Many retirees are forced to pay taxes on the money they take from retirement accounts each year. Withdrawals completed from traditional IRAs are taxable as current income and taxed at the regular income tax rate. These tax bills are reducing the value of IRA withdrawals in many cases. With a reverse mortgage, you may be able to avoid those tax bills next year. A reverse mortgage allows you to tap the equity in your home and the proceeds from a reverse mortgage are usually available tax-free. Reverse mortgage proceeds are NOT taxed If you are over the age of 62 and have equity in your house along with an individual retirement account that will be taxed on withdrawals, you have options. By using the equity in your home to access cash for retirement expenses, you could leave the money in your...

It is often said that there only two things that can’t be avoided in life – death and taxes. By taking care of ourselves, we seek to put the first one off as long as possible. But for the latter, we face taxes every day and at least once a year, submit forms to the IRS in the painful process of filing our income taxes. Almost everyone is completely honest when doing their taxes because the large penalties for cheating far outweigh the small potential for gains. However, sometimes we can make mistakes and those who have ended up communicating with the IRS to fix an error would usually rather never to do that again. The fact that the IRS is so tough to work with makes identify theft even more painful if the identify thief uses your personal information to claim an illegal tax refund. And...

Taxes are a factor to consider in retirement. Many retirees want to live where taxes are low so that they can use their retirement income to enjoy living. While taxes are an important consideration, we need to be looking at in context. Sometimes low taxes mean a low level of community services because the local government won’t have the resources to fund quality of life programs. Taxes are a payment for services. If you frequently use parks or libraries or other government services, your tax payments might be a bargain considering what you get in return. Other reasons taxes are important It might help to think about traffic flows. Traffic is heavier in large cities than it is in small towns. That is an obvious statement since there are so many more people in large cities. But the reason ...

A reverse mortgage allows you to stay in your home for as long as you live. After that, there could be some benefits for your heirs as well. Retirement brings the reality of estate planning into sharp focus. Many people put off decisions about how to handle their estates while they are working because it can be difficult to consider these questions. As we age, it is important to ensure that we plan to address some of the financial concerns our survivors will face. A reverse mortgage could be a valuable financial planning too for senior citizens while they are living. Your home could be your largest asset and a reverse mortgage can convert that asset to an income stream. With a Home Equity Conversion Mortgage (HECM), you can access the equity in that asset now and repay the loan later. No p...

Many of our mothers warned us, “If it sounds too good to be true, it probably is.”  Mothers frequently used sayings like this in the good old days, which is why we all know that we should never jump off a bridge, even if all of our friends are doing that. Because economists don’t win Nobel Prizes by repeating wisdom they learned from their mothers, they formalized that concept into what is know as “no free lunch”. They’ve proved mathematically that if something sounds too good to be true, it is. Tax scams typically sounds pretty good This sound advice applies to taxes. The IRS has issued a news release about a new scam that targets senior citizens and offers them money for nothing. This scheme involves scammers promising that they can obtain refunds for people ...

If there’s one thing everyone on both sides of the political aisles can agree on, it’s that taxes should be fair. Everyone should pay what they owe, and that includes corporations as well as individuals. The current debate is simply on whether or not top earners in this pay their fair share. They say they do; liberals say they don’t. Whatever your opinion may be, many people don’t know that some of the nation’s largest companies pay nothing in taxes, even though the current U.S. corporate tax rate of 35 percent is among the highest in the world. That’s because of the many loopholes and deductions that allow almost every business to pay less than the maximum, and in some cases, nothing at all. In fact, according to The Wall Street Journal, the Organization fo...

Congress ended the year with a debate over taxes. The payroll tax cut was set to expire on December 31, but after public and confusing negotiations, that tax break was extended for two months. A short-term extension guarantees that Washington will be forced to tackle the issue again and taxpayers face additional uncertainty about what they will pay in 2012. One tax question that could impact retirees in particular is related to the tax rate paid on dividend income. In 2003, that rate was cut to 15 percent for five years. A two-year extension to that rate was passed by Congress in 2008, and an additional two-year extension was approved in 2010. Without new legislation, dividends will be taxed at the same rate as ordinary income after 2012, with a maximum rate of 39 percent. The effects on...