Federal Housing Credit
Housing market prices are still low, rates are still very low and sales are increasing. Is now the right time for you to buy your new home?
Many people are trying to purchase a property before the $8,000 housing credit expires in November. Currently, if a property is not purchased by the end of November, you will not be able to get the $8,000 credit. However, before claiming the tax credit, make sure that you have qualified for it and verify the amount that you can claim. Even though you purchased a house, you may not qualify for the entire $8,000 credit as it is based on the amount of the house.
Preparing for Tax Season
After being laid off during these difficult times, many Americans have started their own small businesses. Now that the year is over half over, these small businesses need to start thinking about their upcoming tax returns. Today we will be focusing on proper documentation of expenses.
Most expenses that businesses deduct from their income need to be properly documented. What is proper documentation of an expense? It is a receipt for the expense, a canceled check, or a bill for the expense. The documentation required varies depending on the type of expense being deducted. For example, dining expenses must be documented by a receipt that has the name and location of the restaurant, the number of people served, and the date and amount of the expense. Generally, I like to take a restaurant receipt and write the name of the people who attended the business dinner and the general business matter discussed on the back of the receipt. This way, even if I can’t remember the specific meeting several months later when preparing the business taxes, there is a reference that shows that it was a legitimate business expense.
For other questions dealing with business receipts and documentation, check out IRS publication 463.
Credit Card Woes
With the new legislation passed by Congress taking effect soon that will limit the rates and fee increases that credit card companies can charge, many companies are making last minute changes to their cards. Keep an eye on your statement for July and August to see if there have been any changes to your rates and fees.
Starting your own business? Remember to pay your taxes!
Many small business owners start making a profit, take a salary, and then get a huge surprise when tax day rolls around. Most small business owners do not have a tax or accounting background, however, it is extremely important that you not neglect this side of your business. If as a self-employed person you are not taking employment taxes out of your paycheck each payperiod, you can be in for a shock when you complete your 1040 tax returns.
Employment taxes are actually two parts, the part that the employee sees taken out of his paycheck when he receives it and the part that the employer pays for each of his employees. If a person is considered self-employed, he mush pay both the employer and the employee portion of taxes. At the end of the year when he files his taxes, he will get a credit for a portion of the taxes he paid, however, if he hasn’t been making these payments throughout the year, he will have a huge bill to pay when he files his taxes.
Save Money by Increasing Your Energy Efficiency
By increasing your energy efficiency, not only can you save some cash, you can also help save the planet. There are so many little things you can do that will make a difference in your energy bill. Each of these things will help to lower your bill and bit and those savings can definitely add up.
To best take advantage of these savings, I would recommend that you first find out what your average energy bill is now and then put aside your savings from the reduced energy costs so you can see how much it adds up to and use the money for a family outing or other fun event. This way you are reducing your energy costs and treating your family to something special while saving the planet.
Here are some simple tips to help save the planet and reduce your energy bills:
1. Use energy efficient appliance
2. Use blinds or window treatments to decrease sun exposure inside the house, thus reducing your need for air conditioning during the hot summer months.
3. Use electrical strips that you can turn off when you are not using the items plugged in or that automatically turn off electricity to items that are not turned on. If you don’t have one of these strips you can also save energy costs by simply unplugging the devices after you use them.
4. Use ceiling fans to keep the temperature down instead of air conditioning. This way you are cooling only the room that you are actually in. Remember to turn the fan off when you leave the room.
Planning for Retirement
Many people just starting out in the workforce might not be thinking about retirement planning just yet, however, the earlier you start planning and saving for retirement the better off you will be.
Even if you start out putting only a few dollars a week into an IRA or 401k it can still make a difference when compounded over forty or fifty years. The website below allows you to calculate how much you would have when you retire if you put away a certain amount of money each year for retirement. For example, suppose you start with $500 in your retirement account and put in an additional $4,800 a year (only $400 a month) for 40 years. At the end of 40 years when you are ready to retire, the money would grow to $806,000 when you earn an annual interest of 6% on the money.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
Play around with the calculator and see how much you need to invest each year to have what you think you will need to live on when you retire.