Monday, April 20, 2009

Found Money

We drive miles out of our way to save a few pennies on gas, then go around the corner and use an ATM that charges $2.50 for every withdrawal. There’s no doubt that saving a dollar on a fill-up is gratifying. Imagine how many gallons of fuel we could save if we watched ATM fees, bills and and other parts of life. Here are some easy ways to save money around the house.

Household Bills

  • Shop around. Compare service providers for things like phone and internet. When buying big ticket items compare the offers of at least three providers (make a sheet with the features and options of each so that you’re comparing apples to apples).
  • Cancel unused services. If you’re not watching cable, for instance, as much as you thought, then cut your cable bill down to the basic package, or cut it out of your life entirely.
  • Cut heating bills. Reduce energy costs by as much as 30% using Energy Star appliances and making sure your house is well insulated.
  • Put in some effort. Convenience can be expensive. You’ll spend about twice as much on items such as pre-washed mixed greens and a jar of pasta sauce versus a head of lettuce and the ingredients for marinara.
  • Go generic. Buying the store brand can save up to 50% according to Consumer Reports. And today’s store brands are typically very good quality.
  • Brown bag lunch. Take your lunch to work.
  1. Don’t pamper your car. Unless a high-octane gas is specifically recommended for your car, buy regular unleaded.
  2. Go slow. Improve fuel efficiency by 10% by observing the speed limit and accelerating slowly.
  3. Drive a smaller vehicle. Drive a sedan instead of an SUV or truck.

Monday, April 13, 2009

Credits At Tax Time

April 15th, tax day is just around the corner. For many this can be a very stressful time, especially this year. Following is some information that I hope you will find helpful in preparing your 2008 taxes and/or planning for your 2009 taxes.

Having Trouble Paying Your Taxes?

For those of you who might be having trouble paying your tax bill be sure to still submit your tax return and notify the IRS of your inability to pay. The IRS has a specific form for this purpose. If you have questions on how to obtain the form or what you should do, give the IRS a call at 1-800-tax-1040 or go to your local IRS office to speak with someone in person.

Credits and Deductions at Tax Time Explained

A tax credit lowers your tax bill dollar for dollar. A deduction reduces your taxable income, so the value depends on your tax bracket. If you're in the 25% bracket, a $1,000 deduction lowers your tax bill by $250. But a $1,000 credit lowers the bill by the full $1,000, no matter in which bracket you are.

Tax Credits You Should be Aware of

Home Energy Efficiency Tax Credits
The Energy Policy Act of 2005 established tax credits for energy efficiency retrofits and on-site renewable energy projects. Many of these incentives that were due to expire in 2007 or 2008 have been extended or expanded. Following are some of the energy efficiency and renewable energy project tax incentives that might be of most benefit to you.

Residential Efficiency Incentives
These incentives provide a tax credit of 30% of the cost of materials up to $1,500 for home envelope improvements. Home envelope improvements include improvements to windows, insulation, roofs, duct sealing, etc. This credit is also available for high efficiency heating, cooling and water heating equipment. When making improvements to your HVAC system, the tax credit also applies to the cost of the labor to install the equipment. In order to qualify for the tax credits the improvements must have been placed in service in 2009 or 2010 and installed in the taxpayer’s principal residence only.

On-Site Renewable Generation Incentives
These incentives provide a tax credit of 30% of the system cost for installing (materials and labor) solar energy systems, small wind systems and geothermal heat pumps. This tax credit can be used for systems put in service in 2008 through 2016. There is no cap on the tax credit for systems put in service starting in 2009. Those systems put in service in 2008 must comply with earlier caps. This tax credit is NOT limited to the taxpayer’s principal residence.

For the specifics of how to qualify and receive these incentives please visit the following web resources

Child Tax Credit
Many working families can qualify for the Child Tax Credit and get up to $1,000 for each child under 17— in addition to the EIC for which they may qualify. To be eligible for the CTC refund, a single or married worker must:

  • have a qualifying child under age 17;
  • have taxable earned income above $11,300; and
  • have either a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN). ITINs are issued by the IRS to individuals who are unable to obtain a Social Security number.

To get the Child Tax Credit you must file a federal income tax return — Form 1040 or 1040A, but not 1040EZ and file form 8812.

Earned Income Credit
If your family works but doesn’t earn much money, there’s a way to reduce taxes or get a refund, even if you don’t earn enough to pay federal taxes. It’s the Earned Income Tax Credit.

The EIC is a special tax benefit for working people who earn low or moderate incomes. Workers who qualify for the EIC and file a federal tax return can get back some or all of the federal income tax that was taken out of their pay during the year. They may also get extra cash back from the IRS. Even workers whose earnings are too small to owe income tax can get the EIC. What’s more, the EIC offsets any additional taxes workers may owe, such as payroll taxes.

Who can get the EIC and how much is it worth?
Single or married people who worked full-time or part-time at some point in 2006 can qualify for the EIC, depending on their income.

Workers who were raising one child in their home and had income of less than $32,001 (or $34,001 for married workers) in 2006 can get an EIC of up to $2,747.
Workers who were raising more than one child in their home and had income of less than $36,348 (or $38,348 for married workers) in 2006 can get an EIC of up to $4,536.
Workers who were not raising children in their home, were between ages 25 and 64 on December 31, 2006, and had income below $12,120 (or $14,120 for married workers) can get an EIC up to $412.

Workers with investment income exceeding $2,800 in 2006 may not claim the EIC.

Here’s an example of how it works. In this case eligible workers can pay less in taxes and get a check from the IRS.

Mr. and Mrs. Johnson have two children, ages 20 and 21, in college. They earned $29,000 in 2006 and owe the IRS $550 in income tax, none of which was withheld from their pay during the year. Their income makes them eligible for an EIC of $1,936. So, the EIC eliminates their $550 income tax — now they don’t owe IRS anything — and gives them a refund of $1,386.

Getting the Credit
If you have children in your home then to get the EIC you must file either Form 1040 or 1040A and must fill out and attach Schedule EIC. Workers with children cannot get the EIC if they file Form 1040EZ or do not attach Schedule EIC. The children must meet some qualifications.
Workers who were not raising a “qualifying child” in their home in 2006 can file any tax form — including the 1040EZ.These workers write “EIC” (or the dollar amount of their credit) on the Earned Income Credit line on the tax form. They do not file Schedule EIC.

Tax Preparation Assistance
Low-income workers can get free help with tax preparation through a program called VITA (Volunteer Income Tax Assistance). To locate the nearest VITA site, call 1-800-829-1040.

Friday, April 3, 2009

enroll now for a chance to win Suze Orman's 2009 Action Plan

It's not too late to enroll in Wyoming Saves and be eligible for the drawing for Suze Orman's 2009 Action Plan book. Wyoming Saves is part of a national effort called America Saves in which over 67,000 Americans have committed to achieving a savings goal. To help people save, Cole Ehmke, UW Extension specialist, collected several resources of interest. The information given herein is supplied with the understanding that no discrimination is intended and no endorsement by Cooperative Extension is implied.

In addition to managing the Wyoming Saves program I am also a participant. Today I transferred my first installment of my savings goal into my savings account.

If you have any questions or concerns about your participation in Wyoming Saves, please let me know. I am here to support you and be a resource for you to help you achieve your savings goal.

Following is the first article that was sent to Wyoming Saves Participants.

Two great ways to establish automatic savings
(1) Online Savings Accounts – provide high yields; all of the following currently pay 5%+, with no minimums to establish (or maintain) an account, no fees, and are FDIC insured.
a. Emigrant Direct
b. FNBO Direct
c. HSBC Direct

(2) Mutual Funds – while many mutual fund companies require a large initial investment to open a mutual fund account, some companies will waive the initial investment if you establish an automatic investment (typically $50/month). T.Rowe Price and TIAA-CREF are a couple of notable ‘no load’ fund companies; AIM Funds and American Funds are examples of load fund companies that allow for automatic investments to open accounts. The Mutual Fund Investor Center provides a search tool to find companies that accommodate people looking for automatic investment opportunities.
A recent Federal Reserve Board study identified successful saving strategies:
- Have a reason to save. Households with an identifiable goal for saving were more likely to have financial assets (and also have higher levels of assets). Setting a goal is an important part of any saving strategy.
- Think ahead, plan ahead. Looking into the future can be an important motivational tool to help people anticipate and be prepared for future expenses. The most prominent goal of the Savers in the program is to develop an emergency fund. Many experts recommend having a fund that could cover three or more months of living expenses.
- Develop a savings habit. It is no secret that getting started is the biggest challenge people face financially. Once the habit is developed, people comment on how “second nature” saving becomes.
- Make savings automatic. Automatic savings via payroll deductions or automatic transfers from a checking or savings account is one strategy found to be very effective in “creating” Savers.