What is the Earned Income Tax Credit?

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Filing taxes can either be very simple or overly complex.

There are so many exclusions, credits, loopholes, and deductions to know about that it can be easy to miss out on credits that you qualify for simply because the tax system is so complex.  One of those tax credits worth knowing about, especially if you are in a low income bracket, is the EITC or Earned Income Tax Credit.

What is the Earned Income Tax Credit?

Tax credits are great because they are a direct reduction in the amount of tax that you owe.  Tax deductions are good, too, but they simply reduce your income that will then be taxed.

A tax credit like the EITC is much more valuable.  It’s important to find out if you qualify for the EITC, especially if you know that you don’t have significant investment returns or income for the tax year.

The Earned Income Tax Credit is meant for people who are working and have low to moderate income.  The credit is designed to provide incentive to keep working rather than relying on government subsidies.  Part of the goal of the EITC is to offset social security taxes that you pay as you earn an income.  As with many government tax credits and deductions there is some controversy around the support the Earned Income Tax Credit provides for individuals or couples with children. Continue Reading

Selection Sunday and Links

Today is Selection Sunday and college basketball teams around the country are anxiously waiting to learn their fates.

Will it be that coveted last spot in the NCAA tournament?  Or relegated to the NIT?  (Sure, playing in any tournament is nice, but the NIT pales in comparison to the real deal.)

If you are like me and your team is sitting in the first four out list (as of time of this writing) you see a lot of similarity to financial issues.  My team, the University of Tennessee, is on the outside looking in.  They lost in their conference tournament when a win would have likely locked up a bid to the NCAA tournament.

Instead they lost, but even with a loss they aren’t completely out of the running.  They are just reliant on a bunch of other teams losing in order to propel them into one of those last few spots in the tournament.

Don’t we often run our finances this way?

We miss doing things right and do just enough.  We cut corners, and suddenly find ourselves reliant on someone or something else to save us.  That might be a relative lending us money or just hoping that our employer continues to employ us.

Don’t live your financial life like a NCAA basketball bubble team. Take control of your finances with some of these great reads:

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What Are Dividend Aristocrats and What You Need to Know About Them

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If you have been looking at dividend investing as an income generating option you have probably run across the term “dividend aristocrat“.

The stocks carry a unique title, but often it is not explained as to what exactly a dividend aristocrat is.

Should this be a type of stock that a dividend investor should target? Or do you want to avoid Dividend Aristocrats?

What is a Dividend Aristocrat Stock?

What are dividend aristocrat stocks?

A dividend aristocrat stock is a stock that has raised its dividend to shareholders for a minimum of 25 years straight.  There are a limited number of stocks that make this achievement over a long period of time.

To consistently raise your dividend to investors every year for decades is a solid commitment to returning value to your shareholders.

Why Invest in Dividend Aristocrats?

It is great to get higher dividends as an investor, but is that the only reason to invest in these special stocks?
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Michigan Takes Over Detroit and Links

File this under things I’ve never heard of.

The state of Michigan has announced it plans to take over the city of Detroit due to massive cash flow and financial issues for the city.  The city government has 10 days to appeal (which I am assuming they will do), but the state seems pressed to take over operations.  In the event the state takes over they will put an emergency manager in place who has the authority to make drastic changes for the city to include voiding contracts with unions.

While the takeover isn’t official, it underlines the point that we all need to manage our finances.

Despite a comeback in the auto industry after the Great Recession the financial situation within Detroit has not improved.  The city has issued new debt to cover its obligations, and we all know how swiping our credit card to pay for things we can’t afford works out.

Avoid spending more than you earn — like Detroit did — with some of these tips:

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Why You Should Avoid Penny Stocks

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Have you ever received a random email touting the benefits of a company or its recent business success?

How many times have you been on a financial forum and seen some random posts about a stock that is “poised to see explosive growth” or some other crazy claim?

Or have you ever used a stock screener to find an attractive stock, but were shocked to see the share price was only 10 cents?

Whether you knew it or not you were being prospected for penny stocks.  These dangerous stocks are deployed by scammers to steal money from you, but can be confusing to understand.

Avoid Penny Stock Scams

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Exploding Meteors, Electric Car Problems, Ruined Cruises and Links

It certainly was an interesting week in the news. 

First, you have a cruise ship lose all power and drift for a while in the Gulf of Mexico before two tug boats could slowly pull it back to safety.  Passengers slept on the deck of the ship, had no working toilets, and food started to get low.

Then you have a meteor unexpectedly exploding in the air over Russia with the equivalent power of 20 Hiroshima-sized nuclear weapons.

Lastly, you have an aspiring electric car maker sparring with the New York Times’ reporting of its vehicle.

But a piece of news that you might have missed, but is likely more important to you personally: The National Foundation for Credit Counseling launched a Spanish version of its online tool called MyMoneyCheckUp.  The tool aims to help consumers evaluate different areas of the personal financial lives such as planning for retirement, saving money, budgeting, and credit management.

You input some data about yourself and your habits, and the tool gives you a report of things you should keep doing as well as serious risks you are currently taking.

Tracking all four of the above money topics is critical in life. Here are some reads to guide you in some of them:

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Why You Won’t Get Rich Quick

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Get rich quick schemes are everywhere.

From late night informercials touting real estate success to the coffee shop barista that wants to sell you on the magical pyramid scheme he’s caught up in, it just seems so tempting.

You see everyone else has it better than you.  They’ve figured out the trick, and they’ll let you in on the secret for only 17 easy payments of $42.71.

Deep down we know better.

We know that getting rich quick schemes won’t work, but we’re still drawn to them because… well… being rich sounds great.

We live in an immediate gratification society and if we could all snap our fingers to be rich the resulting sound of the cumulative snaps would be a sonic boom.

Unfortunately, getting rich quick just doesn’t work.

Why Getting Rich Quick Doesn’t Work

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