Tag Archives: Tax Payment

File Taxes Online

Turbotax is one of the online tax filing services that consumers can use to file taxes online. Turbo tax can be found at Turbotax.com. It can be down loaded to your PC. You can file your taxes easily online. Subsequently you can then make your payment from your bank account if you owe taxes to the Federal Government.   This program will also help you make sure you get all of your tax deductions. You can also get your tax refund early. File taxes online prior to April 15th in the US and prior to April 30 in Canada to avoid any tax penalties on tax amounts owing.

Many people use a tax preparation service from companies that use Turbo tax and provide  tax services. In some cases they may even prepare your tax forms for free. File your taxes,  for both federal and state taxes. Canadians can do the same, filing for provincial and federal taxes online.

If you are a  business or a  consumer, it does not matter. It is easy to file  using the efile, capabilities of Turbotax. All of the financial forms you will need are included. They include all income,  interest, and investment income. If you have loans or mortgage interest expense, you can use Turbotax to track all of your income.

Tax Deferred Retirement Plan

tax deferred retirement plan A tax deferred retirement plan is an investment plan that allows us as tax payers to invest pretax dollars into a plan, and collect income within the plan without paying tax as long as the funds are left in the plan. This is an excellent way for individuals to save for retirement using income that is only taxed when the money is withdrawn from the plan. The usual mantra is to invest in these plans when you have a high income and are attracting more income tax, then withdraw income when you are making less income. You still will pay tax, but at a lower rate of tax. The theory is that there will be a net savings for the tax payer and in many cases this is true.

Consumers can build up huge retirement savings by using pretax dollars when invested wisely with diversity in mind and in quality stocks and bonds. There will be wide swings in the actual value of the plan since stocks and mutual funds will vary a great deal, however if you are well invested in high quality dividend paying stocks, the value of your investment plans will continue to increase over time. This increase will be from both income from dividends and interest as well as appreciation of these investments.

Tax Deferred Retirement Plan – What to do With Tax Refunds

Consumers can save thousands of dollars with pretax money by using a tax deferred retirement plan. They can save much faster with pretax dollars than they could with after tax dollars. If they are in a high tax bracket they can save or reduce their tax payable by a significant amount. Withdraw the money when they are in a lower tax bracket after they have retired. Tax refunds that are triggered due to investing in a tax deferred plan should always be invested. Invest into these plans or use the funds to reduce other debt such as mortgages and loans.

For example, $10,000 invested in a tax deferred retirement plan would trigger a $5000 tax savings for a person at a 50% tax bracket. Therefore the cost to the tax pager is only $5000. Later when he retires he can begin to withdraw money. Let’s assume now that he is in a 25% tax bracket and withdraws the same $10,000. He will only pay $2500 in tax for a net tax reduction of $2500. This is the real power of a tax deferred retirement plan. Tax planning and income planning is something that your tax adviser or your income adviser can help you with. Determine the best time to withdraw money from your plans.

Sheltering Income

All income in the tax deferred retirement plan is tax sheltered until it is withdrawn from the plan. This is a really powerful method for consumers to save money for their retirement! Begin early in your life by saving money in a tax deferred retirement plan. It is quite easy to accumulate well over a million dollars in the plan for your retirement. Save for retirement even if you have a company sponsored retirement plan. With a tax deferred retirement plan as well you will have the confidence of knowing that your retirement is financially secure.

Why Should You Invest in a Tax Deferred Retirement Plan when you Have a Company Plan

Many lucky people to have a company pension. Consumers ask themselves why should they save additional money in a tax deferred plan. Turns out there are a number of reasons to save in one of these plans over and above the savings you get from decreasing your taxes.

These reasons include the following:

  • Not all pension plans are sufficient to provide the quality of life you may want to have in retirement.
  • Many companies do not survive long enough to provide a pension
  • Not all companies pay sufficient money into the company pension plan
  • Early layoffs and retirements can mean a lower pension than planned

Assume that none of these things mentioned above occur. The real bonus is that you have a savings plan sitting there. It can be used to provide you with a better quality of life than you were expecting. We really are suggesting that consumers should plan for the worst. In most cases the worst does not happen. You gain the benefits of having a savings plan to use for improving your quality of life during your retirement.

Tax Refunds – Did you Pay Too Much

Tax RefundsIt is the time of year when we begin to think about filing our income taxes with the government. Some of us get it done as fast as we can so that we get it over with, while others will wait until the last day and run to the post office to send in their tax statements.  With electronic systems now, many people use tax software programs such as Intuit to complete and file their taxes online. Submitting your tax report only takes a matter of minutes and if you are getting a refund, you are finished. Just wait for that check to arrive.

But what if you owe tax, you can still file on line, however you had better follow up with either a check in the mail with the envelope postdated on the deadline or you send the money from your bank electronically. Is it better to get a refund or is it better to owe money at tax time. The answer is somewhat complicated and really depends on the individual and how you manage your money.

Should You Owe Money to the Fed”s? or Tax Refunds

The writer believes it is better to owe money. After all it is your money to start with and why should the government use it when you can. If your the type of person who has no problem coming up with the money when it comes time to file, then this approach is probably the one to take.

However if you have a problem saving or you do not like surprises, then it is probably best that you allow a larger source deduction to take place and receive a refund each year. Some people even look at this approach of paying too much as a means of savings. They like to get a refund in April of every year which they use to pay bills or go on a trip.

Besides for some people it is another way of saving money. Who doesn’t like to get a refund and some money in April or May from the government. It can be a nice little present that you can use to for special activities or even saving for retirement.  Here is a summary of what the options are and the benefits of each scenario:

Receive a tax Refund

  • Government has access to your money for up to a year
  • Nice surprise
  • Pay off bills when you get it
  • Another way of saving money

Taxes Owing at Tax Time

  • Did you save enough to pay your taxes or will it be a hardship
  • You had access to the money
  • If you have loans, then you may pay less interest
  • Government may assess a penalty if your late filing
  • Government may tell you to pay more during the year

These are just a few of the issues to consider when considering a Tax Refunds  and whether you paid too much.  The main thing that all of us need to focus on is to complete our tax forms and get them filed on time. Oh yes, if we owe money pay it on time as well. It is only the end of Feb at time of writing and we have almost two months to get this done, so don’t procrastinate, do your tax forms and file on time.

Also if you end up having to pay a lot at tax time, the government may send you a notice reminding you to pay more during the year and reduce what you owe at the end of the year. While this is not the end of the world, it is a reminder that you need to pay your taxes in regular monthly or biweekly installments.

If you have strong opinions on this subject, submit a comment. Comments that are well written and help our readers if if it is a different point of view. We will will even approve comments with links for well written comments. All other comments will likely be caught by our filter systems.

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