Tips for paying less in taxes all year long

(BPT) – American taxpayers file roughly 140 million tax returns annually, according to the IRS. Of those, just 14 percent are the simplest type of form, the 1040EZ. In fact, all the 1040EZs, 1040s and 1040As filed — the least complex types of returns that you should, in theory, be able to do for yourself — account for just 22 percent of all tax returns, IRS data show.

“It’s not what you make that counts. It’s what you keep,” says Bill Harris, CEO of Personal Capital and author of a new book “Investment Tax Guide.” “Tax time is a great time to review your strategy for saving taxes on your investments — all year long. You need more than basic tips and last-minute tricks to efficiently benefit from all the complexities of the tax code.”

Several key strategies can help investors manage their tax liability.

Focus on tax-efficient investments

Of course the goal of any investment is to generate returns. Tax-efficiency refers to how much of those returns you have left after Uncle Sam has taken his share. The more you have left, the more tax-efficient your investments are.

Investment accounts can be taxable, tax-deferred or tax-exempt. For taxable investment accounts, such as money market mutual funds and individual or joint investment accounts, you pay taxes on income from those accounts in the year you earn it. Tax-deferred accounts like IRAs, Roth IRAs and 401(k)s allow you to put off paying taxes on returns as long as the returns remain in the account. When you finally withdraw returns in retirement, you will — in theory — be paying a lower tax rate because your income will be less.

Of course, tax-exempt accounts mean you never pay taxes on returns. Municipal bonds, REITs and 529 college savings accounts are examples of tax-exempt investment accounts.

Invest in tax-advantaged accounts

“You have numerous options for investing and each has different tax implications,” Harris says. “To maximize your portfolio’s tax efficiency, it’s important to invest in accounts that offer tax advantages.”

Harris offers these tips for choosing tax-advantaged accounts:

* Instead of investing in mutual funds, which have notoriously high tax impact, put your money in exchange-traded funds (ETFs). ETFs are generally more tax-efficient than mutual funds; their passive management means lower turnover and lower tax bills. ETFs are also traded like stocks, so you don’t need to sell the securities in your ETF in order to raise cash for redemptions.

* Municipal bonds can be a good option for people in very high tax brackets. You’ll pay no federal income tax on the returns, and if you live in the state where the bonds were issued, you won’t pay state tax either.

* Properly managed individual stocks are the most tax-efficient way to invest. Certain stocks do pay taxable dividends, but it’s up to you whether to invest in them or not. Mutual funds and ETFs both take that decision out of the investor’s hands.

Individual stocks, when properly managed, are the most tax-efficient way to gain exposure to equities. They leave control over realizing gains entirely in the hands of the investor. Of course, certain stocks pay taxable dividends; but the choice to own dividend-paying stocks is up to the investor. This is not the case with mutual funds or ETFs, where investors lack control over underlying securities.

Make losses work for you

Of course, not every investment produces returns. Sometimes you lose money, and that can be a good thing from a tax perspective. Tax-loss harvesting is a strategy that helps you benefit from investment losses.

By selling losing investments such as individual stocks, ETFs or mutual funds, you can offset the amount of return you gather from taxable accounts. For example, if you sell individual stocks for a loss of $3,000, you may be able to reduce your taxable income by that amount.

Consider a conversion to a Roth IRA

Roth IRA gains are tax-exempt, you can contribute at any age, you can withdraw without penalty whenever you want, and you can use the Roth to leave a legacy for your heirs if you choose. However, high earners don’t qualify to open Roth accounts.

You can tap the tax advantages of a Roth IRA by converting a traditional IRA to a Roth at a later date. There are no income restrictions on Roth IRA conversions. However, because Roth IRAs are funded with taxed income, and your traditional IRA was funded with pre-tax income, when you convert to a Roth IRA, you’ll pay a conversion tax based on your ordinary income tax rates.

To get more information, you can download Harris’ book at www.personalcapital.com/tax.

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The lowdown on leasing

(BPT) – If you’re in the market for a new car, you might be thinking about leasing. After all, it seems very attractive on the surface — so attractive that leases accounted for one-third of all vehicles sales nationally in 2016. Taking a closer look though, you may be surprised to see there’s more than meets the eye in some lease offers. So, here are a few need-to-know nuggets about leasing a car.

Cash up front is required.

If you’re thinking that leasing gets you out of needing cash for a down payment, think again. That low monthly payment you’re after comes with upfront costs like taxes, registration, tags and other fees all due at signing. This could cost you thousands of dollars. And, if you want to lower the monthly payment even further, you’ll have to put additional funds toward the cost of the lease to get your payment where you want it to be.

Bells and whistles cost extra.

Just like when you’re buying a new car, the extras cost more. Advertised lease specials are usually for the base model — not the one with the navigation and safety packages you’re probably coveting. Adding on all the bells and whistles to your vehicle will mean higher payments because that raises the price of the car. Again, you may have to put an additional deposit down to land the payment you think you can afford.

Not owning means no asset.

Leasing is basically renting a car for an extended period of time — three to five years or so. Unlike buying a car, you won’t have an asset at the end of your lease. Which means you’ll have a decision to make: pay the residual value (the value of the car at the lease’s end) to own the car outright, finance the residual or turn in your leased car for another. Regardless, you’ll again need the cash for a down payment or the upfront costs for your next lease — whereas with buying a car you’ll have a definitive end to monthly payments. Once your loan is paid off, you can put that money toward savings or paying down debt. Or, you can use your car as a trade-in on another ride or for cash if you ever need to sell it.

Once you’re in it, stay in it.

If you get halfway through your lease and decide it’s not for you, you’ll be charged for early termination, something to keep in mind if your financial lifestyle changes often. In some cases, you might be required to continue to pay all regularly scheduled payments or your credit could take a hit.

Understand complex negotiations.

Understanding how a car loan works can sometimes be difficult for a first-timer, and things get even more intricate when you lease. Here are a few terms you may hear during lease negotiations:

Capitalized cost: Cost of the vehicle today.

Lease term: Length of the lease, usually expressed in months.

Residual value: Vehicle’s expected value at the end of the lease.

Depreciation: The difference between the capitalized cost and residual value.

Lease factor, or money factor: Cost of leasing, or interest — usually expressed as a very small number such as .003. Multiply this number by 2,400 to get your interest rate. In this example, that’s 7 percent. As a note, interest rates on leases tend to be higher than those on auto loans.

If you want to ace your lease negotiation, you should study the vocab and have A+ credit, too. You may not get the best deal if you’re unsure about your credit score, leasing terminology or the calculations mentioned above.

Mind your miles.

Depending on how often you get behind the wheel and how far you go, you could be forced to make some lifestyle changes if you lease. Most leases cap mileage somewhere between 10,000 and 15,000 miles per year, or a total of 30,000 to 45,000 miles. Driving over this limit could cost you up to 25 cents per mile.

If you drive 30 miles round-trip for your commute, you’re traveling 150 miles over a five-day workweek. That’s nearly 8,000 miles just driving to work each year — 24,000 miles over the course of your lease. Depending on your limit, that doesn’t leave much wiggle room for things like road trips, traveling to sporting events, chauffeuring the kids to extracurriculars or even grabbing a bite to eat downtown. Those things could be taken off the table if you lease. If the freedom of driving whenever, wherever is something you enjoy, a lease may not be the best option.

The choice is yours.

Leasing might be for you if you want to drive a new car every three to five years, can drive within the limits and maintain good credit. On the other hand, today’s cars can easily last 10 years if maintained well, and once fully paid for, allow you to sock away monthly payments for other things. There are sites that offer side-by-side comparisons of buying and leasing to help you make the right choice. This calculator from Navy Federal Credit Union is just one example. In the end, it’s up to you. Armed with the details on the real deal of leasing and your buying options, you’re on the road to making the right choice.

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Key retirement milestones everyone should know about

(BPT) – Retirement can seem like a very distant destination in your early working years. However, as you age, that once distant destination starts to become more real. As you enter your 50s you can really start to think about how much you have saved and how that will translate into retirement income. You can also start to better understand the idea of allocating part of your retirement nest egg to guaranteed income based on your calculation of how much pension income and Social Security you will receive. Also critical during this final phase of working is understanding the key retirement milestones and how they will impact your ability to retire.

The following are the critical retirement milestone ages:

Age 55

If you are fortunate enough to consider the possibility of an early retirement, attaining age 55 is a critical date since you can start withdrawing from your 401(k) without the application of the 10 percent penalty tax applicable to premature plan distributions. This exception from the general applicability of the penalty tax, however, depends on you retiring from the company sponsoring your 401(k) plan during or after the year you reach age 55. You cannot continue to work at the company and decide you want to start using your 401(k) assets at age 55. In that circumstance the 10% penalty tax will still apply.

Age 59 1/2

At age 59 1/2 you are no longer subject to the 10 percent penalty tax for premature withdrawals on all of your retirement assets, such as your IRAs, 401(k) or annuities. Therefore, for many this is really the earliest that one can consider retirement as a possibility. Of course, retirement at age 59 1/2 will increase the length of your retirement and the risk that you will outlive your assets.

Age 62

At age 62 you become eligible for a reduced Social Security benefit. In terms of managing your guaranteed income for retirement, in general you will be better served to not start taking Social Security at such a young age since the benefit will continue to grow. Only those with a shortened life expectancy should consider starting Social Security benefits at this age. And even someone with a shortened life expectancy might consider delaying benefits if married, since turning on benefits early will reduce a surviving lower earning spouse’s benefit. Unfortunately, the reality is many individuals do turn on their benefits at age 62, either because they have not saved enough for retirement or because they want to start getting money back from the system they have contributed to over the years.

Age 65

Age 65 is a critical year for considering retirement since you will become eligible for Medicare. Prior to age 65, retirement requires you to consider the cost of paying for your own health care insurance, which can be a very costly proposition. This health care analysis gets more complicated if you have a spouse who is not working and has not attained age 65 when you do, since you will need to consider the cost of health insurance for that spouse until he or she attains age 65. While the Affordable Care Act (ACA) has helped ensure that you can obtain health insurance regardless of your medical condition, the cost of such health insurance remains a significant deterrent to those considering retiring before Medicare eligibility. Also, as this is written, Congress is planning to repeal and replace the ACA, and you will need to understand the replacement plan and how that impacts health care planning for those who are not Medicare eligible.

Age 66-67

At this age you will become eligible for full Social Security benefit payments, and not the reduced payment you can take at age 62. The full retirement age has been raised over time and varies depending on your year of birth. For those born from 1943 through 1954, age 66 is the full retirement age. For those born in 1955 through 1959, the full retirement age is 62 plus 2 months for each year. For example, someone born in 1955 has a full retirement age of 62 and 2 months, and someone born in 1958 has a full retirement age of 66 and 8 months. For those born in 1960 or later, the full retirement age is 67. Bear in mind that while attaining the full retirement age allows you to take an unreduced Social Security benefit, it does not maximize the benefit payment.

Age 70

Age 70 is the delayed Social Security benefit age, or when you must start taking your Social Security payments. By delaying to age 70 you can increase your full retirement age benefit by 8 percent a year from your full retirement age. Given that Social Security is an annuity that pays you for your lifetime, and the benefit itself is increased by inflation costs each year, the increase in benefit payments from the full retirement age to age 70 can have a material impact on your benefit payment in future years. Maximizing Social Security should be your first consideration when thinking about how to ensure that your assets last as long as you do. Unfortunately, many nearing retirement do not understand the importance of maximizing this benefit, from an insurance perspective, and take the reduced payout at age 62 or at the full retirement age.

Age 70 1/2

At age 70 1/2 you must start taking Required Minimum Distributions, or RMDs, from your retirement assets such as your 401(k) or IRA. Your RMD amount is determined by an IRS table, which effectively requires you to take an increasing percentage of your assets. The idea is that you will be forced to liquidate your account gradually over your lifetime. For example, at age 71 the table requires you to take out around 3.77 percent of your account value, determined on Dec. 31 of the year prior to the RMD withdrawal. At age 80 you must take out around 5.35 percent. At age 90 you must take out around 8.77 percent. You have a choice for the year in which you attain 70 1/2 to take your first RMD amount in that year or defer the distribution to before April 15 of the following year. Keep in mind that if you do defer this first RMD amount you will have to take two RMD amounts in the following year. You may want to consider carefully whether this makes sense since you could be increasing your overall tax liability.

RMDs are not required from a Roth IRA but are required from any funds you have in a Roth account in an employer plan. You may want to consider rolling funds, for example, from a Roth 401(k) to a Roth IRA, if you want to eliminate RMD requirements on these funds. You should know, however, that the time you have invested in the Roth 401(k) does not carryover to the 5-tax-year period for income tax free withdrawals from a Roth IRA. So if that is part of your future strategy, you may want to open a Roth IRA ahead of time to start the 5-tax-year clock running, which could include making a Roth IRA contribution or converting some traditional account assets to a Roth IRA. Once the 5-year-clock has run it applies to all future contributions, even if a particular contribution has not been in the account for 5 years.

The above analysis of retirement milestone ages highlights the importance of delaying your retirement as long as you can. Delaying your retirement ensures that you will not be subject to the 10 percent penalty tax on premature distributions from retirement plans and IRAs, that you will have affordable health care coverage under Medicare, and that you will maximize the Social Security lifetime benefit payment. Importantly, it also reduces the length of your retirement which, of course, increases the likelihood that you will be able to make your retirement assets last as long as you live.

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Secrets smart investors use year-round to save on their taxes

(BPT) – Come tax time, many people work to locate tax breaks. While this is always a smart financial move, a little-known way to help build your net worth is to keep taxes top of mind throughout the entire year.

Reducing taxes means you keep more of what you earn, according to Nick Holeman, a financial planning expert at Betterment.com.

“You can’t control the stock market, but you can control some of your taxes,” Holeman said. “Knowing how your investments affect your tax bill can help you save money not just on April 15th, but for years to come.”

Check to see whether your long-term investment strategy is running efficiently with these tips from Holeman.

Invest your tax refund: One smart place to invest your tax refund is in an IRA. Normally, investors might divert a portion of the refund into this account as part of a well-rounded investment strategy and claim the deductions for next year’s tax time. Invest your refund, and you may get a portion of that back in tax savings. Stay in the habit of investing that refund if you can and watch those small returns add up over time.

Think several moves ahead: Investing is complex and from time to time you will have to sell some of your investments; everybody does. It might be to rebalance your portfolio or maybe your goals have changed and your investments no longer match their intended purpose.

Still, smart investors need to think ahead before blindly selling parts of their portfolio. This is because selling could potentially lead to taxes. By carefully choosing which investments to sell, you can help minimize that hefty tax consequence.

One way to do this is to partner with an investment company that has the tools to make this information easy to access and understand. Betterment.com, for example, offers Tax Impact Preview, which lets investors see estimated potential tax on a sale before making the trade. If you don’t think the pros outweigh the cons, don’t do it.

Reorganize your investments: Another way to potentially leverage even small tax advantages into long-term growth is to build your portfolio like an energy-efficient engine, built to run for more miles with less need to refuel. You can help accomplish this by reorganizing your portfolio. Move inefficient investments like international stocks and other assets that are taxed more often into a tax-deferred account, such as an IRA or a Roth IRA. That way, you can enjoy the high growth for less tax. Then, move less-taxed assets, such as municipal bonds, into taxable accounts.

Benefit from losses: Help keep your portfolio in balance by selling off the laggards and replacing them with a similar investment. You can receive a tax deduction from your losses that can help cancel out the taxes you owe on assets that have gains. This is done automatically for investors at many automated services through a strategy called tax loss harvesting. Smart investors should always remember that investments involve risk and may result in loss.

Give to a worthy cause: While it’s important to secure your future, many investors see community support as an important goal. Consider donating a to a nonprofit organization in your community. Not only are you helping to improve the quality of life in your locale, you can potentially claim a deduction from your income tax. It can pay to do the right thing.

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Small nest egg, big dreams? Tips for buying your retirement home

(BPT) – Planning for retirement means making a lot of decisions, including when you’ll stop working, how much you’ll withdraw from your savings each year, and where you’ll live. Many Americans view retirement as an opportunity to move into a house they’ll love and live in for all their golden years. In fact, 64 percent of retirees either have moved or plan to move, according to a Merrill Lynch survey.

Some retirees move to be closer to children or grandchildren, to down-size into a more manageable home, live in a warmer locale, or to secure a more luxurious home where they can easily age in place.

“The decision of where to live in retirement is important and can directly affect quality of life in your golden years,” says Geoff Lewis, President of RE/MAX, LLC. “Research by Trulia shows that in virtually all areas of the country, it makes better financial sense for retirees to buy a home, rather than rent. In fact, buying is nearly 42 percent cheaper than renting for seniors across the country.”

With offices in more countries than any other real estate brand, RE/MAX agents have helped millions, including retirees, find the home of their dreams. Lewis and the RE/MAX team offer some advice for buying your retirement home:

Have a plan

Ideally, you should think about where you want to live long before retirement, but it’s never too late to think about your priorities. Do you want to be close to family or health care resources? Do you desire a home in the mountains or somewhere you’ll never see snow again?

Trulia’s research shows that some of the cities most popular for retirees are also ones where buying a home can save you the most money over renting. Desirable, warm-weather locations in Florida and Arizona offer significant value, even in regions where average home prices are higher.

Make a list of what you want in a home location so you’ll have a starting point for your search.

Don’t delay

If possible, don’t wait until poor health or declining finances force you to move somewhere that’s not your ideal location. Move while you’re still young enough to enjoy your dream retirement home.

Get professional financial advice

It’s important to protect your nest egg and keep it growing throughout retirement. A professional financial planner can help you understand what size mortgage is right for you, so your dream home doesn’t strain your finances.

Be mindful of amenities

When choosing a location and a home, in addition to your personal priorities, it’s important to keep in mind accessibility to amenities important to seniors. Community features such as good transportation, quality of roads, safe neighborhoods, and access to health care, socialization opportunities, shopping and cultural venues are all options to consider.

Rely on real estate pros

Once you know where you want to be, it’s time to find a real estate agent. Well-versed on local real estate trends, RE/MAX agents can help retirees sell their current home so they can make the purchase of their dream retirement home a reality. Visit www.remax.com to search for an agent.

Focus on must-haves

Make a list of must-have features and those you would like your retirement home to have. Share the list with your agent to help him or her focus on properties that meet your criteria. Your list of must-haves and desirables will likely be very different from the list you made when you bought your first home. Now, a single-level house with large bathrooms and a level lot may be more desirable than a two-story with lots of bedrooms and a big backyard.

Finally, says Lewis, keep in mind whether you plan to age in place. “More Americans are looking for homes that will allow them to stay independent and living on their own throughout their retirement years,” he says. “If that’s your plan, look for home features that will help facilitate that, like wider doors, few or no exterior stairs, and good lighting.”

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Tax tips for extension filers with investments

(BPT) – It’s a common misconception that if you have investments you need to shell out a large chunk of change to have your taxes prepared by an accounting genius. The truth is, it’s easy and affordable to do your own taxes and maximize tax savings — even if you’re an investor.

“First and foremost, gather all of your tax forms and financial information before you get to work on your return. It will save you time when you prepare your return and the process will be much easier,” says Mark Jaeger, director of tax development for online tax preparation software provider TaxAct. “In addition to tax forms from brokerages, employers and financial institutions, you’ll also want to have all documentation about your transactions readily available. That information will help prevent you from overpaying or underpaying taxes on your investments.”

Many DIY tax preparation solutions import transactions directly from brokerages or provided data files. TaxAct, for example, offers electronic import for most common tax forms including W-2 (Wage and Tax Statement), 1099-B (broker transactions), 1099-INT (interest income), 1099-OID (Original Issue Discount), 1099-DIV (dividend income) and 1099-R (retirement income).

However, if you have hundreds or thousands of transactions and you can’t electronically import the related brokerage statements, Jaeger recommends entering your total short- and long-term gains on Form 8949, Sales and Other Dispositions of Capital Assets. Then, you’ll simply attach the statements that list your transactions individually when you e-file your return.

The following helpful tips from TaxAct can help you save time and money when you prepare your tax return this year.

1. Don’t rely solely on your Form 1099s.

Verify the information shown on your Form 1099-Bs aligns with your records. It is a good idea to review cost basis and date acquired. Whether that information is included on your form depends on where the investment originated and how long you’ve held the asset.

Keep in mind even if you don’t see your cost basis and acquisition date on your Form 1099-B, you still have to report that information on your tax return. Without it, any sales proceeds without a cost basis will be taxed as a capital gain.

If you’re still waiting for 1099s or other investment information, Jaeger recommends preparing as much of your return as possible now, but wait to file until you receive it to avoid amending your return.

2. Make sure you report the correct cost basis.

The cost basis is the purchase price of an asset adjusted for stock splits, dividends, return of capital distributions and any other basis adjustments. It is important to use the correct cost basis to accurately report and calculate a capital gain versus a loss, the difference between the asset’s sales proceeds and the cost basis.

Even if your cost basis is reported on Form 1099-B, it is a good idea to check your investment records to verify it’s correct. The cost basis reported on your Form 1099-B is based on the information available to your brokerage, which may not include data needed to calculate the true cost basis. For example, the sale of certain employer stock options may be reported on your Form W-2 and Form 1099-B. If you don’t adjust your cost basis to account for this, your sale may be taxed as ordinary income and as a capital gain.

If you need to report adjustments to cost basis amounts on your tax return, you’ll include the adjusted amounts and an adjustment code next to each that explains the reason for the change.

3. Short- and long-term gains: Make sure you know the difference.

Assets held for more than 12 months are considered long-term and benefit from reduced capital gains tax rates of zero, 15 and 20 percent based on your tax bracket. On the other hand, short-term gains for assets held for less than 12 months are taxed at ordinary rates.

Verify the asset’s purchase date before selecting the short-term or long-term reporting category for the transaction on your tax return. Remember, the date acquired may not be on Form 1099-B. Incorrectly reporting the term may result in overstating or understating your total tax liability.

For future investments, you may want to consider waiting to sell assets with large gains or holding periods approaching one year. For more investment tax tips visit www.irs.gov. To learn how you can easily and affordably file your own return with TaxAct, visit www.taxact.com.

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3 tax hints every investor should know

(BPT) – It’s a common misconception that if you have investments you need to shell out a large chunk of change to have your taxes prepared by an accounting genius. The truth is, it’s easy and affordable to do your own taxes and maximize tax savings — even if you’re an investor.

“First and foremost, gather all of your tax forms and financial information before you get to work on your return. It will save you time when you prepare your return and the process will be much easier,” says Mark Jaeger, director of tax development for online tax preparation software provider TaxAct. “In addition to tax forms from brokerages, employers and financial institutions, you’ll also want to have all documentation about your transactions readily available. That information will help prevent you from overpaying or underpaying taxes on your investments.”

Many DIY tax preparation solutions import transactions directly from brokerages or provided data files. TaxAct, for example, offers electronic import for most common tax forms including W-2 (Wage and Tax Statement), 1099-B (broker transactions), 1099-INT (interest income), 1099-OID (Original Issue Discount), 1099-DIV (dividend income) and 1099-R (retirement income).

However, if you have hundreds or thousands of transactions and you can’t electronically import the related brokerage statements, Jaeger recommends entering your total short- and long-term gains on Form 8949, Sales and Other Dispositions of Capital Assets. Then, you’ll simply attach the statements that list your transactions individually when you e-file your return.

The following helpful tips from TaxAct can help you save time and money when you prepare your tax return this year.

1. Don’t rely solely on your Form 1099s.

Verify the information shown on your Form 1099-Bs aligns with your records. It is a good idea to review cost basis and date acquired. Whether that information is included on your form depends on where the investment originated and how long you’ve held the asset.

Keep in mind even if you don’t see your cost basis and acquisition date on your Form 1099-B, you still have to report that information on your tax return. Without it, any sales proceeds without a cost basis will be taxed as a capital gain.

If you’re still waiting for 1099s or other investment information, Jaeger recommends preparing as much of your return as possible now, but wait to file until you receive it to avoid amending your return.

2. Make sure you report the correct cost basis.

The cost basis is the purchase price of an asset adjusted for stock splits, dividends, return of capital distributions and any other basis adjustments. It is important to use the correct cost basis to accurately report and calculate a capital gain versus a loss, the difference between the asset’s sales proceeds and the cost basis.

Even if your cost basis is reported on Form 1099-B, it is a good idea to check your investment records to verify it’s correct. The cost basis reported on your Form 1099-B is based on the information available to your brokerage, which may not include data needed to calculate the true cost basis. For example, the sale of certain employer stock options may be reported on your Form W-2 and Form 1099-B. If you don’t adjust your cost basis to account for this, your sale may be taxed as ordinary income and as a capital gain.

If you need to report adjustments to cost basis amounts on your tax return, you’ll include the adjusted amounts and an adjustment code next to each that explains the reason for the change.

3. Short- and long-term gains: Make sure you know the difference.

Assets held for more than 12 months are considered long-term and benefit from reduced capital gains tax rates of zero, 15 and 20 percent based on your tax bracket. On the other hand, short-term gains for assets held for less than 12 months are taxed at ordinary rates.

Verify the asset’s purchase date before selecting the short-term or long-term reporting category for the transaction on your tax return. Remember, the date acquired may not be on Form 1099-B. Incorrectly reporting the term may result in overstating or understating your total tax liability.

For future investments, you may want to consider waiting to sell assets with large gains or holding periods approaching one year. For more investment tax tips visit www.irs.gov. To learn how you can easily and affordably file your own return with TaxAct, visit www.taxact.com.

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The lowdown on low down payment mortgage

(BPT) – You would like to buy, but you can’t manage that 20 percent down payment. Does this sound familiar?

The down payment is the biggest impediment to buying a home according to surveys, but in reality many individuals can qualify for a mortgage with as little as 3 percent down.

It is important to compare loans and do the math. Consider your closing costs (the cash you need in-hand), the monthly mortgage payment, and if that payment will go down or up in a few years. Paying a few more dollars each month in the beginning can sometimes save borrowers money in the long term.

For this exercise, we compare a $234,900 home purchase (the national median home price as of December 2016), with a 5 percent down payment and a 720 FICO score. And because calculators and loan terms vary, consider these costs as examples only. A mortgage professional can provide you with specific estimates.

Conventional loan with PMI

A conventional loan is a traditional mortgage from a lender that is not insured by a government agency. With a 5 percent down payment, the borrower finances the remaining 95 percent over 30 years with a 4 percent interest rate. Private mortgage insurance (PMI) is required because of the low down payment and is $78 of the monthly bill, making the total monthly mortgage payment $1,143.

Pros: A borrower can get a conventional loan with PMI with as little as 3 percent down. PMI can be cancelled once 20 percent equity in the home value is reached, which means your monthly bill decreases.

Cons: For some borrowers, a 5 percent versus 3 percent down payment may be a better deal as costs may be lower. However, for many prospective homebuyers looking to lock in low interest rates, build equity and home appreciation faster, an option to get into a home with the lower down payment may be better.

A combo loan (aka piggyback mortgage)

A piggyback involves two separate loans simultaneously. In this scenario, the first “primary” mortgage covers 80 percent of the loan with a 30-year fixed interest rate of 4 percent; the second loan is for 15 percent with 10-year fixed interest rate of 5 percent; and the remaining 5 percent is the down payment. The total monthly mortgage payment would be $1,271.

Pros: The borrower will not pay PMI.

Cons: It may be a more expensive as the borrower will pay closing costs on two loans. And unlike PMI, the piggyback loan doesn’t cancel, but will be paid off over the term of the mortgage. The second loan often comes with higher interest rates too.

FHA loans

FHA loans are mortgages insured by the government through the Federal Housing Administration. The limits for FHA loans typically are lower than conventional mortgages. However, FHA mortgage insurance cannot be cancelled and must be paid for the life of the loan. FHA has other specific requirements, like the condition of the home. In this scenario, the mortgage is set at 95 percent of the home’s value with a 30 year fixed interest rate of 3.75 percent. The total monthly mortgage payment would be $1,199.08.

Pros: A borrower can get a FHA loan with as little as 3.5 percent down and a FICO score as low as 600 may qualify.

Cons: FHA mortgage insurance cannot be canceled, so your monthly bill won’t be reduced the way it is with a conventional loan with PMI. Also, FHA loans are subject to an upfront fee of 1.75 percent that is financed over the life of the loan.

No matter what you choose, do the math and compare so you can make an informed decision. If the conventional option sounds appealing, LowDownPaymentFacts.com provides more information.

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4 tips to help protect your identity this tax season

(BPT) – Tax season is a busy time for everyone. From accountants and small business owners to families and individuals, especially as more people choose to file their taxes themselves. Unfortunately, it’s also a busy time of year for cybercriminals who use the flurry of activity to swindle sensitive personal information from unsuspecting victims.

In fact, the Norton Cyber Security Insights Reports revealed that online crime has become so prolific, 36 percent of U.S. consumers believe it’s only a matter of time before a criminal steals their identity.

Take for example, Melissa, a marketing manager from Chandler, Arizona, who last year received an alert from her online tax filing service that her account password had been changed. But she dismissed the notification as a mistake.

“Two days later I got an alert from LifeLock about a credit card that I hadn’t opened.”

Thinking this was strange, Melissa followed up with her tax filing service and found that a criminal had accessed her account, stolen enough personal information to open a credit account in her name and redirected her tax return to another account.

Fortunately, Melissa was able to resolve her case but she is just one of a staggering number of individuals who’ve fallen victim to criminals lurking the web. According to research from Symantec, cybercriminals launched more than 1 million web attacks against internet users every day in 2015. While this statistic may seem shocking, there are things you can do to help protect yourself and your identity from cybercriminals.

Start by applying these four simple tips to keep your personal information away from cybercriminals this tax season:

1. File your taxes as early as possible. The sooner you file your taxes, the harder it will be for criminals to file taxes on your behalf for a refund, which a thief can do with only your date of birth and Social Security Number. (And don’t think this information is difficult to find, it could already be for sale on the Dark Web if you were impacted by a data breach.) If you want some extra protection this tax season, consider contacting the IRS to see if you’re eligible for an Identity Protection PIN. It’s a six-digit code that is assigned to you by the IRS to help prevent misuse of your SSN on fraudulent federal income tax returns.

2. If you’re filing your taxes online, use a secure Wi-Fi connection or a Virtual Private Network (VPN). One of the best ways you can help protect yourself when e-filing is to use a secure internet connection and not a public Wi-Fi network. If you are not sure about the security of your internet connection, use a VPN – an easy-to-use technology that ensures a secure connection.

3. Remember the Internal Revenue Service (IRS) only communicates through the United States Postal Service. They will never request personal and/or financial information through email, text messages or social media sites. If you receive a letter in the mail and you’re not sure if it’s legitimate, use the IRS lookup tool to find your letter: www.irs.gov/individuals/irs-notice-or-letter-for-individual-filers

4. If you receive a phone call from someone claiming to be from the IRS, ask for their name, badge number and call back number. Report the call to the U.S. Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484 and provide this information to confirm the authenticity of the caller’s request. If the caller isn’t willing to provide this information, hang up and report the incident to the IRS.

If you believe you’ve been the victim of an IRS scam, you may also report this to the TIGTA at their website: www.treasury.gov/tigta/contact_report_scam.shtml. Don’t delay in doing so. After all, it’s your identity and it is up to you to protect it every single day.

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5 fast shortcuts to make your home sparkle this spring

(BPT) – We all know that one person who just adores cleaning. But for the rest of us, it’s a necessary evil that gets old very quickly!

Before you tackle that long list of spring cleaning tasks, try some of these cleaning hacks designed to make these chores faster and easier. When cleaning is fun and even effortless, you’ll feel more energized and gain the momentum you need to knock out your list of chores. Afterward, your house will sparkle from top to bottom, which is its own reward!

1. Find smarter tools

Throw out the messy bucket and mop and reach for a smarter floor solution that’s efficient and fun to use. For example, the O-Cedar EasyWring Spin Mop & Bucket System has a built-in wringer that offers superior moisture control of the mop, which makes it safe and easy to use on all hard floor surfaces — even hardwood! The hands-free wringer requires a simple press of the foot pedal to easily spin out the water and help finish the job with less mess and faster drying times.

2. Try natural solutions

Commercial cleaning solutions can add extra costs to your deep cleaning session, not to mention the harsh chemicals can leave behind unpleasant odors. Why not experiment with everyday pantry items? These often cost less and are just as effective in their cleaning power.

A simple solution of warm water and vinegar removes built-up grime from your floors, while leaving a clean, rinse-free finish. Just add a half cup of distilled white vinegar to a gallon of warm water and start mopping.

If you dislike the smell of vinegar, add a couple drops of your favorite essential oil — the fresh scent will be like a small reward!

3. Shortcut to shining windows

If you want streak-free mirrors and clean windows without the hassle, Cas Aarssen, author of “Real Life Organizing: Cleaning and Clutter-Free in 15 Minutes a Day” and the YouTube channel ClutterBug, has this expert tip: Add a teaspoon of cornstarch to your favorite glass cleaner and shake until dissolved. Cornstarch improves the cleaning power of the solution and makes streaks a thing of the past, so you’ll get the job done more quickly.

4. Use a cleaning method that also protects

Aarssen has an easy tip that will not only shine up your kitchen appliances, it will repel fingerprints and food splatters often left behind. Just spritz on a little wood furniture polish and rub in with a soft cloth until the surface shines like new.

5. Clean up top

Dust can collect on those high, hard-to-reach places, such as decorative molding and ceiling fans, making cleaning day more difficult. To clean your ceiling fan without showering dust bunnies everywhere, an old pillowcase is your best tool. Spritz the inside of the pillowcase with a vinegar and water solution and slip it over the blades of the fan, pulling it back to trap the dust.

For those tough to reach moldings and corners, use a sturdy rubber band to wrap a microfiber cloth around the end a broom, and give those hard-to-reach areas a clean sweep!

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