Whoo hoo! A refund. Speaking personally, this is the first time in about 10 years that I’ve qualified for a refund. I think it’s because I took this full-time job at Reuters and signed up to have big bucks deducted from my paycheck. And it’s because 2010 tax breaks passed retroactively actually lowered my total tax bill (and those of many others).
This year, the average tax refund is pushing $3,000, according to the Internal Revenue Service. Many financial advisers believe that it is a big mistake to get a big refund. Getting a big refund means you’ve loaned the IRS money all year long without earning a penny in interest. “My gripe with large tax refunds… is two-fold,” Eleanor Blayney, the consumer advocate for the CFP Board of Standards, said in a recent press statement. “First, they make mincemeat of any attempt to manage your cash flow. Second, they often go unplanned.” She advocates budgeting your taxes as closely as you possibly can to the amount you’ll actually owe when the year ends, and integrating the extra cash you’re not sending the IRS into a reasonable spending and saving budget.
If you are one of those chronic procrastinators who has yet to close out the 2011 tax season, don’t waste time reading all of this. Just file an extension asap. If you think you’ll owe money, send a check along with it.
And what if you’re reading this after the April 18 deadline has passed? Go directly to your post office and mail an extension form right now. It couldn’t hurt.
WASHINGTON (Reuters) – Life is kind of crazy and unpredictable, and that doesn’t stop when you retire. You could still win the lottery or get hit by a bus, or anything in between.
That’s why traditional straight-line retirement planning does not address much of what goes on during real-life retirement. The old guidelines of “put this in every month until you retire, then take this much out every month,” just don’t cut it anymore. In order to protect your life style no matter what happens, you have to cover a lot of bases.
Data expected out of Washington this week may raise anxiety levels of investors and consumers who are already worried about inflation and rising interest rates.
On April 12, the Bureau of Labor Statistics reported that U.S. import prices jumped in March. We’ll also get data on producer prices on April 14 and consumer prices on April 15. But here’s what we already know: It costs more to fill your car, and your belly. And what doesn’t run on food or fuel?
It was just a month ago that we reported on a big fat miles offer from Capital One on its Venture Card. The company offered to double existing airline miles for new cardholders until it had given away one billion miles. That was fast! They weren’t quite gone in 60 seconds, but Capital One announced on April 5 that it had given away all those miles and was done with the promotion.
Don’t despair if you missed it. There are some new and potentially juicier deals on the table from other issuers. Here’s where to get your free trips now:
A threatened government shutdown won’t stop Internal Revenue Service commissioner Douglas Shulman from filing his own taxes on time; they’re already done. “I make sure it gets done on time,” he told Reuters. “I just have to look it over.” He said that taxpayers should follow that example and not expect to get any extra filing time if there is a temporary federal work stoppage.
“The IRS will be accepting tax returns,” he told the National Press Club in a luncheon speech on April 6. “The American people should file their taxes and they are required to file by April 18.”
WASHINGTON (Reuters) – As publisher of the SavingforCollege website, Joe Hurley is a bit obsessed with 529 college savings plans, so it’s no surprise that he has one in his name and one in his wife’s.
What’s unusual is that he doesn’t expect to use those funds to send his kids to college. One has already completed his undergraduate education and the other is almost done.
Don’t stay up at night worrying about having your taxes audited, or imagining horrible interrogation scenarios with tax agents and windowless rooms. Fewer than one percent of returns are ever examined, and the vast majority of those are done through the mail and not in person. More reassuringly, more than one in 10 of those audits result in “no change” in the amount the taxpayer owes.
That data and more is included in the Internal Revenue Service’s most recent data book. In 2009, the IRS received 187 million returns, and it audited 1.7 million returns in fiscal year 2010, producing a 0.9 percent audit rate. So breathe.
Still day trading? You might as well roll your dollars into a fat cigar and smoke them. That’s not a comment on your investment prowess, it’s the official position of the U.S. Tax Court.
Here’s the backstory: A taxpayer named Larry Tucker filed tax returns for 2000, 2001 and 2002 on April 15, 2003, but didn’t pay his taxes. By 2004, he owed $23,263 and, facing a tax lien, asked the Internal Revenue Service to accept an “offer in compromise.” (That’s a technical term for the deal the IRS will cut with a taxpayer who can afford to pay part of his bill, but not all of his bill.) But the IRS is permitted to reject those compromises if it decides the taxpayer has been wasting or consuming money that could have otherwise been used to pay taxes.
Are you so into tax season that you hate to be away from your tax forms? Maybe you’ve got questions about your return that you’d like to be answering while you’re on your way to work, or out at dinner with your friends.
If you’ve got a smart phone, you’ve got an answer. Here are some tax apps for this tax season.