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  • Archive for the ‘Tax Season’ Category

    Ready, Set, SAVE!! Ways to start saving in 2015

    Tuesday, January 27th, 2015

    TaxesWith each new year comes new opportunities to boost your savings. For many people, their first opportunity comes at tax time. As you prepare your tax return, here are two important ways to save that you should consider.


    Find Out if You Qualify for the Saver’s Tax Credit.

    The Saver’s Tax Credit is available to eligible individuals who save for retirement through voluntarily contributions to IRAs and 401(k) plans (or similar workplace retirement programs.) Many people who would qualify for this credit, however, know little about it. It is effectively a federal match for retirement contributions.

    You can claim the credit for the 2014 tax year if you are:

    *  Single, married filing separately, or a qualifying widow AND your adjusted gross income is not more than $30,000;
    *  Filing as head of household AND your adjusted gross income is not more than $45,000; or
    *  Married filing jointly AND your adjusted gross income is not more than $60,000.

    It is also important to note that the Saver’s Tax Credit is a non-refundable credit. In other words, if you do not owe taxes, then you will not be eligible for this credit. Download WISER’s fact sheet to learn more. The amount of this credit will not change the amount of refundable credits such as the earned income tax credit or the child tax credit.


    Save Your Tax Refund!

    If you expect money back from Uncle Sam this year, resist the urge to think of it as windfall or bonus that you can use to splurge on something you may not need. Instead, think of it as an instant stash of cash that you can use to boost your savings. IRAs and Savings Bonds are great places to park those tax refunds.

    Individual Retirement Accounts (IRAs)

    duck-coins-1IRAs are a great option for retirement saving at tax time (or any time of year), especially if you do not have access to an employer-sponsored retirement plan. You can open an IRA at many financial institutions, including banks, mutual fund companies and brokerage firms. Both Roth and Traditional IRA accounts provide a convenient way to save money long-term. You can ask for free information on IRAs from your financial institution of choice to help you choose which IRA best fits your situation.

    Here are some basics about IRAs to get you started (and check out WISER’s fact sheets on Roth IRAs and Traditional IRAs for more information):

    *  You can contribute up to $5,500, or $6,500 if you are 50 years or older.
    *  Traditional IRA accounts are tax-deferred, so you pay nothing while contributing but must pay taxes when you withdraw money at retirement.
    *  For Roth IRA accounts, you pay taxes now on your contribution, but you do not have to pay taxes when you withdrawal funds in retirement. This type of IRA is especially good if you expect to be in a higher income tax bracket upon retirement.
    *  IRAs are meant to be long-term investments. You will be penalized if you withdraw from your IRA before you reach 59 ½ years of age. A few exemptions to this rule include withdrawals for college tuition, certain medical expenses, and first time home purchases.

    I Bonds

    Did you know that you can direct a portion or all of your tax refund toward the purchase of savings bonds? Simply complete IRS form 8888 and submit it with your tax return. The most common and popular savings bond is the I Bond. I Bonds are savings bonds with interest rates tied to inflation, and they can be purchased for as little as $25 or $50. This is a great low-risk investment for folks with small amounts to invest, and/or who are getting closer to retirement age.

    Here are the ins and outs of I Bonds, which are a great way to save any time of year:

    *  Current composite interest rate of I Bonds is 1.48% thru April 30, 2015.
    *  Your I Bond can earn interest for 30 years, after which you should cash it out
    *  You can cash your I Bond any time after 12 months, but if you do so before you have had it for 5 years, you will lose out on at least 3 months of interest.
    *  Interest you earn on any U.S. savings bond is exempt from state and local income taxes. You do not pay federal income tax until you redeem the bonds, or after 30 years.

    In addition to using form 8888 to purchase savings bonds with your tax refund, you can buy savings bonds electronically any time of year by setting up an account at With a TreasuryDirect account you can directly purchase I bonds, or you can arrange for a payroll direct deposit or automatic deduction from another account to purchase I bonds at whatever denomination you select.

    Whether you have $25 or $2,500 to spare, there are smart ways to invest your money and build your retirement savings. Saving at tax time can get you off to a great start for 2015, and you’ll benefit from these savings for years to come!

    Putting America Saves Week Into Action– Step 5: Save at Tax Time

    Friday, February 28th, 2014

    For my last blog for America Saves Week, the theme is “Save at Tax Time.”

    One simple way to save is to put away that tax refund. Resist the urge to spend it all and instead put some of it in your savings account or retirement fund. The IRS makes saving during tax time pretty simple. There is a specific form, an 8888, which allows you to split your refund between two accounts.

    I filed my taxes several weeks ago and already received my refund. Many people treat their tax refund as a windfall of money and spend it immediately. WISER instead encourages saving during tax time as it is a perfect time to add a little more to your savings. So when I filed my taxes, I sent my refund to my savings account. I choose to save all of my refund, partly because it was a pretty small amount to start, but also because I would rather have that money for a rainy day than splurge on something I do not absolutely need.

    Another great way to save at tax time is to make sure you get all the tax credits for which you are eligible. Common tax credits that are often overlooked by many who are eligible is the Saver’s Tax Credit and the Earned Income Tax Credit.

    While I do qualify for those tax credits, I did learn that I qualify for Free File. Free file allows tax payers whose income is below $58,000 to file taxes for free. The IRS links to professional software programs that assist you while completing the paperwork.
    Filing online worked for me because my taxes are pretty simple and I am very comfortable with technology, but if you do not think this is the right option for you there are other resources available to help during tax time. Many local libraries and other organizations particiapte in Volunteer Income Tax Assistance, which provides free tax help if you meet certain income requirements. If you are 60 years or older, you can also participate in the Tax Counseling for the Elderly Program, which specializes in questions about pensions and retirement issues that are unique to seniors. You do not have to face the complicate issue of taxes alone

    For more assistance tools, take a look at this website.

    Make sure you ask whoever helps you file your taxes how you can send part or all of your refund to a savings account or retirement fund (like that IRA we talked about setting up yesterday!).

    Thanks everyone! It was great going through the steps of America Saves Week with you! Keep on saving!

    Do You Qualify for the EITC?

    Friday, February 6th, 2009

    Do you:

    1. Possess a valid Social Security number.
    2. Meet certain residency and filing criteria, including following guidelines for a qualifying child.
    3. Have an investment income that’s no more thatn $2,950.
    4. Have a total earned income of at least $1 and and an earned income and adjusted gross income (AGI) that’s less than:
    • $12,880 with no qualifying child ($15,880 if married, filing jointly)
    • $33,995 with one qualifying child ($36,995 if married, filing jointly)
    • $38,646 with more than one qualifying child ($41,646 if married, filing jointly)

    If you meet the criteria above, you may be eligible for the Earned Income Tax Credit (EITC). The EITC is a refundable credit for low and moderate-income taxpayers. If you qualify, you could pay less federal income tax, pay no tax or receive a refund. To find out if you’re eligible for an EITC this year, visit the IRS website and use their eligibility tool. If you know you’re eligible, find out how much your EITC will be for 2008.


    About Us

    WISER is a nonprofit organization that works to help women, educators and policymakers understand the important issues surrounding women's retirement income. WISER creates a variety of consumer publications including fact sheets, booklets and a quarterly newsletter that explain in easy-to-understand language the complex issues surrounding Social Security, divorce, pay equity, pensions, savings and investments, banking, home-ownership, long-term care and disability insurance.

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