7 Tax Tips for Parents

Posted on Friday 25 February 2011

Tax time is rolling around again, and if you’re like most people you’re looking for ways to decrease your tax burden. For families with children there is good news–those kids could help you save some money on your tax payment, providing you meet certain criteria. Here are 7 tax tips that may be helpful for parents.

Child Tax Credit

If your children meet the government’s criteria, you may be able to take advantage of the Child Tax Credit of up $1,000 for each child. There are six tests each child must pass in order to qualify.

  1. The child needs to be 16 years of age or younger at the end of 2010.
  2. The child must have a proven relationship to you, such as a son, daughter, stepchild, or foster child. The minor child could also be a close relative, such as a brother or sister, or a stepbrother or stepsister. They could also be a child of any of these, such as a grandchild, niece, or nephew.
  3. You must have supplied at least half of the child’s support during the year.
  4. Your federal tax return must show the child as a dependent.
  5. The child must be a U.S. citizen.
  6. With some exceptions, the child must have lived with you at least half the year.

Child Care

If you pay for daycare for your child aged 12 or younger, or an adult dependent that is disabled, you may be eligible for a federal tax credit of up to 35% of the price of that care.

Your Parent as an Exemption

If you claim your parent as a deduction, you may be entitled to a tax credit as an added personal exemption on your income tax. An exemption diminishes your total taxable income by $3,500.

Earned Income Tax Credit

An Earned Income Tax Credit (EITC) is a tax credit for low wage earners. It can come either as a tax refund or a tax credit. The EITC has been around since 1975 and acts as an incentive to work. If you work, but don’t make a lot of money, you get the credit.

Higher Education Credits

There are numerous tax incentives for parents who are saving for their child’s higher education or already have a child in school. There are even tax breaks for parents who are paying off school loans. A couple of possible tax credits are a tuition deduction or Hope and Lifetime Learning Credit.

Self-Employment Health Insurance Deduction

If you’re self-employed, there are additional tax credits available. You are allowed to take a tax deduction for health insurance costs for your family, including yourself, your spouse, and any dependents. Certain criteria must be met in order to take the deduction. One of the qualifications is that you can take a deduction for the full cost of health insurance, but aren’t allowed to be part of a group insurance plan.

Adoption Tax Credit

An adopted child is viewed as if they were your own child, and could qualify for a Child Tax Credit. You can also receive credit for expenses associated with an adoption. It is an extremely complicated credit system, and it would serve you well to see a tax professional in order to help you understand the details and requirements.

More Tax Credits

The deductions and tax credits listed here are only the tip of the ice berg for possible tax relief. Along with these tips is one additional tip that may be the best advice anyone can give you before turning in your tax return: it would be to your benefit to consult a tax attorney or an accountant. They are specially trained to provide you with accurate information that can help you receive any tax credits you may qualify for.

Guest post from Bailey Harris. Bailey writes about home insurance and related topics for www.homeinsurance.org.

savvy @ 8:03 PM
Filed under: General Finances
10 Ways to Save on Personal Fitness

Posted on Tuesday 15 February 2011

To stay healthy, adults need at least 30 minutes of moderate-intensity aerobic exercise five days a week, according to the Centers for Disease Control and Prevention, not to mention strength training for all your major muscle groups at least two days a week. But these days, exercise doesn’t come cheap. Personal trainers and gym memberships can cost you a pretty penny, particularly since most of the January deals are over. To help you save money on personal fitness, I present the following 10 ways to exercise on the cheap or even for free:

1.) Take up jogging or brisk walking.

Nothing’s better than pounding the sidewalks in your neighborhood or hitting up some hilly trails to work up a sweat and get your blood pumping every day. Those who live in the south can often get away with this year-round, but those in the north may need to bundle up and invest in a neck gaiter to cover their nose and mouth for running in cold weather. Either way, it’s a great free exercise option for non-winter months.

2.) Use an apartment gym.

Today’s modern apartments are often equipped with fitness rooms with excellent exercise equipment and free weights. If you’re an apartment dweller, you would do well to take advantage of this free perk. If you’re a home-owner, chances are you know someone through your work, church or elsewhere who lives in an apartment and would let you have access to their apartment’s fitness room. The same is true of apartment pools in the summer time for swimming. Apartment managers generally don’t have problems with their residents bringing in guests from time to time, and you may even gain a workout buddy in the process!

3.) Stream workout videos on Netflix.

If you already subscribe to Netflix to save money on movies (it’s only $7.99 a month!), you get access to a number of streaming workout videos. This is a great option for those cold months when you don’t really feel like leaving the house to get a workout.

4.) Ask to borrow your friends’ workout DVDs.

If you have cable, you’ve probably seen infomercials for programs like P90X, Insanity and the Biggest Loser Workout. Instead of shelling out the money for expensive popular exercise DVD series like these, network with your friends and family to see if someone already has them. When I asked around, I discovered a former co-worker who had finished his round of P90X and had no problems with me borrowing it. My sister-in-law was happy to lend me her Tae Bo series with Billy Blanks. They’re still my go-to options when I don’t feel like leaving the house, and I never had to pay a dime for them!

5.) Hit up Craig’s List, garage sales and Goodwill for cheap exercise equipment and DVDs.

If you like getting good deals, chances are you already frequent Craig’s List and hit up your neighborhood garage sales on Saturdays. These are great places to find items like sets of dumbbells, ankle weights, exercise bikes, treadmills, and workout DVDs for dirt cheap. Even better, if you have a friend or family member who uses a piece of equipment more for hanging laundry than for exercise, you may want to make an offer on it. Chances are they’ll cut you a good deal to get rid of something that’s collecting dust in their home.

6.) Try the library.

Your neighborhood library may have workout videos that you can check out for free. Offerings may be slim, and they may only have VHS tapes, but it’s worth a shot. The library’s also a great place to check out fitness books or read fitness magazines to glean ideas for personal workouts, instead of shelling out money for them at the checkout stand at the store.

7.) Check out cable programming.

If you have cable, see if you have Discovery Fit & Health, formerly Fit TV. This TV channel has excellent fitness programming in the morning, including Bodies in Motion with Gilad and Namaste yoga. My mother and I love watching Shimmy, which teaches you how to belly dance while giving you a great workout. If you don’t have cable, check out local listings for any early morning workout programming.

8.) Play on gyms’ competitive natures.

If you’re more of a gym rat than an at-home or outdoors workout person, start doing some cost comparisons of memberships at gyms in your hometown. Once you’ve narrowed down the best deals in town, you’ll want to pick the one closest to you to save on gas. If that gym doesn’t offer the lowest cost, then ask to speak with the manager and negotiate. If you can show them that you found a different gym that offered a better deal, they will often meet or beat that gym’s cost, and you’ll get to save yourself a longer trip.

9.) Choose group sessions over a personal trainer.

Some people need the encouragement of another person when they exercise. Instead of opting for a pricy personal trainer, participate in group exercise at your local gym or YMCA. It’s typically a lot cheaper than a personal trainer and you’ll still get the feedback and support you need when you work out. Popular options are Zumba, kickboxing and cycling.

10.) Search for free workouts on YouTube.

You can find a variety of free workouts on YouTube, and have yet another option for working out in your home.

This guest contribution was submitted by Raine Parker, who specializes in writing about accounting degree.  Questions and comments can be sent to: raine.parker6@gmail.com.

savvy @ 8:06 AM
Filed under: General Finances
Another Giveaway

Posted on Wednesday 9 February 2011

I haven’t done a giveaway in a while so the first 25 readers to comment will get a free tire safety kit.

CalRecycle’s Tire Sustainability campaign, Just Check It, is offering the first 25 Ms Money Savvy readers a Just Check It Tire Safety Kit, which includes the following items:

  • Tire Gauge
  • Reusable Garbage Bags
  • Oil Rags
  • Car Window Decals
  • Tire Pressure and Tread Reminder Cards
  • Tire Maintenance Fact Sheets

A simple monthly tire check can save you up to $200 a year in fuel efficiency and, according to the National Highway Traffic Safety Administration, under-inflated tires cause more than 600 vehicle fatalities and 33,000 injuries each year.

If you’re in California, you can save money at gas stations now. Find out more by watching this YouTube video at:

http://www.youtube.com/watch?v=fCTP1ETskG8

savvy @ 8:02 AM
Filed under: General Finances
FTC to Protect Consumers from Online Debt Settlement Companies

Posted on Friday 4 February 2011

The Federal Trade Commission has ruled that starting Oct. 27, 2010, companies that sell debt relief services over the phone will not be able to charge a fee in advance of settling or reducing a client’s debt.

Many debt settlement companies promise to settle debt by 50 percent or more, but collect fees up front and frequently aren’t able to reduce the debt as promised. In some cases, because of the accumulation of unpaid interest, consumers end up facing more debt than when they started.

Starting Oct. 27, 2010, a Telemarketing Sales Rule will go into effect with the following provisions:

  • Debt relief companies must make specific disclosures to customers.
  • These companies cannot make misrepresentations.
  • These provisions also apply when consumers call debt relief companies in response to their advertising.

Specific requirements state that for-profit debt relief companies may not collect fees until:

  • The debt relief company successfully reduces, settles, renegotiates or changes at least one of the customer’s debts.
  • There is a written agreement regarding the debt, whether a settlement agreement, debt management plan or other similar agreement that the client has agreed to.
  • The consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief company.

If a customer has multiple debts, the rules specify how a debt relief company can charge a fee for each settled debt. The company’s fee for one debt must be in proportion to the total fee that would be charged if all of the debts were settled. If the fee is based on a percentage of the debt reduction, the percentage charged must be the same for each debt.

The Final Rule outlines how debt relief companies can establish “dedicated accounts” for customers’ fees and future payments only if they meet the following five requirements:

  • Dedicated accounts are held at insured financial institutions.
  • The customer retains ownership of the funds and any accrued interest owed.
  • The customer can withdraw the funds at any time without penalty.
  • The debt relief company doesn’t have any affiliation with the account administrator.
  • The company does not pay to or receive any fees from the administrator.

Under the area of disclosure, debt relief companies must disclose the time it will take to have results, what it will cost, information regarding the dedicated accounts if they are to be used, and the possible negative consequences of using a debt relief service. The rules prohibit debt relief companies from misrepresenting their programs, success rates or nonprofit status. Consumers with complaints should visit www.ftc.gov/ftc/complaint.shtm.

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About the Author:

Financial survival counselor Hollis Colquhoun is an expert in “financial self-defense” for women and author of the new book, Women Empowering Themselves: A Financial Survival Guide. Hollis wrote the concise, pocket-book manual to help women take charge of their finances and overcome money anxiety disorder (M.A.D.). Hollis, who holds black belts in Karate and Taekwondo, combines martial arts principles with over 20 years experience on Wall Street and with her work as a financial counselor to help women of all ages and situations achieve financial security and independence. Contact Hollis at WomenEmpoweringThemselves@gmail.com.

savvy @ 1:26 PM
Filed under: General Finances