient.

David Grabiner