Don’t End Up Owing Taxes for 2018

Recent new tax laws have brought a slew of changes that could impact how much you owe for your 2018 taxes.  The Government Accountability Office recently issued a report with a warning that many taxpayers may come up short if they don’t act now and adjust their withholdings. No one wants to end up owing more than they thought so here are some tips and suggestions to help.
The new tax laws will limit or even eliminated many itemized deductions claimed by millions of taxpayers. The biggest contributors to this are the new limits on state and local tax deductions (the SALT deductions), a restriction on the amount you can deduct for home mortgage interest and the elimination of the deduction for job-related expenses.
Those most likely to owe tax for 2018 are those who itemize deductions.  The IRS recommends that taxpayers who itemize should do some planning now to avoid the sticker shock of a large tax bill for 2018.
If you are concerned, a good tool to use is the Withholding Calculator found on the IRS website.  This free tool will ask you to enter estimated values for your income in 2018, the number of children you would claim, an estimate of your itemized deductions and the amount of federal tax withheld on your last paycheck. It only takes a few minutes — all you’ll need is your most recent pay statement. But having your 2017 tax return handy can help to speed up the process. 
The calculator will not allow you to enter any amount that exceeds $10,000 as a deduction. If your calculated results indicate you will owe, you can save money now for your tax bill and put it in a money market fund that could help you earn some interest. You can revise your W-4 and increase your amount of tax withheld.  Also, consider any additional income that you are not currently paying taxes on such as a side business, interest or dividends. Don’t be caught unprepared.
Information summarized from: “Millions of taxpayers could wind up owing for 2018” By RAY MARTIN MONEYWATCH September 10, 2018, 5:00 AM.  https://www.cbsnews.com/news/millions-of-taxpayers-could-wind-up-owing-for-2018/

Tasha S. Barnes, MBA, MHA 

Advertisements

Get out of Debt by Rolling Over!

Have you ever heard you can get out of debt by rolling over? No, this does not mean flipping from one side to the other but rather the payment rollover method. Dave Ramsey, a well-known financial advisor calls it the Snowball method. It is very useful and will amaze you at how fast your debts will disappear if followed and adhered to.

The concept is easy. Say you are paying off furniture, a credit card, school loans, and a mortgage. You pay at least the minimum monthly payment on each except the smallest one, which in this case is the furniture expense. On the furniture, you pay as much as you can afford above and beyond the minimum monthly payment. Once you have paid off the furniture, you roll over that payment and combine it with your minimum payment of the next smallest debt such as the credit card. This process continues until you are paying all the previous payments onto only one such as the mortgage which will greatly increase the speed of paying off the balance. Like a snowball, as you start rolling, you gain momentum and size.

So, how do you get started?

Step 1: List your debts from smallest to largest. Step 2: Make minimum payments on all your debts except the smallest. Step 3: Pay as much as possible on your smallest debt. Step 4: Once the smallest debt is paid off, roll the amount you were paying on that to the next smallest debt and so on.

Here is an example.

Monthly Expenses:

Mortgage:                     $1,500.00

Student Loan:              $250.00

Credit Card:                  $75.00

Furniture:                      $33.00

($25.00 is the minimum but I can swing an extra $8.00 a month)

I get my furniture monthly expense paid off and now my payments look like the following because I have ROLLED OVER my furniture payment.

Mortgage:                     $1,500.00

Student Loan:              $250.00

Credit Card:                  $108.00

My monthly amount I am paying has not changed but the rate I am now paying off my credit card has. This method has been attributed with being the most cost effective, fastest, and emotionally satisfying ways to get out of debt.

Tasha S. Barnes, MBA, MHA

Benefits of a Budget

budget blogAre you tired of hitting the 20th of the month and realizing your bank account is empty? Living from paycheck to paycheck is never fun but with the help of a well set budget, you should be able to find some breathing room to make it to the end of the month.

A budget is a financial plan laid out indicating where you will spend money each week. It breaks down expenses into line items including mandatory payments such as rent/mortgage, utilities, groceries, car expenses, taxes, child care, etc. and then optional expenses such as entertainment, eating out, travel, etc. Budgets give control over your money and help you to spend your earnings with intent. Another benefit is that it keeps you focused on your money goals, allowing you to not overspend, possibly save for a rainy day or for that vacation you want to take down the road. The biggest benefit is being able to know where your money is at all times and how it is working for you. Money no longer disappears.

The key to a well-established budget is to write down every expense you encounter in a month or week and then to rank them in order of necessity. Don’t forget to incorporate the quarterly or yearly expenses also. Rent, food and utilities are requirements but not all expenses are. If your funds seems tight, make sure all the requirements are covered first. This may mean cutting some of the nice to have expenses such as eating out or the daily coffee from your favorite local shop.  Sometimes budgets get a negative connotation because they may feel limiting, but if planned out correctly and followed, you will find that it ends up creating a lot of financial freedom down the line. It is a delayed gratification technique that will lead to further success. Without a budget, it is easy for little purchases add up, keeping you from something bigger you have always wanted. By sticking to a budget, you will be amazed at the control you will gain over your expenses.

 

Tasha S. Barnes, MBA, MHA

 

Retirement Planning Without a 401K

Retirement Blog

If you are like me and you own your own business, you probably do not have a 401K. At some point, we want to be able to retire so we need to plan for the future and find investments plans that helps us feel secure.

Fund an IRA: (Individual Retirement Account). In general, you can contribute up to $5,500 a year into an IRA and defer income tax payments. IRA’s allow you more investment options than a 401K and you can shop around for funds that charge lower fees.

Open a Roth IRA: Contributions are the same as a traditional IRA but the taxes are different. You contribute funds after taxes have been withdrawn so when you draw from your account, you’re not taxed on the funds.

Set up a Direct Deposit: One of the things that makes 401K convenient and successful is that they are automatically deducted from paychecks before you ever receive your pay. If you set up an automatic transfer from your checking account to an IRA account or even your savings, it will force you to save and plan for the future.

Start a hobby business: Some people have started small businesses that are a hobby but that make enough money to supplement the bills. These can be an Etsy shop, an EBay shop or mowing lawns, etc. Either way, if you are able to make a little extra money selling something you enjoy making as a hobby, or selling things you find a good deal on for a small profit you can get ahead if you save the funds and invest them.

Invest in Real Estate: Buy a condo or home or several if possible that you can rent out. Once the units are paid for, you can live off of the rental income.

There are lots of ways to plan for retirement that do not require a 401K. The key to success is to start as soon as possible. The earlier you start, the more you are able to accumulate.

Happy Planning,

The Zeigler & Barnes Team

Spring Into Smart Investing Habits

pexels-photo-298246.jpegways to invest blog

They say money doesn’t buy happiness but when there is a little extra, no one complains. The key whether you have a lot or a little is to make your money work for you. The way to do this is to find investments that work for you and your risk comfort level.

There are multiple ways to invest any extra funds you have. If you get your money working for you and building more funds, the extra will continue to add up.

Savings Account: Numerous studies have proven that it is extremely important to pay yourself, or in other words, save every month. The general suggestion is 10% of your paycheck. If this is too much, just put away as much as you can and you will be amazed at how fast it starts to grow. Once you have some money in savings that you can use for a rainy day, it is wise to start looking for an investments.

Real Estate: One of the safest investments is real estate. Purchasing your own place not only gives you a tax write off but generally allows you to gain equity. Equity is the increase in value of your purchased home versus what you paid for it. Once you have purchased your own place, you can look to purchase land, a home to fix up and sell for a profit, a condo or home to rent to others or even a commercial building to rent to businesses.

Stock Market, Bonds & Funds: Those who are more willing to take risks can invest in the stock market or a specific fund. Your money is tied to the ups and downs of the market but if you invest well in businesses that are growing or evolving with the demands of the world, you can make money. The key is to be able to weather the lows and the highs without panicking.

Business: You might get the chance to invest in a business or a new development through crowdfunding. Although there is a lot of risk, there can be big rewards.

The key is to be well informed and to do your homework. Get someone to help you if needed, read up on different options and find what works best for you. Turn your few extra dollars into something to live on.

“I LEFT A GOOD JOB IN THE CITY” Transitioning From Corporate America in Less Than 6 Months…

Maybe you’ve been thinking about the American dream of starting your own business and breaking away from the 9-5 corporate environment. This is exactly what I did in less than 6 months.

When I made the decision to start my own business I was working as an International Corporate Controller. I was spending more than 50 hours a week working for someone else company. Although I had a paycheck, I had nothing to show for the time or quality work I was producing. If I wanted to work from home to take care of personal things or have a more flexible schedule, it always seemed to be questioned. This might not be the case at every employer but it made me question why I wasn’t working for myself.

So, I started Zeigler & Barnes. Yes, I had doubts and fears that I would be able to replace my income or that I would have the time to do my own business while maintaining my current job. Almost overnight, after following the previous blog “Tips for Starting a Business” I had opened my business. Then came the tasks of designing a logo, getting a website together, renting a space, and advertising for clients. All of this was energizing because my dream was becoming a reality.

The more energy I focused on my business, the more it blossomed. Yes, I was working round the clock but it was for my gain, for a better work life balance, pursuing my interests and strengths. Working at my business no longer felt like work because I was doing what I loved.

Although it did not replace my income immediately, eventually I could see growth headed in the right direction and I made the leap of faith to resign from my corporate job. I couldn’t be happier with the choice and am left with the words from Tina Turner’s song Proud Mary…”I left a good job in the city, working for the man every night and day and I never lost one minute of sleeping worrying ’bout the way the things might’ve been…and were ROLLING!”