How to Plan Your Income for Retirement

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Planning for retirement is important if you want to cope with life after your days in the office. According to the Employee Benefit Research Institute, 4 out of 10 American workers are saving money for their retirement. Do you want to be part of these smart employees or the lost majority? Here are some of the things you need to know about preparing for retirement.

Setting Financial Goals
Saving is a process that demands commitment. Since retirement is definitely not your only saving goal, you should try striking a balance or prioritizing what is necessary and weighty. For instance, you could comfortably do away with lingering debts and saving for vacations, cars, homes, and lattes.

Saving for Retirement
Retirement involves more than just assessing the amount of saving you need. When planning for retirement, it’s is also important that you pay attention to where you save your money. Find the best investment or saving account. Take time to calculate how much you need to save for retirement as well.

Investing
While saving is simply amassing wealth, investing is the process of multiplying the wealth. Cash is not a great way to store your wealth, and there are thousands of reasons why. Before investing your money in any project, assess the reward-to-risk ratio and the return on investment. Which investments are more diversified, and when do you get in for maximum gains.

What Do You Invest In?
Are you ready to have your retirement saving work for you? Well, if that’s the case, setting up an investment portfolio should not be complicated. Acquaint yourself with principal retirement investment rules. Are you a DIY person, or will you need to hire the services of a financial adviser? If you want to manage your retirement saving yourself, it is recommended that you gather sufficient knowledge on investment strategies. If you will choose to work with a professional, get to know about the related costs.

Building Wealth
Retirement investing is not a phenomenon that occurs in one sitting. It is a process that will change with the dynamics of your employment as you move from one job to another or up the promotion ladder. You will also have to endure changes in the stock markets and meet family obligations. However, that does not necessarily mean that you will have to babysit your retirement investment. There are numerous ways to protect and manage your wealth and savings in the long haul.

Which Tax Software Should You Use?

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It’s January, and that means that employers have begun to give employees their W2 forms. When it comes to filing your taxes, you should consider your options. Do you want to meet with a professional, or would you rather use a tax software? This article focuses on tax software. Below is a breakdown of three of the most popular tax software options.

TurboTax

TurboTax is one of the most popular names when it comes to online tax software. The software is easy to navigate, and the instructions are straightforward which makes it a great choice for taxpayers who are using tax software for the first time. Furthermore, the software allows you to import documents from over a million employers and financial institutions. The bottom line is that TurboTax is one of the most user-friendly tax software options that are available. With TurboTax it’s never an issue to go back and update your entries, so you don’t have to worry if you forget to add something. One of the only cons with TurboTax is its price. There’s a fee for using the online version and a fee for getting a state tax return. Plus if you have certain investments you might have to use TurboTax Premier which is more expensive than their basic version.

H&R Block

H&R Block’s tax software is just as easy to use as the TurboTax software. One of the best features of Block’s software is the checklists it provides. For example, one checklist makes sure you don’t forget to provide all of the required tax forms before you submit your filing. Block also provides “Learn More” links that answer most of the questions you will have when completing your taxes. The cost of using Block is similar to TurboTax; however, unlike TurboTax, you don’t have to pay more if you have investment income. One of the only downsides of Block is its search feature. It doesn’t always provide the best resources to help you get the answer you’re looking for.

TaxAct

TaxAct is one of the most inexpensive software on the market. However, if you decide to itemize you may have to pay more than you would otherwise. Still, the software offers a great deal when compared to competitors. Compared to competitors’ software, it’s not as easy to update your filing if you realize you forgot to add information. TaxAct probably isn’t the best choice for taxpayers who have never used tax software before. Other programs do a better job of hand-holding. The software has some reassuring security features, though. If you leave the program open but aren’t active, it will automatically log you out after a couple of minutes. Ultimately, TaxAct is the best software to use if your biggest concern is affordability. The software’s “Price Lock Guarantee” means that once you pay for the program you won’t have to pay more—even if you purchase it in January and wait until April to submit your filing.

The Documents You Need To Provide Your Tax Accountant

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When you meet with a tax accountant it is important to bring all the necessary documents in order to get the most out of this meeting. There is a long list of important documents necessary to prepare your tax return. I recently found this article, which I thought would be important to share. Whether you have been to an accountant before or you just need a refresher, here is a comprehensive list of documents that you need to bring to make the most of your visit.

Documents that show all your income for the year. These documents may include:

  • W-2s from your employers
  • 1099-MISC forms (self-employment income)
  • 1099-INT (interest) and 1099-DIV (dividends) forms
  • 1099-B forms (shows brokerage trades in stocks and bonds)
  • K-1 forms (income from a partnership, small business, or trust)
  • 1099-SSA (Social Security received)

Expense Documentation

It is important to bring written documents, such as a spreadsheet or bank statement, for any income not reported on a W-2 or 1099 form. This income could include other self-employment income, rental income or alimony.

You will also want to bring the necessary documentation for any contributions to your traditional or SEP-IRA, moving expenses, college expenses, medical and dental expenses, real estate taxes, gifts to charities and churches, and daycare or childcare costs.

Note: Some expenses are reported to you. For example, mortgage interest is reported on form 1098 and student loan interest is reported on form 1098-E.

Lastly, if you paid estimated taxes, bring a summary of your estimated federal and state tax payments as well as any canceled checks.

What to do if you are missing documents:

  • If you are missing your Form W-2, you can ask your employer to send you a new copy. Some employers may charge a small fee for this service but all employers are required by law to keep copies of your W-2 forms for at least four years.
  • If you are miss your Form 1099, your bank may have tax documents available on their website or you could get a copy mailed to you by contacting customer service.
  • To report stock trading and dividend activity, investment brokers can mail you copies of Form 1099-B and 1099-DIV. You can also try to download a copy from the brokerage website.
  • For consultants or independent contractors, if you earned more than $600 then you will need a 1099-MISC to report this income. Your client is required to send you this document, but even if they did not send it, you are still required to report this income.
  • For other types of 1099 forms, you should contact the organization responsible for issuing the tax form.

How to obtain copies of your tax documents from the IRS

  • Online: You can request a copy of your Wage and Income transcript for this link.
  • Mail: You can mail or fax Form 4506-T to the IRS. This form will allow you to your income documents, including: Form W-2, Form 1099 series, Form 1098 series and Form 5498 series transcript.

Note: Your tax accountant will be able to request copies from the IRS as well. You will likely want to contact the institutions shown on the IRS transcripts to obtain a copy of the original documents as well.