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Paying less in Federal income tax means you get to keep more of your hard-earned income for yourself, for your family and to share with others. You benefit, your family benefits and the economy as a whole benefits.
At least, that’s the way it’s supposed to work.
The new tax proposal is being pitched as a “tax cut for the middle class”. As with every tax overhaul there are winners and losers, but taxpayers need to be careful what they wish for.
As expected the Federal Reserve voted to keep interest rates unchanged at its most recent Open Market Committee meeting last week. This comes after four rate increases in the Federal Funds Rate since they began raising interest rates in December of 2015.
The Federal Funds Rate remains at 1.25%. The next FOMC meeting is scheduled for September 19-20 when many Fed watchers predict another increase or possibly a change in tactics.
Imagine getting hit with a $500,000 tax bill just because you checked the wrong box on a form.
If you inherit an IRA, what you do next determines how much tax you will owe on your inheritance. Make a mistake and the entire IRA balance becomes taxable. In addition to owing Federal income taxes on the inherited IRA, you may also owe state income tax and possibly even estate taxes when you inherit an IRA from someone other than a spouse.
Tally it all up and half or more of the IRA could end up going to the IRS.
The average IRA balance varies by age, but for people over age 65 the average balance exceeds $212,000. In many cases IRAs can exceed $1 million or more during the IRA owner’s lifetime. A wrong move by the beneficiary could result in a gut-wrenching six-figure tax bill.
When you inherit an IRA, follow these three steps to avoid a tax disaster.
Most years the deadline to file your Federal income tax return is April 15th. This year you have a little extra time.
Since April 15th falls on a Saturday this year, you have until the following Monday to file your 2016 Federal Income tax return. However, this year Monday, April 17th, is a holiday known as Emancipation Day in the District of Colombia where the U.S. Department of Treasury is located.
“If there’s one thing I love to do on a weekend, it’s to bury myself with papers and receipts, dive into a stack of IRS Publications, and go to work on my tax return,” said no one. Ever.