The Tax Benefits of Your Retirement Savings Plan
Debt poses a growing threat to the financial security of many Americans — and not just college graduates with exorbitant student loans. Recent studies by the Center for Retirement Research at Boston College (CRR) and the Employee Benefit Research Institute (EBRI) reveal an alarming trend: The percentage of older Americans with debt is at its highest level in almost 30 years, and the amount and types of debt are on the rise.
Am I Having Enough Withheld?
If you fail to estimate your federal income tax withholding properly, it may cost you in a variety of ways. If you receive an income tax refund, it essentially means that you provided
the IRS with an interest-free loan during the year. By comparison, if you owe taxes when you file your return, you may have to scramble for cash at tax time – and possibly owe interest and
penalties to the IRS as well.
Surviving An Audit
Even the most honest of taxpayers can be left trembling at the thought of an IRS audit. Let’s face it — it’s right up there with public speaking. To survive an audit, you’ve got to arm yourself with information You should understand what the audit process is all about, why your return was audited, what your rights and responsibilities are, and how you can appeal the findings.
An audit is not an accusation of wrongdoing.
Education Tax Credits
It’s tax time, and your kitchen table is littered with papers and forms. As if this isn’t bad enough, you recently paid your child’s college semester bill, and you don’t know where you’ll find the money to pay the taxes that you expect to owe. Well, you might finally catch a break. Now that your child is in college, you might qualify for one of two education tax credits — the American Opportunity credit and the Lifetime Learning credit. And because a tax credit is a dollar-for-dollar reduction against taxes owed, it’s more favorable than a tax deduction, which simply reduces the total income on which your tax is based.
The Tax Benefits of Your Retirement Savings Plan
Taxes can take a big bite out of your total investment returns, so it’s encouraging to know that your employer-sponsored retirement savings plan may offer a variety of tax benefits. Depending on the type of plan your employer offers, you may be able to benefit from current tax savings; tax deferral on any investment returns you earn on the road to retirement; and possibly even tax-free income in retirement.
Income Tax Key Numbers
This post lists key numbers you should be aware of when filing your 2020 taxes. This illustrates any changes in Standard Deductions, Top Tax Brackets and Top Capital Gain Tax Rate Thresholds.
