Archive for March 2013

By Peter Andrew

When I wrote 3 tips for avoiding an IRS audit last month, I was amazed by two statistics my research turned up: The National Taxpayer Advocate's 2012 report reckoned that nearly 60 percent of federal filers hire tax preparers, while another 30 percent use commercial software for their filings.

In my mind, another icon of Americana crumbled: No longer do most moms or dads perform the annual ritual of grim evenings spent at kitchen tables, growling at passing kids and muttering under their collective breath as they wrestle with piles of forms, receipts, pencils and erasers. Now, it's all outsourcing, laptops, tablets and even smartphones -- appropriate, I suppose, for modern America.

Of course, it's the ritual, not the reality, I miss. It's hard to get nostalgic about an annual stress-fest that saw millions with lousy arithmetic skills struggle to meet their obligations. How much better to let someone else or an electronic device take the strain. And, as families cut back further on unnecessary spending, it may well be that cheap -- or free -- software applications and e-filing services could become increasingly popular. So what do you need to know when choosing your tax-filing package?

Online or on-board tax-filing applications?

The first thing you have to decide is whether you want to buy or download an application that's going to save your results onto your computer, or one that operates in the "cloud" as a browser-based e-filing service.

By Jennifer Goforth Gregory

I excitedly told my father that I was getting a large tax refund, expecting him to be as happy as I was. I was 22 years old. I had been working at my first professional job for less than a year and struggling each month to pay rent. To me, the $4,500 IRS check headed my way was the equivalent of winning the Powerball lottery.

But instead of being happy for my windfall, my father, who has worked his entire career in the financial and banking industries, gave me a gentle but firm lecture about how I had given the government an interest-free loan on my money.

Who doesn't like lump-sum payments?

I was not alone in my joy over a large refund. According to a March poll from the National Foundation for Credit Counseling (NFCC), 58 percent of people intentionally receive an income tax refund instead of keeping a larger portion of their take-home pay throughout the year. But as my dad so wisely pointed out, this really isn't the best financial move.

By Libby Kane, LearnVest

This article comes from our partner LearnVest.

Just before the Enron scandal broke, the company's CEO immediately put his money into annuities—in his wife's name.

Why? Because those assets are creditor-protected, so they can't be seized (in this case, by the government).

This is just one example of many—remember the 14% tax rate Mitt Romney paid on his $13 million income?—illustrating how extremely wealthy people get the most from their money. And most of them do it legally.

Much of their success comes from knowing where to find loopholes in the financial system—"hacks," if you will. While we would never recommend any illegal or dishonest money moves (seriously, don't break the law!), there are a handful of legal personal finance hacks that are available to all of us—like these seven incredibly useful, low-profile tricks.

By Tim Sullivan

Credit cards have made it easier to spend money today than any time in the past. Before credit cards, you had to go to the bank and fill out a withdrawal slip whenever you needed easily spent funds. But now we have our money available to us 24 hours a day, which can be both a blessing and a curse.

Imagine making a few bad financial decisions while out on a Saturday night. Back in the day, if you spent all your money on Saturday, you wouldn't have it on Sunday. The banks were closed on Sunday, so unless you could find a place that would accept a check, football would be accompanied by whatever was in the fridge instead of a pizza delivery.

These days, with the easily available funds offered by credit cards, you can continue your spending unabated throughout the weekend. Because of this, many personal finance experts (and others) feel that credit cards are a saver's worst enemy.

But it doesn't have to be that way. Ease of spending doesn't have to come with lack of consciousness. Credit cards can make you a smarter spender as well. By keeping a close eye on your credit card records, you can use your card to improve your spending habits and realize more of your financial goals.

A helpful record

Unless you are saving every receipt and keeping a watchful eye on your budget, having cash in your wallet can lead to untracked spending.

By Justin Boyle

The spring equinox is approaching, and thousands of people are getting ready to rid themselves of clutter that has piled up over the previous year. While everyone's getting their houses in order, take the time to open the dusty door on the storehouse of your personal finance and credit habits. It might be time for spring cleaning in there too.

The beginning of spring is a great time to check your life for pockets of stagnant energy, like the corners of the garage or the back of your closet, and clean them out so that new and good things can take over. Spring is the season of new growth, after all, and new growth tends to thrive when old and needless things are removed from its surroundings.

Some of us approach our credit cards and personal finance habits in the same way we approach the clutter under the bed: If we don't look at the mess, it isn't there. Take a cue from the closet-cleaners and garage-salers this season and see if you can't vacuum some stagnant energy out of your wallet. Here are four tips for getting started:

1. Consider consolidation

I know from personal experience that it can be hard to keep track of multiple credit bills each month. If you can find a zero- or low-interest balance transfer credit card offer with a high enough limit to shoulder the lion's share of what you owe on credit, it might be prudent to shift your smaller balances over.

As far as what to do with the cards whose balances you empty, take a look at tip number two.