USC Credit Union Blog

USC Credit Union Blog

Tax season is here. Are you prepared?

Posted by Sydney on Mar 4, 2020 11:48:11 AM

Although April 15th marks National Banana Day (we promise we didn’t make this up), it’s also the day that you’re 2019 takes must be filed by. Between forms from your employer, student loan company and health insurance provider, it’s hard to keep track of all the documents you need to successfully file your taxes.

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Tax Day’s Dirty Dozen

Posted by Brianna Seaberg on Mar 28, 2019 2:00:00 PM

As Tax Day draws near (Monday, April 15th this year), the Internal Revenue Service has released its annual “Dirty Dozen” list of tax scams. The takeaway? Be aware and alert. Take the time to understand your tax return before signing. If something sounds too good to be true, it likely is.

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4 Smart Investments Using your Tax Return

Posted by Katherine on Apr 5, 2018 1:22:00 PM

It is smart to invest your tax return money. When we say invest, we do not mean to invest in your vacation plans. Though it may be tempting to see tax return as free vacation money, it might be wiser to save it, pay down debt, or invest for your future.

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Taxes: The What, Who, and How

Posted by Katherine on Mar 22, 2018 12:42:00 PM


We know tax preparation isn’t fun, but, unfortunately, it’s necessary. Though it may seem like an inconvenience, filing your taxes correctly can sometimes give you a nice return. You may be reluctant to begin because of the confusion on where to start or what information is necessary. We are here, however, to simplify taxes for you so the task can seem less daunting.

What are income tax returns?

Income tax returns are documents that are used to evaluate whether you owe any taxes this year or if you are eligible for a tax refund. Taxes are calculated based on your total income minus any deductions you are eligible for.

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3 Ways to Up Your Financial Game this President's Day

Posted by Katherine on Feb 15, 2018 12:00:00 PM

Happy President’s Day! Now that there is a nice three day weekend, let’s talk about finances…

No wait, come back!

I know that fixing your finances isn’t the ideal way of spending your three-day mini vacation, but if not now, when? Don’t worry, we’ll try to help make this as painless as possible.

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End of Year Tax Tips

Posted by Katherine on Dec 19, 2017 11:48:00 AM

The trick to saving money on taxes is to defer income and accelerate expenses since income is taxed in the year it is earned. Your income is taxed during the year it is earned. This means you might want to hold off on additional income if it puts you in a higher tax bracket. Expenses are also deducted in the tear they are paid. Paying tax-deductible expenses earlier helps lower tax liability making it better to pay on December 31st rather than January 1st.

Holiday or Bonus Income

If a holiday bonus pushes you into a higher tax bracket, ask your employer to delay the bonus until January 1st so you will not have to prepare taxes on it until the following year. Make sure the bonus is reported to the IRS in the correct tax year by your employer if you defer income.

Charitable Contributions

If you make a charitable contribution and pay with a credit card on December 31st, you can deduct the contribution on this year’s taxes regardless of when you pay the credit card bill. The amount can be paid out sometime in January, instead.

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What Are the Tax Benefits to Opening an IRA Account?

Posted by Pierce Conway on Apr 12, 2017 2:00:00 AM


One of greatest advantages to saving for retirement is the tax benefits you get when investing in an IRA or other qualified retirement account. Most people know there are tax benefits to opening an IRA account, but few understand how many benefits there are, and how powerful they can be in the cause of saving money for retirement. Did you know there are at least six tax benefits to opening an IRA account?

We discuss these benefits more in-depth below, and how you can leverage them for your own retirement savings.


1. Annual Contribution Tax Deduction (in Most Cases)

If you don’t participate in an employer-sponsored retirement plan, you can contribute up to $5,500 per year to an IRA ($6,500 if you’re age 50 or older) and deduct the amount of the contribution from your income when you file your federal income tax return (usually state as well).

Here’s an example: if you’re in the 28% federal income tax bracket, you’ll save $1,540 in income taxes with an annual $5,500 IRA contribution.

You may also be able to make a tax-deductible contribution even if you participate in an employer-sponsored plan.

Single taxpayers can take a full IRA deduction with an income up to $61,000 for 2015, and a partial deduction up to $71,000. Married couples who file jointly can take a full deduction on an income up to $98,000, and a partial deduction up to $118,000.


2. Investment Earnings Tax Deferral

Whether or not your IRA contribution is tax-deductible in the year it’s made, any earnings that accumulate in your account will be fully tax-deferred until they’re withdrawn. This can result in a significant improvement in the investment performance of your retirement portfolio.

The difference between a taxable investment and tax deferred investment can be substantial. If you’re in a combined federal and state income tax bracket of 35%, a 10% average rate of return on your investment portfolio will be reduced to just 6.5% in a taxable account.

With $100,000 invested in a taxable account for 30 years, at effectively 6.5% your investment will grow to $661,436. But $100,000 invested in a tax-deferred account for 30 years at the full 10% return will grow to $1,744,940.

That’s a difference of well over $1 million! That’s the power of tax deferral.


3. Lower Adjusted Gross Income (AGI)

The IRA tax benefit here is not nearly as impressive as the tax deferral demonstrated above, but it works in your favor nonetheless.

A tax-deductible IRA contribution lowers your adjusted gross income (AGI), which is used to calculate certain itemized tax deductions, as well as your tax rate.

For example; in order to deduct medical expenses, those expenses must exceed 10% of your AGI. A $5,500 IRA deduction will lower that threshold by $550, which is to say that an additional $550 in medical expenses will be deductible on Schedule A of your Form 1040.


4. Tax-Deferred Investment Income Up to Age 70½

Though most people are concerned primarily with taking IRA withdrawals when they retire, or as early as age 59 ½, the reality is that you don’t need to begin taking withdrawals until you turn 70 ½.

This means that is if you retire at 65, you don’t need to begin taking withdrawals from your IRA account. You can allow the money in the IRA to continue accumulating tax-deferred investment income right up to age 70½. This gives you extra 5½ years of investment accumulation and compounding interest. This will make a big difference when you finally do begin taking withdrawals.

Let’s say you have $200,000 in your IRA at age 65 when you retire. Instead of taking withdrawals immediately, you delay tapping the account until you turn 70½. If you are earning an average of 10% per year, your account will grow to $337,823 during the extra deferral period.

This can be an excellent strategy to ensure your retirement assets are able to last throughout your entire retired life.


5. Additional Tax-Deferred Retirement Savings

An IRA enables you to make additional retirement savings contributions, even if you’re covered by an employer-sponsored plan. You can contribute up to $5,500 (or $6,500 if you’re 50 or older) in addition to the funds you’re putting into your 401(k).

You get the match from your employer (which is essentially like getting free money), and are able to contribute your own savings to an IRA at the same time. This will have the effect of multiplying your retirement savings considerably.

And even if your income exceeds the contribution limits, you can always make a nondeductible contribution that will still earn and accumulate tax-deferred investment income.


6. A Catch-All Fund for Other Accounts

Sooner or later you will leave every employer you’ve worked for, and in most cases that will happen well before you reach retirement age. If you already have an IRA account established, you’ll have an account you can roll your employer-sponsored plan over into. This allows the employer plan to continue growing — on a tax-deferred basis — until you’re ready to begin taking withdrawals.

While you typically do have the option to either keep an employer-sponsored plan where it is, or even to roll it over into the plan of your next employer, there are certain advantages to putting it into a self-directed IRA account.

IRAs typically have more investment options than employer-sponsored plans. Those additional investment opportunities are a chance to earn even higher investment returns, which will allow your retirement money to grow even bigger versus just sitting in an employer plan.

As you can see, IRAs have too many tax advantages to ever be without one. Even if you have a retirement plan through your employer, you should still have a self-directed IRA account that will enable you to take advantage of all of the additional tax benefits it provides.


USC Credit Union can offer you two types of IRAs account, Traditional IRA and Roth IRA. For more information about these types of accounts or to speak with a member relationship representative, click here.



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Top 10 Ways to Make The Most of Your Savings From Your Tax Refunds

Posted by Melissa on Apr 8, 2014 10:30:00 AM

If you’re expecting a tax refund this year, you need a good plan for your money. Be sure to revisit your W-4 form and adjust your federal income tax withholding allowances.

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