Friday Financial Five – January 11th, 2013
Friday, January 11, 2013
You’ve probably already seen a drop in your net pay due to the increase in Social Security withholdings from 4.2% to 6.2%. Review your budget and retirement plan contributions to see if you can increase what you’re putting in a 401(k) or 403(b). January is also when parents can begin filing the Free Application for Federal Student Aid (FAFSA) to get answers on financial aid for high school seniors. Finally, the new tax legislation will allow this month’s tax-free charitable distributions from an IRA account to count for the year 2012.
The beginning of the month should see the arrival of 2012 W-2’s. The IRS will start accepting returns in January, but most early birds will be able to complete their returns in February. For those expecting a refund, get on the ball and finish your tax returns as soon as possible. This means gathering items like your mortgage interest statements, investment statements, and a list of expenses that might be deductible. Put it all together and get your money back from Uncle Sam.
For the state of Rhode Island and school year 2013-2014, the state deadline for FAFSA submission is March 1st by midnight. For corporations that have a fiscal year that coincides with the calendar year, 2012 tax returns will have to be completed by March 15th. This includes most S-Corporations. Also by the Ides of March, you’ll need to spend all funds in flexible spending accounts, assuming your health insurance plan allows a grace period.
April 15th is Tax Day and falls on a Monday. Check your eligibility for utilizing Traditional IRAs and Roth IRAs, which have a $5,000 limit for 2012. Those over the age of 50 are eligible for another $1,000 catch up, making the total possible contribution $6,000. April also happens to be National Financial Literacy month.
On the first of May, the U.S. Treasury announces rates for I-bonds and EE savings bonds. There are some limitations, but these bonds can be used in a tax advantaged way to pay for education. May is also when you can plan to review federal loans, private loans, or other options to pay for college education come the fall.
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