Blog   Tagged ‘taxes’

Don’t let tax credits fall through the cracks

  |  Posted by

How can you get a bigger refund when filing your taxes? These tips can help:
tax credit tips
Even if you’re dreading the process of filing your taxes this year, taking the time to know what you’re doing can equal a bigger refund check. Everything from plugging in your electric car to adopting a child can be considered for deductions, so don’t miss out on refunds this year.

The IRS offers several federal tax credit options designed to lessen the burden of taxpayers. This is especially true for low- and middle-income households, which often retain a higher percentage of their annual salaries for basic living expenses than high-income households.

Earn tax reductions with a retirement plan
Some of the best tax deductions tend to be linked to retirement plans. With these deductions, you save money on annual taxes and invest in your future.

The Saver’s Tax Credit (previously known as the Retirement Savings Contributions Credit) is for those making eligible contributions to a 401(k), IRA, or other workplace retirement plans such as a 403(b), 457, or Thrift Savings Plan. If you’re contributing and are in a lower-income bracket, you can receive a tax credit up to $1,000 when filing alone and up to $2,000 if filing jointly.  This credit is on top of the tax advantages already associated with retirement plans, which might include pre-tax contributions, tax-deferred growth, or tax-free withdrawals in retirement.

Tax credits for small business owners
The IRS also offers potential tax credits for small business owners. One of the biggest deductions is through a home office credit.

More than 50 percent of U.S. small businesses operate at an owner’s home, according to the Small Business Administration(SBA). Unfortunately, many fear taking advantage of this tax credit will red flag an audit from the IRS. The good news is, that fear is usually unfounded.

To be eligible for a home office tax deduction, the IRS requires a portion of a residential property to be considered a legitimate home office. The home must be a primary workplace. If there is an additional office used, you cannot file a home office deduction. An exception can sometimes be made for those who work all day at an office part of the week and all day at home the rest of the week.

To figure out a home office credit, the SBA recommends calculating deductions by comparing the size of the home office versus the rest of the home. However, a business owner can also deduct expenses for a separate freestanding structure, which means a business owner can use a studio to conduct work, or a garage or barn for storage. But those freestanding structures should be exclusively for business.

Tax refunds as a way to save
Remember that getting a large refund may not always be in your best interest. It could be a sign that you’re having too much money withheld from your wages. If you have trouble saving on a regular basis, however, forced savings through tax withholdings is better than not saving at all. Just try to set aside all or a portion of your refund for the future. Some great ways to use your refund include paying down high-interest debt, building an emergency fund and investing for retirement.

 

Take a look at the IRS website for a comprehensive list of deductions, and ask a trusted tax accountant for advice on which ones apply to your situation so you can take full advantage of your options.

 

Continue Reading

*This post is not meant to replace the advice of a tax professional.

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


Mr. Chen is a Vice President and Portfolio Manager for UMB Private Wealth Management. He is responsible for all aspects of portfolio construction, including asset allocation, security selection and mutual fund analysis for high-net-worth clients. He joined UMB in 2013 and has 10 years of experience in the financial services industry. Mr. Chen earned a Bachelor of Science in Business with an emphasis in Financial Management from Kansas State University and Master of Science in Business with a Finance Concentration from the University of Kansas. He serves on the board of directors for the Financial Planning Association of Greater Kansas City and the Kansas City CFA Society. He is a Certified Financial Planner® and is a CFA charterholder.



Leave a Comment

Tagged: , , , , , , , , , , , ,

Happy Income Tax Day from the Mad Men

  |  Posted by

April 15 is finally here! To “celebrate” we want to take a look at what taxes the Mad Men (and women) at SC&P would have paid back in the 1960s…and if they were real people.

Enjoy this retro infographic from our friends at H&R Block.

“TheThe Taxes of Mad Men‡ via H&R Block

Continue Reading

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.


UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.



Leave a Comment

Tagged: , , , ,

Building long-term wealth with your HSA

  |  Posted by

So you know what a health savings account (HSA) is and that you can use it for long-term savings. Now what? How exactly do you use your HSA as a savings tool? You can use them as a compliment to your retirement strategy to build wealth for qualified2 medical expenses, including tax-free Medicare premiums.

Continue Reading

Don’t sell yourself short

According to the Devenir Year-End 2012 survey, the average HSA individual account balance was $1,807. Most people aren’t taking full advantage of their HSA. The IRS allows a maximum HSA contribution of $3,250 for individuals1 or $6,450 for family1 coverage for 2013 (plus a catch-up amount of $1,000 more for people over 55 years old).

Medical costs are a major financial burden for retirees. Fidelity’s widely-recognized annual study shows an average healthy couple retiring in 2012 at age 65 needed $240,000 for out-of-pocket health care costs (after Medicare and not including long-term care costs).

Everyone faces the possibility of high medical costs in their later years so you should start planning sooner rather than later. Starting to save earlier adds more to savings, and delays limit the amount of the nest egg. Long-term returns may vary, but like all savings plans, it’s always a good idea to start early.

Gain triple tax advantages

It’s also a good idea to always first take advantage of any offered match for your HSA or 401(k). While many further invest in their 401k or IRAs, your HSA may be a more appealing choice in terms of flexibility, tax advantages and long-term growth potential.

It’s important to consider taxes in long-term investing because of the compounding of savings. The comparison chart below shows the key tax considerations for each type of account.

 Building long-term wealth with your HSA

 * Not taxed if funds are withdrawn for qualified medical expenses.
**  Tax references are at the federal level.  States can choose to follow the federal tax-treatment guidelines for HSAs or establish their own; some states tax HSA contributions. If you have questions about your tax implications, consult your tax advisor.
***
Investment products are not FDIC insured, have no bank guarantee, and may lose value.

HSAs have the potential to offer triple tax advantages for individuals – something not seen in other retirement accounts. Only an HSA offers tax benefits at deposit**, during the account’s life and upon a qualified2 medical expense withdrawal. So a person saving for future medical needs can avoid taxes at all three stages in this life cycle.

Invest for long-term growth

Major HSA providers now offer multiple investment options. Learn more about what kind of investment options are available with your employer’s HSA. If your HSA encourages long-term savings, consider participating in the multiple investment options available. And take advantage of any tools offered by your employer to help you plan for the future, including investment objectives, risk tolerance and mix of assets across all accounts.

You have an opportunity to prepare for future health care expenses during retirement or later in life. Start learning more about your employer’s HSA and how you can use it to your advantage.

 

When you click links marked with the “‡” symbol, you will leave UMB’s website and go to websites that are not controlled by or affiliated with UMB. We have provided these links for your convenience. However, we do not endorse or guarantee any products or services you may view on other sites. Other websites may not follow the same privacy policies and security procedures that UMB does, so please review their policies and procedures carefully.

 

1 If you do not meet HSA eligibility requirements for the full tax year, you may not be able to contribute the maximum amount. Please consult your tax advisor or employer for more information.

2 Qualified medical expenses are those defined under Section 213(d) of the Internal Revenue Code.

 

Investments in securities, whether through a Money Market Sweep Account or through a Self-directed Brokerage Account are:

Not FDIC-Insured • May Lose Value • No Bank Guarantee.

 Securities  through your self-directed HSA brokerage account are offered through UMB Financial Services, Inc., member FINRA (www.finra.org), SIPC (www.sipc.com).  UMB Financial Services Inc. is a subsidiary of UMB Bank, n.a. UMB Bank, n.a. is a wholly owned subsidiary of UMB Financial Corporation. UMB Financial Services, Inc. is not a bank and is separate from UMB Bank, n.a. and other banks.


Dennis Triplett is chief executive officer of UMB Healthcare Services. He is responsible for the strategic direction in healthcare banking and manages the sales and marketing activities, plus product development and relationship management. Dennis has more than 29 years of experience in the banking industry. He currently serves as board chairman for the Employers Council on Flexible Compensation, chairman of America’s Health Insurance Plans’ HSA Leadership Council and a charter member of the American Bankers Association’s HSA Council.



Leave a Comment

Tagged: , , , , , , , , , , , , ,