Wednesday, February 29, 2012

Use Leap Year to Get Your Financial House in Order

If there’s one thing everyone wants, it’s more time, and that’s exactly what we have this year. A once every four-year phenomena of the calendar known as Leap Year is providing us with 24 extra hours this February 29.

For some, the day will come and go with little to show for it. However, with a little forethought, people can use the extra hours to make a difference in their financial lives. Financial advisors suggest that consumers dedicate this gift of time to tackling the financial tasks they may have been putting off.

Tuesday, February 28, 2012

A Focus on Tax Strategies

Taxes and inflation erode the return you make on your investment portfolio. If you are in a 30% tax bracket and inflation is 4%, you need to earn 5.7% to earn nothing.

Any effective plan to minimize your income taxes requires an ongoing effort on your part. That means you have to plan and make adjustments year-round, not just when you fill out your tax forms. Most tax preparers are just scorekeepers. They are reactive rather than proactive. You should work with a firm available throughout the year, not just one time a year.

There are three broad categories of tax-favored investments that reduce your income taxes. These are: “Tax-Exempt”, which offers income that is not taxed by the federal government; “Tax Deferred”, which defers taxes on accumulation until it is withdrawn; and “Tax Advantaged” instruments, which provide a tax credit against taxes.

Municipal bonds and Tax Free Money Market funds are two types of tax exempt vehicles.

The most popular tax-deferred investments are 401k plans, and IRA’s - both Traditional IRA’s and Roth IRA’s. Other tax-deferred alternatives are annuities, life insurance, and individual stocks and mutual funds.

Tax advantaged alternatives legally shelter income from taxes by creating a tax credit versus a tax deduction. The 3 primary Tax advantaged vehicles are: Rental Real Estate, Low Income Housing and Historic Rehabilitation Properties.

Older annuity and life insurance contracts can be exchanged for newer, higher paying interest contracts by using a 1035 exchange. This IRS section allows you to re-position these investments without incurring any tax liability.

The tax law allows married couples to exclude up to $500,000 of capital gains on the sale of their personal residence. This benefit can be used every two years.

There are numerous options available for all of these strategies and a tax and financial professional should assist you in selecting one that properly fits your specific needs.

Thursday, February 23, 2012

IRS Has $1 Billion for People Who Have Not Filed a 2008 Income Tax Return

WASHINGTON — Refunds totaling more than $1 billion may be waiting for one million people who did not file a federal income tax return for 2008, the Internal Revenue Service announced today. However, to collect the money, a return for 2008 must be filed with the IRS no later than Tuesday, April 17, 2012.

The IRS estimates that half of these potential 2008 refunds are $637 or more.

Some people may not have filed because they had too little income to require filing a tax return even though
they had taxes withheld from their wages or made quarterly estimated payments.

Wednesday, February 22, 2012

Social Security Tax Rate to Remain at 4.2% for All of 2012

Congress has voted in favor of extending for the entire year of 2012 the temporary reduction in the employee's portion of the Social Security tax. Currently, employees pay 4.2% of their wages in Social Security taxes, a rate that has been in effect since January 2011 and was scheduled to expire at the end of February 2012. HR 3630, the Middle Class Tax Relief and Job Creation Act of 2012, extends this 4.2% rate through the end of 2012. The House voted in favor of HR 3630 by 293 to 132; the Senate approved the legislation by a vote of 60 to 36. President Obama has not yet signed the bill into law.

Tuesday, February 21, 2012

IRS Experiences Further Tax Refund Delay Problems

WASHINGTON, D.C. - The Internal Revenue Service has been having more problems with delayed tax refunds.

Early in tax-filing season, the IRS warned that taxpayers who had filed prior to January 26 might see delays of a week beyond the projected date shown in the online “Where’s My Refund” tool (see IRS Warns of Tax Refund Delays).

Saturday, February 18, 2012

IRS Releases the Dirty Dozen Tax Scams for 2012

WASHINGTON –– The Internal Revenue Service today issued its annual “Dirty Dozen” ranking of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.

The Dirty Dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns.

Friday, February 17, 2012

6 Ways to Establish and Maintain a Healthy Credit Score for Your Startup or Small Biz

Establishing good credit is essential if you intend to apply for a business loan. But it’s not just for loans anymore – a good credit score can also help you:

  • Secure a business credit card
  • Open a merchant account
  • Benefit from lower insurance premiums
  • Build relationships and get flexible payment terms from suppliers
  • Rent commercial property
  • Lease or buy business vehicles

But how do you establish and maintain a healthy business credit score? What if your personal credit score

Thursday, February 16, 2012

IRS Notice - Delayed Tax Refunds

Problems at the IRS cause Nationwide Tax Refund Delay

Due to new and additional problems at the IRS with their new IRS computer systems, up to 50-60% of the refunds expected to be released by the IRS on 17 Feb 2011will not released.  Most of the effected tax refunds were filed between 2/2 and 2/7.  Earlier this week, the IRS released a statement noting problems with their computer systems which could delay some refunds.  The IRS also notes that Where's My Refund is incorrectly giving the impression that many of these returns have not been filed when in fact they have been.   This problem is a nationwide problem affecting all tax preparers and millions of taxpayers nationwide.  Taxpayers who visit the IRS and click Where's My Refund will see a statement explaining this problem at the top of the page.  The IRS says they are working on the problem but at this time they are not forecasting when you can expect your refund.  Per IRS they don’t see delaying your tax refund a big deal and don’t seem to be all that concerned about it and they are not taking ownership of this problem.

Historically IRS has deposited most tax refunds on Fridays however  the IRS has not told us when they will be fixing this computer problem and making these deposits but we are expecting and hoping they will be deposited next Friday Feb 24th.

Tuesday, February 14, 2012

Life Insurance – You Do It for Love

What's the best gift to give your loved ones on Valentine's Day??

It’s called Life Insurance, but it could just as easily be labeled Love Insurance. Buying life insurance is really an expression of love. It lets loved ones know that you care so much that you’ve made plans to provide for their well-being…even after you’re gone.

If someone will suffer financially when you die, chances are you need life insurance. Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like funeral costs, daily living expenses and college funding. What’s more, there is no federal income tax on life insurance benefits.

Most Americans need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones fare financially?

Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers’ fees, etc.)? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to put the kids through college or retire comfortably?

The truth is, it’s always a struggle when you lose someone you love. But your emotional struggles don’t need to be compounded by financial difficulties. Life insurance helps make sure that the people you care about will be provided for financially, even if you’re not there to care for them yourself.

Call us now to set up your free life insurance review.

Monday, February 13, 2012

Do I only have to use the ROTH IRA 5-year rule once?

Q: Does the establishment of ANY Roth IRA start the clock on the 5-year rule? For example, a 40-year-old establishes a Roth IRA in January 2007. In March 2012, he establishes another Roth IRA, which contains funds converted from a Traditional IRA. Could he withdraw those converted funds and not pay a penalty tax?

Sunday, February 12, 2012

7 Tips for Home Buyers

Interest rates at favorable levels and a good selection of homes provide an opportunity for buyers. Here are a few things for buyers to keep in mind:

1. Know what you can afford before you fall in love with your dream home.

2. Consider additional expenses that come with owning a home like property tax, insurance, and repairs.

3. Be flexible on the little things. It would be wonderful to find a home with everything you want, but those are hard to come by – distinguish nice-to-haves and must-haves early.

4. Have imagination and look beyond paint colors, wallpaper, or other easy and affordable things you can change.

5. Don't compromise on the big things, such as enough bedrooms to accommodate additions to the family or space for an office if you work from home.

6. Always inspect even if the surface looks great; it's important to know if anything major is wrong and what it will cost to fix.

7. Think about the future in regard to the neighborhoods, surroundings, schools, and developments.

If you have any questions feel free to call. If you are interested in one of our First Time Home Buyer Seminars, check the NFS Events page to find out when our next FREE seminar is

Thursday, February 9, 2012

Don't Be Fooled by Intuit Tax ID Scam

With tax season ramping up, tax scams are on the rise. Scams aren’t limited to in person scams; online scammers are in on the action, too. The latest tax-related scams to make the rounds might have landed in your inbox as early as last month but they’re still going strong; I received three just this morning.

Wednesday, February 8, 2012

Seven Tips to Help You Determine if Your Social Security Benefits are Taxable

Many people may not realize the Social Security benefits they received in 2011 may be taxable. All Social Security recipients should receive a Form SSA-1099 from the Social Security Administration which shows the total amount of their benefits. You can use this information to help you determine if your benefits are taxable. Here are seven tips from the IRS to help you:

1. How much – if any – of your Social Security benefits are taxable depends on your total income and marital status.

Monday, February 6, 2012

Payroll Tax Cut Enters Final Month Amid Talks to Extend

Congress is still currently debating the extension of the two-month payroll tax cut which will expire at the end of February. Disagreements over how to pay for the tax break (scored at some $170B) have hindered lawmakers’ efforts to extend the break through the end of 2012, notwithstanding the fact that both sides of the aisle are, in principle, in support of the break.

House and Senate conferees met publicly this week to hash out their differences. E@lert has some observations: first, we have the possibility of yet another short-term extension of the payroll tax cut. Out here in the real world, we all know that would be a nightmare, but that doesn’t mean it won’t happen. The second observation is that there has been some discussion of including the general tax

Friday, February 3, 2012

36 people in Obama’s executive office owe the government $833,970 in back taxes

President Barack Obama has preached that all Americans should pay their fair share in taxes, but a government report finds that tens of thousands of federal employees — from staffers in Congress to federal agencies and even Obama’s executive office — collectively owe the government billions in back taxes.

Data from the Internal Revenue Service found that more than 279,000 federal employees and retirees owed $3.4 billion in back income taxes as of Sept. 30, 2010.

Reader's Choice Awards Voting

The 2012 Readers Choice Awards are here! Vote for the best in town and the best around, and make sure your favorites win. Vote online today at and enter for a chance to win a brand new Kindle Fire!

When voting please remember NFS - Northeast Financial Strategies Inc. in the Local Insurance Agency category!!

Voting ends Wednesday, Feb. 15, 2012 at 5 p.m. One entry per person and you must be at least 18 years old to vote. Voters must be from Massachusetts. Results will be published in a specially bound keepsake edition the week of June 24.

Thursday, February 2, 2012

Taxpayers Must Attach Checklist to All 2012 Returns with Earned Income Credit Claims

The IRS has issued proposed regulations that require paid tax return preparers to file a due diligence checklist with any federal return claiming the Earned Income Credit (EIC), beginning in 2011.

As a preparer, I have been required to complete this form and retain it in my client records. However, now it must be sent in with the tax return. To fill out the checklist, I am required to ask questions about a client’s dependents, sources of support, living situation, and family relationships. Requiring that this checklist be submitted as part of the tax return raises its legal significance and subjects it to much greater scrutiny by the IRS.

Happy Groundhog Day: 6 more weeks of winter

(AP)  PUNXSUTAWNEY, Pa. - Pennsylvania's Punxsutawney Phil emerged from his lair to "see" his shadow on Thursday, in the process predicting six more weeks of winter.
But, at this rate, that might not be so bad.

The groundhog made his "prediction" on Gobbler's Knob, a tiny hill in the town for which he's named about 65 miles northeast of Pittsburgh.

Temperatures were near freezing when he emerged at dawn — unseasonably warm — and were forecast to climb into the mid-40s in a winter that's brought little snow and only a few notably cold days to much of the East.

Wednesday, February 1, 2012

Identity Theft Crackdown Sweeps Across the Nation; More than 200 Actions Taken in Past Week in 23 States

WASHINGTON – The Internal Revenue Service and the Justice Department today announced the results of a massive national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.

Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states. The coast-to-coast effort took place over the last week and included indictments, arrests and the execution of search warrants involving the potential theft of thousands of identities and taxpayer refunds. In all, 939 criminal charges are included in the 69 indictments and informations related to identity theft.

Marriage Penalty Relief

Marriage Penalty Relief