Tag Archives: Tax Season

Budget Check Up: Tax Time Is the Right Time

Posted on by
Reply

Every year, about 140 million households file their federal tax returns. For many, the process involves digging through shoe boxes or manila folders full of receipts; gathering mortgage, retirement, and investment account statements; and relying on computer software to take advantage of every tax break the code permits.1

It seems a shame not to make the most of all that effort.

Tax preparation may be the only time of year when many households gather all their financial information in one place. That makes it a perfect time to take a critical look at how much money is coming in and where it’s all going. In other words, this is a great time to give the household budget a checkup.

Six Step Process

A thorough budget checkup involves six steps.

  1. Creating Some Categories. Start by dividing expenses into useful categories. Some possibilities: home, auto, food, household, debt, clothes, pets, entertainment, and charity. Don’t forget savings and investments. It may also be helpful to create subcategories. Housing, for example, can be divided into mortgage, taxes, insurance, utilities, and maintenance.
  2. Following the Money. Go through all the receipts and statements gathered to prepare your taxes and get a better understanding of where the money went last year. Track everything. Be as specific as possible, and don’t forget to account for the cost of any lattes on the way to the office each day.
  3. Projecting Expenses Forward. Knowing how much was spent per budget category can provide a useful template for projecting future expenses. Go through each category. Are expenses likely to rise in the coming year? If so, by how much? The results of this projection will form the basis of a budget for the coming year.
  4. Determining Expected Income. Add together all sources of income. Make sure to use net income.
  5. Doing the Math. It’s time for the moment of truth. Subtract projected expenses from expected income. If expenses exceed income, it may be necessary to consider changes. Prioritize categories and look to reduce those with the lowest importance until the budget is balanced.
  6. Sticking to It. If it’s not in the budget, don’t spend it. If it’s an emergency, make adjustments elsewhere.

Tax time can provide you with an excellent opportunity. You have a chance to give your household budget a thorough checkup. In taking control of your money, you may find you are able to devote more of it to the pursuit of your financial goals.

Need some help with preparing your future financial plan? Contact First Financial’s Investment & Retirement Center by calling 732.312.1534.  You can also email mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

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:

  1. IRS.gov, 2025

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Common Tax Errors to Avoid

Posted on by
Reply

Navigating the U.S. tax system can be challenging. How you will file depends on your income and filing status, as well as which tax deductions and credits you can claim. Your taxes are your responsibility, even if someone assists you in filing them.1 As you prepare your taxes, here are some common filing issues that you may be able to manage with a bit of preparation.

Keep in mind that this article is for informational purposes only. It’s not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your strategy. Remember, tax rules are constantly changing, and there is no guarantee that the treatment of certain existing rules will remain the same.

Error 1: Overlooked Side Income

Taxpayers must claim any income they’ve received in a tax year. One area that some taxpayers overlook is claiming side money that is in addition to their normal salaries. If you receive income from efforts outside your regular wages or self-employment, then you are obligated to report what you receive.

This money usually isn’t reported on a 1099 or W-2 and can include income from the following sources (and more): 2

  • Hobbies that yield a profit
  • Bartering for services or property
  • Forgone interest from below-market loans
  • Canceled debt, including discounts on mortgage loans
  • Social Security benefits to spouses and dependents (subject to filing status and income)
  • Unemployment compensation

Error 2: Unrealized Tax Breaks

Tax breaks can help you manage the taxes you owe or change your liability, resulting in greater benefits for you. While deductions are one form of a tax break, others include tax credits, exemptions, and certain tools designed to help you manage your tax burden. 3

Error 3: Wrong Filing Status

Your filing status can greatly impact your taxes because it defines your standard deduction and tax brackets. A common reason people choose an incorrect status is that their status has changed during the tax year. Before filing your taxes, be sure that you’ve updated your tax paperwork to reflect any changes to your filing status.

The five tax filing statuses are:

  • Single: Taxpayers who aren’t married, are divorced, or are legally separated (as state law dictates).
  • Married Filing Jointly: Taxpayers who are married and will file a combined joint return. Widow(er)s can typically file a joint return within the first tax year of losing their spouse.
  • Married Filing Separately: Taxpayers who are married and choose to file separate tax returns, which may or may not decrease their tax liabilities.
  • Head of Household: Taxpayers who are typically single and pay at least half of all home expenses for themselves and a qualified person.
  • Qualifying Widow(er) with a Dependent Child: Taxpayers whose spouse has died within the past two years and who have a dependent child, assuming other qualifications are met.4

Error 4: Incorrectly Claimed Dependents

Taxpayers can claim dependents for whom they are financially responsible during a tax year. The IRS defines a dependent as a “qualifying child” or “qualifying relative.” Taxpayers can no longer claim personal exemptions for each dependent, and they can miss out on other tax benefits by incorrectly claiming or forgetting a dependent. Be aware that if you have a blended family in which you share children with another taxpayer, you could end up accidentally claiming children when only one parent would be able to do so.5,6

Error 5: Not Having Proof of Purchases

Your paperwork is crucial for filing taxes correctly and includes everything from your pay slips to receipts. Beyond helping you file taxes, your documents also serve as proof of the claims you make on your return. Should the IRS find any errors or choose to audit you, you’ll need these records to back up the numbers.

A partial list of items to have on hand for verifying your financial records includes receipts, mileage, documents on life events, and medical and expense records for home improvements.7

Error 6: Not Accounting for Income

Your or your family’s income is the key determinant of how much you’ll pay in federal taxes. The IRS will tax you at a rate depending on the total you report.

In Conclusion

Filing your taxes can be a complex responsibility, and accidental errors can be easy to make. By being diligent, carefully strategizing, and keeping tight records, you can improve your ability to file taxes in a timely fashion while attempting to follow all of the federal and state guidelines. Even if you’re choosing to work with a tax professional, you are responsible for making sure you correctly file your financial details.

Remember, if you have any questions about your financial life, we’re here to help you navigate this complicated landscape. We always welcome collaborating with your tax professionals to align the strategies you take across your financial priorities. You can call or email the financial professionals in the First Financial Investment & Retirement Center at 732-312-1534, mary.laferriere@lpl.com or maureen.mcgreevy@lpl.com

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:

This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results. Consult your financial professional before making any investment decision. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial professional for further information. These are the views of FMG Suite, LLC, and not necessarily those of

the named representative, broker/dealer, or investment advisor and should not be construed as investment advice. Neither the named representative nor the named broker/dealer nor the investment advisor gives tax or legal advice.

Sources: 1-7 IRS.gov, 2024

Things to Do ASAP in Preparation for Tax Season

Posted on by
Reply

It’s only January, but April 15th (AKA: Tax Day) will be here before you know it. One of the smartest things you can do is begin to prepare everything you’ll need to file sooner rather than later. Here are a few places to start.

Get Your Personal Information Prepared: If the personal information on your tax forms isn’t correct, it can be a nightmare. Be sure you know your Social Security Number and that it appears correctly on your forms, and if applicable – your spouse and children’s Social Security Numbers as well. It’s also a good idea to keep last year’s return nearby in case you need it for reference and to ensure everything matches up.

Organize All Your Documents in One Place: Be sure you have access to all of this year’s income documents that you will need to file your return, and keep them in one spot (a file folder labeled for this tax season or a digital folder on your computer where all the documents are scanned in together). Documents you’ll need are your W-2, and any other sources of income like rental income, dividends, or unemployment. If you’re a homeowner with a mortgage, you’ll also want to have your mortgage interest statement available.

Keep Your Receipts: If you’re a small business owner or self-employed, you’ll need to file a Schedule C with all of your business expenses. Be sure you have kept your business receipts and expenses from the past year, and that you store them all together in a place where you can easily locate them to file this year.

Decide How You’ll File: Now is the time to choose between doing your taxes on your own or if you’d rather pay a professional. Decide now, because as it gets closer to April 15th – tax professionals may get backed up and not be available to file your return on time. If your taxes aren’t overly complicated and you decide to file on your own through TurboTax or H&R Block, First Financial members can save money as well as enter this year’s grand prize sweepstakes once you file!*

Need More Time? File an extension. If you don’t think you’ll have everything ready by April 15th, you can file for an extension with the IRS for October 15th. However, if you owe – you most likely will still need to pay what you’ll owe by the April 15th deadline. Learn more and complete the IRS tax extension form here.

Getting ready for tax season early will simplify the process as it draws closer to Tax Day. For more financial tips and resources, subscribe to our blog or monthly member e-newsletters.

*TurboTax Offer: Visit turbotax.intuit.com for TurboTax product guarantees and other important information. Limited time offer for TurboTax 2023. Savings are on TurboTax federal products only. Terms, conditions, features, availability, pricing, fees, service and support options subject to change without notice. Intuit, TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties’ trademarks or service marks are the property of their respective owners. H&R Block Offer Void if sold, purchased, or transferred and where prohibited. No cash value. Valid at participating U.S. offices only. A new client is an individual who did not use H&R Block or Block Advisors office services to prepare their 2023 tax return. Discount valid only with or for preparation of an original 2023 personal income tax return. Coupon must be presented prior to completion of initial tax interview. Discount may not be combined with any other offer or promotion. Expires October 15, 2024. OBTP#13696-BR ©2023 HRB Tax Group, Inc. NO PURCHASE NECESSARY. Legal residents of the 50 United States (D.C.) 18 years or older who are members or employees of a U.S. credit union. Ends 4/15/24. To enter and for Official Rules, including odds and prize descriptions, visit https://taxservices.lovemycreditunion.org. Void where prohibited.

 

Guide to Preparing for Tax Season 2023

Posted on by
Reply

Tax season can be daunting, but don’t let it overwhelm you! Last year, we shared tips on what to do with your tax return, and this time we’re focusing on tax season preparation. With some planning and organization, you can make sure that you’re ready when the time comes. Here are a few tips and tricks to help you get equipped for tax season 2023.

Gather your documents

The first step in getting ready for tax season is gathering all of your documents. This includes any income statements, like W-2s or 1099s, as well as any deductions or credits you may be eligible for. Make sure to keep all of these documents in one place so that they are easy to access when needed. Additionally, if you made any donations throughout the year, make sure to save receipts from those as well.

Understand tax changes

It’s important to stay up-to-date on any new tax changes that have been implemented since last year. While most of the standard deductions remain the same, there may be some new credits or incentives available that could lower your overall tax amount. New Jersey has incentives for working individuals and families that could help put more money back in your pocket. The IRS also lists any changes that could affect your tax refund in 2023.

Organize your finances

Once you’ve gathered all of your documents and familiarized yourself with the latest tax changes, it’s time to get organized. Knowing how much money you made throughout the year will help determine what forms need to be filed and how much you need to pay. Take some time now to organize all of your financial information so that filing taxes will be a breeze come Tax Day, which is Tuesday, April 18th this year.

Determine how to file

There are two main ways to file your taxes and what you choose will depend on your income level and comfort with the filing process. If you own property or run a business, it’s likely best to work with a professional. Whereas single individuals with one source of income may find it easier to use tax software.

First Financial members get access to tax season discounts through Love My Credit Union Rewards. Members can save up to $15 on TurboTax federal products, and $25 for new clients on tax services through H&R Block (returning clients will receive Tax Identity Shield for free, a $35 value).*

Tax season doesn’t have to be scary! With a little preparation and organization now, you can make sure that everything runs smoothly come April 18th. If you’ve already filed for this year, follow these steps now so that come tax time next year – you’ll already have everything taken care of in advance. Have more questions? Stop in your local branch to speak with a representative today!

*Limited time offer. Terms, conditions, features, availability, pricing, fees, service and support options subject to change without notice. Intuit TurboTax®and H&R Block are tax preparation software products offered to our members through Love My Credit Union Rewards and are not products of this credit union.

Be Aware of Tax Scams this Tax Season

Posted on by
Reply

The Internal Revenue Service (IRS) recently announced that the 2020 federal income tax filing deadline for individuals would be extended from April 15th to May 17th in response to the ongoing recovery efforts surrounding the COVID-19 pandemic, and to help provide taxpayers some ongoing relief.

In the midst of tax season, it’s important to be reminded that there is often an increase of fraud attempts and tax scams. Annually, the IRS shares and emphasizes certain scams that may be of risk to taxpayers. This year, scams related to Coronavirus tax relief continue to target taxpayers.

Here are a few things to be on the lookout for this tax season, as extensions can create confusion and make tax payers more susceptible to fraud attempts. The IRS recently announced the following to be aware of for the 2021 tax filing season:

  • Phishing Scams: Taxpayers should be alert to potential fake emails, texts, phone calls, or websites looking to steal their personal information.
  • Phone Scams (Vishing):  These scam phone calls work hard to instill a sense of urgency, and often threaten arrest, deportation, or some type of retaliation if a tax bill is left unpaid.  
  • Charity Scams: These schemes share bogus information about a charity to trick people into sending money or into providing personal information. This is often attempted with a fake website, using names similar to legitimate charities, or unsolicited communication. 
  • Social Media Scams: Social media scams frequently use events (lately COVID-19) to trick people into disclosing personal information. Typically, this involves convincing a potential victim they are dealing with a person they trust via email, text, or social media direct messaging.
  • Refund Theft Scams: Refund and Economic Impact Payments (EIP) as provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act have been targeted in recent scams with identity theft and filing false tax returns to divert funds to the wrong address or bank account.
  • Elder Fraud: Seniors are more likely to be targeted and victimized by scammers due to unfamiliarity or uncertainty on how to respond across digital channels. 
  • Offer in Compromise (OIC) Scams: Misleading tax debt resolution companies can exaggerate chances to settle tax debt through an Offer in Compromise (OIC) and submit false applications for candidates. OIC offers are available for a bill reduction, but taxpayers must typically meet very specific criteria under law to qualify.
  • Payroll and HR Scams: Phishing scams are designed to steal W-2 and other tax information. This scheme has increased with many businesses still closed and employees working from home due to COVID-19. W-2 forms contain sensitive information and are highly valuable for identity thieves.
  • Ransomware Scams: This cybercrime targets human and technical weaknesses to infect a potential victim’s computer, network, or server. Once infected, ransomware looks for and locks critical or sensitive data with its own encryption. 

Consider these preventative tips to keep your personal and financial information safe this tax season:

  • Be cautious of communication: Communication requesting personal or financial information – tax related or otherwise, should be treated with caution. The IRS and state tax authorities will never reach out by phone, email, text, or social media.
  • Pay attention to how money is requested: The IRS does not require that taxes or bills be paid with a prepaid/reloadable debit card, gift card, or money wires through services like Western Union or MoneyGram.
  • Report threatening messages: Calls demanding immediate payment or threatening legal action are more than likely scam attempts. The IRS or state of residence will not call to discuss taxes you owe without first mailing you an official bill.
  • Don’t open attachments or click on links: This is especially true if you have suspicions about the communication source you received, which may contain a malicious code or virus that will infect your device. Cybercriminals will often use a phishing email to trick a potential victim into opening a link or an attachment containing ransomware.
  • Be wary of rejected file requests due to duplication: If an e-filed return is rejected because a duplicate EIN/SSN is already on file with the IRS, or an unexpected receipt of a tax transcript doesn’t correspond to anything previously submitted – it may be a warning sign of identity theft. 

If a tax scam is suspected, report it to your state authorities and/or the Federal Trade Commission here.

Find out more about tax scams from the IRS website here.

Think First because There’s Harm In Not Knowing!

Article Source: CUInsight.com

3 Reasons to File Your Taxes Sooner Rather Than Later

Posted on by
Reply

The Federal tax deadline has been extended to May 17, 2021. If you are planning on waiting until a lot closer to that day to get your taxes done, here are three reasons you should really get moving and file your taxes as soon as possible.

Sooner is better regardless of the outcome: The sooner you file, the sooner you’ll get money back if you are getting a refund. If 2020 hit you hard financially, that refund may be something you’ve been banking on. And if you get the opposite result and owe the government money, you’ll have more time to save up and pay. You can’t go wrong filing as early as possible.

You’ll reduce your stress: Filing tax paperwork was probably simple when you were in your 20s. Once life gets more complicated, it’s not quite as easy or quick to file. If you know your taxes will be more difficult than in past years, lessen the stress it might cause by getting started as soon as you have your W-2. Filing early can prevent Tax Day from being a source of stress.

It’ll be a smoother process: Not only is the IRS less busy at the beginning of the year, but tax professionals typically are as well. Keep this important detail in mind if you’re not filing on your own. If you file online it won’t be a big deal, but if you need a tax professional to help sort you out, you’ll be glad you got started earlier. The closer you get to the tax deadline, the longer the whole process will take (as well as you probably won’t be the only last minute client).

The moral of the story: Start preparing your tax documents and file as soon as possible!

Article Source: CUInsight.com