Eight Financial Tips for Working Seniors

More and more people are continuing to work beyond retirement age. For some, it is a choice that keeps them active and involved. For others, it is a financial necessity. Whether work is a choice or a necessity, here are eight financial concerns that those who continue to work should keep in mind: 

1. You are entitled to begin receiving Social Security benefits at age 62. However, if you receive benefits before age of 66 and your earned income exceeds the set limit, your Social Security benefits will be reduced. At age 66, you will receive your full benefits regardless of earned income.

2. If, between the ages of 66 and 70, your earned income is sufficient that you don't need your Social Security benefits, defer them. For every year that you defer your benefits up to age 70, your benefit amount increases by 8% with an adjustment for inflation.

3. Consider the effect of employment on your income tax rate. Calculate your taxable retirement income from Social Security, pensions and retirement accounts and compare it to the current IRS tax brackets. If your earned income puts you into a higher tax bracket, put the amount of income that increases your tax rate into tax-deferred retirement accounts.

4. Take full advantage of tax-deferred retirement accounts. Older workers are allowed to save an extra $1,000 beyond the maximum annual contributions. Many of these accounts have having check writing privileges. You have the choice of standard checks or designer personal checks. This extra saving option adds money to your future retirement income and reduces your current taxable income.

5. Regardless of whether or not you are eligible for Medicare, take advantage of employer health insurance. Basic Medicare does not cover all expenses, and at best, pays only 80% of expenses that it does cover. Additionally, paycheck deductions for health insurance may be made pre-tax, which reduces your taxable income.

6. As investors approach retirement, investment strategies commonly switch from a growth-oriented portfolio to an income-producing one. Those who continue to work, however, are not relying investments for income. Moreover, earned income reduces the potential effects or a decline in the stock market. Those who feel comfortable with the risk could add to their future retirement income by continuing a growth-oriented investment strategy with some investments.

7. Keeping accurate records of living and employment-related expenses has two benefits. Accurately tracking living expenses enables you to make a more accurate estimate of your living expenses after retirement and assures that your combined Social Security benefits, pension, and investment provides a sufficient level of retirement income. Tracking employment-related expenses may lead to job-related tax deductions.

8. Studying your current cash flow and projecting it out for one year, three years, and five years for scenarios such as working full-time, working part-time, or retiring, enables you to analyze the benefits or necessity of working versus retiring. This study switches the emphasis from retiring on an arbitrary date to retiring as preparations become adequate to sustain the life you want to live. That is what retirement should be.

Author's Bio
Phillip Gruppelaar worked as a Sales Tax Inspector and Administration Manager before entering the finance industry in 1988. While working in motor vehicle finance he earned the “AIM Insurance, NSW Business Manager of Year 2000” award. He then moved to home loans and general asset finance including sourcing machinery finance. In 2007, he became General Manager of an online asset financing company, building it to be one of Australia’s largest and most successful. In December 2011, he returned to his own management consultant business and focused on improving client relationships and staff training for another of Australia’s large online finance brokerage firms.

Fundraising 101: Turn a "No" Into a "Yes"

According to GrantSpace, there are more than 1.5 million nonprofit organizations registered in the United States. If you're keeping count, that is more than one million charitable organizations vying for the same donations. It's not unusual for fundraising professionals and volunteers to get a "no" from potential donors far more often than they get a "yes." Here's how to turn someone who doesn't want to donate into someone who does.

1.I Don't Have the Money

There's no doubt that times are tight right now. People across the country are not only living paycheck-to-paycheck, but are worrying about how to keep the lights on. When someone tells you that they don't have the money, empathize with them. Tell these people that you understand, but that even a dollar would help. Consider that if you got $1 from 100 people, you've raised $100 for your charity. If you try to force 100 people to give you a specific amount of money and all decline, you've raised nothing. 

2.I Already Donate to...

Many people will tell you that they already donate to a charitable organization, using the excuse to not donate to yours. Thank them for their generosity to the other charity, and kindly explain that your organization is not affiliated with that group. Explain how even $5 can help your group continue its mission. 

3.I Have to Talk to My Partner

Don't push someone who tells you that they have to speak with their partner before they can commit to donating to your charity. It's not unusual for people in a relationship to consult each other when it comes to joint finances. Instead, ask this person if you can call them a few days from now or stop back by. Do not rely on the fact that you will be contacted, take control of the situation. Remind the person that you are not asking for much, and reiterate that any little bit will help your charity or project.

4.I Don't Donate to Charity

Many people don't donate to charities simply because they don't understand the group's mission, history or current projects. Have a flash drive loaded with your information ready to hand this person. Empathize with your prospect, and let him know that you understand that there are millions of charities seeking his donation. Assure him that he will not be contacted again should he choose to donate one time only, and ask him to view your flash drive and pass it onto a friend or family member who may be interested. 

5.Send a Thank You

Send a thank you note or email to every person that you come into contact with, provided that you have at least gathered contact information. Even if the person doesn't donate, thank them for taking the time to speak to you. This simple act of courtesy may encourage someone to donate even after they have told you no.

You never want to pressure anyone to donate to your organization, but you do want to have responses at the ready if you receive an initial no. If someone takes the time to explain to you why they will not, or cannot, donate, take the time to respond. You'll never turn a "no" into a "yes" if you don't try.

Writer Ken Osteen is an avid blogger for dvdcopycat.com where you'll find more ways to use technology to help with fundraising.

So…Where Does All of Your Tax Money Go To?

Filing your tax returns is never fun business, especially when you don’t really understand where your money goes. For the most part, Americans know that their tax dollars help the government pay for infrastructure such as roads and defense for the country. But exactly how much of their money goes towards these purchases? Nowadays, the answer can be found with the click of a button. As promised in the State of the Union, you can now visit http://www.whitehouse.gov/2012-taxreceipt the White House website and input your income tax details to see how the Federal government is spending your money.

So exactly how does the government spend the income tax of an average American family which makes $50,000 per year and consists of two parents and a child? Here is a listing of the departments that the government pays for with income tax payments:

National Defense - 24.64%

The primary job of a government is to protect its citizens, so it is not surprising that defense swallows nearly a quarter of the average family’s income tax. This includes the massive 10.26% that is currently being spent on ongoing operations in places like Afghanistan. While many see defense as a necessary big-budget item, others complain that America overspends: the US spends more on defense than the next 19 countries combined!

National budget estimates for 2013: http://comptroller.defense.gov/defbudget/fy2013/FY13_Green_Book.pdf

Health Care - 22.45%

Medicaid and Medicare make up most of the healthcare category which provides cheap health insurance for the elderly, the disabled and those receiving a low income. A small fraction of the health care budget is also spent on health research and disease control which helps to maintain a good quality of public health for all those in the United States.

More info about healthcare spending in the US: http://www.kaiseredu.org/issue-modules/us-health-care-costs/background-brief.aspx

Job and Family Security - 17.26%

The Job and Family Security section of your federal income tax receipt makes up most of the welfare which covers a wide array of safety-net programs. The largest item within this bracket however is actually retirement and disability benefits for federal military and civilian employees. These benefits ensure that everybody from soldiers to teachers has enough money to retire and live contently. This is followed by food and nutrition assistance (including SNAP, formerly known as food stamps) at 3.89% and unemployment insurance at 0.99%.

Breakdown of Job and Family Security section and other sections: http://www.whitehouse.gov/2012-taxreceipt


Net Interest - 8.01%

The government currently spends more on running the country than it receives back in taxes, meaning that the federal government currently runs a deficit in the borrowed. As you are probably aware from credit card bills or your mortgage, interest can be killer and there is no exception when it comes to sovereign debt. In the case of the US, 8.02% of the average family’s tax money is spent just on servicing the interest on loans the US government has taken out. 

More info about the Net Interest paid by the government: http://www.cbo.gov/publication/21960

Education and Job Training - 3.30%


Considering that education is supposed to be the silver bullet, a surprisingly small amount of tax money is spent on maintaining K-12 education, college financial aid and job training from federal income tax. This department also provides training and positions for those who have disabilities. This number can be seen as misrepresentation however, as some state taxes also go towards funding education.

Breakdown of Education and Job Training section and other sections: http://www.whitehouse.gov/2012-taxreceipt

Veterans Benefits - 4.53%

Veterans benefits is probably the one section of government spending that requires no squabbling, as looking after those who have served their country is seen by many as a duty and not as an option. In fact, many are arguing for spending on veterans benefits to be slightly included so as to quicken the process of veterans receiving their benefits, as currently the Department of Veterans Affairs does not use a computer filing system and therefore many needy veterans must wait months (if not years) to receive their due.

More information and detailed breakdown on Veteran Benefits: http://www.va.gov/opa/pressrel/pressrelease.cfm?id=2433

Natural Resources, Energy and Environment - 2.05%

Most of the energy and environment budget is spent on energy and environment concerns that most of us take for granted: reducing pollution, managing the nation’s water and undertaking conservation of our nation’s forests and protected areas. This section does contain some items that can be controversial: from the funding of renewable energy projects at one end and to the funding of oil pipelines at the other.

Breakdown of Natural Resources, Energy and Environment section and other sections:
http://www.whitehouse.gov/2012-taxreceipt

International Affairs - 1.72%

Most Americans think a much greater proportion of the federal budget is spent on international affairs than actual is with a tiny 0.8% of tax payers’ money being spent on development and humanitarian assistance. The figure for international affairs also includes the 0.5% that is spent on the essential components of foreign affairs like funding embassies and America’s participation in international organizations.


Detailed breakdown of the spending: http://www.state.gov/r/pa/prs/ps/2013/04/207281.htm

Science, Space and Technology Programs - 1.06%


Just over 1% of your tax bill is spent supporting scientific research, with that money roughly being split evenly between NASA and the National Science Foundation. As well as funding big ticket items like shuttle missions and probes, money invested in science in the US pays back dividends in all kinds of unusual ways. For example, the Internet was pioneered by NSF back in the late seventies.
Detailed breakdown of this sector and other sectors as well: http://whatwepayfor.com/default.aspx?f=2773


Additional Programs - 14.99%


The remaining items on the itemized federal tax receipt are small-ticket items that nevertheless are essential to the running of the USA, including the cost of law enforcement, response to natural disasters, and Additional Government Programs which includes the cost of running federal government and paying congressmen, senators and the President.

Author bio: This article was written by Simon a blogger, content manager, financial expert. He is a financially conscious guy with a Msc. in International Economics. He is a longtime contributor to various financial, accounting, taxation blogs among others the authoritative taxation and accounting blog of the Wallace&Associates APC Los Angeles a tax consulting services company.

How to Manage Your Financial Payroll With Accounting Software

 (Photo credit: Wikipedia)

Processing payroll is a primary duty of different sizes as well as kinds of business houses. However, all entrepreneurs will uniformly agree that this aspect of managing a business is extremely time consuming. For collating the information of the different employees, applying the tax to be deducted and for complying by the new legislations a lot of time is wasted. Even if you have a special in house team working for the same purpose, they spend a lot of time in performing this particular task. To aid the finance team of your organization, you can take the help of accounting software. These softwares are tailor made to meet with the payroll processing needs of the clients and increase the efficiency of the accounts team.

If you are planning to install accounting software in your organization, you are going to come across many options on the cyber world. However, opting for the one suiting your need is the most vital challenge.

Here are some ways discussed by Mitchell Charlesworth whereby you will be able to manage your payroll processing efficiently with the aid of accounting software:

One Stop Solution

The payroll accounting softwares are the one stop solution for handling different aspects of payroll processing. Right from accurately determining the monthly pay of every employee to managing the taxes applied on their scale of salary, everything is handled by the software automatically and with precision. However, the employees need to incorporate the right facts and figures in the software, for it to work properly.

Expert in Multitasking

The payroll accounting softwares are expert in multitasking. If different employees in your organization are paid in different methods like some are paid in monthly basis, while others are paid in hourly basis or some are hired on contract, then the salaries are to be calculated using different methods. Moreover, the rate of tax applied is also different. The payroll accounting software can handle the multiple payment rates for different employees with efficiency. Moreover, if your employees are working in different states, the payroll accounting software can handle their portfolios with ease as well.

Easier to Apply Different Kinds of Benefits and Taxes

The accounting softwares are developed in such a way so that it can automatically calculate the tax rate applicable and bonuses and withholdings applicable to different employees accurately. Thus there would not be any chance of grievances among the employees and they will be happily working for growth and profit of the company.

Easier to Track Records

Payroll accounting softwares ensure the use of least paper works and all the important data are stored in the platform itself. Moreover, professionals have the option of storing hard and soft copies of the different payroll transactions and the income and expenditure of the company. Therefore, it is much easier to track different monthly and annual records for preparing valuable market reports and innovating new policies that will be crucial for the growth of the organization. Thus by using this advanced technology, handling different aspects of the business become much easier and faster.

Latest Updates

The payroll accounting softwares are automatically updated by the organizations that develop it. Therefore, the latest legislations and tax rates are integrated in the software at the earliest so that the organizations using it can comply with the latest guidelines set by the IRS. So there will be no instance of fines or litigation because of failure of the professionals who were not aware of the latest rules and laws.

However, to get the best result it is extremely important to choose the right software meeting your need. There are different softwares meeting up with the needs of different size of organization. Choose the one that has the facilities meeting your company’s and employees need. Presence of extra features might make it a bit difficult for the users to make the best use of the payroll accounting software. So do some research and communicate with accounts teams to understand the need of the company and thereafter invest in an ideal one.

Top 10 Tax Tips For The Self-Employed

(Photo credit: patrick h. lauke)

Self-employment is a tough road to go down, but luckily there are a few things that you can benefit from. Self-employed individuals will have a different tax status to those who are employed by someone else. As a result, you are going to want to take a look at your taxes and see what you can do when it comes to making the most out of your situation.

Determine Your Net Income

Your net income is the income that you receive after all of your business expenses have been deducted. This can be done after a year of working to determine what you are most likely to earn.

Keep a Record

Make sure to keep a record of everything that you earn. Knowing how much you earned every week or month will allow you to figure out the proper rate at which you will be taxed.

Calculate Estimated Tax

Try to determine what percentage of your tax you are going to have to pay. Deduct this from your net income and you will have an idea of how much you owe.

Expenses for the Home Office

If you have a home office, then you will be able to make it a tax-deductible business expense. Remember that you are not able to deduct more than your net business profit.

Get an Accountant

Having someone to take a look over all of your expenses is a great thing. On top of this, you can also deduct what you pay from your accountant as a business expense.

Remember to Report

Making over $600 from a client means that you are going to have to report it to the IRS. When this happens, your client is going to give you a 1099-Misc.

Set Up a Separate Account

Get a separate account where you will be able to put all of your estimated taxes in. This is much easier than scraping for the money at the end of the year.

Keep a Track of All Business Expenses

Business expenses can include anything that you use in order to carry out your business. These can include your computer, your desk, your phone and your Internet connection. Make sure to keep a track of everything in this regard.

Remember to Pay Quarterly

You do not pay your taxes on a yearly basis. Instead, you pay every quarter of the year. This means you have to make sure that you have everything organized.

Keep Everything Together

Get files for all of the necessary expenses and tax records that you are going to need. Organizing all of this properly will ensure that you know what is going on when the time comes to pay.

Being self-employed can be difficult for many reasons, but it is always a good idea to keep on top of your tax returns. There are a number of things that you can also do for tax relief, so make sure to take advantage of them if you can. This way, you can ensure that you make the most out of being self-employed.

If you are interested in more tax relief tips, the author recommends you visit OptimaTaxRelief.com

Start Filing Your Tax Return With These 6 Steps

IRS Form W-9 (Photo credit: Wikipedia)

By Neda Jafarzadeh, a financial analyst with NerdWallet Investing. NerdWallet helps consumers make better financial decisions and compare total costs to find the best broker for their needs. 

If you haven’t already started preparing your 2012 tax returns, you will want to get started as the April 15th deadline is fast approaching. To get started, consider the following six tips: 

Tip 1: Know If You Need to File

If you aren’t sure whether you need to be filing a tax return for 2012, the IRS has a page that helps you decide whether or not you need to be filing. If you’ve decided that you do not need to file a tax return, keep in mind that you won’t be able to take advantage of the various credits that would otherwise be available to you. For example, if you made less than $50,270 in 2012, you may quality for the Earned Income Tax Credit (EITC), or if you were a college student in 2012 or your dependent was a student, you may be eligible to receive the American Opportunity Tax Credit. 

Tip 2: Taxable vs. Nontaxable Income

While most types of earned income is subject to taxation, other types such as child support payments, gifts, inheritances and welfare benefits, are not. In addition, keep in mind that if you received a refund, credit or offset from the state, you may be required to include that as income even if you did not receive a Form 1900-G. To learn more about what income is subject to taxation, check Publication 525 on the IRS page. 

Tip 3: Finding Forms and Publications

There are numerous ways you can get the forms you need to file your tax return. One way is it get the forms online or by phone if you call 1-800-TAX-FORM (800-829-3676) between 7:00 AM to 7:00 PM, Monday through Friday and request that they be mailed to you. You can even find the forms at your local post office or public library. 

Tip 4: Don’t Get Scammed

Tax scams are more common than you might think and the IRS has gone to great lengths to educate the public on recognizing and reporting these scams. If you aren’t sure whether you’ve fallen victim to a scam, the IRS has set up case scenarios to help you identify common scams, usually involving phone scams or identity theft. If you know you have fallen victim to a scam, you can use Form 3949-A to report it to the IRS. 

Tip 5: Get Help

If you are planning on using a DIY tax software, make sure you read customer reviews for the tool to see if your needs will be appropriately satisfied. NerdWallet also ran a comparison of the top two softwares available H&R Block and TurboTax, so feel free to reference that resource as well. If you plan to hire a professional tax preparer, do check his qualifications by asking for his Preparer Tax Identification Numbers (PTIN). 

Tip #6: Use Tax Credits Available to Parents

If you are a parent, be sure to look into the tax credits that are available to you like the Child and Dependent Tax Credit. You should be eligible to receive this credit if you have a child under the age of 13 and had to pay for a caretaker while you went to work or while you looked for work.

Use It or Lose It: Spending Suggestions for Your FSA

 (Photo credit: Amarand Agasi)

Unlike funds from Health Savings Accounts, or HSAs, which can be rolled over into the following year, funds from Flexible Savings Accounts or FSAs are forfeited if they’re not spent by the end of the calendar year. The Internal Revenue Service has also imposed new limits on FSA funds beginning in 2013. At present, there are no limits on how much money each person can put aside in an FSA. However, as of 2013, the maximum amount of funds allowed in an individual FSA will be limited to only $2,500 

If you’ve collected funds in an FSA, now is the time to begin considering how you will spend those funds to avoid losing them. Whether you have a few hundred dollars or thousands set aside, you don’t want to forfeit what is, after all, your own money.

Extra Eyewear and Supplies

If you wear contacts, glasses, or both, consider stocking up on extra eyewear and eyewear care equipment as a means of exhausting leftover FSA funds. Purchase contact lens solution in bulk or look ahead and purchase a year’s worth of disposable lenses, like Acuvue Moist. Splurge on an extra pair of eyeglasses so that you won’t be left fumbling around if you lose or break your main pair of eyeglasses. Splash out on a great pair of prescription sunglasses and your eyes will thank you on every summer day. 

Expensive Medical Procedures 

Are you overdue for an overall physical examination, oral examination or immunizations? Are you thinking of getting braces or having other dental work done? Has your doctor advised you to obtain physical therapy for acute or chronic pain? If you have accumulated several thousand dollars in your FSA account, you should seriously consider going ahead with those procedures this year. Many medical professionals will allow you to set up payment plans that will allow you to pay for ongoing treatment from your present FSA even after the beginning of 2013, Smart Money reports. 

Prescription Refills

FSA funds can be used to purchase prescription medications for which you must pay out of pocket. If you are running low on prescription medications, now is the time to restock them. If you have the funds available, ask your physician to supply you with a prescription that would allow you to purchase several months worth of prescriptions at a time, which may also allow you to save money. Having extra medication on hand can be helpful when you travel or if you’re facing a budget shortfall. 

Replenish Your First Aid Kit

As of January 1, 2011, funds from an FSA could no longer be used to buy over the counter medications, except for insulin. However, over the counter first aid supplies are still a valid FSA expenditure. Non-drug items such as bandages, sterile gauze, tweezers, gloves, scissors and blankets are useful items to have on hand in your home, your car and in your office, and all are allowable. Accidents can happen anywhere, and having a well stocked first aid kit can mean the difference between saving a life and life tragically lost.

Richard Harrelson is a personal finance researcher. He is constantly looking at ways people can adapt to a changing economy and end up in front. His articles mainly appear on personal finance blogs.

For Further Reading

Benefits Pro: 2013 HSA and FSA Cheat Sheet
benefitspro.com/2012/05/08/2013-hsa-and-fsa-cheat-sheet
Investopedia: Seven Last-Minute Ways to Spend Your FSA Dollars
investopedia.com/financial-edge/1211/7-last-minute-ways-to-spend-your-fsa-dollars.aspx#axzz2Co3NQMsM
Kids Health from Nemours: First Aid Kit
kidshealth.org/parent/firstaid_safe/home/firstaid_kit.html
Smart Money: Last-Minute FSA Moves
smartmoney.com/spend/deal-of-the-day/lastminute-fsa-spending-moves-1330645620564/

Follow the IRS on YouTube and Twitter

Image via CrunchBase

I will never accuse the I.R.S. of being behind the times every again. They have been constantly updating their computers and data processing for years. There are new ways to file your taxes like never before. You can do them on computer, online and now on your phone.

Image via CrunchBaseThe I.R.S. has kept up with social media too. You can follow there videos and tweets here.

YouTube

The IRS has short and informative YouTube videos on tax related topics in English, American Sign Language (ASL) and a variety of foreign languages:

IRS Videos – http://www.youtube.com/irsvideos

ASL Videos – http://www.youtube.com/IRSvideosASL

Multilingual Videos – http://www.youtube.com/IRSvideosMultilingua

Twitter

IRS tweets include various tax-related announcements, news for tax professionals and hiring initiatives:

@IRSnews – http://twitter.com/irsnews

IRS news and helpful information for the public, the press and practitioners

@IRStaxpros – http://twitter.com/irstaxpros

IRS news and guidance for tax professionals

@IRSenEspanol – http://twitter.com/irsenespanol

Información, Comunicados de Prensa y Noticias en Español del IRS

News and information in Spanish from IRS

@RecruitmentIRS – http://twitter.com/recruitmentirs

IRS Human Capital Office

@YourVoiceatIRS – http://twitter.com/yourvoiceatirs

Taxpayer Advocate Service

Audio Files for Podcasts

The IRS creates audio files for use as podcasts. Each short audio recording provides information on one tax related topic. The audio files and their transcripts can be found in the Multimedia Center on IRS.gov. These files are also available as podcasts on iTunes.

Widgets

Widgets are tools that can be placed on websites, blogs or social media networks to direct others to IRS.gov for information. The IRS has developed a variety of widgets that feature the latest tax initiatives and programs. These widgets can be found on Marketing Express, the marketing site that allows IRS partners and tax preparers to customize their IRS communications products.

The I.R.S. has an App to Track Yor Refund

The I.R.S. is trying to make itself more helpful by giving us an app for our phones. The most disliked department in our government is keeping up with modern times. This new app will not help you to avoid taxes, but it will at least keep track of your refund.

The IRS2Go app, introduced on Monday, lets filers check on the status of their refund from their phone and get daily tax tips. The free app is available for the iPhone and phones on the Android system.

I think it's great the stogy old I.R.S. is taking advantage of modern technology to be a little helpful to us. The app is pretty slick with a nice interface. I checked out the iPhone version and it's pretty easy to use. It has 4 buttons consisting of a Get your refund status, Get tax updates, Follow online, and Contact us.

To check the status of their refund through the app, users enter their Social Security number, which is encrypted for security. They then select the filing status they used along with the amount they expect to receive in their refund.

People who file online can check the status of their refund 72 hours after they receive an e-mail from the I.R.S. confirming that it has received their tax return. Those who file paper returns must wait up to four weeks.

Additionally, users of the app can sign up to receive tax tips it promises will be in “plain English,” about topics like child tax credits and education credits. They can also sign up to follow the I.R.S. Twitter feed.

Isn't that special, the I.R.S. is on twitter. I hope they go on Facebook because I can't wait to add them to my friend list.

At the present time there is not an app to file your return by the I.R.S. Though Intuit does have such an app, but only if your using the 1040EZ form.

I can't wait to see what they come up with next. Maybe a tax audit app.

More helpful links for tax help:

File Your Tax Return For Free - Here's Where to do it

The New Tax Law: Gifts For All

Related articles

• An I.R.S. App Lets You Track Your Tax Refund (textually.org)
• IRS2Go Tracks Your Tax Return from Your Phone [Downloads] (lifehacker.com)
• Official IRS App for iOS and Android (slashgear.com)