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College Savings Plans: 529 Plan vs. Coverdell ESA

September 23rd, 2014 by Rebecca Lake

529 plan vs coverdell esaMillions of students are heading off to college and that collective groan you hear is the sound of parents who are scrambling to figure out how to handle the cost. While scholarships and grants can ease some of the burden, the demand often outstrips the supply of funding. Loans are another alternative but as the current student debt crisis has demonstrated, borrowing isn’t always the wisest move.

One of the best ways to tackle the question of how to pay for education expenses is to start saving as early as possible. Parents have plenty of options, but two of the most popular ones are 529 plans and Coverdell Education Savings Accounts. Read more »

bank settlement big tax billLast November, JP Morgan Chase made headlines when it agreed to a $13 billion settlement with the U.S. Department of Justice to resolve federal civil lawsuits stemming from the bank’s issuance of certain residential mortgage-backed securities leading up to the housing market crash. In July, Citi announced a similar settlement and now, Bank of America is the latest company to jump on the bandwagon, agreeing to pay the DOJ a record-breaking $16.5 billion.

As part of the settlement agreement, Bank of America has said it will earmark $7 billion to help provide relief for homeowners who were negatively impacted by the housing crisis as a result of the bank’s actions. Read more »

7 of the World’s Weirdest Tax Laws

August 27th, 2014 by Rebecca Lake

strange tax lawsThe U.S. tax code is full of idiosyncrasies and there are plenty of strange tax rules at the state level. For instance, if you live in California you won’t pay any sales tax on fresh fruits and vegetables you get at the grocery store but buying blueberries in Maine will cost you an extra 1.5 cents per pound. While these laws may seem a little quirky, they’re nothing compared to some of the taxes that people face in other countries. To give you a little perspective, we’ve rounded up seven of the most unusual tax laws from around the world. Read more »

Top 5 Tax Planning Tips for Recent College Grads

August 19th, 2014 by Rebecca Lake

college graduate tax tipsGraduating from college feels a little like crossing the finish line of a very long race but in reality, it’s just the beginning. Going from the classroom the working world is a major transition that brings new responsibilities, including obligations to Uncle Sam. If you’re just starting out in your first job, seeing how much of your money goes to taxes each payday can be a real shocker. To help you hang on to more of your cash, take a look at these helpful tax tips for new grads.

1. Claiming Your Exemption

While you’re still in school, there’s a good chance that your parents claimed you as an exemption on their taxes to score tax break. For 2014, each exemption you claim reduces your taxable income by $3,950. One of the most important things you need to figure out is whether you’re able to claim a personal exemption for your own benefit.

The IRS guidelines on exemptions are pretty clear-cut for students. If you’re under 24 at the end of the year, you were a full-time student for at least five months of the year and your parents provided more than half your support they’re entitled to claim your exemption. If you’re under 24 and provide most of your own support or older than 24, then congratulations, you can take the exemption for yourself. Read more »

taxpayer bill of rightsThe federal tax code is complex and if you’re not a financial professional, trying to make sense of it is often an exercise in frustration. When you have a tax question or issue that needs to be resolved, calling up the IRS for help can lead to more confusion. Part of the problem is that consumers often don’t realize they’re entitled to certain protections under the tax code.

In an effort to improve the resolution process, the IRS recently unveiled its Taxpayer Bill of Rights, which summarizes several key provisions of the tax law. The agency plans to provide the millions of Americans who receive a tax notice this year with a detailed description of their rights. If you’re facing an audit or attempting to negotiate the payment of a tax debt, here’s what the IRS wants you to keep in mind. Read more »

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