10 Ways to Pay Taxes If You Are Unemployed

                            

There are over 10 million Americans are still unemployed. Many unemployed Americans owe taxes because they are not aware that unemployment compensation or unemployment benefits are taxable.  Seven states fully exempt unemployment benefits: Montana, New Jersey, Alabama, Pennsylvania, Arkansas, California, and Virginia.  Wisconsin and Indiana offer partially exempt unemployment benefits. All other states that offer unemployment benefits tax them in full.

When you apply for unemployment you have the option to have income tax withheld. If you do not choose this option you will be required to pay taxes on the money received when you file taxes for the current year and could end up owning thousands of dollars.

You will receive a Form 1099-G of the following year which will show your total unemployment compensation and the amount of federal income tax and state taxes that were withheld if you choose those options. Even if you stopped receiving unemployment compensation it is to your advantage to file a return. You may be entitled to a tax refund if you income is lower for the year.

If you took early withdrawals from a pension plan or retirement account such as a 401k, the withdrawals are taxable unless they are rolled over into another qualified retirement plan or IRA within 60 days. If the withdrawal is used to pay for living expenses while you are unemployed the withdrawals are taxable. In addition, if you are under age 59 ½ you may also be subject to an additional 10% tax on early withdrawals unless your money is stored in a 457 plan. 

Here are 10 options if you owe taxes and are unemployed.

1.       Apply for a private loan from a friend or relative or from a peer-to-peer lending company such as Zopa or Prosper.

2.       Apply for a hardship withdrawal from a retirement plan or pension plan. 

3.       Apply for an installment plan and setup an IRS payment schedule by filing IRS Form 1127.

4. Pay by credit card.  Pay by credit card.
5. Take out a loan from your life insurance policy.
6. Borrow money from family or friends.
7. Consider getting a full-time or part-time job to earn money to pay back your taxes.
8. If you can pay the taxes owed within 120 days contact the IRS to see if you can qualify for a short-term extension.
9. Go to an IRS office to get advice on the best option to handle your tax situation.
10. Request an Offer in Compromise if you cannot pay the total amount owed. This allows you to settle your tax debt for a smaller amount than you owe if you will be unable to pay back the amount owed within 10 years. 

11 Financial Tips for Teachers

                                  

There are approximately 4 million teachers in the United States. There are over 50 million students being taught in the United States.  Becoming a teacher is a huge sacrifice and requires specialized education, certification and continuing education for elementary, middle school and high school levels. 

Many teachers are committed to educating their students despite political, state and local roadblocks. In addition, teachers are not provided with adequate resources, tools and supplies for their students. 

Teachers educate students, make out-of-pocket purchases, and tackle social issues such as homelessness, poverty, hunger and teaching students basic life skills. Many teachers spend money to buy their students necessary supplies such: pencils, papers, pens, glue, arts and crafts, snacks, clothing, toothbrushes, hygiene products, field trip fees, toys, and alarm clocks and spend on average $444 a year. However, they not receive reimbursements and only receive a small tax credit. 

The average starting teacher salary is $35,672. Some teachers are forced to obtain part-time jobs to make ends meet and to help cover costs for out-of-pocket expenses for students. 

Here are eleven financial tips to help teachers stretch their paychecks.

1. Create a Budget - A budget will help determine what you owe, what you earn and what you spend.
2. Reduce Expenses - Find ways to reduce expenses. Shop at discount or wholesales stores. 
3. Pay Down Debt - Pay more than the minimum monthly payment to pay down debt faster.
4. Downsize.  Trade in your expensive car for a cheaper used car.  Downgrade your home or refinance to get a lower interest rate.
5. Shop. When shopping at retailers ask for they offer discounts for teachers.
6. Shop online for bargains. Use comparison shopping websites to find bargains at sites like Amazon, eBay or Bizrate.com.
7. Coupons. Use coupons when shopping. Also shop at discount stores such as Costco, Sam's Club or Target.
8. Barter.  Barter services with friends, co-workers or family members who have businesses or who can provide a skill, produce or service that you need.
9. Used vs. New.  Buy used vs. new items.
10. Student loan forgiveness programs. Teachers who work in low-income elementary or secondary schools may be able to cancel a portion or all of their federal student loan debt.
11. Consult a professional – Consult a professional to set current and future financial goals.

Fight Identity Theft with Prepaid Cards

                                    

Every year millions of people are victims of identity theft including credit card and debit card holders.  One way to protect yourself from identity theft is to purchase a prepaid credit card or prepaid debit card.  American Express recently began offering a prepaid debit card. I made a decision to pay for everything with cash. 

However, some merchants prefer customers pay with a credit card. However, there are several benefits of using a prepaid credit card.  The benefits of using a prepaid debit card are:

1.       Can be purchased online or at a retail location.

2. Load cash online, from another card, direct deposit or at a retail location.

3.       Accepted everywhere.

4.       Zero liability.

5. No maintenance fees.

6.       Helps manage your money. Can’t spend more than you have.

7. Can’t go over the limit.

8.       Can be used overseas.

9.       Can be used at ATMs.

10.   Some companies use codes to prevent credit card skimming such as American Express, Discover and MasterCard.

11.   Must be 18.

12.   Can reload money as many times as you want.

13.   Can make purchases online.

14. No late fees.

How to Stop Undercharging Clients

                                        

When I first started my business I undercharged clients all the time because I was so eager to become a business owner and didn’t research the competition for pricing. In many instances clients would say “I can’t believe you only charge this much” or “You should be charging more”.

During the first few years I had several accounts in the red due to clients not paying or providing partial payments. I didn’t want to spend the money to hire a collection agency so I just absorbed the loss.  I later realized this was not the right business decision.  I now have an effective invoicing system in place and use software to keep track of clients, billing and revenue. I also keep track of “pro bono” work I provide and have policies where I only do a certain amount of “pro bono” work each month. I realized that a business owner should be in business to make money.

Undercharging directly relates to your level of confidence in your skills and abilities. The more confident you are the easier it will become to establish effective prices that help generate revenue. Time is money.  Your fees reflect how you value your services and should show your worth.

You can’t help anyone if you are broke and in debt. Remember this is business not personal. This is part of running a business. Your business with not be sustainable if you continue to undercharge for your services. I learned from my mistakes and hope that other business owners use this valuable advice to prevent making the same mistakes I did.

1.       Research competitive prices and adjust prices as needed.

2.       Created policies and processes for clients who failed to pay or who paid late.

3.       Discounts have to be earned not given freely.

4.       Don’t be afraid to ask for what you deserve and don’t be afraid to ask for payments from clients.

5.       Use tools such as pricing worksheet http://www.chicagoartistsresource.org/articles/pricing-worksheet, retainer based services worksheet http://stefan.haflidason.com/worksheet-offering-retainer-based-services-for-recurring-revenue/ or business worksheet http://www.nesta.org.uk/sites/default/files/cet_worksheets_case_studies_and_tutor_notes.pdf

6.       Read books such as Value Based Fees How to Charge and Get What You’re Worth by Alan Weiss.

7.       Use resources such as attending business seminars, joining your local Chamber of Commerce.