Retirement Savings Contribution Income Tax Credit of up to $2,000

You may be able to take an income tax credit of up to $1,000 (up to $2,000 if filing jointly) if you make an eligible contribution to an employer sponsored retirement plan or an IRA. This credit is a nonrefundable tax credit. A nonrefundable credit cannot exceed the amount of the tax liability. This credit is in addition to any IRA contribution or contributions that you may make to a qualified plan

Where to Find the Credit – The credit is calculated based on your adjusted gross income and the your filing status. The IRS issued a tax table that indicates applicable percentages ranging from 10% to 50% to for the amount of the credit.

Eligibility To obtain this credit, the following conditions must be met:(1) You must have made a contribution to an IRA or qualified retirement savings plan. (2)You must be at least 18 years old as of December 31, 2009. (3) You cannot be claimed as a dependent by another person. (4)You cannot be a full-time student. (5) You had to be born before January 2, 1992. (6) Your adjusted gross income cannot be greater than $27,750 if single, or $41,625 for a head of household or $55,500 if married filing jointly if married filing jointly.

Limitations to the Credit – Usually distributions decrease eligible contributions. In this connection, contributions taken in determining the credit must be reduced by distributions received over a definite period of time, which the IRS considers as the “test period”. The current tax year, the following tax year up to the due date of the tax return including filed extensions, plus the two preceding tax years consist of the “test period”. Though, trustee to trustee transfers and rollover distributions do not offset the amount of the credit.In addition distributions from a military retirement plan do not reduce the credit.

When to Claim the Credit You can claim the credit on Form 8880, Credit for Qualified Retirement Savings Contributions. You can only claim the credit if you file Forms 1040 or 1040A. If you normally file Form 1040EZ then file Form 1040 to claim this credit. If you file your 2009 tax return claiming an IRA contribution that will be made in 2010, in that case the IRS permits you to consider that contribution as long it is being before the filing date of your tax return in the subsequent year, 2010 as an allowable contribution to determine the amount of this credit. The credit amount of the retirement savings contribution credit claimed by you cannot be greater than your income tax liability less foreign tax credits plus alternative minimum tax liabilities.

This article is not intended to be legal or accounting advice. Tax laws are complex, change constantly and each situation is unique. The reader is advised to do his or her own due diligence and consult competent professionals in these areas.

Learn more about how we can help you determine if you are eligible for the retirement savings tax credit and other new IRS tax credits and about our reasonably priced paperless and internet based system to tax preparation at affordable prices. Sandor(Sandy) E. Lenner,C.P.A. – M.B.A. has provided business and accounting services for over 35 years and works part-time at his wife’s CPA firm .

Hints On Ways Coupons Can Cost You Money

Today many families are trying to save money. One of the ways they have found is to use some of the many coupons appearing daily throughout the media. While some people have cashed in on these coupons and have made tremendous savings in their purchases, it is important to remember, without carefully checking these coupons can cost you money.

There are many examples of ways in which coupons can actually cost more money than they save, but if one looks at the purpose of a coupon it makes perfect sense. Companies need consumers to buy their products in order to stay in business, whether they need them or not. If a family normally purchases generic cereal for a nominal amount, but gets a coupon for money off the same product that is a name brand, they generally opt to buy the brand name. However, if comparing the price of the generic brand with that of the brand name after the coupon discount, they often find they have paid more for the same amount and kind of cereal as they would if they had purchased the generic brand in the first place.

Due to the way economics works, each season brings trends which include changing out products to make room for merchandise that will be needed during the next season. The general public often sees this as clearance sales which offer huge discounts in order to draw customers in and it usually works, but in today’s trying economic times it is taking more than the word “sale” in the window to get people to buy.

Business lures are now coming in the form of coupons which offer additional savings. Often, however, when people arrive what they discover is a disclaimer saying that they have to buy a certain amount in order to qualify for the discount. Another form of what is known as bait-and-switch is for customers to arrive only to find out the store is out-of-stock on the discounted item and are then directed to a higher priced similar item. Even with the coupons, customers often find themselves paying more for the item than the original price of the item they actually wanted.

Certain tactics are used in coupons so consumers must beware when considering their use. Many contain requirements which must be met in order to qualify for their use. For instance, if you have to buy a case of dog food in order to use the coupon, but you haven’t got a dog, how much have you really saved? On the other hand, if you are required to buy 10 pairs of pantyhose, but you work every day and wear a dress, this may be a good coupon for you. The things to consider are how much you actually need the item you are buying and whether or not you can purchase it for less at another retailer.

Whether the purchase is for groceries, clothing, household goods, or other items there is no savings with a coupon if it does not fit in with one’s lifestyle and meet basic needs. Checking the Internet for coupons is a good way to find the ones which fit a person’s particular needs and assist in stretching the budget dollar farther.

Coupons are a sales ploy designed to make a consumer think they are saving money whether they are or not. They are colorful and key words are enlarged in order to draw the eye. Some are even designed to look like real money or checks. It is up to savvy consumers to be mindful of the intent of coupons, compare the price of like products, compare like products offered by different retailers, and be aware of how it fits into their lifestyle because you need to watch out, coupons can cost you money.

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How To Clip Coupons To Save Money And Cut Your Grocery Bill In Half

In the current lagging economy, everyone is searching for money-saving tips and techniques. You will be surprised how much you can save when you set your mind to it and establish a strict budget. Food costs have obviously risen, and this one of the areas of our budget that we can make a few simple adjustments to save a lot of money. You can clip coupons to save big bucks on your grocery bill. You may be surprised how those little savings add up to big dollars over a short period of time!

This article is for those who are new to couponing. It is intended to give you some basic starting points so that you will be well on your way to successfully stretching your budget.

Where do you find coupons to clip? There are many places for you to find coupons. Coupons are in your weekly Sunday paper that you may already receive. If you do not receive it, check with your friends and family who do; they may be perfectly willing to hand over their coupon inserts to someone who will use them. This is a great place to start.

There are also online websites that offer free coupons for you to print. These are an excellent recourse to take advantage of. You can also purchase multiple coupons from online coupon sites and Ebay, but I only recommend this when you are looking for a specific item.

What is the best way to maximize on my coupon clipping? The best way to get the most out of your money and make it stretch the farthest is by combining coupons with sales. Buy a product that is on sale and combine it with a coupon and you can often get an item for free.

The key to your success is to plan ahead. Search the store ads weekly for sales and match them up with your coupons. Plan your meal schedule around what foods you can find good deals for this week. Stockpiling is another major aspect of couponing. When you find an item on sale that you use often or need, find as many coupons as possible to stock up on that item at the best price.

At first glance, you may be overwhelmed and think that couponing takes a lot of work and effort. While it does take time, seeing the savings add up will be a very satisfactory experience for you. One shopping trip of saving over 50% or scoring a cart full of free stuff and you will be hooked!

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SMSF – The Freedom Of Managing Your Own Money

The superannuation system is great for all of us. Our employer puts money away for our retirement, money which we never really see anyway so it does not impact our lifestyles. Then, when we retire, we have a massive pool of saved funds which we can enjoy.

One of the pitfalls of superannuation for me though is the way you lose control of your money. It is your money, yet often someone (such as your employer and usually due to your own inaction) decides where your money is invested. For this reason, I set up my own Self Managed Superannuation Fund (SMSF).

All a DIY Super fund is, is a legal structure you can use to manage your own superannuation money. There are a number of responsibilities you must take care of, ensuring the fund meets its obligations in as much as superannuation laws go. Once set up though, you can be as involved as you want and outsource the parts you are not interested in managing. The things that need to be taken care of include:

Firstly, someone needs to be the trustee. The trustee takes legal ownership of and responsibility for the fund, and all the assets there within. Time wise, it is not onerous, its more of a legal responsibility.

b) All the housekeeping. Someone needs to do all the book keeping and accounting work. This includes preparing all the annual tax statements, balancing the books and lodging tax returns.

3. Audit – The auditor looks over all the accounts prepared by the administrator to ensure they comply with the existing superannuation and tax law. A successful audit will mean you maintain your status as a complying superannuation fund, so you can continue to receive the superannuation tax benefits.

d) Investing the money. Superannuation is retirements savings. Someone needs to make all the investment decisions within the superannuation regulations, in a way which maximises the future retirement benefits of its members.

Myself, well all I wanted was to make my own investment decisions, live and die by my own sword so to speak. I have always thought this was really important as retirement savings are one part of my entire investment strategy and estate, they are not an isolated pool of funds. The decisions I make here need to be responsible to the big picture and work in harmony with the non-retirement savings investment decisions I make.

I find all the other responsibilities to be very time consuming so I’ve outsourced them. This leaves me more time to analyse my investments properly and make better investment decisions.

Gnifrus Urquart appreciates controlling his retirement investments, as well as the leisure time outsourcing his DIY Superannuation Administration affords him.

One Year’s IRA Contribution Can Really Make a Difference in Savings

(NewsUSA) – New data from Fidelity Investments found that more  than eight out of 10 Americans have cut back on discretionary purchases because of the recent economic crisis, and nearly half of respondents are now saving money. But many are unsure where to place the savings for the greatest benefit.

“After maximizing workplace savings plans and paying off credit card debt, investors should consider saving more for retirement using an Individual Retirement Account or IRA,” said John Ragnoni, senior vice president, Fidelity Investments. “Even though Americans are facing a challenging economic environment, it’s important to prepare for the future by making annual contributions.”

For example, an investor who makes a single contribution of $5,000 to a Roth IRA now could see that amount potentially grow to more than $53,000 in 35 years, assuming an annual rate of return of 7 percent.

Additionally, consolidating old workplace savings accounts at former employers into an IRA may offer the most compelling benefits for managing one’s retirement savings, including a broader range of investment choices.

This hypothetical example assumes the following: (1) one annual $5,000 Roth IRA contribution made on January 1 of the first year, and (2) an annual rate of return of 7 percent, and (3) no taxes on any earnings within the IRA. The ending values do not reflect taxes, fees or inflation. If they did, amounts would be lower. Earnings and pretax (deductible) contributions from a Traditional IRA are subject to taxes when withdrawn. Earnings distributed from Roth IRAs are income tax-free, provided certain requirements are met. IRA distributions before age 59 1/2 may also be subject to a 10 percent penalty. Systematic investing does not ensure a profit and does not protect against loss in a declining market.

How much do you need to retire?

This is from a CNN/Money article published October 24. It can be found here. Bottom line is that the more you made during your working years, the less that Social Security will proportionately replace your income if your spending and lifestyle does not decrease. To make up the difference you would naturally have to accumulate savings to cover your needs and wants for your life expectancy. Premier Guaranty can design such a plan for you. Give us a call.

Dow Closes at 9,955.50

For the first time in 4 years, has the DOW broken the psycological support level of 10,000. Where do we go from here? Economists portend, as do participants in the stock market, that what is going on today is a reflection of what we are likely to see in the future. Only the future is now. It is going to take longer than that to have all of this gut wrenching retirement plan wrecking market/economic activity to work itself out.

This is not a American problem folks, our friends across the Atlantic are going through the same pain and stabilization process to correct as we are. Even the Russian stock exchange halted trading twice today.

The market gave up $2.5 trillion in wealth today. That represents a lot of hopes for the future gone for now. Some of you were just recovering from the market collapse in 2001 and haven’t broken even yet. I read an article this weekend from a notable market analyst who said “buy and hold”. That may be fine for a young investor who has time for the market to turn around. For those who were relying on this for income because of a current or upcoming retirement, that strategy won’t do. If you are taking out money at the same rate of your portfolio as before the market collapse, you will find yourself depleting your retirement savings at a faster rate.

It’s time for a DEFENSIVE safe money portfolio review. Yes, there are still safe places to put your money and even get a 5% return guaranteed. Next you design the portfolio so you can never run out of money while receiving the highest income possible at lowest tax iiability. Call today.