Princeton's Ask the Doctor March-April 2020

Lowering AGI this year can help taxpayers when they file next year A taxpayer’s adjusted gross income is one factor that determines how much tax they owe. Taxpayers who plan today can lower their AGI. This tip is one in a se- ries about tax planning. These tips focus on steps tax- payers can take now to help them down the road. Here are a couple things taxpayers can do now to low- er their AGI: Know how adjusted gross income affects taxes • A taxpayer’s AGI and tax rate are important fac- tors in figuring their taxes. AGI is their income from all sources minus any adjustments or de- ductions to their income. Generally, the higher the AGI, the higher their tax rate, and the more tax they pay. • Tax planning can include making changes during the year that can lower a taxpayer’s AGI. The tax- payer could: • Contribute to a Health Savings Account • Claim educator expenses if they’re a qual- ifying educator • Pay student loan interest A full list is on Schedule 1 of Form 1040. Save for retirement Retirement savings can also lower AGI. • Contributing money to a retirement plan at work like a 401(k) plan can reduce a taxpayer’s AGI. • Investing in a traditional IRA plan is another way to save for retirement and lower AGI. • Self-employed SEP, SIMPLE, and qualified plans are also retirement options that can lower AGI. The IRS has several digital tools taxpayers can use to stay updated on important tax information that may help with tax planning.by visiting IRS.gov.

Saving Your Home From Foreclosure O ne of the biggest accomplishments for many people in New Jersey is to become a homeowner. It often takes years of saving and hard work to own a home. Of course, when a financial situation changes and an individual can no longer afford to make mortgage payments, foreclosure may be in one’s future. The concept of losing a home that one worked so hard for can be completely devastating to a homeowner. However, there are a few ways that you may be able to save your home from going into foreclosure. First, you may want to try and have your mortgage loan modified. In the best cases, a loan modification can allow an individual to lengthen their mortgage term, lessen monthly payments, and even lessen interest rates to make it more affordable. However, a loan modification must be approved by the lender. If the lender does not approve this plan, the homeowner may want to consider filing for bankruptcy under a Chapter 13 plan which will stop a foreclosure and allow to catch up on your payments over 3 to 5 years. While many bankruptcies can be filed without an attorney, if you want to save your home, it is best to seek legal advice to make sure you are protected. If your home goes into foreclosure, it is best to speak with a lawyer early in the process. Our consultation is free, and the earlier you come in the more options you have. The saddest situation is when someone comes in to see me days before their sheriff sale and their mortgage payments are their only debt. They would have been a good candidate for a loan modification but now they can only save their home by filing for bankruptcy. DON'T FACE FORECLOSURE ALONE Fight back and save your home. FREE CASE REVIEW Foreclosure Defense, Loan Modifications, Bankruptcy, Debt Litigation Defense Frances Anne Tomes, Esq.

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