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Save More for Retirement With This IRS Tax Break



Half of all workers claim they don’t have enough income to save for retirement, according to a recent Transamerica survey. It’s an alarming situation to find yourself in, especially as you near the age when your peers begin exiting the workforce. But your situation might not be as bad as you think. You may be able to take advantage of a little-known government incentive that can help low-income people save for retirement more easily. 

How to get up to $2,000 back from the government every year

The government offers people a variety of deductions and credits to help them save on their taxes. Deductions lower your taxable income for the year, while credits offer a dollar-for-dollar reduction of your tax bill. For example, if you owe the federal government $5,000, but qualify for a $1,000 tax credit, you’ll only owe $4,000.

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One of the best credits available to low- and moderate-income households is the Saver’s Tax Credit. This is worth up to 50% of your annual contributions to your retirement account on a maximum of $2,000 in contributions ($4,000 for married couples). That means individuals could get up to a $1,000 tax credit for contributing $2,000 to their retirement, while married couples could get up to a $2,000 credit for contributing $4,000.

The exact value of the credit varies depending on your tax filing status and adjusted gross income (AGI). Here’s a table to help you find out how much you might get:

Credit Rate

Married Filing Jointly

Head of Household

Single, Married Filing Separately, and Qualifying Widow(er)

50% of your contribution

AGI of $39,500 or less

AGI of $29,625 or less

AGI of $19,750 or less

20% of your contribution

$39,501 to $43,000

$29,626 to $32,250

$19,751 to $21,500

10% of your contribution

$43,001 to $66,000

$32,251 to $49,500

$21,501 to $33,000

0% of your contribution

More than $66,000

More than $49,500

More than $33,000

Data source: IRS.

As your income increases, the maximum credit you qualify for decreases, but you could still shave several hundred dollars off your tax bill, even if you don’t fall into the 50% tier.

Who qualifies for the Saver’s Tax Credit?

Any taxpayer who meets the income limits and the following criteria is eligible for the Saver’s Tax Credit:

  1. You’re 18 or older.
  2. You’re not claimed as a dependent on anyone else’s tax return.
  3. You’re not a student.

For the purpose of this credit, a student is defined as anyone who was a full-time student at a trade school or university during any part of at least five calendar months during the year. It also includes those who take full-time, on-farm training courses.

How to get the most out of the Saver’s Tax Credit

If you’re able to free up even a few hundred dollars for retirement, you can take advantage of the Saver’s Tax Credit this year. This will reduce your tax bill and could lead to a larger tax refund than you’ve gotten previously. If you turn around and stash this refund in an IRA or another retirement account, you could increase the size of your Saver’s Tax Credit for the next year. 

Be strategic about where you stash your retirement savings to get the most out of it. If you choose a tax-deferred retirement account, you can enjoy a tax deduction on top of your Saver’s Tax Credit, but you’ll owe taxes on your withdrawals in retirement. If you go with a Roth account, your contributions won’t reduce your taxable income this year, but you’ll get tax-free withdrawals later.

If you have access to a 401(k) that provides a match, start here to get that extra money. A single adult earning $20,000 per year who qualifies for a 3% dollar-for-dollar 401(k) match could get an extra $600 from their employer if they contribute $600 to their 401(k) on their own. But that’s not all.

That $600 would reduce their taxable income for the year, bringing them into the 50% credit rate for the Saver’s Tax Credit. So in addition to setting aside $1,200 for their retirement, they’d also get another $300 knocked off their tax bill. This may come back to them in the form of a refund, which they could then put toward their retirement contributions for the next year.

The Saver’s Tax Credit income requirements change from year to year, so it’s important to look at these every year you plan to claim this credit. But whenever possible, take advantage of it to help your retirement savings grow as quickly as possible.

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Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



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