Free Tax Filling Help for Procrastinators

Most of us have already filled our taxes, but for those of you who have procrastinated here is a something you might look at. Since the filling deadline is tomorrow, Michelle Shildkret with H & R Block emailed me to let my readers know.

I hear you about gas prices-- I just filled up in Brooklyn, NY and I was paying $3.45 a gallon. Ouch!

I see you're basically done filing, but tax day is tomorrow (ack) and I thought you might like to share the news that H&R Block is now offering TaxCut Basic + efile for the low, low price of FREE:
http://hrblock.com/cmpgn/online/free_online_lp.html

In addition, anyone that files with TaxCut is automatically entered to win a Cancun family vacation: http://www.facebook.com/HRBlockonline

Feel free to share with your readers- hope this makes their last minute filing a bit easier.

Thanks,
Michelle

So if you are one those that have procrastinated, hurry up. You are runny out of time and this online program, may be just the thing for you to get those taxes done.

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And that's my view, what's yours?




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Taxes and budget

Well I got my taxes back from the tax preparer. I took some cash out of my emergency fund/insurance savings to pay his ($110) fee. Kurt is wonderful. He is a Dave Ramsey ELP (Endorsed Local Provider). He was able to get me a $531 Federal Refund, although I owe the state $74. That means that my IRS debt will see a substantial reduction this year. Especially considering the $600 stimulus tax credit coming in May. Altogether, I will see that particular debt decrease by $1100. Meaning, 1/3 of my tax debt will be gone this year.

I expect to use some of the savings money to pay off some of these debts, replace the laundry machine that went out on me (with another used one), get the bathroom door repaired (estimate $50) and hopefully get the tree limbs off the roof of my neighbors and my homes and away from the power lines. Not sure, I will have enough funds to do it all, but I am going to prioritize and make a valiant effort. I am expecting to have Amerifirst paid off by May 1st.

Item	Budgeted	Actual	Owed
GIVING
Tithe/Charity	$??	$???
subtotal	$??
HOUSING
Mortgage	$80		$791.51
Insurance	$0
Maintenance	$0
Taxes	$0
State Income Taxes	$74
subtotal	$154		$791.51
UTILITIES
Electric	$80
Gas	$80
Water	$30
Internet	$35
Phone	$0
Cell phone	$50
Trash	$15.50
subtotal	$290.50
FOOD
Grocery	$50
subtotal	$50
Transportation
Auto Gas	$70
Insurance	$0
Maintenance	$0
Tags & Taxes	$0
Car Payment	$400		$9,537
subtotal	$470		$9,537
CLOTHING
Sunday Best	$0
Work	$0
Everyday	$0
subtotal	$0
MEDICAL/HEALTH
Prescriptions	$0
Deductibles	$0
Eye Doctor	$0
Insurance	$0
subtotal	$0
RECREATION/Memberships
Entertainment	$0
Dating	$0
Optimist Membership	$40
Farm Bureau Membership	$0
Subtotal	$40
DEBTS
Providian Credit Card	$0		$0
Fingerhut	$10		$1,000
Black Gold Insulation	$0		$0
IRS	$531 (tax refund)		$3,795.52
Subtotal	$10		$4,795.52
TOTAL	$940		$15,124.03

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Tax Time

It is once again that time of year to file our taxes. Unfortunately, I can't file mine for probably another month. Because of that real small holding I have (thanks to an inheritance) in a small local telephone company in my hometown. Since it is an LLC, I, as a shareholder am treated as a partner so I have to wait for them to file their taxes, before they can send me the information for mine. Something I hate, since I am one that always prefer to get my taxes filed early.

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Another Look At The Rebate Checks

Now that both houses of Congress has approved the stimulus package and the President has signed it, the checks are in the mail. Well not quite. The Treasury Department says that it will be early May of this year before they actually get in the mail. If you get one at all.

Will you get a check if you owe the IRS? How Much will you get? Will you get a check at all? These are all questions, I will answer in today's post.

Tax rebate checks will be mailed to about 130 million people, according to the Internal Revenue Service. Because of amendments made to the bill in the Senate, some 20 million retirees living on Social Security and 250,000 veterans receiving disability benefits also will get checks.

Single tax filers with adjusted gross incomes of less than $75,000 and couples filing jointly with adjusted gross incomes of less than $150,000 will qualify for full rebates.

How much is the rebate?

Most taxpayers will receive a check of up to $600 for individuals and $1,200 for couples, with an additional $300 for each child. Children are defined as younger than 17.
- Topeka Capital-Journal

OK, but there are people who owe the IRS, what about them? I might point out, that I am not talking about tax dodgers here. I am talking about people who for one reason or another came into a windfall of money. Spent it all. And now can't afford to pay the taxes. These people are guilty of poor planning, not of tax invasion.

If you owe taxes, the IRS will withhold your rebate and apply it to what you owe, according to a Treasury Department spokesman.
- MSNBC

So you are going to get a rebate check. What should you do with it?

Dave Ramsey actually made some suggestions recently that I thought would be perfect to share with you my readers.

1. Pay off debt.
Dave Ramsey says, that this may be a no-brainer, but he expects few people will actually do it. As he points out, if you actually do this, then you will be one step closer to being able to buy that I-Pod, TV or whatever it is you have your eye on (for cash).


2. Invest it.
This is the idea I like best and if I wasn't payig down debt with mine would be exactly what I would do with my $600. Think about it, the way Ramsey put it. If you invest in a good "mutual fund averaging 12%. In 2018, that one-time investment will grow to approximately $2,000! If left in for 20 years, it will be worth about $6,500! For the married folks, this free money can grow up to $13,000 over 20 years." Now that's what I call a good investment.

- and finally -

3. Have some fun
Ramsey says that there is nothing wrong with having some fun with your rebate check. A nice dinner out, a couple pair of jeans, a movie are all fun things you could spend some of this money on. However, Ramsey reminds us, no warns us, to know our boundaries. "The quicker you get out of debt," Ramsey says, "the more fun things you can do and the more money you can give away to bless others."

So there you have it. What more can I say? Well there is one more thing. Something that even I believed was fact, for which it isn't. Take a look at this quote, also from the Capital-Journal article.



I have heard this is just an advance on next year's refund. Is that true?

No. This is actually a tax credit for 2008 that normally would reduce the tax you pay when you file next year. Instead, to stimulate the economy, Congress ordered a prepayment of the tax savings.
- Topeka Capital-Journal




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Dave Ramsey ,the Presidential Campaign and Taxes

I have been hearing a number of people (even had visitors searching the search engines on this topic) asking who Dave Ramsey was endorsing for President. So, I decided to make a call to Brentwood, TN and ask the source directly.

Beth Tallent, Director of Public Relations, said that Ramsey, typically stays out of politics unless it deals directly with finance.

When asked, what his opinion of Mike Huckabee's Fair Tax was, she said that he hasn't addressed Huckabee's Fair Tax, although he has addressed the "Fair Tax" long before Mike Huckabee ever was a candidate. She then promised to get me a quote from Ramsey on the issue.

Below is Dave Ramsey's thoughts on the Fair Tax:

“I love the idea of the Fair Tax. The beauty of it is that by in large it’s a voluntary tax. If you don’t want to pay the tax, don’t buy something. I bought a car not long ago, and there’s a tax on that car when we record the title in the state of Tennessee where I live. And if I didn’t want to pay the tax, I didn’t buy the car. But when I bought the car, I knew the tax went with it. And that’s part of the thing. But it’s a voluntary tax and I like that part of it.”

So there you have it. No endorsement from Ramsey, but he does seem to like the idea of the Fair Tax.



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How will you spend your tax rebate?

I have been leery about writing this post, because, I am not sure i know enough to talk about it. However, after hearing a couple of local talk shows tackle the topic, I believe I am better informed at least enough to write this post in a certain style and format, that won't get me in trouble.

First, individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who earn at least $3,000 but don't pay taxes would get $300 rebates. Personally, I am not sure how that is a rebate. If you didn't pay taxes, then it's not a rebate, instead it's redistribution of wealth.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes.

"I can't say that I'm totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come," Pelosi said.
- The Associated Press

OK, now, that we know some of the important details, I would like to ask the same thing that one of those local talk shows did. How will you spend your "tax rebate"?

For me, if I even get a rebate, because of my IRS debt, I will use it to pay down my debt. If I don't, I assume that it will be a credit to my IRS debt (anyone know?). I would love to say that I was going to put it in savings, but fact is I must get these debts paid down.

Now, I know that it's not what President Bush wants, since I am not spending the money on a new TV or some other item, but I don't care. You can say I don't care about the economy, but as a personal finance blogger and a follower of Dave Ramsey, if we really want to help the economy, we will stop spending more then we make (more on that later).

So I ask again, what are you going to spend your tax rebate on?

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Tax Time - IRS Good! - State Bad!

With tax day approaching fast, it is time to post about my taxes. In addition, my joke of the day site, is posting tax jokes each day until April 17.

So haw did I fare on my taxes? Federally, I did OK, but the state not so well. However, I did better on the state level than I did last year.

I made almost $8,000 more in 2006 than I did in 2005

Federal Taxes:

• My 2006 taxes netted me a refund of $226, compared to balance due of $44, in 2005.
• It will be nice to see my IRS debt, to be reduced again.
• I need more deductions, to lower my taxable income.

State Taxes:

• I owe on my 2006 taxes I owe $51, compared to the $119 that I owed in 2005.
• This payment hurts, as these kind of payments hurt everyone else. Next year though, I will be better planned and have the money in savings.

I mentioned in a past post that I plans for insulation in my attic. I still plan to give you details in the near future, but I need to come up with about $500 so I can get insulation blown into my attic. This will net me a credit on my 2007 taxes, thus lowering my taxable income this next year. Not to mention the energy I will save on my home heating bills, this next winter. Something that is hard to do, when I am so deep into debt. Speaking of which, somehow some way, I want to get ALL of the credit card paid off before May 5. Anyway, that's my current tax situation. I will be updating my IRS debt situation in a few weeks, when I get my update letter from the IRS.

A favorite tax joke

The local bar was so sure that its bartender was the strongest man around that they offered a standing $1000 bet. The bartender would squeeze a lemon until all the juice ran into a glass, and hand the lemon to a patron. Anyone who could squeeze one more drop of juice out would win the money. Many people had tried over time (weight-lifters, longshoremen, etc.) but nobody could do it.

One day this scrawny little man came into the bar, wearing thick glasses and a polyester suit, and said in a tiny squeaky voice.

"I'd like to try the bet." After the laughter had died down, the bartender said OK, grabbed a lemon, and squeezed away. Then he handed the wrinkled remains of the rind to the little man.

But the crowd's laughter turned to total silence as the man clenched his fist around the lemon and six drops fell into the glass. As the crowd cheered, the bartender paid the $1000, and asked the little man.

"What do you do for a living? Are you a lumberjack, a weight-lifter, what?"

The man replied, "I work for the IRS."

Incoming Money Delayed

Thursday was the 8Th of the month. What is so special about the 8Th? The 8Th of each month is when my roommates rent is due. As of yet, I have not received his check and with insurance premiums due, I am getting antsy, even though I know it will probably be setting on my recliner when I get home in the morning. Then again it may depend on his payday, which may not be until this Thursday.
At least I received my weekly paycheck this past Thursday. It was nice to see it back to the regular dollar amount after seeing it drop $25 each of the previous 2 weeks, thanks to cuts in hours at work.
In a related note, it is about time for my quarterly check from Peoples Telecommunications, LLC, which would help out a lot also. That check should come sometime in the next month or so. In addition, somewhere around the 15Th of March, I should receive my K-1 from them, so that I can get my taxes filled.

Thoughts & Questions on the Energy Credit

Last year, I posted about my need for insulation (here also). At the time, I estimated I would need about 10 rolls at a total cost of around $300. Well tonight, I was talking to a guy at Lowe's to get a better idea of what I needed (I want to get the energy credit for this year to). R-25 costs about $25/roll and I would probably need about 22 rolls rather then 10, meaning I would need to come up with about $600 to finally get insulation in my attic. Of course that would not get the upper portion of the 3 attics I have in my house, but would get the most important areas on my ceilings.

While I am thinking about the governments energy credit. Does anyone know, if switching to the compact florescent bulbs would be included? I picked up 3 more bulbs while I was there at Lowe's. In fact one was a 2-pack (1st time I had seen a 2-pack) for my ceiling fan. The other was a compact flood light, for my back porch. In addition, I seen the regular compact florescent in a 4-pack (1st time seeing 4-packs to). Next time I buy bulbs, I will be picking up a couple 4-packs at Lowe's. I expect to have most of the lights replaced with these energy savers by the end of the year, and I just wondered if I should save my receipts for the tax man or not.

I know, if I replace the water heater, I can get a credit. But what if I just buy the insulation to wrap my current one in?

Other Ways to Get the credit

• Replace old windows with double or triple pane windows


• Replacing Exterior doors with doors rated as energy efficient


• Metal roofs (meeting applicable Energy Star requirements) - I have thought I would like to go this route instead of my shingles, I just never thought it was more energy efficient.

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Residential energy property credit

A new tax credit of up to $500 is available to individuals for non business energy property, such as residential exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters placed in service in 2006 and 2007. The non business energy property must be installed in or on a dwelling unit in the United States that is owned and used by the taxpayer as the taxpayer's principal residence and originally placed in service by the taxpayer. There must be a reasonable expectation that the qualified energy efficiency improvements (exterior doors and windows, insulation, and certain metal roofs) will remain in use for at least 5 years.

The residential energy property credit is limited to a maximum of $500 for all tax years and no more than $200 of the credit can be based on expenditures for windows. The credit is equal to: (1) the residential energy property expenditures plus (2) 10 percent of the cost of qualified energy efficiency improvements. Eligible improvements include: insulation materials; exterior windows, including skylights; exterior doors; metal roofs with special pigmented coatings; electric heat pump water heaters; electric and geothermal heat pumps; central air conditioners; natural gas, propane, or oil water heaters or furnaces; hot water boilers; and advanced main air circulating fans.

There is also a nonrefundable tax credit available to help individual taxpayers pay for residential alternative energy equipment. The residential alternative energy credit is 30 percent of a qualified solar electric property expenditure, qualified solar water heating property expenditure, or qualified fuel cell property expenditure made by the taxpayer during the year. The maximum credit for any tax year is $2,000 for each category of solar equipment, and $500 for each half kilowatt of capacity of fuel cell property installed during the year. Eligible equipment must be placed in service during 2006 through 2008.

- http://www.finance.cch.com/text/c60s15d780.asp

Sounds like I would be able to get most of my money back for the insulation, but if I do anything else, it would be just out my own pocket, with no rebate. I mean, If I spend $1000 to get a Pella "blind between the glass" picture window, I would be able to claim a credit of $200 on that window, but then I would only be able to claim $300 on the insulation. Am I reading that all right? Am I missing anything?
No matter what, all these items would help save me money on my home heating/cooling bills.

Frugal Living As A Form Of Tax Resistance

I recently read a couple of articles by David Gross, that I found very informative. His tips are geared towards resisting taxes legally, however, even if you aren't trying to make a statement, his methods are fantastic tips to remember so that we can all save on our taxes.
Here is how Mr. Gross says it works:

It starts by noticing that the federal income tax isn’t designed to tax all of your income, just your “taxable income.” So path #1 involves removing as much
of your income as possible from the “taxable income” category.


Once you’ve done this, you’ll end up with a certain amount of “taxable income” and a certain amount of tax owed on it. But that’s not the end of the story. This tax can be offset, eliminated or even reversed into a “refund” by using various credits. Path #2 is qualifying for these credits.


Then, once you run the numbers and figure out how much money you can earn and
spend without owing taxes, you need to take a look at your lifestyle and your
goals and adjust them if necessary so that you’re living in your means
at this income level.


That’s it, in a nutshell.

Some income is invisible to the tax man. For instance, if you had money
deducted from your paycheck before taxes are deducted from your check.

• 401-K
• Health Savings Account
• Some companies may withhold money from your paycheck to buy bus and subway
• passes
• Check your company to see what is available to you



• Your “total income” also includes any “capital gains” you might have made during the year — for instance, if you sold stock
  or property at a profit. On the other hand, if you sold stock at a loss you
  can subtract this loss when calculating the “total income” (up to
  $3,000 — don’t worry if you lost more than this because you can
  save up the rest of the loss to use in future tax years).



• Business owners can deduct business losses.



• other deductions may apply to you as well

Now that you have your "Total income" it's time to get to your "Adjusted Gross Income"

By “adjusted” they mean “lowered” because all of the
adjustments are deductions (so use as many of these as you can). Your
“adjusted gross income” is what is used to calculate some of the
credits that I cover in “Path 2” below — and the lower it
is, the better. For myself, the key to qualifying for credits that brought
my taxes down to zero was to get my “adjusted gross income” under
$15,000.

• a tax-deferred Individual Retirement Account (IRA) — not only because the money you put in (up to $4,000) is deducted right away from your “total income” but because by putting money in a retirement account, you can qualify for a generous credit. Beware, though, that there are forms of IRA, such as the “Roth IRA,” that aren’t tax-deferred and that won’t lower your adjusted gross income. Ask about the tax ramifications before you invest.
  



• You can also “adjust” up to $4,000 off of your income by spending
  money on tuition for higher education.



• If you run your own business or are otherwise self-employed, you may be able to take a number of deductions here on things like your health insurance costs, and part of the cost of your payroll taxes (FICA)



• Other deductions are available for interest paid on student loans and on
  educational supplies bought by teachers. These aren’t the only
  deductions, and I haven’t covered any of them in much depth or detail.
  It’s just an overview to give you a feel for what is available.

From “adjusted gross income” to “taxable income”

There are two remaining deductions: the personal exemption, and the itemized
or standard deduction. Once these are subtracted, you are left with your
“taxable income.”

• The personal exemption is just a certain amount of income that the law lets
  you have tax-free, no questions asked. Don’t get too excited —
  it’s only a little over $3,000. You also get a similarly-sized
  exemption for each of your dependents



• The standard deduction is similar, and somewhat larger, but you have the
  option of either taking it or “itemizing.” By itemizing,
  you can take a whole mess of deductions for things like charitable donations,
  medical expenses, interest paid on loans, job expenses, tax preparation fees,
  and such. Even so, for a lot of people, the standard deduction is higher than
  their itemized deductions would be, so they’re better off taking the
  standard deduction instead

(Itemization note) A few years ago, when my grandmother died, I inherited a few thousand dollars, I donated a percentage of that to charity, however, the donation was large enough that I couldn't deduct the everything at once. The law allowed me to carry that deduction over, I was able to deduct that one donation (or a piece of it) over the course of three (3) years.

Finally, Mr. Gross touches on tax credits:

There are a handful of ways you can get tax credits. These credits are not
deductions that are subtracted from your income, but they are subtracted
directly from the tax you would otherwise owe. For instance, if you looked
up your taxable income in the tax table and found that you should owe $750,
but you qualify for a $500 credit — that credit is subtracted directly
from the owed tax: $750 − $500 = $250.


Among these credits is one for education expenses (but note you can either
take this credit or the deduction on tuition I mentioned in
“Path 1” above — not both). Another gives you a credit for
income tax you’ve paid to a foreign government. Another gives you a
credit if you spent money on child care or dependent care. You also get a
per-child “Child Tax Credit” — and that is higher now than
it has been in recent years. My favorite credit, though (childless as I am),
is the retirement savings credit.


Remember how when you put money into a 401k or an
IRA, you
were able to deduct that amount from your income before calculating your tax?
Well now it gets better. You can take a certain percentage of the first
$2,000 you put into retirement accounts as a credit. If your “adjusted
gross income” is under $15,000, that percentage is 50%, and your credit
is as much as $1,000, which is guaranteed to drop your tax burden down to
zero. That’s how I did it.


The “Earned Income Tax Credit” is a special creature. Most other
credits allow you, at best, to lower your tax to zero. The Earned Income Tax
Credit allows you to lower your tax below zero so that the government
actually owes you money.


In order to qualify for this, your adjusted gross income has to be very low
(but you must have earned some income during the year). It’s also
easier to qualify if you have at least one dependent child. Millions of
people do qualify for the
EITC (and
many of them fail to take advantage of it), but it does typically require
having a very low income

Fair Taxes & Cracking the Millionaire Code

When I went to my mailbox today yesterday, I found two packages there. One, was sent by someone pushing an agenda, that he hopes will be introduced into law. On the surface the proposal known as the "Fair Tax," looks pretty good, but looking through the book, I have some concerns. More on that after, I can watch the DVD and read through the book.

The other package was from the library. It was one of the two books that I had placed my name on the waiting list for. Cracking the Millionaire Code, was the second book that I had requested, but first one to arrive. I am looking forward to going through it. It is co-written by the author of the Millionaire Next door (the other book that I am waiting for from the library).

I plan to talk more about this book later, but he asks the common question does it take money to make money? "Absolutely not," Allen says, "why do most business' fail? ...because they fail to access their hidden resources."

Pay Those Taxes

I am not familiar with other states, but in Kansas today is the last day to pay those nasty property taxes. I went to the county court house yesterday, and paid mine. Money, I really didn't have yet. Every time I try to get my savings built up, either something breaks or I stupidly overspend and raid the saved money.
Something I have started doing is automatically putting one source of extra money in the savings and forcing myself to not use it for regular spending. Over the course of the past month since I implemented the plan, it has been working. However, it was not enough to cover the $390 tax bill.
The good thing, if I can keep the plan going as planned I will have the money saved for the 2ND half of my taxes as well as my insurance payments when they come due again.