Don’t Make These Tax Filing Mistakes

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From math errors to missing Social Security Numbers to forms that aren’t signed, there are plenty of common tax mistakes that taxpayers can make when filing their returns. These mistakes can lead to delays in processing returns and issuing refunds. If serious enough, they might even lead to an IRS audit. Fortunately though, the IRS does allow do-overs. You can usually file an amended return if you realize that you’ve made a mistake. But that’s the problem — you might not realize you’ve made a mistake. Brush up on the following tax fails before you file, so you can avoid making the same errors this tax season.

Waiting Until the Last Minute to File

Although plenty of people put off doing their taxes, waiting until the last minute to file a tax return can backfire.  Do you really want to be scrambling to make the tax filing deadline (April 15th)? In a rush to file, you may forget to actually pay your taxes if you owe – which can result in a late payment penalty from the IRS (0.5% of taxes owed each month the payment is late). File as early as possible and avoid this headache altogether.

Forgetting to Pay Taxes on a Cashed-Out IRA

Did you cash out IRA money last year or plan to roll one over and then never did? If you forget to do this, the amount that has been cashed out is taxable. You also need to report any IRA changes on your tax return. If you forget to do this, it could result in a tax audit. And once that happens, everything will be checked with a fine tooth comb. The moral of the story: don’t forget to report any retirement account changes you made in the last year.

Mailing the Tax Check to the Wrong Agency

If you owe taxes or have a situation in which you have to pay taxes on an employee during the year (you hired a nanny to watch your children and are paying taxes on the nanny’s wages), be sure your payment is going to the right place. Failure to do this can again result in late fees and a giant headache. The same goes for electronic payments. Double check the mailing address and then check again.

Not Knowing the Filing Deadline for Businesses

Are you an S corporation? Typically, an S corporation business must file a return by the 15th day of the third month — not the fourth month, according to the IRS. Failure to file by the correct deadline could result in a file penalty fine of $450.

Not Making Estimated Tax Payments

Because self-employed workers don’t have employers to withhold taxes from their paycheck for them, they have to make estimated tax payments to the IRS throughout the year.  A good habit to get into here if this pertains to you, is to set aside money each month and try to estimate as accurately as you can – should you owe more on taxes when you file.

Forgetting to Make Tax Payments

This is a pretty straightforward one – don’t forget to make your tax payments if you owe this year. And if you are self-employed, don’t forget to send in your estimated tax payments. If you are required to send in estimated tax payments and you forget, you could receive an underpayment penalty fee.

Trying to DIY Tricky Tax Returns

If your tax situation is simple enough to file the 1040 form, you don’t need to hire a professional to prepare your return. But if you don’t have a simple tax situation and have multiple sources of income, own a home (or two), have investments, a military pension, etc. – it might be a good idea to let a professional handle filing your return for you.  A tax accountant can help you identify expenses you hadn’t previously been claiming as deductions, which can ultimately lower your tax bill. They’ll also look at your withholding with you, and see if it can be adjusted if you always seem to owe the IRS money come tax time each year. Sure – you’re going to have to pay for this service, but if you have a complicated tax return it will probably end up saving you money (and aggravation) in the long run.

More sound advice: it’s best to prepare for tax season all throughout the year. As you collect receipts, paperwork, statements, and so forth during the year – put them in a file and take them out and go over them right at the start of each new year. This way you stay on top of any changes that come up throughout the year, and aren’t digging for items at the last minute. Be prepared and organized, and filing your taxes each year will become second nature.

4 Tips to Keep Your Money Goals on Track this Year

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Even if you feel you’re doing pretty well with your finances, you could probably stand to make a few changes to your financial habits. If you’d like to stay a little more on track with your money this year, here are a few things to consider …

Be cautious with credit: A credit card can be a valuable tool, but if it’s abused, it can quickly create a mountain of debt. Try to only use your credit card for purchases you will pay off each month. Credit cards can be a great way to improve a credit score, but always make sure you’re being careful when paying with plastic.

Be on the lookout for savings:  It doesn’t matter what you’re buying, you can probably find it cheaper somewhere else. Have you looked online? You’ll probably find exactly what you’re looking for on the internet, and usually for less. If you don’t feel like waiting for something to be shipped, see if the store will price match your online price. If shipping isn’t free – see if you can order online and ship to your local store to pick up, which is usually always free.

Stop forgetting to pay bills: Have you mapped out your monthly bills and their due dates? If you’re not a very organized person, it may be time to design an auto pay schedule that will keep you from missing any payments this year. Paying your bills on time is must if you want to keep your credit score up.

Embrace frugality: No matter how much money you make, you should always try to spend less than you want to. You’ll be glad you filled up that savings account when an emergency arises.

Article Source: John Pettit for CUInsight.com

3 Things You Should Do With Extra Money ASAP

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According to a recent report by CareerBuilder, 78% of Americans who work full-time live paycheck to paycheck. Thinking about the long term is hard, especially when it comes to finances, but life does get easier the earlier you start laying the foundation for good financial habits. Whether you have $100 or $1000 to spare every month, investing extra funds wisely can have a significant impact on your financial future.

1. Pay Off Your Debt

First and foremost, consider putting part or all of your extra income every month toward paying off your debt. Being in any kind of debt can definitely loom heavily over your life and finances. Instead of spending any extra cash, it’s smart to chip away at that mountain to become debt-free. You should start with your highest interest debt first and work your way down, though some people find more motivation to tackle their debt by focusing on paying the smaller debts first.

2. Put it in Your Emergency Fund

Having an emergency fund is not just a smart idea, it’s a necessity. Life is unexpected and you never know what can happen. Having an emergency fund can help you in life’s hardest situations, such as a car accident or the loss of a job. Begin putting money toward an emergency fund, any little bit helps. It’s ideal to have six months of expenses saved up just in case.

3. Invest in Your Retirement

After you’ve paid off your debt and put money in your emergency fund, it’s now time to think about the future – which means retirement. While it’s still years or maybe decades away, saving for retirement as early as possible means you reap more rewards later. And that can start with a 401k. Surprisingly, many full-time workers are unaware that their employers may match up to a percentage of your contribution to the company’s 401k plan. Find out what your company’s policy is and get started with contributing to your retirement as soon as possible.

A Roth IRA is another popular retirement savings account that allows your money to grow tax-free. When you’re ready to withdraw at retirement, you do not pay taxes on these funds. If you’re under the age of 50, the most you can contribute to a Roth IRA is $5,500 yearly. This basically means that those who have earned income, can put in just over $458 monthly to reap the most benefits in their retirement future.

If you have extra income at the end of every month, start with these three steps. It will set up a healthy financial foundation for you and your family. Going forward if you still have money leftover after that, you might want to start looking into investments or perhaps spending a bit on yourself.

Need help with retirement planning? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com, or stop in to see us!*

*Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. First Financial Federal Credit Union (FFFCU) and First Financial Investment & Retirement Center are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using First Financial Investment & Retirement Center, and may also be employees of FFFCU. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of FFFCU or First Financial Investment & Retirement Center.

Securities and insurance offered through LPL or its affiliates are:

Article Source: Connie Mei for moneyning.com

 

12 Tips to Stay in the Money Saving Mindset

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If saving money isn’t your strong suit, don’t worry. Changing your money habits will have its challenges, but with a little effort, you can stop making so many unnecessary purchases and start building a sizable savings.

The first step is to think about your goals and priorities. Why do you want to save money? You might be looking for the security of an emergency fund, hoping to spend less time working, or preparing to buy a new car.

Whether your savings journey is just starting out or you’re already a saver and want to keep it that way, these 12 tips will help keep you from backsliding into poor money habits.

1. Remember why saving is important to you.

Think about why you want to save money, and take every opportunity to remind yourself. Talk about it out loud, or write it down.

2. Hold yourself accountable.

Budgets, spreadsheets, and shopping lists are enough to put the average consumer to sleep, but don’t be afraid to give this strategy a try. People who are already in the habit of jotting down notes or lists will likely be successful making strict shopping lists and sticking to them.

Once you make a reasonable budget, don’t stray from it. Check it over every once in a while and try to eliminate or reduce any expenses.

3. When you get a raise, don’t increase your spending.

After you get a raise it might seem natural to spend a little more. The problem is that a more expensive lifestyle could jeopardize your saving behavior. Think of a pay raise as an effortless way to speed up your savings.

4. Create a vision board.

It’s easier to reach a financial goal if you can see yourself accomplishing it. One way is to create a financial vision board. Cut out pictures of the financial goals you desire to reach and put them in a photo collage together.

5. Separate needs from wants.

You may fall out of the money saving mindset when you spend money on wants instead of needs. The two can be easily confused, especially if you really want something – you might become so invested in it that you convince yourself that it is a need and not a want. Prevent this by taking your time with purchasing decisions.

6. Learn why you spend.

It will be easier to save when you get to the bottom of why you spend. Do you buy a lot of clothes because you want to impress someone? Are you always spending money on eating out because you don’t set aside time to cook? If you’re more focused on impressing others or you haven’t established financial discipline, it is time to start figuring out these bad habits.

7. Address lingering money problems.

If you want to stay in the money saving mindset, you need to take care of any destructive money issues. Maybe you’re not used to having a lot of money, so you tend to save your money and then find an excuse to spend it. Consider consulting with a financial therapist or joining a financial support group.

8. Ask for Help.

No matter how hard it gets to save money, stay committed. If you find it hard to continue saving money, ask a friend or family member to help you stick to your goal. Don’t be afraid to ask for help.

9. Make a game out of saving money.

Saving money doesn’t have to be a chore. Make a game out of it, so you can stay motivated. Invite your friends to join and try the 52-Week Money Challenge, which requires you to save a certain amount of money each week during the year.

10. Track your progress.

Don’t get too comfortable after reaching a big savings milestone. Once you’ve saved a certain amount of money, it’s easy to fall back into your old habits. Continue to keep an eye on how you are doing with your goals.

11. Keep educating yourself.

Continue to learn as much as you can about how to manage your finances. If you want to be a money success, it’s important for you to keep feeding on new financial information every day. The more you learn about money and how it works, the more you will commit to making savings a priority.

12. Celebrate successes.

Keep moving forward by giving yourself a pat on the back when you reach a goal. Every time you reach a savings milestone, celebrate – but don’t celebrate so much that you get yourself back into debt.

 

Valentine’s Day On a Budget: How to Find Love & Laughs for Less

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When it comes to the topic of Valentine’s Day, public opinion seems to be split. Some people love everything about it. Hearts, roses, candy, flowers, cupid — you name it, they’re here for it! On the other end of the spectrum, you’ll find “Valentine Scrooges” who consider February 14th a day like any other. They’re convinced the celebration and fanfare are nothing more than Hallmark-sponsored money grabs. To be fair, these positions are extreme.

If you’re like most people, you probably enjoy spending the romantic holiday with your special someone, but you prefer to celebrate without spending a ton of money. Good for you. There’s nothing more attractive than someone who plans a financially responsible Valentine’s date. So, if you’re looking to create an inexpensive, fun-loving Valentine’s experience you’ll remember for years to come, we have a few suggestions you might enjoy.

Dress up and dine in. At first, this suggestion may seem pretty crazy. Why would you go through the trouble of getting all dressed up if you’re not going out in public? Because there’s a strange, yet undeniable appeal to doing something that doesn’t make sense to anyone else, that’s why. So, go ahead—go big. Glam it up. Suit and tie. Gown and heels. The more overdressed, the better. Whether you cook for yourself or order your favorite takeout, the food choice isn’t nearly as important as the fact that you’re both ridiculously overdressed for the occasion. And that’s the point. Have fun with it!

Dress down and hit the town. Like the previous idea, this one involves an unexpected combination of date attire and meal selection—but with a completely different twist. Before the big date, you and your date head to the nearest thrift store (you can shop together or separately) and buy a complete outfit for the other person, spending no more than $10 in the process. The clothing selections can be as tacky and outrageous as you please—the tackier, the better. The only catch is that you both have to wear the outfits to dinner, no questions asked. If you play this one right, not only will you save money and enjoy your date, everyone around you will probably get a kick out of it as well.

Dollar store gift challenge. You and your date can play this one a couple of different ways. The first approach involves heading to the nearest dollar store and seeing who can find the single best/craziest/funniest/most ridiculous gift for the other person. The second option involves setting a spending limit and seeing who can rack up the most entertaining gift collection. (No need to go above $10. After all, it’s still a dollar store). For a little additional fun, take some selfies with your newfound treasures, and share your pics on social media using the hashtag #DollarStoreScore. After your adventure, head out and grab some dessert. Since you did your Valentine shopping at the dollar store, you’ll have plenty left to cover a sweet treat or two!

Whether you use the tips above or come up with a clever idea of your own, being smart about your Valentine’s spending goes a long way towards ensuring your day is filled fun-loving memories instead of expensive mistakes. And when you’re wondering what to do with all your savings, don’t forget to stop by your local credit union — we’re happy to help you find ways to make your money work for you. And let’s be honest, long-term financial stability is sweeter than a $10 box of chocolates could ever be!

Important Member Alert: Tax Season Phishing Scams

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It’s tax filing season, and the Internal Revenue Service (IRS) and state tax agencies have issued warnings related to a recent increase in sophisticated phishing emails. The emails appear to come from the IRS and demand a payment or threaten to seize tax refunds as a result of non-payment.

What is phishing? Phishing is a tactic cyber criminals use to collect an individual’s online banking, credit card, or other identifying account information. Once received, the cyber criminals can use your information and make transactions as you.

The tax refund season is the time of year in which the majority of tax related scams occur and there is increased vulnerability. This year, the IRS has reported a 60% increase in phishing emails attempting to steal taxpayer funds and tax-related information.

Phishing emails can be hard to detect. Often, intimidation tactics and urgent requests are commonly used by cyber criminals. The emails sent in a phishing attempt will appear to come from a trusted source, using a spoofed or compromised email address. Phishing emails usually contain stolen logos and often include hyperlinks to malicious websites, or contain attachments that are embedded with malware or viruses.

Targeted tax time victims have reported that their emails contained the following:

  • An email originating from IRS Online
  • Contained an attachment titled “Tax Account Transcript”
  • A subject line using the phrase “Tax Transcript”

In addition to email phishing scams, similar phone scams have also been reported. A common phishing phone attempt involved a caller claiming to be from the IRS and threatening victims with a lawsuit or arrest if a tax payment isn’t made immediately with a debit card.

To reduce your risk of falling victim to a phishing scam:

  • Remember that the IRS will never initiate contact with taxpayers via email, text, or social media network to request personal or financial information.
  • The IRS also will never call a taxpayer and threaten a lawsuit or arrest.
  • Do not click on links or open email attachments from an unknown or suspicious source. Even if the email appears to be from someone you know, subtle variations will be present in the sender’s email address (for example: JohnSmith1@abc.com instead of JohnSmithI@abc.com).
  • Another red flag for email recipients includes grammatical errors and spelling mistakes. Legitimate professional organizations and agencies typically do not contain such errors in their communications.
  • For more information on preventing and reporting tax scams to the IRS, click here.