Moving Expenses Deductions & Digital Nomads

It’s been a busy few months around here. My family moved from Phoenix, Arizona to Omaha, Nebraska to be closer to my family and experience seasons once again. We bought a very neglected 60-year old house in an awesome neighborhood. It’s already proving to be a money pit, but we’re excited to fix it up and make it our forever home.

 

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Cow posse not included.

We started thinking about moving to Omaha nearly two years ago when we visited my family during Halloween. The autumn weather, real pumpkin patches (as opposed to dozens of trucked-in pumpkins tossed on the desert floor with a few hay bales thrown in for aesthetics), and trick-or-treating in the neighborhood my dad grew up in made us long for a place that felt more like home.

 

Although we loved our little home in Phoenix, we were never fans of Arizona. Brian grew up in the mining town of Elko, Nevada and I grew up in Las Vegas. We met in Reno before moving to Phoenix for four years. Despite all of this, both of us feel “at home” here. For me, it’s because my dad grew up here – lives in the house he grew up in, in fact. I visited my grandparents here often. My parents, two of my brothers, my sister, and nephew are all here, within a five-minute drive. Brian enjoys the cooler weather, trees, and short commute.

So when Brian saw that an ad agency here in Omaha was looking for a new Art Director, he applied and landed the job.

Brian’s relocation for a new job means we’ll get to take advantage of the tax deduction for moving expenses. My freelance writing business moves with me. It got me thinking about whether digital nomads can benefit from the tax breaks for moving, so I wrote about it for Forbes last month.

Give it a read and let me know: What’s the last big move you made and why?

Image credit: Dominik Lange via Unsplash

 

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Can a Balance Transfer Hurt Your Credit Score?

I recently wrote a piece for Magnify Money on how a balance transfer affects your credit score. Did you know that a balance transfer can drop your credit score by about 40 points initially? Does this mean you shouldn’t take advantage of those 0% balance transfer offers?pexels-photo-259200

Check out the full piece on the Magnify Money blog and let me know what you think!

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3 Ways You Can Still Reduce Your 2016 Tax Bill

Tax season is in full swing, and all of those 1099s and W-2s are trickling into our mailboxes. Are you worried about owing additional tax when you file your 2016 return? It may be too late make a charitable donation, pre-pay your next mortgage payment, or make an estimated state income tax payments to increase your itemized deductions for 2016, but you might have a couple options for reducing your 2016 taxable income. The best part about these deductions is, unlike prepaying your mortgage interest, you’ll keep the money in your own pocket.8koeusir1zm-jimi-filipovskiYou have until April 18, 2017, to make traditional IRA contributions for 2016, but not beyond that date, even if you file an extension.

Make an IRA contribution

For 2016, you can contribute up to $5,500 ($6,500 if you’re age 50 or older). There are no income limits for contributing to a traditional IRA, but if you have a retirement plan through your employer, your deduction may be limited.

 You can also contribute to an IRA for a spouse that isn’t working as long as you file a joint return. The maximum contribution to both spouses’ IRAs can’t exceed your joint taxable income or double the annual IRA limit, whichever is less.

Traditional IRA contributions can be taken as an “above-the-line” deduction on Line 32 of Form 1040. Above-the-line deductions can be valuable because they reduce your adjusted gross income (AGI), so they could potentially increase other tax benefits that are phased out or disallowed altogether based on AGI. Also, you don’t have to itemize to take advantage of above-the-line deductions.

Make a SEP IRA contribution

Self-employed taxpayers and freelancers may be able to put away more money for retirement and benefit from bigger deductions by opening a SEP IRA. The maximum SEP contribution can’t exceed the lesser of 1) 25% of your net profit shown on Schedule C reduced by the deductible portion of your self-employment tax, or 2) $53,000 for the 2016 tax year.

You have until the date you file your return, including extensions, to make SEP contributions. Those contributions can be deducted as an above-the-line deduction on Line 28 of Form 1040.

Make an HSA contribution

If you were covered by an HSA-eligible health insurance plan for 2016, you have until April 18, 2017, to make your contribution for 2016. For 2016, you can contribute up to $3,350 for an individual or $6,750 for a family.

To qualify for an HSA, you must be insured under a high-deductible health plan (HDHP) that is HSA-eligible. An HDHP is any plan with a deductible of at least $1,300 for an individual or $2,600 for a family. And although the average deductible for single coverage is currently $1,478, few insurance plans are actually HSA-eligible. That is because the IRS specifies that except for preventive care, “and HDHP may not provide any benefits for any year until the deductible for that year is satisfied.” So more generous plans that pay for anything other than preventive care benefits before the deductible is met are not HSA-eligible.

If you made contributions through an employer’s pre-tax plan, those contributions have already been deducted from your taxable income in Box 1 of Form W-2, but if you make contributions on your own, you can claim those as an above-the-line deduction on Line 25 of Form 1040.

This post originally appeared on Forbes.

(Image: Jimi Filipovski via Unsplash.)