Free From Broke

A Personal Finance Blog for Regular Folks

What You Need to Know About Taxes

Most people don't enjoy paying taxes. But the more we know about them the better we can plan for them. Articles here contain information on new tax rules as well as how to save and plan for your taxes.

Investment Losses? Harvest them for a Tax Deduction

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No one likes to lose money on their investments.

However, in some cases, it is unavoidable.  If you are looking at some investment losers, though, you might consider how you can use them to your advantage.

Tax harvesting your losses allows you to get a deduction when you sell for less than you bought for.  As you get close to the end of the year, and you begin planning to maximize your tax deductions, consider how your investments losses can reduce your tax liability:

Offset Capital Gains

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Innocent Spouse Tax Relief Changes – New Rules

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When you file a joint tax return, you are responsible, along with your spouse, for the information in the return.  If it turns out that your spouse under-reported his or her income, or claimed deductions or credits without being entitled to them, you might be liable for the resulting taxes, penalties and interest — just as your spouse is.

There are some instances in which you might find tax relief, however.  The IRS, with a new rules regarding innocent spouse tax relief, is making it a little easier to get free of your spouse’s tax debt.  If you want “equitable relief” there is no longer a two-year limit for applying.  And, if you have been turned down because of being outside this limit, you can reapply under the new rule.  But, in order to take advantage of this rule, you have to be an “innocent spouse.” [Read more…] about Innocent Spouse Tax Relief Changes – New Rules

What Are You Doing with Your Payroll Tax Cut?

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At the end of last year, Congress hurried through a tax package.

One of the credits that was allowed to expire was the Making Work Pay tax credit.  However, our representatives replaced the Making Work Pay tax credit with a reduction in the payroll tax paid by employees. This means that you should be seeing a paycheck that is a little bit bigger.

Our leaders, of course, want you to go out and spend that money, pumping it back into the economy.  The whole point of tax cuts is to encourage you to spend so that we can keep the economy, which relies a great deal on consumer spending, moving in a direction of positive growth.  However tempting it might be to spend that extra money, though, it is a good idea to consider how that money can help you down the road.
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5 Things You Should Know About Filing a Tax Extension

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Tax Day seems to be suddenly staring you in the face.

You’ve known for a while that it’s been coming, but it still takes you by surprise.

If you can’t seem to track down the documentation that you need, or if you are uncertain that you will be able to file by Tax Day (April 17 in 2012), you may want to file for an extension.

Just about anyone can file for an extension using Form 4868.  You can even file this form electronically.  It’s convenient, and you get an extra six months to prepare your tax return.

However, it is important to note that it’s not as simple as filing some paperwork.

Here are some things you should know about filing a tax extension:
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Tax Year 2010: Time to Begin Repaying the 2008 First-Time Homebuyer Tax Credit

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Here in America, we view the housing market as one of the main pillars of the economy.  As a result, when the real estate market moves slowly, our leaders are concerned about what could happen to the economy.  This was a big concern in late 2007 and early 2008 as signs of a housing meltdown really began manifesting.  Even before the financial crisis, leaders were trying to prevent a real estate market collapse, and they began offering a first-time homebuyer tax credit to encourage citizens to buy homes.

Homebuyer Tax Credit 2008: Not a True Tax Credit

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