It’s that time of the year again. Many of us are busy compiling paperwork, bank statements, and W-2 forms to file tax returns. But, have you slowed down long enough to calculate your net worth? Many of us don’t know how much we are worth. By definition, net worth equals assets minus liabilities. As individuals, our assets are our houses, cars, investments, savings, and etc. Our liabilities are our debts, mortgage, and utilities bills.
If you’re not sure if you need to file a tax return, take this test from the IRS website. It’s only 12 minutes long.
Here are some general reasons why you may want to do it:
1. Federal Income Tax Withheld You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
EITC is a tax credit that can return as much as $5,751 to people earning less
than $49, 078. The Internal Revenue Service estimates four of five eligible
workers claim and get their EITC. It is NOT automatic. Some not so great tax softwares will not even find it for you. You have to do a search for it. Don’t miss it.
To get their credit, workers must file federal income tax returns, even if they are
not otherwise required to file, and specifically claim the credit.
Dr. Holleman from the Faculty Voice Blog wrote today that New Year’s Resolutions are a bad idea. I wish I can link to his blog here but I can’t because it’s an intra-company blog. According to Dr. Holleman, some of the reasons for this bad idea are:
- In order to work, the “resolutions” have to be planned and prepared for in advance.
- Resolutions work when they start from a place of self-understanding and honest reflection.
- Resolutions take serious motivation and they require serious self discipline.
- Resolutions work when they have social support of friends and family
My dad received a letter from the Social Security Administration late last year about getting a 3.6% increase on his monthly social security benefits starting in 2012.
To offset this hike, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.
Tax season is here. Don’t let it slip on by. Here are some tips to stay ahead:
- Gather your records: receipts, canceled checks, taxes paid (property + school district), interests paid on students loans, mortgage interests, tuition, etc. If you don’t have these information, you can call the banks or schools to get one.
- Sign up to get W-2 Online: It will make your life simpler by reducing mistakes. From my own experience, the number one common error is entering the wrong social security number, employee ID, and/or salary amounts. With the online W-2, you will be able to download the information directly saving you time and effort.
- Hire a CPA to save time: Consult a CPA if your tax situation for 2011 is complicated
- Use Free File: If you made $57,000 or less in 2011, you are eligible to file for free at www.irs.gov/freefile
- Increase your IRA contribution: In 2011, the maximum contribution for tax payers under the age of 50 is $5,000 and for those above 50, it’s $6,000. You have until April 17, 2012, to do so.
- Consider direct deposit: a refund via direct deposit is much faster and more reliable.
- Review your information: including but not limited to your filing status, the number of exemptions you can claim, W-2 Information, and other personal information.
Remember, the deadline for individual returns this year is Monday, April 17, 2012. If you need help filing your taxes, please contact me vivian.truongCPA@gmail.com
I finally signed up for Google+ today. Google+ has a long way to go before it can catch up to Facebook. For one thing, it is not very user friendly. The buttons and graphics are not aesthetic either. Double blah. Additionally, I can’t find any of my friends on there. I guess Google expects me to find them some new users.
So, if you don’t yet have enough to worry about, join my circle on Google+.