Nobody likes tax season, except the CPAs (and even that's debatable.)  Becoming aware of tax credits, deductions, and exemptions can ease the burden and make you feel good on Tax Day.

To become fully versed on breaks this tax season, let’s briefly break down what the difference is between tax credits, deductions, and exemptions:

Deductions, exemptions, and credits all reduce your tax bill, but deductions and exemptions specifically reduce your overall bill.  For example, they will all cut your taxes by a percentage and reduce your income subject to tax.  Tax credits, however will cut your tax by a dollar amount, instead of a percentage, to reduce tax burden.  There are many tax credit options available, and some differ by state, but below are some general tax breaks that can go unnoticed.

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1) Tuition and Fees Deductions

Amidst the long sleepless hours of studying, cramming for midterms, and scrounging up enough money to buy a venti Starbucks drink, there's a benefit that tuition-paying college students shouldn’t overlook.  According to the IRS, the tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.  Payments of education through grants, scholarships, and even loans are applicable for deduction.  Being a full-time student is also not necessary, and you can potentially deduct for work-related education—for example, if you’re working and going to school for a potential promotion.  There are other options for student loan payers, such as the ability to deduct up to $2,500 of the interest you paid on a qualified student loan.

2) Home Office Deductions

For those of you who are fortunate enough to work from home full-time, working from home just got a little more appealing—not that working in your pajamas wasn’t already appealing.  The IRS lists a 'Business Use of Your Home' section, which offers deductions on direct and indirect costs that ensue while working.  For example, deducting a percentage of services, and repairs that are only related to the business part of your home may be applicable for direct costs.  Applicable indirect costs include utilities, real estate taxes, casualty losses from damage, or rent using a percentage of use bases, because they are related to your entire home.

3) Energy Tax Credits

Generally speaking, tax credits are used to influence behavior.  For example, you can be rewarded if you make changes towards energy efficiency.  There are tax credits available for up to $7,500 if you have purchased an energy-efficient car in or after 2010, with newer cars being worth more credit.  If you have upgraded to a more green option in your home, Residential Energy Efficient Property Credit may apply.  Qualified equipment includes solar hot water heaters, solar electric equipment, and wind turbines. The decision to help the environment has a tax incentive—an opportunity you shouldn’t waste.

4) Saver’s Credits

Apparently, saving money can earn you money in more than one way.  If you have added money into a 401K, IRA, or other retirement fund, you may be able to claim that amount, 50%, 20% or 10% of your retirement plan or IRA contributions up to $2,000 for individuals and $4,000 for married couples filing jointly.  The maximum credit you may receive is $1,000 and $2,000, respectively.  The income that you put into the savings accounts can be turned into tax credits depending on specific criteria, including your adjusted gross income.  This credit is meant as an incentive for mid- to low-income individuals and families to save money.  There are some caveats, though: you must be over the age of 18 and neither a full-time student nor listed as a dependent.

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Becoming aware of tax credits, deductions, and exemptions can ease the burden and make you feel good on Tax Day.

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5) Health Care Exemptions

The Affordable Care Act requires all individuals to be insured; however, sometimes circumstances for getting insurance are not ideal.  The fees for being uninsured in 2016 have steadily risen from those of the previous years.  Now, the tax rate is either 2.5% of your income, or a flat rate of $675 for adults and half for children—up to $2,085!  Whether or not you like the Affordable Care Act, you will be taxed for not having ‘minimal essential coverage.’  Fortunately, there some are exemptions to this law.  The most common situation may be being in between jobs; if you lack of insurance coverage for three months or less, you should look into filing for an exemption.  If the least expensive health insurance available to you costs more than 8.13% of your 2016 income in premiums, you are exempt as well.  Moreover, there are religious exemptions if your religion objects to insurance, and there are hardship exemptions if you have been homeless, have experienced domestic violence, or have faced eviction (to name a few.)

 

Resources from the IRS Website and healthcare.gov can help you navigate the right decisions for your situation.  As Americans, it's our duty to pay taxes to readily have services available; however, it's also our duty to be smart about paying taxes and take advantage of the breaks offered. 


And remember, please deduct responsibly!

 

Prativa Hartnett is an aspiring creative writer, painter, and psychonaut living deep in the heart of Texas.

 

As a student, I loved discussing and thinking about big ideas: how large corporations should be held accountable for environmental externalities, whether foreign aid has a positive impact on developing countries, and how agricultural subsidies influence the American diet—ideas of  importance, but largely disconnected from my immediate existence.  In retrospect, I realize I learned the most powerful and practical lessons from Women and Financial Independence (WFI), a program designed to provide women with skills and knowledge to address financial issues.

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In one regard, attending WFI events caused me to feel a measure of anxiety.  I learned about credit card debt, the necessity of an IRA, the importance of a strong credit score, and why an emergency fund is so vital.  Before this point, I’d never given any thought to financial planning; I assumed that I would do everything I could to scrape money together for my student loan payments and then do my best to put whatever was leftover into a bank account.  But after my first WFI event, my eyes were opened to a whole new host of financial realities to fret over.

Despite some trepidation on my part, I continued going to these talks.  Though I was initially overwhelmed, a larger part of me was fascinated by this new world of money and financial planning.  While many of the discussions sponsored by WFI left a deep impression on me,  it was a talk by Janet Clarke McKinley, an accomplished woman with 25 years of investment management experience, that had the most lasting impact.  I was fascinated by her experience and background, but what struck me most was her insistence: ‘you’re not too poor to save, you’re too poor not to save.’

Hearing these words made me realize, for the first time, how much autonomy I had over my financial situation.  Instead of viewing investment, savings, and smart planning as privileges relegated to the very wealthy, I began to see how these tools were just as important, if not more so, for someone without a huge sum of money in the bank.  Rather than just feeling anxious about anything related to money, I began to understand how judicious financial planning could assist me in building the life I wanted.

This knowledge hasn’t automatically made me into the poster child for financial health and smart planning; there are still plenty of times when I feel sorry for myself and bemoan my entry-level salary and $20,000 in student loans.  During these low moments, this saying has stuck with me as a reminder that I am in control of my financial well-being, not a passive bystander.  Everyone’s financial journey is different and heavily influenced by a number of individual factors.  Here are a few habits I’ve developed that help me continue building wealth, albeit on a small scale.

1)  Set up an Acorns account

This is by far my favorite financial app.  After connecting your cards and accounts to your profile, all your purchases are rounded up to the nearest dollar, and the rounded up amount is invested in one of Acorn’s 5 portfolios of your choosing.  I’ve always been a bit intimidated by investing, and this is an incredibly approachable and user-friendly way to begin.

2)  Take advantage of rewards programs

Whenever possible, I use my Citibank Credit Card to make purchases.  I earn points for every dollar spent and then redeem those points for a student loan rebate.  When I use the rebate, I still make my scheduled monthly payment, so in effect, I am doubling up on my payments to further reduce the overall balance.

3)  Talk about it

Money can be a tricky subject to broach, but some of the best advice I’ve received has resulted from discussing finances with friends and family members.  By talking about salary negotiations, investments, and learning from others’ experiences, I’ve had the opportunity to learn about benefits and investment opportunities that would otherwise never have occurred to me.  

4)  Regularly evaluate your spending

Every month I take a critical look at the reoccurring payments linked to my credit card.  I recently cancelled my Amazon Prime subscription, and am constantly reassessing whether or not I use the services I pay for such as Netflix, Spotify Premium, and Nytimes.com often enough to justify the monthly payment.  

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Instead of viewing investments, savings, and smart planning as privileges relegated to the very wealthy, I began to see how these tools were just as important, if not more so, for someone without a huge sum of money in the bank.

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5)  Get a side job

Regardless of my employment situation, I’ve always had a side job, which provides additional funds to contribute to my IRA, increase my student loan payments, or soften the blow of an unexpected expense.  Furthermore, my side job gives me a sense of security; if something were to happen at my current job, I would have a little something while I searched for another full-time position.

6)  Celebrate the milestones, big and small

While I always have larger financial goals in the back of my mind, focusing too much on huge milestones (paying off all my student loans, getting my retirement account to 5 figures, and building a healthy investment portfolio) can feel daunting.  I make a point to celebrate and remember even relatively small victories, like getting my emergency account up to 4 digits or paying off one of my student loans.  Celebrating and acknowledging small milestones keeps me motivated and excited to continue working toward my larger goals.


Just as everyone’s idea of financial success is different, so is everyone’s financial journey.  There is so much you can’t control about your finances, but at the same time, there are so many things you can.  Learn all you can, and know that financial well-being is in your reach.

 

Astrid is a young professional living and working in Shanghai.  She is passionate about financial literacy, prison reform, and brie cheese.

 

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It's a rare afternoon in Manhattan when you get to share the same air with a woman as powerful and as articulate as millionaire Barbara Corcoran.  Best known for her firecracker personality and smart investments on ABC’s hit Shark Tank, I count myself lucky to have had the opportunity to get to know the woman behind the national best-selling book, If You Don’t Have Big Breasts, Put Ribbons On Your Pigtails (an unlikely-titled business book that every female entrepreneur should add to her library).  While endorsing an up-and-coming financial wellness platform, Zebit, Corcoran addressed a room full of eager women by relaying helpful hints, charming anecdotes and how-to’s for avoiding financial missteps and stress.  Corcoran, along with Zebit founder Michael Thiemann, have deemed the month of March as ‘Financial Stress Awareness Month’, citing that women and millennials are particularly susceptible to the pitfalls and hazards of financial stress such as credit card debt, looming student loans, and physical ailments.  Over the course of the afternoon, I found myself empowered by Corcoran’s success story and the idea that awareness and proactivity lead to a healthy and happy bank account.

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About Getting Started

You know her.  You love her.  But do you know exactly how she managed to become the millionaire and television personality she is today?  By utilizing grit, ingenuity and imagination — that’s how.  Corcoran grew up in a typical Catholic family as one of many: ‘Walk in my shoes for a minute.  I’m at school with nine brothers and sisters and I spend my whole day just dreaming.  I daydream about stuff I do well, which is rooted in imagination.  By the time I was in my twenties, I had twenty-three jobs.  I was a people person and I made networking work for me.  New York was exploding and I was in the heart of it.  I was a chump in school, but a champ outside… the lesson to be learned from my experience is that all kids are different.  You use your drive to pursue your dream… I say it to poke fun, but the three dyslexic kids in my family are all rich, and the conventional ones are not.  Every kid is different and that’s good.  Do work differently.’ 

About Investments

Today, Corcoran sits at the top of an investment empire, citing that ‘taking chances almost always makes for happy endings.’  When asked about the smartest investment a woman can make to set herself up for financial success, she smiled knowingly.  ‘The best investment you can ever make is in yourself… Be hungry to build yourself up and believe in your business because you are your own moneymaker.  No one else.  When people come to me and ask where they should put their money, I immediately ask where their business could use it.  The most useful use for your money is in your own big dreams.’

Corcoran went on to detail specifics about how she had utilized this methodology both when she was just getting started and when looking at investors on Shark Tank.  ‘I created my real estate business with a start-up of only $1,000 [a loan from her boyfriend], and I turned it into so much more by going for it… When I see someone come on the show, who really has that attitude of being all in — smart people, but all in — I listen.’

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I found myself, being mowed over like a little piece of grass by the men in the room.

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About Having It All

Corcoran is the ideal example of a bSmart woman who balances it all.  From her notoriety on television, to her various investment endeavors, to her happy home life, at 67 years young, she is an inspiration.  In this same light, one of the more prolific and interesting questions she answered that afternoon was how motherhood had changed her as a business owner and boss.  Her answer was both inspiring and honest.  ‘I felt insecure about having children, but when it happened it put my life in a wonderful sort of aggravated balance.  Every employee working for me said I was softer, kinder.  Not that I had been an a**hole before mind you!  But from the age of 23-46, work was my baby, and my time and energy reflected that.  I used to be the first person in the office at 7:00 or 7:30 AM, walking around and putting to-do post-its on people’s desks, cleaning up, and getting ahead.  When my baby came along, all that changed.  I enjoyed the walk to pre-school even if it got me into work significantly later.  And ultimately, I sold my business.  Now, people — women — ask me if I had chosen to have kids earlier, if I think I could still have managed to build what I’ve built.  And my answer, like it or not, is no.  No.  I couldn’t have.’ 

Corcoran followed up by saying everyone balances work and home differently, and what works for one woman is not the gospel for all women.  But even so, in an age that still puts pressure on a young woman’s choice of when is right for her to have children (if at all), it was empowering to see an example like Corcoran who truly has managed to have it all even while defying societal norms.          

About Shark Tank 

Corcoran couldn’t take the floor for more than 30 seconds without someone bringing up the monstrous fish in the room: Shark Tank.  Corcoran’s current bread and butter, Shark Tank is a television show that centers around a panel of ‘sharks’ or high-rolling, business savvy investors, presented with pitch after pitch of new products and services of which they can invest and make deals.  Products have included everything from clothing lines, to up-and-coming apps, to holistic remedies and food products, to the internet sensation ‘I Want To Draw A Cat for You’ (look it up).  Now in season 7, the show has garnered accolades and quite a following, but as Corcoran would tell you, it wasn’t always smooth sailing on the voyage to Shark Tank.    

‘When I initially heard about the show I thought it sounded amazing.  I was recruited and signed the contract without even reading it.  Three days before I was supposed to fly out to LA to begin taping — I had just bought a new wardrobe from Bergdorf Goodman — the producers contacted me and said they had decided at the last minute to go with a different shark, and I would be the fallback if something else went wrong.  I was devastated.  For me, the word fallback was worse than rejection.  Way worse.  So in that moment, I decided to be bold.  I wrote the producers a rejection email literally saying that rejection is my good luck charm and from my greatest rejections have come most of my multi-million dollar successes — so thanks for the good luck charm!  I learned later that out of the 60 rejections they sent, all to men, I was the only person who had the guts to respond and write an email back standing up for myself.  Of course, it ended up working out and now I’m a shark, but it wasn’t without that email, that step of bravery.’

Having spent years in business prior to her experience on Shark Tank, Corcoran was asked what her biggest challenge has been as a female entrepreneur, financial advisor and businesswoman.  In spite of all the challenges she has faced in working for herself, her answer still went back to her most current success.

‘For the first two seasons of Shark Tank I was more afraid than I have ever been in my life.  People ask if that was fear of making a bad investment, and that was not the cause at all.  I was afraid of not being heard.  For those who don’t know, we tape the show in ten-hour increments.  They are long days.  I found myself, being mowed over like a little piece of grass by the men in the room.  My credentials didn’t matter, my intelligence didn’t matter — I couldn’t get a word in.  So those first two seasons, I look like a really polite secretary to the other guys.  It wasn’t until I started asking myself what a man would do in my shoes that I felt like I was able to be heard.  While that in and of itself isn’t okay — having to parallel everything you say and do to what men say and do — it got me shouting.  That’s what got me heard.’ 

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I was afraid of not being heard.

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About Zebit

Designed to specifically aid against financial stress, Zebit, as attested by founder and CEO Michael Thiemann, is a real solution.  Endorsed by Corcoran, who lent her expertise in explaining the values and impact of such a model, Zebit is a free financial benefit employers can utilize to help their employees make smarter financial choices and ultimately, minimize workplace stress to foster a more productive environment.  Available both online and as an app, Zebit boasts features such as interactive financial training, instant budgeting, personalized ‘Zebitscore’ analysis for financial growth, and a marketplace filled with quality products that can be paid for via Zebitline, a plan that has no interest, hidden fees, or credit check.  Sounds too good to be true, right?  Well this amazing option exists, and thanks to the endorsement of Corcoran, is quickly on the rise.        

To learn more about Zebit and all of its game-changing offerings, check out the website here.  To see Corcoran in action, tune into Shark Tank Fridays at 9:00 PM on ABC.  I, for one, can’t wait to see what this inspiring woman invests in next!  

 

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You’ve likely heard that Harriet Tubman will be the face of the new $20 bill, but did you know that many impactful women of American history, as well as one man, will be featured on other bill denominations as well?  Gals, it’s about time.

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Representing historic women on paper currency in the U.S. has been a long time coming.  In fact, it’s been over a century since a female face has been depicted on paper money.  As of 2016, Martha Washington and Pocahontas are the only women to have ever graced a greenback, while only three women have ever appeared on non-commemorative U.S. coins: Sacagawea, Helen Keller, and Susan B. Anthony.  (We’re not counting the fictional goddess, Liberty.) 

To appear on a U.S. bill, it's required that the person be well known in history and must be deceased.  The Secretary of the Treasury, together with the Bureau of Engraving and Printing, pick those worthy of the designs.

Five women influential to the women’s suffrage movement, Sojourner Truth, Susan B. Anthony, Elizabeth Cady Stanton, Lucretia Mott, and Alice Paul, will be added to the back of the $10 bill, while Alexander Hamilton (the first Treasury Secretary of the U.S.) will remain on the front.  Of course, this is significant due to the 1913 Women’s Suffrage Parade demanding Constitutional amendments for female voting rights on the steps of the Treasury Building. 

The $5 bill, on the other hand, will keep Honest Abe while adding portraits of Eleanor Roosevelt, Marian Anderson, and Martin Luther King, Jr. to its back, all of whom took part in important events at the Lincoln Memorial.  After being refused permission to sing in Constitution Hall in 1939 because of her race, gifted African American singer Marian Anderson, with the help of Eleanor Roosevelt, performed on the steps of the Lincoln Memorial on Easter Sunday of that year.  Martin Luther King, Jr. delivered his ‘I Have a Dream’ speech on the same steps in 1963.

If you were wondering, George Washington won’t be going anywhere.  As of 2001, it’s actually illegal to change the face of the $1 bill. 

The biggest change is the addition of Harriet Tubman, another staunch supporter of women’s voting rights.  Along with the aforementioned persons, Tubman will be the first African American in our nation’s history to appear on a U.S. banknote.  Born into slavery, Harriet Tubman helped over 300 slaves escape the South via the Underground Railroad in the mid-1800s, often wearing disguises and dressing in a soldier’s uniform.  She personally led 19 secret trips to free those still in slavery, at times armed with only a rifle and the knowledge of how to tell the weather, gather food, and follow stars. 

She will be replacing Andrew Jackson, our nation’s seventh President, on the front of the $20 bill.  Jackson will remain on the bill on the opposite side, a correlation the U.S Treasury Department’s website is unclear about.  In fact, nobody is really sure why he replaced Grover Cleveland on the $20 bill in 1928 to begin with.  Jackson himself hated paper money and personally tried to crush the idea of a national United States bank.  While treasury.gov couldn’t conclusively share the reasoning for this change, the website provides ample information regarding various symbolism on our bills including explanation about the Eye of Providence and the significance of the series of years and suffixes on paper money.

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In a time where over half the United States’ population is female and eight years after the election of our first African American President, couldn’t we stand to be more representative?

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Changes to bills are made every seven to ten years to deter counterfeiters, now even including tactual features to aid the blind.  These new bills, however, will not be in circulation until 2020 when the designs will be unveiled and not widely available until the 2030s. 

While it’s pleasing to see representation of a more diverse group of historical figures on our currency, the question still remains, why not bigger changes?  While no one would object to honoring the makers of American history, in a time where over half the United States’ population is female and eight years after the election of our first African American President, couldn’t we stand to be more representative?

 

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If you haven’t started investing, I don’t blame you!  It’s not something we’re taught growing up, it’s incredibly intimidating, and we’re scared to make a mistake and lose our hard-earned money.  There are entire TV channels, countless articles, and thousands of books dedicated to the topic of investing and to make matters worse, these resources often provide us with the opposite advice.  Yikes!  What’s a gal to do? 

While I completely understand why we put off investing, I urge you to give it a try!  Here are my four reasons why you should start investing now:

1)  We learn by doing.

How many times have you studied everything you could possibly learn about something only to find that you didn’t really understand it until you gave it a try?  Think about your time in college.  No matter what you learned about life after college or how many skills you gained to prepare you, nothing compared with the value you received from real world experience.  Investing is no different.  You can read and research until the cows come home, but until you open a brokerage account, purchase an investment, and experience what it’s like to own something in the market, you won’t fully ‘get’ it.

2)  You have enough money to start.

One of the most common reasons I hear that people haven’t started investing is that they don’t have enough money.  Maybe that’s why you haven’t started yet.  We assume that investing is just for millionaires or for Wall Street bankers, but you don’t need much money at all.  Did you know you could invest in all of the largest 500 companies in the U.S. for under $200?  Yes, that’s true.  You can own a piece of all 500 companies on the S&P 500 for under $200.  What are you waiting for?

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3)  You’ll reach your goals faster.

If you are part of the bSmart community, I assume you’re pretty awesome.  You’re most likely up to big things and have some pretty amazing and ambitious goals.  Guess what?  Investing helps you achieve your long-term goals faster.  If you want to achieve financial freedom so that you don’t have to work, can invest in property, travel the world or [insert your biggest goal here], investing your savings will help you get there faster.  Not only do you have the potential to earn more on your savings when you invest it, but you also get to invest your earnings year after year, which is called compounding.  Warren Buffet calls compound interest the 8th wonder of the world because it allows for the accumulation of wealth.  Your money grows and your money growth grows

4)  If you don’t invest, you are leaving hundreds of thousands, if not millions of dollars on the table.

Not only does investing help you reach your goals faster, it also helps you earn thousands, if not millions more over the course of your lifetime.  Talk about a raise!  Let’s say you save $5,000 this year and expect to be able to save an additional $1,000 each year going forward.  That means you will have saved $5,000 this year, $6,000 next year and $7,000 the year after. 

For the sake of simplicity, let’s also assume that you plan to use all of these savings for long-term goals.  Over 20 years, you will have saved $315,000.  If you put that money in a high interest savings account with a return of 1%, you’ll have almost $340,115.  Not bad. 

But, if you invested that savings in the S&P 500, which has had an average return of around 9.4% over the last 20 years according to Yahoo Finance, you’d have almost $708,000 saved.  That is more than double the amount you set aside.  Imagine what the difference would be if you saved even more than that!

Long story short, don’t cheat yourself by putting off investing.  Getting started is much more important than being perfect and I’m here to help!  I promise, it’s not as scary as you might think.

What’s holding you back from investing?  What’s one thing you can commit to doing this week that will move you forward in the process?  No matter where you are in life or how long you’ve been putting this off, it’s time to get your earn on!

 

Ashley Feinstein Gerstley founded Knowing Your Worth where she demystifies the world of personal finance and money for her clients whether they are creating a financial plan, negotiating compensation or paying down student loans.  Her Savvy Investor Course launches on September 8th and will have participants investing confidently and competently in just three months.

Register for Ashley's Savvy Investor Course here!

Information provided on and available from this website does not constitute any investment recommendation.  No representation or warranty, express or implied, is given as to the accuracy of the information provided on and available from this website.  Neither we, nor the author, has taken into account your objectives, financial situation or needs. Before making an investment decision, you need to consider whether this information is appropriate to your objectives, financial situation and needs.

 

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