Pension

The Easy Way to Do Your Taxes (Without Paying Someone Else)

Like clockwork, Tax Day comes every year. In 2017, it falls on Tuesday, April 18 (Wednesday, April 19 for residents of Maine and Massachusetts). If just the mention of taxes makes you nervous, or even stressed, you’re not alone. Since 2007, the American Psychological Association (APA) has been tracking the top causes of stress for Americans and has found that money, including tax preparation, is consistently at the very top of the APA’s list.

While it may feel tempting to relieve this stress by paying somebody else to file your return, or buying expensive tax prep software, there is a long list of options to have your taxes prepared for free. Let’s review what organizations offer free tax preparation services and what you can do to make the whole task… less taxing.

1. Free File Software From the IRS

Individuals who earned less than $64,000 in 2016 — 70% of Americans, according to the IRS — can file their federal taxes for free with Free File Software from the IRS, a partnership of the IRS with eight software providers, including TaxSlayer, H&R Block, and ezTaxReturn.com.

In addition to free federal tax filing, most Free File Software partners offer free state tax filing for residents of states with income tax requirements. Some providers may charge a fee for filing state tax returns.

2. IRS Tax Volunteers

Looking to help the community by preparing taxes free of charge, many Americans receive training by the IRS and then volunteer at approved locations in their communities. IRS-certified tax volunteers participate in two main programs.

Volunteer Income Tax Assistance (VITA)

Individuals who make $54,000 or less, have disabilities, or have limited English proficiency have access to free basic income tax return preparation with IRS-certified volunteers through VITA. Qualifying taxpayers have their returns filed electronically.

Tax Counseling for the Elderly (TCE)

IRS-certified volunteers for the TCE program focus on taxpayers who are 60 years of age and older, and specialize in questions about pensions and retirement unique to seniors.

Located at neighborhood centers, libraries, schools, shopping malls, and other convenient locations throughout the country, VITA and TCE sites can be found online through the VITA/TCE Locator Tool or by calling 1-800-906-9887. Since many TCE sites are operated by the AARP’s Foundation Tax Aide program between January and April, you can also use the AARP Site Locator Tool or call 1-888-227-7669.

3. Free Tax Services at Universities and Colleges

Around the country, many student-run service organizations offer free tax assistance for low- to moderate-income individuals. Generally, these organizations offer free e-file for federal and state tax returns under the supervision of the IRS and CPA certified accounting faculty. Here are some examples:

The majority of student-run organizations offering free tax assistance are also IRS-certified VITA sites. Keep in mind that free tax preparation programs at universities and colleges can only provide tax preparation to individuals making $54,000 or less. Student volunteers will most likely turn away small business owners and self-employed individuals because volunteers are limited to returns with certain types of income, including Wages and Salaries (Form W-2), Interest Income (Form 1099-INT), Dividends Received (Form 1099-DIV), Unemployment Compensation (Form 1099-G), IRA Distributions (Form 1099-R), Pension Income (Form 1099-R, Form RRB-1099), and Social Security Benefits (Form SSA-1099).

Student-run tax prep organizations can generally help nonresidents on a student visa (F, J, M, or Q), or a teacher or trainee…

If You’re Lucky Enough to Receive a Pension, Here Are 6 Things You Need to Do

Pensions are becoming a thing of the past — so if you’re still entitled to one, consider yourself lucky. Once you have a pension, however, what will you do with it? How will you manage it? Here are a few suggestions on how to handle your well-earned windfall.

1. Request an Updated Pension Statement Annually

Call me crazy, but I check my bank account every morning when I wake up. It’s all still there each day, but I don’t like to take any chances. You need to keep an eye on your pension, too. Granted, you don’t need to check in every day, but you should request an update once a year.

“Like your Social Security benefits, your pension benefit amounts can change,” explains Brannon T. Lambert, owner of the investment firm Canvasback Wealth Management. “Not only that, but pensions can have several options for payouts, survivor benefits, or cash out options. You want to know every option available to you especially if you are married or have dependents.”

2. Weigh Your Payout Options Carefully

Before the IRS passed a law in 1978 to make self-funded 401Ks possible, many companies provided employees pensions — a fund that accrued in value over time to ensure that their employees were at least modestly supported through their retirement. That’s all but reversed nowadays. In 1979, 28% of all workers were enrolled with pension plans, whereas only 2% of today’s workforce is enrolled. Conversely, between 95% and 98% of employers offer 401K plans. Go figure.

When it’s time to receive your pension, the first decision you’ll need to make is how you want to receive the money— which, in turn, raises many important questions. Morgan Christen, CFA at Spinnaker Investment Group in Southern California, explains your options.

“Pension planning involves many decisions that are irrevocable; anyone that will receive a pension should learn about all of the payout options,” he says. “Do you want to receive income for your life? Do you want to make sure a spouse is covered should you pass away? If you want to cover a spouse, how much of your benefit do you want that person to receive — 100%, 75%, or 50%?”

These are all things to think about when it comes time to take your pension. Keep in mind that if you want to cover a spouse, you will be taking a reduced amount on a monthly basis — and if your spouse predeceases you, you may not be able to change course.

3. Investigate the Social Security Offset…