News Now

Consumer
Three ways to leverage your payroll tax raise
NEW YORK (1/10/11)--If you have a job and pay into Social Security, you’ll get a temporary “raise” in 2011. That’s because a 2% decrease in your payroll taxes is part of the Tax Hike Prevention Act Congress signed into law at the end of 2010 (msnbc.com Jan 3). You won’t see this money in a lump sum. Instead, each paycheck will be a tad more because you can expect to pay a little less in taxes. How much? You can get an idea by visiting Kiplinger.com and typing “tax cut calculator” in the search engine. No matter what size your “raise,” if you don’t plan how you’ll use that money it will slip away. Here are three ways to get power out of that extra cash:
* Invest in yourself. If you don’t have any credit-card debt, put the entire 2% in a pre-tax retirement account or Roth IRA, start laddering certificates of deposit/share certificates (CDs), open a high-yield savings account, or invest in a mutual fund. If you have credit-card debt, use the extra cash to pay it down. * Invest in your living situation. Establish an appliance-replacement fund and think “energy-efficient,” pay more on your mortgage every month, or put the money aside every paycheck for auto maintenance. * Invest in quality of life. Start a fund for gift giving so you can celebrate important occasions and give to charity without worry, add a line to your budget for family entertainment so you’re ready when the big show comes to town, stash the money to pay the rising costs of health care, or join a fitness club and invest in your personal health and well-being.
Two of these ideas have bonuses in that you’ll get a percentage back if you invest in a pre-tax retirement account or a health savings account. Others save you money by reducing costs: If you pay down credit card debt, pay more on your mortgage, or upgrade an appliance, you’ll wind up paying less in interest or the cost of energy. If you invest in a Roth IRA, besides bringing you more money when you retire, your contributions most likely will be cheaper in today’s tax climate than they will be in the future. For more tax help, view the video “Getting Tax Records Organized” in the Home & Family Finance Resource Center.
Other Resources

RSS print
News Now LiveWire
July 's Fed Bank's "FedFocus" has some interesting articles: incl cost/benefits of $1 currency 2 coin conversion ttp://tinyurl.com/nybmnhh
9 hours ago
Do you wish you were a News Now subscriber? Go here: http://t.co/7evfBSjeMx
9 hours ago
Financial education for student body key part of Altura #creditunion, UC-Riverside partnership #NewsNow http://t.co/Xp6OJd66o6
10 hours ago
.@VTcreditunions gains 200 new FB followers in just 2 wks to reach 1,000 http://t.co/I89xJcv4Jg
11 hours ago
.@CUNA is testifying on reg relief Tues,July 15 at 2 p.m. be4 Hs Fin Serv Subc. Here is the agenda and witness list: http://t.co/yBRhlmdqHt
13 hours ago
Unite for Good Share your Stories150x172_Inside ExchangeData-Breach-150x172.jpg