tax deductions

Educational Savings Accounts

When it comes to getting a college education, financing is one of the most important considerations that you will need to make. Unfortunately for far too many, it is one of the last factors thought about when it comes to the education of our children. If you are a parent, you owe it to your child and yourself to plan and plan carefully to cover the cost of your child’s education. There are, fortunately, a few great ways in which you can do this.

The most common is to begin by opening an educational saving account for your child (under the age of 18). When you open educational savings account for your child, you can contribute up to $2,000 per year per child. It is a combined total contribution however and includes the financial gifts of grandparents, friends, and family in addition to your contributions. The money from these funds can be withdrawn tax-free if they are used for educational purposes.

Educational expenses, in this case, include books, tuition, fees, supplies, and college room and board provided that your child is at least a part-time student. If you do not use all the funds for your child, there are options as far as what to do with the remaining funds in the account. The first option would be to leave the funds in the account and allow the account beneficiary to withdraw them up until the age of 30. There is a penalty involved, and the recipient will be required to pay income tax on those funds. You could also elect to roll those funds over to the next child under the age of 18 who will have educational expenses in the future.

The money you set aside in these accounts to cover the cost of the education of your child or children is not tax-deductible. However, it is a great way to begin saving money and investing in the future of your child. If you start spending the maximum amount $2,000 per year upon birth, your child should have a nice nest egg to help cover educational expenses.

If your child is fortunate enough to qualify for scholarships and other sources of financial aid you can turn the funds over as a graduation gift or save it for the next college student in your family that comes along. Either way, you’ve saved yourself a good part of the worry that goes along with providing for your family by having this fund set up for your children.

You can sign up for programs like Upromise to subsidize your contributions with donations from corporate sponsors as their way of thanking you for buying their products or using their services on any credit cards that you, your friends, and your family members have registered to go into your child’s account. Every edge you give yourself when it comes to investing in the education of your children is an edge worth having. College tuition rates are rising at an alarming rate while corporate expectations of college degrees are growing at the same near lightning speed. It means that a college degree is more critical for our children than in any past generations.

Take the time now to check into securing the future of your children by establishing an educational savings account. Let friends and family know that any gifts they are planning to give your children that involve money would be appreciated if they instead invested in the future of your children rather than now. You can also ask your friends and family to sign up their credit cards with Upromise to provide a little bump in donations to your child’s college savings account. These small steps add up to significant savings throughout 18 years. You might find that the investment you are making is adequate to cover the costs of your child’s tuition in full.

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Invest in Property to Secure Your Retirement

Have you considered property investment to secure your retirement’s financial future? There are many great ways that you can let real estate build a nice little nest egg for your retirement, and the sooner you begin the process, the better.

While there are all kinds of stocks and mutual funds that confuse even the most intelligent among us, real estate is a straightforward business. The problem is that many people feel it is too risky. The truth is that there are many different types of real estate investing that all carry different risk to the buyer. One thing is for sure, and that is that with proper care and attention properties tend to gain value over time rather than lose value. If you purchase properties today and adequately maintain them, you can not only reap years of rental income while paying the mortgage on these properties, but you can also find your retirement home and pay today’s prices for it rather than the rates of tomorrow.

When it comes to real estate, it is always good to arm yourself with knowledge before taking any steps, and you should carefully discuss all plans for your financial future with your trusted financial planner or advisor. His or her job is to guide you when making plans and purchases that will affect your financial stability and security. They can also help you with the matters of taxation, cost analysis, estimated inflation, and the average rise in property value for an area.

As mentioned, before there are always risks when it comes to any investing. The same holds for real estate investing. Things can go wrong. On occasion, you will find lemon properties; for this reason, you need to have a complete and thorough inspection performed before you purchase the property. You should also make sure that you are aware of your state and local laws as they apply to landlords. For this reason, it is a good idea to consult with an attorney that specializes in financial investment in addition to your financial advisor.

Rental properties aren’t the only way to build a property investment portfolio. There are all kinds of property investment opportunities for those that are willing to take the risk. When it comes to property investing, the more significant risks often net the greater potential rewards. The thing you must remember is that you are gambling with your financial future. I tend to stick with rental properties as they are a safe bet and pay for themselves over the years while building a nice nest egg for my future.

There is the eternally fascinating investment opportunity that property flipping presents for one. When flipping a property, you purchase a property below market value—preferably one that requires minor cosmetic repairs. Make the repairs. Then sell the house for a substantial profit. It is a risky venture for those who are novices to the field, and many would be investors have lost a great deal of money doing this. Successful investors, however, can net significant profits in a short amount of time if they have the knowledge and skills to do the work themselves and time things correctly.

There are even more property investment opportunities that provide even higher risk, as they are highly speculative known as pre-construction investing. It is the investment that creates millionaires. On the flip side, it has sent many into bankruptcy along the way as well so tread very carefully before engaging in this sort of real estate investing and take great care never to spend more than you can afford to lose.

As you can see, there are ample opportunities in real estate to create an outstanding financial retirement plan for you and your family. You only need to decide whether property investment is the right thing for you.

Business Opportunities Versus Employment: Which Is Right for You?

When it comes to making a living, there are two options: being in business for yourself or being employed by a company or an individual. Of these two options, there is considerable latitude in what is considered being in business for yourself, especially if you take advantage of business opportunities. Some business opportunities so closely mirror employment, that many people mistakenly believe them ‘jobs.’ But business opportunities are not in this category. To understand the difference, read on as this article will explain in detail how things work with business opportunities versus regular employment.

Firstly, most business opportunities will require a person to fill out 1099 versus a W-2, which is the tax form used for regular employment by companies. Both types will alert the IRS that you need to pay your taxes, but 1099 does not allow for deductions as a W-2 does. When you use 1099, you must pay for your taxes on your own. It is one of the significant disadvantages of working with business opportunities, especially if you make a lot of money. To try to avoid problems, make sure you keep a close record of all your business transactions. Also set aside 35 percent of your salary for taxes. You can put this in a savings account so you can accumulate interest. Hopefully, you will have enough write-offs that you’ll be able to pocket your savings once tax time comes.

Secondly, most business opportunities do not offer ‘guaranteed’ 9-to-5 employment, as most hire you as an independent contractor. It is the case whether you are working business opportunities at home or in an office. If you must fill out 1099, you are in business for yourself. Anyway, some business opportunities offer such a steady stream of work that you not being hired as an hourly employee is not a problem. However, many others have jobs now and then. In these cases, you will want to try several sets of business opportunities, so you can always have a steady stream of work to support yourself.

Lastly, business opportunities tend not to offer health insurance. Granted, nowadays many ‘regular’ employers also won’t offer health insurance but being able to get some form of health insurance seems to be more typical with full-time jobs. With most business opportunities, you will not get health insurance no matter how many hours you work. However, there are exceptions, but they are quite expensive exceptions. In these situations, all that has happened is that the company offering the business opportunity has struck up a ‘deal’ with an insurance company. You are still paying as if you had signed up for the insurance yourself without the aid of a company.

In conclusion, the main differences between business opportunities and regular employment are found in the areas of taxes, work structure, and health insurance. Indeed, these differences may make some conclude business opportunities are not for them. For others, it may not matter as much because the freedom offered through business opportunities outweigh the disadvantages.

Travel Nurse Employment: Tax Advantages of Per Diem Deductions

Savvy travel nurses know that they are eligible to save hundreds, if not thousands of dollars by understanding that they can take per diem deductions for every day that they are on temporary assignment away from their tax home.

When you are a travel nurse, then you need to have a pretty good understanding of per diem rates and how they might lower your taxes. Many travel nurses believe that per diem is only a tax benefit that staffing agencies offer and yet, surprisingly, others do not. This misunderstanding about what per diem is and how it may affect your taxes is an essential financial issue that you need to understand. How you report, your per diem earnings could mean the difference in thousands of dollars in tax savings.

Whether you are looking to maximize deductions, reduce taxes, or increase your returns, travel nurses should take the time to learn as much as possible about the IRS per diem tax rules. Indeed, one way to learn is to go to the IRS home page, download publication 463 and read the rules so that you have a working idea of what to expect by tax time next year. Another great resource, especially, nowadays is to do your taxes yourself if you have a personal computer or laptop. Turbo Tax is a great software program. Not only is it inexpensive and tax-deductible itself, but it is straightforward to work when you use the step-by-step wizard. You can walk through your entire tax return, and file it electronically. You can get your refund deposited directly into your checking account in a matter of days.

A couple of travel expenses to have a heads up about include:

The travel nurse has a permanent tax home.
The travel nurse takes a temporary (less than 12 months) assignment away from their tax home.

Any travel nurse meeting the requirements outlined by the IRS can claim deductions for certain travel expenses or receive tax-free reimbursements and tax-free per diem allowance payments. These tax benefits are one of the great perks of being a travel nurse.

Unfortunately, one of the most common tax mistakes that a travel nurse makes is not being educated or even aware of the tax advantages to per diem deductions. Now that you are aware that savvy travel nurses are eligible for per diem deductions for every day that they are on temporary assignment away from their tax home, pass on the work to your co-workers, or email them this article so that they can bookmark this overview and take advantage of these tax benefits themselves.

It is essential to be aware that some companies don’t pay per diem allowance, pay too little per diem, or only pay per diem as a function of hourly pay. You can learn what these scenarios mean for your tax situation by consulting with a tax advisor or researching the IRS rules. You deserve to get every dollar of per diem related deductions that you are entitled to, and we hope that this article has helped you.

Note: while much care has been taken to make this article accurate, tax rules do change. Please be sure that you are up-to-date on the latest IRS rules. This article is meant for informational purposes only and is not intended to replace the advice of a skilled tax advisor.