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Jun
06

Save Money: Gas Mileage Tips That Work

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Full gas gauge

 

Gas Mileage Tips That Will Save You Money

Summer is here, the kids are out of school, and the beach beckons. Whether you’re piloting the minivan around town or heading out on a road trip vacation, the price of gas is going to be an issue. In my village the price of gas has been swinging 20 cents overnight – and usually up. I never know what it’s going to cost me when the car or truck needs a fill up.

Do you know that only about 14-26% of the energy from the gas you put in the gas tank is actually used to move your car down the road? The rest of the energy is used to run the accessories, and is also lost to engine and drive-train inefficiency.

The potential to improve your car’s gas mileage is huge. Follow our proven gas mileage tips, and make the most of your gas dollar.

Drive More Efficiently

Aggressive driving wastes gas. When you’re in traffic, maintain a constant pace. Rapid accelerating and braking lowers your gas mileage by 33% at highway speeds, and by 5% in town. Be safe when you drive – you may save more than gas money.  (Potential Savings Benefit:  5%-33%  Gas Money Savings: $0.18-$1.19 gallon)

Let the Cruise Take Control

Maintaining a steady speed while driving on the highway will save gas. Set your cruise control to take control.  If your car has Overdrive, use it. While in Overdrive the car engine slows down, saving gas and reducing engine wear.

Get Rid of the Weight

Clean out your trunk, removing anything that isn’t absolutely necessary. Carrying around an extra 100 pounds in the trunk can reduce your gas mileage up to 2%. Smaller cars will lose more gas mileage than a large car.

A loaded roof rack can reduce your gas mileage by 5%. Save money by packing items in your trunk when traveling.

 Don’t Speed

Observe the speed limit. Every 5 miles above 50 mph uses an additional $0.25 per gallon.  (Potential Savings Benefit: 7%-14%  Gas Money Savings:  $0.25-$0.51 gallon)

Avoid Excessive Idling

Sitting at idle with the A/C on will use one-quarter to one-half a gallon of gas every hour. If you’re parked, turn off the engine. It’s cheaper to turn the engine off and back on than let it sit at idle.  (Potential Savings Benefit:   $0.01-$0.03 minute with the AC Off.  $0.02-$0.04 a minute with the AC On)

Trip Planning is a Must

Trip Planning, or combining many errands into one trip, saves time and money. Starting your car cold and making a short trip, and doing this several times a week, can use twice as much gas as one longer trip. Your car engine will run more efficiently when warmed up. Planning your trips around town will also reduce the distance you drive, saving you time.

Do You Commute?

If you must commute, drive your most fuel-efficient car. Does your employer allow telecommuting? Working at home even one day a week will result in substantial gas savings. Stagger your work hours, if permitted, to avoid peak rush hour periods.

Take the bus. Substantial savings can be seen when using public transportation.

Become a member of a carpool or ride share program. When you take turns driving in a carpool, you can often save half of your normal gas costs, and save wear and tear on your car.

Find the Cheapest Gas in Your Area

If you’re headed out locally for a fill-up, or driving across the state for a short trip, you’ll want to check gas prices at Gas Buddy.  Plug in a zip code, or city and state, and get a list of gas stations and current gas prices.  Gas Buddy has a phone app, too!  Check Gas Buddy Now

Take Care of Your Car, and Your Car Will Take Care of You

Tune up the car engine. Have the car emissions tested. If your car fails an emissions test, or if you know your car is out of tune, scheduling a tune-up can improve gas mileage by 4%. Have your car checked regularly by a good mechanic. A bad oxygen sensor, for example, can reduce your gas mileage by 40%. Spending a few dollars to replace the part can almost double your gas mileage.  (Potential Savings Benefit:  4%  Gas Money Savings: $0.14 gallon)

Use the Right Motor Oil

Get out your owner’s manual and check and see what the recommended grade of oil is for your car. Using 10W-30 motor oil in an engine designed to use 5W-30 can lower gas mileage 2%. Check the can before you buy – it should say “Energy Conserving” on the APO performance symbol. Energy Conserving motor oil contains friction-reducing additives. It’s a good thing.  (Potential Savings Benefit:  1-2%  Gas Money Savings: $0.04-$0.07 gallon)

Check Your Tire Pressure

Keeping the tires inflated to the proper pressure can increase gas mileage up to 3.3%. Properly inflated tires last longer, and they are safer to drive and ride on.

Note: Do not use the maximum tire pressure printed on the tire sidewall. The proper tire pressure for your car will be found on the sticker in the driver’s side door jamb, or the glove box, and also in the car owner’s manual.  (Potential Savings Benefit: up to 3% Gas Money Savings: up to $0.11 gallon)

Replace the Engine Air Filter

On fuel-injected cars made from the early 1980’s to now, changing the air filter won’t increase gas mileage, but it will give the car more acceleration power. If the car has a carburetor, replacing the air filter will improve both gas mileage and acceleration.

Thinking about buying a new car?

When buying a car, remember this: what kind of car you buy will be the most important gasoline/fuel budget decision you make.

Stop and think about how far you drive to work, and what trips will be mandatory, no matter what the price of gas. The miles per gallon your car gets is a big deal when it comes to your money.

Based on a gas price of 3.61 gallon, and driving 15,000 miles per year, a car that gets 20 MPG will use $903.00 MORE in gas in one year than a car that gets 30 MPG. In 5 years, this amounts to $4,515.00 in extra gas cost! That’s quite a bit of money! How are you funding your retirement accounts? Are you pouring money into your gas tank instead of your IRA?  Do you want to book an expensive family vacation in 3 or 5 years? Your car buying decision can make or break your budget dreams.Gas Gauge showing empty

Think, too, about your carbon foot print (because it matters!) Driving that 20 MPG car instead of the 30 MPG car will also add 20 tons of CO2 emissions to the atmosphere over the vehicle’s lifetime.

Every gallon of gas your car burns puts about 20 pounds of CO2 into the atmosphere. The average car emits about 5-8 tons of CO2 each year. CO2 emissions cannot be reduced by pollution control technologies. CO2 emissions can only be reduced by burning less gas or by burning fuel that contains less carbon.

 

If you’re in the market for a new car, or just thinking about it, take a look at this handy tool. You’ll be able to find the most fuel efficient car that will also meet your driving needs: Find and Compare Cars

 

Note: gas savings noted throughout the article are based on a price of 3.61 gallon

Data Sources

Estimates for the effect of speed on MPG are based on results of a current ORNL study (forthcoming).

Information on the impact of air filter condition on fuel economy is based on studies at Oak Ridge National Laboratory (ORNL):

Thomas, J., West, B., Huff, S. 2013. Effect of Air Filter Condition on Diesel Vehicle Fuel Economy. SAE Technical Paper 2013-01-0311.

Thomas, J., West, B., Huff, S., and Norman, K. 2012. Effect of Intake Air Filter Condition on Light-Duty Gasoline Vehicles. SAE Technical Paper 2012-01-1717.

Norman, K., Huff, S., and West, B. 2009. Effect of Intake Air Filter Condition on Vehicle Fuel Economy. ORNL/TM-2009/021. Oak Ridge National Laboratory.

Estimates for fuel savings from vehicle maintenance, keeping tires properly inflated, and using the recommended grade of motor oil based on Energy and Environmental Analysis, Inc., Owner Related Fuel Economy Improvements, Arlington, Virginia, 2001.

Estimates for fuel savings from sensible driving are based on Energy and Environmental Analysis, Inc., Owner Related Fuel Economy Improvements, Arlington, Virginia, 2001.

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Keep Your Kids Busy Learning This Summer with www.Kids.gov

Kids and Dad at the Beach

 

Are your kids out of school for the summer yet? How many days will go by before you hear the inevitable, “Mom, I’m BORED!” or the fingernail-on-chalkboard whine: “There isn’t anything to DO!

Someone asked me tonight what I would have done when I was younger if I had access to the technology of today. I sure wouldn’t have been bored, and your kids don’t have to be, either.  This generation of kids has access to www.Kids.gov, a free, safe, and online world brought to you by your tax dollars at work.

A Free, Safe, Web Portal for Learning

Kids.gov is the federal government’s official web site for kids. The web portal is packed full of activities for K-8th, and is a great way to keep kids learning during their vacation. Kids.gov is a wonderful resource for parents and teachers, too. Take a look!  It’s worth it!

Games & Videos

“Please, Mom, can I play just one more game before I go to bed?!” With the Play Games section at Kids.gov, children can learn math, science, history and more when they spend time playing online games. Your child will become an adventurer as she solves secret codes from the National Security Agency (NSA), or an engineer when he works on word puzzles from NASA, learning all about the Earth.

On rainy days, when the kids are stuck inside, plug them into Kids.gov and let them pick out videos! No way will they have these plots memorized! The Videos section has a wide selection of things for kids to watch. Learn about cool careers in archeology, and how money is made at the US Mint. Meet a keeper at the National Aquarium, and learn how she takes care of an albino alligator. Your kids will love learning about the mysteries of weather and tornadoes as they follow along with a storm chaser. There are videos that educate about current social issues, too, such as how to handle a bully and bullying.

Unleash Your Child’s Inner Van Gogh

Encourage your child’s creative urge with art projects from Kids.gov. Coloring pages, digital photography projects, interactive painting, collage making, animation projects and so much more are available for every artist medium. Meet up with Curious George, or Sesame Street, and let your little artist run wild!

Family Physical Fitness, too

Blue skies and sunshine – kids and adults alike love to be outside during the summer. When you’re ready for a computer break, take it outside. Kids.gov has an Exercise, Fitness, and Nutrition section that is full of ideas to keep the whole family in shape. Learn to work physical fitness into your family’s daily routine. Take your pick of family friendly ideas for exploring America’s beaches, mountains, cities, and everything in between!

 

Kids on summer vacation on the beach

What are your summer vacation plans? 

Are you going on a trip or staying home?

If you’re traveling with kids, what is your #1 travel tip for parents?

 

 

 

 

 

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Easy & Cheap Recipe: Basic Red Tomato Sauce

Mouth with red lips eating spaghetti

Years ago a friend gave me the following recipe. She said it was a family favorite that she had eaten growing up and was now feeding her own kids. After making the sauce a few times and seeing how versatile it can be, it quickly became a family favorite.

This is a basic red tomato sauce that can be used over pasta, fish, meat, chicken, vegetables, egg dishes, spaghetti squash, eggplant, or anything else you like to eat red sauce on. It’s easy to put together and good to eat!

The sauce is quick cooking, and can be ready to serve after a short 30 minute simmer time on the stove top. I’ve gotten into the habit of throwing all of the ingredients into my Crockpot and let that do the cooking for me. On the low setting, the sauce will be ready in 3-4 hours, depending on how your Crockpot cooks. On the high setting, the sauce can be ready in as little as 2 hours. When cooking this sauce in your Crockpot, stir every once in awhile to keep it from sticking to the sides around the top and burning.

A Versatile Sauce That Can Be Used Dozens of Ways

The sauce is very versatile and can be dressed up and changed in any number of ways by any number of additions. If I’m making this for a quick pasta dinner, I’ll add diced fresh or canned tomatoes, chopped sweet onion, and crumbled, cooked hamburger. Try adding any of the following for a complete change of pace:

  • Cooked, crumbled hamburger or sausage
  • Cooked hamburger or sausage meatballs
  • Sliced mushrooms
  • Chopped red and green pepper
  • Fresh diced tomatoes or canned diced tomatoes
  • Cooked stew meat
  • Diced sweet onion
  • Sliced Italian sausage or Kielbasa (quickly brown to remove as much grease as possible)
  • Chunked or sliced zucchini or yellow squash
  • Green beans

On to the recipe:

 

Old Family Favorite:  Basic Red Tomato Sauce Recipe

  • 4 cans tomato sauce (15 oz. Each)
  • 4 cans tomato paste (6 oz. Each)
  • 4 cups of water (use the water to get all of the tomato sauce out of those cans!)
  • 2 Tablespoons Oregano (or to taste)
  • 2 Tablespoons Basil (or to taste)
  • (or, 4 Tablespoons Italian Seasoning)
  • 1 1/2 teaspoons garlic powder (I also use fresh or jarred chopped garlic, a couple of cloves worth)Bowl of tomato sauce with wooden spoon
  • 1 teaspoon onion powder (or to taste, or use diced onion)
  • 1 teaspoon sugar (optional)

Place all ingredients in a large saucepan. Cover.  (Add your alternate ingredient(s) of choice, if desired. Cooked ground beef, fresh mushrooms, cooked meatballs, chopped pepper, etc)

Bring to a boil and reduce to a simmer. Simmer 20-30 minutes until flavors are well blended. Stir occasionally to keep from sticking.

Easy & Cheap!  Feed Everyone or Just The Two of You

This makes a large pot of sauce that will serve 10-12 in one sitting. When I make it and I’m not serving a large crowd, I’ll divide the sauce and freeze half of it for another meal.

You can also divide the recipe in half and make smaller batches if you’re feeding two or three. You can feed 3 at least 2 meals with half of this recipe. If I’m cooking this in a Crockpot, I’ll wait until the last hour of cooking time before adding any fresh alternate ingredients.

If you shop at CostCo or any other membership warehouse, buying canned tomato sauce and canned tomato paste by the case, and pasta in bulk will reduce your cost even more.

When you try this, let me know how you liked it!

Disclaimer:  This recipe was given to me years ago.  If a credit needs to be given, let me know!

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May
31

Don’t Pay This Tax Bill!

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Green piggy bank with tax bill of $1000

 

The email caught me off-guard. It was short and to the point:

Hello again! I have a question for you. We received a letter from the state saying that adjustments need to be made to our income tax return and that we owe $580. It says that if we disagree then we can send them back more information. Do you have any suggestions on what we should do?

My first reaction was to snort and say, “No way!”

My next reaction was concern – concern that this was a new tax client, and first return filed out of the gate they receive a letter from the state demanding money instead of the $350 tax refund they were owed. My third reaction was to groan, knowing that somewhere between the envelope being opened at the state tax office and input into the state computer system, a W-2 had been lost.  How long would this take to fix?

The adjustment notice from the state told the taxpayer that a change had been made in the amount of withholding they had claimed. Because the withholding amount used in the state calculation was less than what was claimed on the return, an anticipated refund was suddenly a balance due.

Quickly checking the math in the notice against my records, it took me about two minutes to find the mistake and verify my fear.

The total state income tax withholding my client claimed on his tax return was $1690.00. The state adjusted that withholding down and used a figure of $830.00.

$1690 – $830 = $860.00

Somewhere, $860 in state withholding had evaporated between the time the return was prepared and the time the state processed the paper. The first thing I did was check the state withholding amounts on the W-2’s of the taxpayer.

Guess what. One of the W-2’s had state income tax withholding of $860.00. It was pretty easy to see that a missing W-2 caused the problem. This is actually a very common mistake at the final processing level. It’s also a common mistake for the taxpayer to forget to include his W-2 with his filed return, or to make a math error when adding his withholding among multiple W-2’s.

This error, although it wasn’t made by the taxpayer, is going to take some time and effort to fix. I’ll write a letter disputing the notice the taxpayer received, explaining the missing W-2 is the reason the withholding was adjusted down. Copies of the W-2 must be attached to the letter to substantiate the case. I’ll make liberal use a bright yellow highlighter to make my point. Once the state receives that information, they will make an adjustment on the case and issue the taxpayer his refund – a few months late.

Hopefully, the adjustments will be agreed to and made without incident. The first correspondence might not do the trick – it may take another letter or a phone call. Remember, they lost the W-2 in the first place!

You should never take any letter from any tax agency, telling you a mistake was made and you owe a bill, as gospel. If you don’t understand the adjustments the tax agency is making to your tax return and your account, contact your tax preparer and discuss your case. Take all letters you’ve received from the tax entity to your preparer.

When you’re dealing with changes being made to your tax return:

  • Make sure you understand completely and agree with the changes being made to your tax return before they are made.
  • Don’t ignore tax correspondence – all letters are sent out on a timed schedule and by law you have certain appeal rights, but if you’ve got 60 days to respond and you don’t decide to answer until Day 90, you’re out of time and too late.   Once Day 60 passes with no contact from you, their changes will become permanent.  If the law says you’ve got 60 days, that means 60 days, not 61.
  • If you choose to ignore the tax agency letters and blow your appeal time frame, the changes will become permanent.
  • If you don’t agree with the proposed changes to your account, present your case in a clear and concise manner. Include copies of the original correspondence to you, your reply, and all exhibits needed to back up your argument.  Keep everything brief but to the point.  They’ve already made the changes. You will have to change their mind.
  • If you prepared your own taxes and don’t know whether you made a mistake or not, make an appointment with a local tax professional and show them the letter. Ask your friends and neighbors for referrals. The best tax experts are often found locally. Personally, I would avoid any of the large tax prep companies and go with a local tax preparer or accountant that comes highly recommended.

Have you ever been on the receiving end of an IRS or state tax agency collection letter?

Were you able to resolve the situation without trading in your first-born?

 

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May
22

Roy: 74, Bankrupt, & It Isn’t His Debt

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Gavel in CourtRoy’s birthday is next week, and instead of spending the day with a fishing pole and a camp chair on the creek bank, he’ll be in federal bankruptcy court. The day of his hearing, Roy will drive two hours from his home into the city, alone.

Roy really doesn’t understand all the fine print on the paperwork, or the lawyer-speak. Roy really doesn’t have a clue how he hit financial rock bottom so quickly after the death of his wife.

What Roy does understand is that in order to keep his home, he must declare bankruptcy and stop any action that could be taken against him on a recent court judgment.

Roy and June were married 55 years. Roy did not handle the finances in the marriage. June did. June passed away after a very short illness, and suddenly Roy was on his own when it came to his money and the bills. If you ask him, Roy can’t tell you the name of his insurance agent.

Gene, Roy’s son, had been helping his mother balance her checking account at times during the previous year. Gene had on-line access to the account, and after having his name added, it was easy for Gene to step in and start paying the bills for his father.  Roy lucked out there.

What Gene wasn’t prepared for was the large stack of paper he found in the old desk in his parent’s living room. Past due credit card bills, collection notices, letters from lawyers, past-due medical bills – there was a lot to sort through,and it took Gene days.

The final picture that emerged was not pretty. Roy owed approximately $20,000 in non-secured debt, in addition to his home mortgage. Of the $20,000 in non-secured debt, $1500 were medical bills in Roy’s name. The remaining debt did not belong to Roy, but it was in his name – and he was getting sued for most of it.

June had taken out credit cards in Roy’s name and given them to her son, Tom, with a promise from Tom that he’d pay the bills. Tom quickly maxed out the cards – and left his mother holding the bag. Tom’s wife bought a bunch of new appliances, and bought Roy a chair, all on credit. When she didn’t pay, they came after Roy for the $5000 balance because his name was on the contract.  That turned out to be an expensive chair.

It was the judgment, recently entered against Roy for the furniture bill, that landed Roy in federal bankruptcy court.

At 74, Roy’s credit is ruined for the rest of his life. The bankruptcy could also affect his insurance rates, and the mortgage loan that is due to balloon in 3 years. Roy is paying an interest only mortgage payment now. He can’t afford for his mortgage interest rate to go up.

Roy filed Chapter 7 bankruptcy, which means all of the non-secured debt will be wiped out. He won’t have to pay the debt back, and none of the creditors can take any judgment enforcement action against him, such as levying his checking account or putting a lien on his house.  In the overall scheme of things, $20,000 is not enough to declare bankruptcy over.  In Roy’s case, however, he’s elderly and on a fixed income.  If his checking account is garnisheed, he’ll starve.

Roy really doesn’t understand any of this, because he never played an active role in his finances. Gene, of course, blames himself. He should have made it his business to know, he thinks. Maybe he could have stopped things from getting to this point, he thinks – if he only knew.

 

  • Are you actively involved in your parent’s finances, or the finances of a elderly relative?
  • Do you know if your parents have loaned money to anyone or given anyone their credit cards? What kind of financial hit would they take if they lost that money?
  • Do you owe your parents money? What would happen to them if you couldn’t pay them back?
  • If you’re married or in a significant relationship, who pays the bills?
  • How involved are you in your finances?
  • Do you know the name of your insurance agent?

 

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Form 1040.  Request an extension and get more time to file!

I may not make the federal income tax filing deadline next week.  My tax return is not done, the fat lady is not singing yet.  I’m going out of town at the end of this week, and I’ll be gone all weekend.  I’ve set aside Friday for my own “tax work”, and what I can’t get done that day, I’ll have to finish up Monday.  Hopefully I can hit the “submit” button before Midnight!

If I can’t get my tax return completed in time, I can file a request for an extension.  Filing for an extension will give me another 6 months to file.  My tax return won’t be due until October 15, 2013.  Filing an extension, however, will not give me extra time to pay.  If I will owe the IRS money, they want me to pay that with the extension request.  They’re willing to wait on the paperwork, but they’re not willing to wait on their money.

Five Things You Need To Know About Filing For An Extension

1.  Filing Form 4868 by mail is the most common way to request an extension (Application for Automatic Extension of Time to File U.S Individual Tax Return).  Pick up a blank Form 4868 at your local library, or download and print from the IRS website.  Fill in the form – it’s short, only a few lines, and attach a check if you think you’re going to owe a balance due.  You don’t have to know to the penny what the bill will be, but take a good guess and write a check for all of it or a large portion of it.  Pay what you can afford.  The IRS will look favorably upon you if you pay now instead of when you file.  You’ve got to get this form in the mail and postmarked before Midnight, April 15.   CLICK HERE FOR FORM 4868

2.  The easiest way to file for an extension is using Free File at the IRS website.  Everyone is eligible to go to the IRS website and use Free File to e-file an extension request.  There are no limitations on this service, income or otherwise, as there is if you’re using Free File to send in a tax return.  Just like your tax return, you’ve got to e-file the extension request before Midnight April 15, and the receipt you’ll get when you file the request is your proof you made the deadline.  This receipt is important – print it and save it.  Put it with your tax return paperwork.  GO HERE FOR FREE FILE

3.  If you do use e-file for your extension request, you can pay any balance due by using the website option to transfer money from your checking or savings account.  You’ll need your bank routing number and account number in order to pay using electronic funds withdrawal, so have your checkbook handy when you sit down at your computer.  CLICK HERE FOR MORE INFO

4.  Do you have your return finished before the deadline, but find you owe money that you don’t have?  File your tax return on time, even if you owe money and can’t pay.  Don’t file an extension.  Send in your return and pay what you can, then call the IRS in about 30-45 days and request a payment plan.  You can also download an application from the IRS website and submit this with your tax return, asking for an installment arrangement that will allow you to make monthly payments (Form 9465, Installment Agreement Request).  The IRS website  has an online tool (Online Payment Agreement) that you can use to apply for a payment plan online.  If you owe money and there is absolutely no way to pay due to unemployment, illness, etc., call the IRS.  There are things they can do that will give you a breather until you can get on your feet again.  The entire time you owe money to the IRS, there is going to be interest and penalties added, and those fees compound daily.  Pay the IRS off as soon as you can.

CLICK HERE FOR THE IRS ONLINE PAYMENT AGREEMENT 

CLICK HERE FOR FORM 9465 INSTALLMENT AGREEMENT REQUEST

5.  Asking for more time to file does not give you more time to pay your taxes.  Tax law says that the tax is due on the money when the money is earned.  This is April 2013 – and the money you owe taxes on was earned in 2012.  You should have been paying Estimated Payments during the year, and not be in a balance due situation now – per the tax code.  If you don’t have the tax you owe paid by the April 15 filing deadline, you will be assessed penalties and interest.  If you can afford it, pay as much as you can with your extension request.  If you still owe, make time to contact the IRS and request a payment plan.  You do not want your account to go to Collections!

Do you feel the need to file an extension?  If not, how fast did you spend your tax refund?

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Apr
10

File Your Federal Taxes For Free

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File your taxes for free

 

April 15th is right around the corner! Have you filed your tax return yet? The Federal FAFSA (Free Application for Federal Student Aid) deadline is June 30th, and many states have deadlines coming up. Colleges can have their own FAFSA deadline, too. If you or a family member need financial aid to attend college, you should get the information in before the deadline in order to qualify for maximum awards.

If you have a college student that worked a job in 2012 and needs to file to report that income and get a tax refund, there are free choices on-line that will keep that refund money in the student’s pocket rather than the preparers.

NOTE: even if your student does not have any taxable income to report, a tax return should still be filed claiming $0 income. When you do this you document that no income was received by the student, and this shows need. Showing need means more financial aid! If at all possible, file a 1040EZ or a 1040A for the student in lieu of a “long form” 1040 – this works in their favor and will allow you to skip about half of the FAFSA questions, too.

 

File Your Taxes For Free

There are many tax-prep companies offering free federal income tax filing this year. Some of these may also file your state return for free – and some will charge a fee. If you find that you are going to be charged a fee to file your state return, go to your state website and check for free filing. Many states offer free on-line filing of state income tax returns, and they’ll have on-line, fillable forms that will do the math for you at the click of a button.

IRS First.  Always.

ALWAYS start your search for free income tax filing on the IRS website! The companies listed there have agreed to offer free filing for being listed on the IRS site. It’s possible, if you access the same company from a source other than the IRS website, you will be charged a filing fee or charged for other products and/or services.

The list of “Free File Companies” can be found at the link below. This is the official IRS website. Be sure and read the eligibility criteria for each company carefully before selecting one – your Adjusted Gross Income (AGI), age, state of residence, whether you are in the military, or whether you qualify for EIC (Earned Income Credit) may affect what company you are able to use. If your AGI falls under $57,000, you should be able to file your federal tax return free of charge.

CHOOSE A FREE FILE COMPANY HERE

Form 1040.  File Your Taxes Free!

Are You Familiar With Tax Prep?  Try Free Fillable Forms

If you are comfortable filling in your tax return information without any interview questions, if you recognize the fields on a tax return and can easily determine what is “wages” vs “what is what” when it comes to the financial information you are reporting, you may want to use

FREE FILLABLE FORMS

  • Free Fillable Forms are on-line, electronic versions of paper IRS tax forms.
  • You can choose a 1040, 1040A, or 1040EZ.
  • The online form program will do the math for you.
  • You must have last years tax return available and the exact amount of AGI (Adjusted Gross Income) in order to file.
  • You can print your return.
  • Can file an extension.
  • Not for use by paid preparers!
  • You cannot file any state returns using Free Fillable Forms.

 

 Save Time by Prepping

In order to be successful and spend as little time as possible filing your tax returns, gather all of the current filing year supporting paperwork you will need. Have a copy of last year’s tax return handy – you won’t be able to file anything electronically without last years AGI or an IRS PIN number.

Direct Deposit is Quick

Use Direct Deposit and get your refund in about 10 working days. When you file electronically and use Direct Deposit, you can check your refund status within 72 hours of filing.

TRACK REFUND STATUS HERE

 

I Owe, I Owe, It’s Off To Pay the Tax Man I Go

Do you owe money to the IRS?

You may find out after filling out all that tax info that you owe a balance due. It’s OK – file electronically anyway, and file before April 15th so you don’t incur a penalty. There are many ways to pay the IRS – they, like every other business out there, will take your credit or debit card:  http://www.irs.gov/uac/Electronic-Payment-Options-Home-Page

 

Click here for more information on how to file your Federal taxes free of charge!

 

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Categories : Form 1040, Free Stuff, IRS, Taxes
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Feb
11

5 Tax Law Changes That Benefit You

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Tax Money The American Taxpayer Relief Act, or ATRA, was signed into law on January 2, 2013. Be thankful the law was passed. There were many tax provisions that expired in 2011 and 2012, and the ATRA not only extended those into the future, but made many of the extensions retroactive. Quite a few of the provisions were also made permanent.

Here are five tax “breaks” that are fairly common, and used widely. Many of you reading right now have relied on these to decrease your tax liability in the past (more than likely increasing your refund), and probably didn’t have any idea the credits had expired. But – Congress (finally!) acted, did the right thing, and gave you the tax deductions back. You’re paying less tax because of these tax law changes – and less tax is always a good thing!

1.  EDUCATION EXPENSE DEDUCTIONS

The two most popular education related tax deductions are the Tuition and Fees Deduction, (Form 8917), and the deduction for Educator Expenses. Both of these tax benefits expired in 2011. The ATRA made retroactive to 2012, and extended through 2017, both of these “above-the-line” deductions.

Above-the-line means adjustments (subtractions) to total income, in order to calculate Adjusted Gross Income. This type of deduction is usually more beneficial to you than “below-the-line” adjustments, which lead to Taxable Income.

Educator Expenses allow elementary and secondary school teachers, who work at least 900 hours a year, to take a deduction for classroom supplies they paid out of their own pocket.  Paper, pencils, software, books, paint, rulers, etc. – but the deduction is capped at $250.  (If you are married filing joint, and your spouse is also a qualifying teacher, you can each take the deduction of $250, for a total of $500).  Most of the teachers I know spend a lot more than $250 on class supplies during the school year.  Write your Congressman.  This deduction needs to be  higher!

The Tuition and Fees deduction allows you to claim a deduction of up to $4000 for qualified tuition expenses for you and/or your spouse, and/or your dependent.  This deduction comes straight off of your Total Income.  Less income means less tax.  Note:  this deduction is phased out depending on income.

2.  STATE AND LOCAL SALES TAXES

If you itemize deductions using Schedule A, this deduction may be a good one for you depending on your situation. This tax benefit gives you the option of deducting state and local sales and use taxes, instead of state and local income taxes. This deduction also expired in 2011.

The ATRA reinstated this benefit, made it retroactive to 2012, and extended it through 2013. Take note – this deduction is due to expire at the end of this year, 2013. You’ll be able to claim it on your 2012 and 2013 Form 1040, but not 2014. (Unless the tax laws change again, and this is included)

3.  MORTGAGE INSURANCE PREMIUM DEDUCTION

Mortgage insurance premiums are just that – mortgage insurance that the lender charged you, and added to your house payment, as insurance to cover him in case you defaulted on your loan. If you have an FHA loan written after December 31, 2006, you’re probably paying mortgage insurance. Many private lenders charge these fees, too.

This tax benefit allows you to deduct, as mortgage interest on Schedule A, your mortgage insurance premiums.

This tax benefit expired in 2011. It was reinstated, retroactive to 2012, and extended through 2013. Take note, this deduction expires at the end of this year. You’ll be able to claim it on your 2012 and 2013 Form 1040, but not 2014. (Unless the tax laws change again, and this is included)

4.  NON-BUSINESS ENERGY PROPERTY CREDITS

This credit has been around for quite a few years, and it’s expired and been reinstated a couple of times already. This tax law change covers Residential Energy Credits, Form 5695.

If you’ve put new windows or doors in your house, installed a new furnace, heat pump, or AC unit, replaced a water heater, added solar or skylights – and quite a few more options – you may know about this credit. It’s been a sales pitch for utility companies and heating & cooling companies for many years.

The deduction expired for good in 2011, but was reinstated retroactive to 2012, and extended through 2013 by the American Taxpayer Relief Act. This credit is usually equal to 10% of what a homeowner spends making eligible energy improvements or upgrades to his home.

Unfortunately, the credit is now capped at $500 (down from a maximum of $1500 in 2009 and 2010), and now the calculation has a little twist called a lifetime limitation.

If you have claimed the credit in the past, specifically in tax years 2006, 2007, 2009, 2010, and 2011, you are required to subtract those used credits from the $500 you’re allowed for 2012.

Let’s say in 2007 you had a qualified window installed in your bathroom, and it cost you $250. In 2012, you installed an eligible, energy efficient back door for a total cost of $500. Remember, you are allowed a maximum credit of $500. Even though you spent $500 for the door, you cannot write off the entire door purchase. You must subtract the $250 credit used in 2007 for the window from the $500 maximum credit allowed.

$500 – $250 = $250

You can deduct $250 of the $500 you spent for the door. I bet the salesman said you’d be able to “take the whole door off your taxes”, didn’t he?

This credit usually covers equipment and the cost of the labor to install. However, there are some energy saving items that qualify for the credit, but the labor to install them does not. You can find specifics about this and any other credit at the IRS website

5.  ALTERNATIVE MINIMUM TAX (AMT) PATCH IS PERMANENT

Well, hallelujah and it’s about time, Congress!

Without this tax law change, 30 million middle class Americans would have had to pay Alternative Minimum Tax on their 2012 returns – this is UP from 4 million in 2012! That’s a difference of 26 million!  26 million!

This tax was created to catch the wealthy person who was taking a lot of tax write-offs, and make them pay something because of all those write-offs. But, the way the tax loopholes are also written, the wealthy are often able to avoid paying this tax – and instead the law catches many people in the middle class and lower middle class and adds thousands to their tax bills!

Do you think you could have been one of the 26 million paying a higher tax bill based on your income, exemptions, and the type of deductions you claim? I’ve seen AMT impact people in a very negative way, and often when they were not liable.

The AMT Patch is permanent, but exemption amounts are higher than in the past, and will now be indexed to inflation.

Congress should eliminate Alternative Minimum Tax altogether – and maybe they will.  There are a few savvy Congressmen trying to repeal this tax as we speak.

 

Suppose the American Taxpayer Relief Act had not been signed into law on January 2nd.  How many of the above tax deductions would you have lost because they expired?

Would your tax bill have gone up?

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Categories : Form 1040, IRS, Taxes
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Jan
31

Ready! Aim! File!

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Picture of Form 1040 and Tax Man Maze

The sun rose as the starting gate dropped! Hard drives fired up all over this land! Bits and bytes were thrown into the ether, much like that dancing eye in The Twilight Zone opening credits. Millions of returns were filed today and I certainly hope the government servers were up to the deluge.

The IRS began accepting and processing federal income tax returns today. This was the first day that you could file your tax return electronically or by mail. Were you one of the many that sent your tax return into cyberspace?

Got your refund spent yet?

Because of the tax law changes Congress made in January, the IRS had to delay the beginning of the tax filing season.

When Congress passed the American Taxpayer Relief Act (ATRA) on January 1, many of the tax law changes were retroactive back to last year. Forms had to be updated and computer programming had to be changed and tested before any processing could begin.

Beginning today the first of an estimated 120 million households will file a personal tax return for the year 2012. 80% of these households will file electronically.

The IRS continues to tell taxpayers that filing electronically is their best option.

Not everyone can file today. The IRS didn’t get everything fixed in time. If you are claiming Residential Energy Credits, Depreciation, Education Credits, and General Business Credits, among others, your tax return won’t be accepted until late February and possibly into March.

Something tells me the IRS is going to offer the employees a whole lot of overtime this processing season.

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Categories : Form 1040, IRS, Taxes
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Jan
19

Big Changes to Office in Home Deduction

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Woman working in home office

IRS Changes Office In Home Deduction

Do you own a home based business? Do you own a small business and use a room in your home as an office away from the office? Do you work for a company that requires you to keep an office in your home, too?

If you use part of your home as an office for your business, it just got easier to claim the Home Office Deduction!

Beginning January 1, 2013, instead of keeping track of the percentages of square feet and stacks of a dozen different expenses in order to calculate the Home Office Deduction, you can now claim a flat rate. Read on – this may save you some time and record keeping this year.

The IRS will now allow you to claim an “optional” deduction instead of the usual “regular” percentage based deduction for business use of your home. This simplified, “optional” deduction is calculated at a flat $5.00 per square foot, up to 300 feet, with a $1500.00 cap for the year.

Example:

  • If your home office is 100 square feet, your Home Office Deduction would be $500 (100 x 5 = 500)
  • If your home office is 250 square feet, he or deduction would be $1250 (250 x 5 = 1250)
  • Simply take the square footage of your home office, multiply it by $5 per square foot and you have your deduction amount.
  • If your home office is 400 square feet and you elect to take the optional method, your deduction will be capped at 300 feet and $1500.

According to the IRS, tax payers spend 1.6 million hours a year on record keeping and paperwork for the Office in Home Deduction. By using a flat rate based on space used, people will save a lot of time and effort.

Claim Mortgage Interest & Real Estate Taxes on Schedule A

You can still claim home real estate taxes, allowable home mortgage interest, and casualty losses for the filing year as itemized deductions on Schedule A. No longer will these expenses be allocated between personal and business use if using the optional method. Depreciation on your home cannot be taken when using the optional method.

Business expenses not related to your home are still deducted as regular business expenses, no change there. These include employee wages, office supplies, stamps, advertising, office equipment, etc. You will continue to claim regular business expenses on Schedule C or the appropriate business form.

Qualified Business Use Is Still the Rule

The old requirement that the home office space must be used regularly and exclusively for only business still applies when using the optional method. Qualified business use is still the rule!

The rule that limits the office in home deduction to income earned by the business is also still in effect.

Year By Year Determination

The good news is, the IRS will allow you a year–by–year determination with this deduction. If you decide to use the optional method for filing year 2013, you can still change and go back to claiming actual expenses for 2014. If you want to flip back to the optional method in 2015, you can do that. Be aware that once you file that original tax return for the year that you claim either the optional or regular method you cannot go back and change that election. An election for any taxable year, once made, is irrevocable.

Need More Info?

You can find out more about the new optional method HERE

Do you qualify to claim the Home Office Deduction? Find out HERE

Contact the IRS

The IRS welcomes comments about the new law. You can contact the IRS if you’d like to tell them what you think:

E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Rev. Proc. 2013-13” in the subject line.

Mail to: Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2013-13), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

Hand deliver to: CC:PA:LPD:PR (Rev. Proc. 2013-13), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

 

 

 

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