Taxes Questions and Answers to Your Tax Questions

Five Of The Most Important Tax Deductions You Can’t Forget

April 15th will be here before you know it. If you are like me, you may be dragging your feet on filing your income tax return. There are many income tax deductions that you may inevitably qualify for, but you do not want to miss them. Make sure you pay the taxes you owe but do not pay more than you must. In 2009, more than 45 million Americans itemized deductions on their tax returns to the tune of $1.2 trillion dollars of savings and deductions. But the real question is: how many income tax deductions did we miss? Did we claim all of the deductions that were owed to us? Or, did we miss a few that could ultimately … Read more

When Should You Hire an Accountant to Help You with Your Income Taxes

by Hank Coleman

Determining when should you hire an accountant can be a hard decision to make. I know that I put off hiring an accountant. I thought that I could continue to do all of the work myself. I soon found out that I was missing the skills and time needed to do the job right. Hiring an accountant or a tax professional can be a tough decision because chances are you are like me and have been doing your own taxes for quite a long time. However, hiring a professional can make a lot of sense in certain situations. The money they save you in taxes could potentially make up for their costs. You could receive a larger income tax refund in … Read more

Reader’s Question: What Is The Savers Tax Credit?

by Hank Coleman

Here is the next installment in our the Reader’s Questions Series which highlight questions emailed to me by you, the readers of Money Q&A. Be sure to find out at the end of this article how you can receive a free copy of Dave Ramsey’s book, The Total Money Makeover if your money question is chosen to be featured on a future week’s blog post. If you’re not familiar with Dave Ramsey’s book, you should run right out and get it. It is one of my top ten best personal finance books that everyone should read. Now….on to our reader’s question.

What is the tax credit for investing in a Roth? And, how do I claim my Roth contributions on my taxes especially if I have already filed my taxes for this year?

What Is The Tax Credit For Investing In A Roth IRA?

It is called the Savers Credit. It used to be called the Retirement Savings Contributions Credit. Tax credits provide refundable credits that offset your taxable income. Tax credits are different than tax deductions. Tax deductions reduce your taxable income.

Tax credits reduce your taxes typically in a dollar for dollar fashion and can be very specific on who qualifies, what events trigger it and can even be a one-year event that benefits people. The beauty of tax credits is that you do not have to have a taxable income in most cases to earn the benefits or the tax credit also simply just add to your income tax refund.

Why A Big Tax Return May Not Be So Bad

by Hank Coleman

I constantly fuss at my wife because she wants to have a fairly large ($3,000+) income tax return every year. Knowingly receiving a big tax refund each year is a big mistake that many workers make. I try to tell her that we are simply giving the federal government an interest free loan by doing that, but she simply doesn’t listen.

It is always a constant struggle to get my wife involved in financial planning for our family. She simply isn’t interested in money and finances and leaves that portion of our lives squarely on my shoulders for the most part. So, I got to thinking. Does it matter if we get a big tax return at the end of the year? Maybe it doesn’t matter after all.

A Big Tax Return Is Forced Savings

Like paying off a mortgage, overpaying the government in taxes every month is a way to force you into a type of savings plan.