Tax Tuesday: Show me the money!

Note: If you owe money to the IRS, you can stop reading now. This post will only make you sad. (and no one wants to be sad)

So you have gathered the paperwork, picked a method to file, filed... and now you are checking your bank account and mail everyday for the increase in your financial status.

If you efiled (as I encouraged you to do!), you should get your refund in 75 hours. Don't wait on your computer clicking refresh every 10 seconds.. it is the IRS afterall, and they this rough estimate can vary based on how many returns came in at once.

If you filed a paper return? It should take 3-4 weeks. (what!? but im used to getting paid every 2 weeks.... welp, should have efiled)

Curious just where you stand? (of course you are! who DOESN'T want their money?) Well, the IRS was sick of phone calls from impatient taxpayers (or should I say, taxreceivers?) so they created a website that lets you check your status! Wheres My Refund? All you need is (1) your social security number (2) your filing status (3) and your refund amount.

Happy waiting...

Tax Tuesday: What Santa and Congress have in common

You better not shout (Yes, it is frustrating to do taxes), you better not cry (Okay, so you might not have a refund this year), you better watch out (hope you saved your receipts...), I'm telling you why.... Congress is coming to town (and collecting taxes)

Yes, there is a strange similarity between the IRS and Santa. (I want to point out the common misconception that the IRS does not actually write the tax law, it just administers Congress's work... probably why taxes are so messed up?) The IRS and Santa invade out homes once a year. The reward, whether it is a tax refund/ lower taxes or presents is directly correlated to your actions all year long - if you are a "good" boy or girl or citizen all year (giving to charity or playing well with others). The punishment, whether it is paying higher taxes or coal has the same correlation.

Both Santa and the IRS try all year to "teach" us to be better. Seems like the two of them are more manipulative than some people's crazy Ex's.  We all know what a "good" boy or girl is like in Santa's eyes, but what about the governments?

1. You should grow up and get married- you get to file jointly!
2. You should buy a home- we will let deduct your interest. Still not good enough? Here, have a tax credit!
3. You should have kids- Its hard enough, so you deserve a deduction for dependents.
4. Your kids should have child care- this way you can work, get more money, and pay more taxes. But we will give you a break on child care.
5. You should go to school- cant afford it? we will help you out
6. You should not smoke or drink or tan- hey, we can implement a sin tax to punish you unhealthy people
7. You should take care of your elders- qualified relative deduction.
8. You should give to charity- charitable contribution
9. You should still take care of your kids if you get divorced- thats right. we will make you pay it AND not charge the poor caregiver income tax on the child support.
10. You should save your money- we just might not tax you on it.

What manipulative people those politicians are. But then again? so is Santa. I guess someone has to teach us right from wrong once we reach adulthood.

They see you when youre sleeping, they know when youre awake (and working so you can pay taxes), They know if you've been bad or good so be good for goodness sake. (Does this not creep anyone else out?)

Tax Tuesday: The big move

The only constant is change -Heraclitus, a Greek philosopher. (Yes, I had to wikipedia the quote so I could correctly cite the right person. I honestly don't know who that guy is. But hes pretty smart and his saying is famous)

This is true when it comes to jobs. When I look at most of my college friends they have graduated college, spent so much time looking for just any job due to the economy, built up their resume, and then switched. Or started with a job, decided they never should have picked their major, and switched. Many times friends have left the city, state, and country to do so. (Not that either of these apply to me and I'm not looking to leave my job, I am simply noting the trend). 

Yes, we are in a world where people change their jobs more than they change their hairstyles. It only makes it that much more important to uncover the hidden tax treasure of "The Big Move".

New Job? Same Job? Your First Job? Doesn't matter. You have to pass two tests to deduct your moving expenses:

1. Is your "New Job" and "Old Home" commute 50 miles greater than your old commute? If yes? continue. If no? You did not pass go and you do not collect a tax deduction.

2. Did you work 39 weeks out of the first 12 months of your move? This stops those government-money-stealing people who are looking for a tax break, so they move to Hawaii and work at starbucks for a week just to quit and have some of the moving expenses deducted. (really? who does that?)

And what do you win? For playing "The Big Move" you win the following deductions:

1. 16.5 cents per mile driving to your new home. which doesn't work so well if you want to drive to Hawaii, don't try it. 16.5 cents is nothing really

2.The cost of packing and shipping your possessions. AWESOME for Hawaii. and for those pack rats out there

3. The cost of travel to your new home- lodging, not meals. 5 star hotels with mcdonalds fries please

4. The cost of disconnecting your utilities and setting up your new ones. Yes, you can still use your blowdryer in Hawaii. Sweet.

What is the best advice? Save your receipts. You never know when you will discover that you can deduct certain items in your move... or defend yourself to the IRS. But don't worry, you can deduct the cost of moving your receipts with you to your new home. (or be practical and scan them into your computer, but whatever works for you)

Tax Tuesday: The art of procrastination

This topic is only fitting since I am writing Tax Tuesday on Wednesday. I am sure everyone was anxiously awaiting Tax Tuesday (since everyone loves reading about taxes) and were extremely disappointed when Tax Tuesday was not posted yesterday (that is, if anyone even noticed). The beautiful thing about having your own blog, and not getting paid for it, is that you can write Tax Tuesday any day of the week that you want.

However, doing your taxes is not QUITE the same. We have the wonderful deadline of  "April 15th". Now, there is this thing you can file called an "automatic extension of time to file." If you are a huge procrastinator (such as one of those people who would write Tax Tuesday on Saturday), you can opt to file your taxes by October 15th. Honestly, I think this is just silly (for most people). You would have to fill out a form to file and extension so you can fill out a form later.  PLUS it is only an extension to FILE, not to PAY your taxes. You still have to pay by April 15th. (For those ultimate procrastinators who thought you didn't have to pay until October 15th- you can send me half of the penalty fees I just saved you)

But why wait until April 14th to file? (for those people who would wait to write Tax Tuesday until 11:50pm on Tuesday) There are many benefits to filing your taxes early! Maybe even this weekend?
(1) Faster Returns- The IRS sends refunds back in the order that the returns are received. There are ALOT of procrastinators out there (guilty) and many of them will be waiting until the last second to file. That means you are waiting in a HUGE line to get your refund. This is like going shopping on Black Friday when there isn't even a financial reward. Why do it? Efile, Direct Deposit, and get your money back NOW! (then you can go shopping next weekend with your refund check!)
(2) Peace of Mind- Then when everyone else is freaking out last second about getting their return in, you will know that you already did it. You can treat yourself to a glass of wine and read all of the frantic facebook posts from your friends trying to do their taxes last second. Plus you have bragging rights in the office when people complain about still needing to file. (You can take yourself guilt free shopping with your refund check without "doing your taxes" hanging over your head!)
(3) Room for Error- Realize you forgot your W-2 from that random summer job you had for a month? Guess what, you still have time to get the form. Have a major tax issue? You still have time. Time is money.... possibly literally this time.
(4) Planning time- You get to the end of your taxes and you see that final number. Whether you owe $1500 or you will be refunded $1500, it helps to have planning time. If you owe the money, you can use your extra few weeks to save your money, beg your friends for money, or start selling boxes made out of Popsicle sticks door to door so you can pay up by the 15th. OR if you are one of the lucky ones, you can do some online shopping and plan how you want to spend your refund!

So what have we learned? Better late than never, Tax Tuesday should be done on Tuesday, and getting your taxes done early is definitely a good thing! Thus, ending your motivational speech of the week... go out there and do some taxes!

Tax Tuesday: Big things come in standard packages

In the real world one size does not fit all. No, I do not care what the label says. That sweater can not possibly fit every girl in this room. Or that scarf? some people want a long one, others want it short. We don't all have the same shoe size. Infact, I don't even have the same shoe size in different brands. But in taxes? see that's a different story. Uncle Sam gave us a standard deduction that is a one-size-fits-all kinda deal.

Think of it like a spending allowance. In highschool my parents decided that my brother and me could spend $10 a week. It doesn't matter if he spent all $10 on breakfast tacos and I bought a new shirt. My parents could figure "eh, the roughly spent $10 each". Uncle Sam figures that we roughly spend $5,700 a year on deductible expenses. (No, he doesn't actually GIVE us the money the way my parents did)

Cool. So we can take the standard deduction of $5,700? Sure! or you can itemize and take the "itemized deduction" instead. I can't actually give you tax advice, but I can give you some facts from the IRS and food for thought from Forbes.

1. The Standard Deduction is not too shabby. Save all your receipts? break a few limbs to increase your medical expense? donate to charities youve never heard of? turns out, you might STILL save more by the standard deduction. 

2. You probably can't deduct your medical expenses anyways. You can only deduct the amount of out of pocket medical expenses OVER 7/5% of your income. So that $80 I spent for my eye exam? not 7.5% of my income. Unless you have a serious illness, you probably wont come close. (don't you dare think "that sucks"- YOU ARE HEALTHY! go skiing or something)

3. How much is your mortgage interest anyways? None if you are like me and live in an apartment. But if you DO own your house? you need to do the math to make sure that you are going to received a bigger deduction than your standard deduction.

4. Charitable Deduction- you might give away your clothes, but I hope you kept the receipt! If you get selected for an IRS audit, you need proof of your charitable deductions. Oh yea, and giving a dollar to the guy on the street corner doesn't count.

5. Miscellaneous Deductions are limited too. (2% of your income) For things like: Tax preparation fees (you should have none if you do them yourself), Safe deposit box fees (count me out), Unreimbursed job related expenses (do my shoes count?... sadly no)

Do I really need to do TWO tax returns and then just take the standard deduction anyways? probably not if you are just out of college, rent, perfectly healthy, and don't even know what a safe deposit box is. BUT I would recommend looking into it (mostly to CMA) and here is a cute little calculator to do it for you. 

Tax Tuesday: Just another shopping trip

Shopping for tax software.. well, the first word sounds fun. But, thats about it.

So now (if you followed your homework from last week), you have gathered your tax items that you need. It is time figure out HOW you are going to do your taxes. Yuck.

It is sort of like a good valentines day date. You know you want to wear heels (or do your taxes in this case), but you just cant decide which one (HR Block, Turbo Tax, Efile..) If you were trying to figure out which shoes to wear, you would try them all on. Well you can't do that with filing taxes unless you want to spend all Saturday "shopping" for tax programs. (And who wants to be shopping for tax programs when you can be shopping for that next perfect heels). Think of reading this blog as saving yourself time on Saturday to do things you really want to do. (like shopping).

The down-and-dirty, save-time-for-shopping options:

1. Hire an accountant (aka the "expensive Louis Vuitton shoes"). Odds are, if you are in your 20s you probably don't need this option. Who wants to spend that much money just to pay more money to the government (or dip into your refund money). Do you NEED to go to HR Block? probably not, unless you have complications with your return (a major life event, tuns of interests, trusts, inheritance, small business, etc.) Of course, if you DO have a trust fund and tons of interest, I am ALWAYS taking personal donations (between us, we can call it a charitable contribution)
2. Free-File on the IRS website (aka the "$3 Old Navy flip flips"). If you make $58,000 or less, you have the option to free file on the IRS Website. AWESOME option if your return isn't too complicated and you aren't making over the limit. Make sure you go through the IRS website so you can avoid filing fees. (I also think doing your own taxes is good because you really get to see where your money comes from and what exactly goes into the dreaded term "taxes")
3. Turbo-tax or an at home solution. Questions to ask yourself when picking a software: Do I really need it? Will my company pay for it? Does it work with my computer software? Does it come with a guarantee?  Oh, and this might be obvious, but beware of buying tax software on ebay. The 2005 edition just wont cut it with this year's tax laws!

And thus concludes your tax season lecture of the day. Happy Tuesday. Do your taxes, then buy some shoes.

Tax Tuesday & Alphabet Soup

It is amazing that no one really cares about my "CPA" or "tax accounting job" until recently. Suddenly all of my friends are incredibly interested and find themselves asking questions like "Wait, so what do you do again?" and "So, you are going to help me with my taxes right?" I wish I could do all of my friend's taxes (do you really want to trust me with all that personal information?) but alas, it is tax season (clearly) and thus I am working WAY to many hours as it is. And do I really feel that confident?

Taxes have become a hot topic, and especially for young professionals who may be filing their first tax return by themselves. Over the last week I have heard people who were worried about how they would file, what they needed, would they take all the right exemptions, and are they still going to get a refund? This isn't just from my "non-finance" friends. The anticipation of tax season even extends into my tax accounting coworkers- who although we know HOW to read tax forms and code, may not have done individual taxes since that one class way back in college that we barely remember.

We have ten weeks until our tax returns are due. That is ten tuesdays until the beloved April 15th, and so I have decided to try to give tips, advice, and help each tuesday regarding the terrible taxes.  (Please note, if you are one of those people who do not even know what April 15th is- you should probably just take your information to HR Block)

Whether you decide to do your own taxes or hire an accountant, you need to gather information and prepare. The form names seems to cause anxiety. "W- WHAT? Schedule M? I...? something something T? EZ? Which reminds me of alphabet soup. (random letters. little meaning)

W-2 - This form is used to report wages earned by employees and the taxes withheld from them. Your employer should provide you with this form (most likely in the mail). Make sure you get this form and also save it. (for some reason it looks like junk mail when it comes in.

1098-T,E -  These forms refer to student loan interest statements (E) and tuition statements (T). Student loans? yes, this form can save you money. But if your university is like mine, they don't just mail it out to you. You have to (1) try to figure out your super old password and user name or (2) fax a request for one to be mailed. Oh yea, and they won't mail it until two weeks after the request is received (really!?)

1099 INT, DIV, B, MISC - The 1099 series reports other income (besides what is on your W-2) Interest (I) Dividends (D) Sales Proceeds (B) and that random side job (MISC). That old mutual fund you had from your childhood that is now in your name? Yep, you better get your parents to mail you the 1099. Independent contractor? Start filling out your 1099-MISC. Mortgage? Yes, you need your mortgage interest statement.

K-1 Statements- These report the income earned from any trusts, partnerships or small businesses you might have been involved with or invested in.

What else do you need to gather?  IRA contributions, education expenses, childcare expenses, healthcare fees, gambling losses (hey- these finally might come in handy!), summary of moving expenses. (There are also great resources on the IRA's Indiviudals website -  I visit it when I have trouble sleeping at night)

I am pretty sure I have just lost every blog reader I ever had. Don't worry, tax tuesday will have shorter and more informative blog posts for the next 9 weeks. This week's homework? Call your alma mater, call your parents, call your company, and make sure you get all of the statements you need.  

What do you think? Helpful? Or does the subject of taxes make you run frantically from your computer?