by NFS | Aug 9, 2012 | Archives
School’s out for the summer (for a little longer anyway), and summer is a popular time for people to move – especially families with children. If you are moving to start a new job or even the same job at a new job location, the IRS offers 10 tax tips on expenses you may be able to deduct on your tax return.
1. Expenses must be close to the time you start work Generally, you can consider moving expenses that you incurred within one year of the date you first report to work at a new job location.
2. Distance Test Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous main job location was from your former home. For example, if your old main job location was three miles from your former home, your new main job location must be at least 53 miles from that former home.
3. Time Test Upon arriving in the general area of your new job location, you must work full time for at least 39 weeks during the first year at your new job location. Self-employed individuals must meet this test, and they must also work full time for a total of at least 78 weeks during the first 24 months upon arriving in the general area of their new job location. If your income tax return is due before you have satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test. There are some special rules and exceptions to these general rules, so see Publication 521, Moving Expenses for more information.
4. Travel You can deduct lodging expenses (but not meals) for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay, but you can only deduct one trip per person.
5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property, including the cost of shipping household pets. You may be able to include the cost of storing and insuring these items while in transit.
6. Utilities You can deduct the costs of connecting or disconnecting utilities.
7. Nondeductible expenses You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, a drivers license renewal, costs of buying or selling a home, expenses of entering into or breaking a lease, or security deposits and storage charges, except those incurred in transit and for foreign moves.
8. Form You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your deduction for moving expenses, use Form 3903, Moving Expenses.
9. Reimbursed expenses If your employer reimburses you for the costs of a move for which you took a deduction, the reimbursement may have to be included as income on your tax return.
10. Update your address When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS.
More details are available in IRS Publication 521 and Form 3903. IRS publications and forms are available on IRS.gov or by calling 800-829-3676.
For a detailed Moving Guide from NFS, please request one here.
by NFS | Aug 8, 2012 | Archives
HOW MUCH LIFE INSURANCE DO I NEED?
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How much life insurance is enough depends on your individual needs and your financial objectives for your family.
While life insurance cannot replace you, it can provide the funds to:
- PAY FINAL EXPENSES
- REPLACE ALL OR A PORTION OF YOUR INCOME
- KEEP YOUR FAMILY IN THEIR HOME
- ESTABLISH A COLLEGE EDUCATION FUND
- COVER FINANCIAL EMERGENCIES
- PROVIDE A CHILD AND/OR HOME CARE FUND
| How much life insurance is enough? |
This question is best answered through an analysis of your family and financial situation, as well as your financial goals and objectives. Contact us to begin your FREE analysis.
To view the complete NFS Financial Facts Newsletter for August 2012, click here.
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by NFS | Aug 6, 2012 | Archives
The Internal Revenue Service has some important information for those who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may be able to exclude all or part of that gain from your income.
Here are 10 tips from the IRS to keep in mind when selling your home.
1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.
2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).
3. You are not eligible for the full exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
4. If you can exclude all of the gain, you do not need to report the sale of your home on your tax return.
5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.
6. You cannot deduct a loss from the sale of your main home.
7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude. Most tax software can also help with
this calculation.
8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.
9. Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523, Selling Your Home, for details.
10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive mail from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.
For more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
For a detailed Moving Guide from NFS, please request one here.
Links:
Publication 523, Selling Your Home (PDF)
Form 8822, Change of Address (PDF)
Tax Topic 701 – Sale of Your Home
by NFS | Aug 1, 2012 | Archives
Being in debt isn’t necessarily a terrible thing. Between mortgages, car loans, credit cards, and student loans – most people are in debt. Being debt-free is a great goal, but you should focus on the management of debt, not just getting rid of it. It’s likely to be there for most of your life – and, handled wisely, it won’t be an albatross around your neck.
You don’t need to shell out your hard-earned money for exorbitant interest rates, or always feel like you’re on the verge of bankruptcy. You can pay off debt the smart way, while at the same time saving money to pay it off faster.
Know Where You Are
First, assess the depth of your debt. Write it down, using pencil and paper, a spreadsheet like Microsoft Excel, or a bookkeeping program like Quicken. Include every financial situation where a company has given you something in advance of payment, including your mortgage, car payment(s), credit cards, tax liens, student loans, and payments on electronics or other household items through a store.Record the day the debt began and when it will end (if possible), the interest rate you’re paying, and what your payments typically are. Add it all up, painful as that might be. Try not to be discouraged! Remember, you’re going to break this down into manageable chunks while finding extra money to help pay it down.
Identify High-Cost Debt
Yes, some debts are more expensive than others. Unless you’re getting payday loans (which you shouldn’t be), the worst offenders are probably your credit cards. Here’s how to deal with them.
• Don’t use them. Don’t cut them up, but put them in a drawer and only access them in an emergency.
• Identify the card with the highest interest and pay off as much as you can every month. Pay minimums on the others. When that one’s paid off, work on the card with the next highest rate.
• Don’t close existing cards or open any new ones. It won’t help your credit rating.
• Pay on time, absolutely every time. One late payment these days can lower your FICO score.
• Go over your credit-card statements with a fine-tooth comb. Are you still being charged for that travel club you’ve never used? Look for line items you don’t need.
• Call your credit card companies and ask them nicely if they would lower your interest rates. It does work sometimes!
Save, Save, Save
Do whatever you can to retire debt. Consider taking a second job and using that income only for higher payments on your financial obligations. Substitute free family activities for high-cost ones. Sell high-value items that you can live without.
Do Away with Unnecessary Items to Reduce Debt Load
Do you really need the 800-channel cable option or that dish on your roof? You’ll be surprised at what you don’t miss. How about magazine subscriptions? They’re not terribly expensive, but every penny counts. It’s nice to have a library of books, but consider visiting the public library or half-price bookstores until your debt is under control.
Never, Ever Miss a Payment
Not only are you retiring debt, but you’re also building a stellar credit rating. If you ever move or buy another car, you’ll want to get the lowest rate possible. A blemish-free payment record will help with that. Besides, credit card companies can be quick to raise interest rates because of one late payment. A completely missed one is even more serious.
Do Not Increase Debt Load
If you don’t have the cash for it, you probably don’t need it. You’ll feel better about what you do have if you know it’s owned free and clear.
Shop Wisely, and Use the Savings to Pay Down Your Debt
If your family is large enough to warrant it, invest $30 or $40 and join a store like BJ’s or Costco. And use it. Shop there first, then at the grocery store. Change brands if you have to and swallow your pride. Use coupons religiously. Calculate the money you’re saving and slap it on your debt.
Each of these steps, taken alone, probably doesn’t seem like much. But if you adopt as many as you can, you’ll watch your debt decrease every month.
by NFS | Jul 31, 2012 | Archives
1. LOVE YOURSELF – It is the nucleus for all motivation. A good place to begin is your physical appearance. Improving it will do a great deal to raise your self esteem.
2. SEEK THE LOVING LIFE – People think love is important for happiness and not only romantic love. When you can focus your attention on others, you feel better about yourself.
3. JOIN THE WORK WORLD – Despite constant complaining, people feel work is essential to happiness. They don’t work for money only – consider volunteer work. Working and accomplishing tasks makes you feel good about yourself.
4. ENJOY THE POWER OF TOUCH – Touching helps to affirm friendship, approval, caring, etc. People put up a lot of barriers to touching and equate it to either sex or violence. We too often avoid the simple acts of touching such as pats on the back, heartfelt handshakes, cordial hugs – that confirm good will.
5. LIVE ONE DAY AT A TIME – Many of us spend much of our “today” worrying about yesterday or tomorrow. Since the past won’t change and the future may never come, forget them and enjoy the day – everyday!
6. TURN ON THE LAUGHTER – Humor is a free ride toward happiness. It can take the sting out of failure and stupidities. It can help us overcome the worst of our experiences. We “look back and laugh” – start looking for the laughs now!
7. MOVE YOUR MUSCLES – Exercise can increase self esteem, relieve anxiety, improve attentiveness, dissipate stress, and elevate moods. Active people seem to be happier.
8. SEARCH FOR MEANING – Develop a set of “guiding principles,” a “belief system,” that will help you to make sense of your life. What holds real meaning for you and what directions can you take to reach these goals?
9. TAKE TIME TO WASTE TIME – Leisure is a “waste of time” that allows you to lose yourself in pleasure and celebration. It’s a way to deal with stress, increase productivity, and enhance contentment. Games, hobbies, play, etc. are all leisure activities that can help you to “waste time.”
10. GIVE TO OTHERS – Altruism can increase happiness. Being concerned about others puts you in contact with others. This type of contact will improve your outlook on life and yourself!
Please call my office if we can be of service.
To view the complete NFS Retirement Readings Newsletter for July 2012, click here.
