tax season

How To Improve Your Financial Health With Lexington Law

Tax season is here, and while many are focused on collecting their W9's and filing their returns, this period is also a great time to start looking to improve your overall financial health.

If you've been suffering from the effects of a less-than-perfect credit score, then first things first, be sure to get your taxes in on time. The deadline has been extended to May 17th, 2021, so no excuses this year. Not all states have extended deadlines to May 17th, 2021, so please confirm your state's deadline with a tax professional.

Once you've checked that off your list, then you can begin working to improve your credit. Negative items, like late payments or collections, can cause serious damage to your credit score. But don't worry, if any of your negative items are unfair, inaccurate or unsubstantiated, then Lexington Law can help you work to repair them. Their proven process can help you address questionable negative items with the bureaus and your creditors.

To get started, simply fill out Lexington Law's Credit Assessment. This FREE tool will give you clarity on your credit score, credit report summary and offer recommendations based on your unique situation.

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After you sign up, Lexington Law will scan your credit reports for any questionable negative items. You can also get in touch with a representative to answer any questions you have.

On top of the support you'll receive, you will also gain access to an online, easy-to-navigate dashboard where you can track your progress, see your credit score and monitor the positive and negative items impacting your credit.

There are resources on the app and the site but I wouldn't call it coaching. Everybody dreads doing their taxes and tackling their credit score, and we get why. But with companies like Lexington Law available to help you carry the burden, improving your financial situation has never been easier. Get started with a FREE credit report consultation today.

Update: Lexington Law is offering our readers a free credit repair consultation, which includes your FREE credit report summary and score. You can follow this link, or call 1-800-245-4135 to take advantage of this no-obligation offer.

Call anytime between 7am and 11:59pm EST to get your free credit report and score!

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Seven of the Most Overlooked Tax Deductions

It's a pretty good feeling to get that tax return check in the mail, but a pretty bad one to realize you forgot to include a tax deduction that would have lowered your tax bill or increased your returns. With the ever-increasing complexity of the tax laws, filing taxes just gets more and more complicated. To help simplify things, we assembled a list of some of the most commonly overlooked tax breaks you should take advantage of.

Student Loan Interest

Student loan payments can be a significant part of your monthly expenses, but luckily you can claim up to $2,500 in interest paid on student loans for higher education. This deduction is available to you if you're paying interest on a student loan for yourself, your spouse, or a dependent child.

Health Insurance Premiums

Health care is expensive, and only getting more expensive. Luckily, the IRS takes this into account. Deductible medical expenses have to exceed 10 percent of your adjusted gross income (AGI) to be claimed as an itemized deduction in 2019, but if this is true of you, you're looking at some major savings.

Social Security Tax By the Self-Employed

Every employed American has to pay into social security, including the self-employed, who are then eligible for a deduction on a portion of this tax. Usually, employers pay a portion of social security, but when you're self-employed you're paying the portion of the employer and the employee, which amounts to 12.4% on up to $128,400 of earnings.

Unusual Business Expenses

It may seem obvious that you can write off the cost of business expenses, but you may not know how many different kinds of business expenses that include. As Turbotax points out, "A junkyard owner, for example, might be able to deduct the cost of cat food that encourages stray cats to hang around and keep the mice and rats away. A bodybuilder got approved to deduct the body oil he used in competition."

Charitable Donations

While most taxpayers probably know that you can write off major charitable donations, many don't know that you can also write off smaller ones. Additionally, it's possible to write off expenses paid out of pocket that allowed you to spend time working for a charity, such as hiring a babysitter for your children so you can volunteer at a soup kitchen. Or, if you drove your car to charitable activities, you can deduct 14 cents per mile, plus parking and tolls paid.

Earned Income Tax Credit (EITC)

While a large portion of Americans qualify for the EITC, 25% of people don't claim it. This is actually a tax credit, ranging from $519 to $6,431 for 2018. You likely qualify for this credit if you're low income, or if you recently lost a job, took a pay cut, or worked fewer hours during the year.

Medical Costs

According to the affordable care act, taxpayers under 65 who accrue medical expenses greater than 10% of their annual income can earn a significant tax deduction. To reach this 10% threshold, you can tally up medical expenses that may not seem obvious, like transportation costs to and from the hospital.

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What are Your Options if You Can’t Pay Your Taxes?

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With April comes spring and tax time.

In 2018, you'll need to file by April 17 or face fees. But don't sweat too much if you can't afford to pay all your taxes at once. The Internal Revenue Service, or IRS, is often willing to work with you to help you pay your taxes without being penalized. That said, it's best not to avoid filing or paying. This bill won't just go away, and you'll accrue more and more late fees and interest the longer you let it sit.

Option 1: Pay by credit card or get a personal loan

The IRS allows several types of payment for your taxes, including a credit card. This isn't the best solution overall. You're essentially trading debt for another type. But if your situation is that you are able to pay, but don't have all the funds right now, a credit card is probably your fastest solution. (Unless your tax amount is too much for your card, then you'll need to consider another option.)

Pay your taxes with your card, and then pay off as much of the balance as you can until you're paid again. You'll still accrue interest on your card, but this amount might be lower than what the IRS would charge if you failed to pay or entered into an installment plan. The same may go for a personal loan from your local bank.

The stress of tax season can be overwhelming, but there are a few options to consider undsgn.com

Option 2: Set up an installment plan

As long as you meet certain requirements, you can set up an installment plan with the IRS to pay over time. And depending on how much you owe, you can even apply without having to talk to a person. If your bill is less than $50,000 in individual income tax, penalties and interest, you can apply for an installment plan online. You can also apply with federal form 9465. If you owe more than $50,000, you'll have to talk to an IRS agent to find out your next steps.

You'll be charged associated fees for entering into a plan, but these will be less if you sign up online. And even less if you agree to direct debit each month. You have to file all your tax returns before you apply for an installment plan. You'll usually be notified within 30 days if you've been accepted.

If it were only so simple...assets.pcmag.com

Option 3: Ask for additional time

Based on your particular circumstances, you might be granted additional time to pay in full. You can make a request like this online, by calling, or by talking with an IRS agent in person. If you're insolvent or unable to pay due to circumstances beyond your control (like unemployment or disability), the IRS is willing to work with you on your payments. You might be eligible for an officer in compromise, which will let you pay less than the actual amount you owe. These options are completely dependent on your unique situation and you'll be able to determine your next steps by communicating with the IRS.

Taxes are never fun, but they don't have to be a financial strain. The IRS has several payment and financing options if you're unable to pay in full by April 17. In extreme situations, you can talk to an IRS agent about reducing the amount you owe or setting up a payment plan. The key is: don't let your taxes sit. If you fail to file by the deadline, your interest and late fee penalties will be more than if you do file and request a different financing option.

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How to File Your Own Taxes Online

When it comes to filing your tax returns, everyone stresses out. All those withholdings (Federal, State, etc.) were painful, but then also add in the actual cost and process of preparing the tax returns…enough.

According to the National Society of Accountants, tax preparation fees average $176 for filing Form 1040 and your state return. On a regional level, New England states and Pacific states have additional premiums to make matters worse.

But rather than move to North Dakota to save a few bucks, online services such as Turbotax and H&R Block offer free, (yes, free) tax preparation services that might be ideal for you.

Is Online Filing Right For Me?

For simple tax filers, you should consider online filing to see if you might be able to save time and money. This solution might be appropriate if any of these apply:

  1. You make less than 100k per year.
  2. You do not own a home.
  3. You didn't sell any investments.
  4. You do not own a business.
  5. You do not have itemized deductions (or don't know what this means).

Online tax preparation walks you through the entire process in a highly organized manner (and even the 3:00am time slot is available!). It allows you to put together your returns and file all necessary forms to complete your filing requirements. They also check your math and when you submit your returns, you are done. It's just like mailing them, but with no need to pay for postage (added bonus)!

Once you get started with online filing, the following years' preparation will also be easier since all the data can be saved.

So what if you have a more complicated return? First, congratulations are in order! Second, don't lose any sleep, as they both offer low cost solutions to meet your needs.

For more on how to file your taxes online, click here!



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