Wednesday, April 18, 2007

Tax record keeping tips

Hopefully you have done your taxes already, and if you haven’t, stop reading blogs and go do them! Once you’re done, you should keep records of what you have filed. Bankrate.com lists some good tips on what you need to file and what you don’t.



There are limits
When it comes to tax-related documents, you should hang on to records that help you identify sources of income, keep track of expenses, determine the value of property, prepare tax returns or support claims made on those returns. However, common sense -- as well as storage space -- should be your guide. …


Use it or lose it
This means 1040 forms and any accompanying tax schedules, along with the documents supporting the return, such as W-2s, 1099 miscellaneous income statements and receipts or canceled checks verifying tax-deductible expenses. …


Housekeeping -- and selling -- records
For most taxpayers, the biggest asset -- and potential tax bill -- is a home.


While the tax rules for home sales have changed in recent years, meaning sale profits don't automatically face IRS charges, any paperwork relating to a residence should be kept for as long as the home is owned. …


Taking stock of investments
Fast on the heels of home sales as tax triggers (and record-keeping headaches) are stock transactions. …


Retirement record requirements
And then there are all those retirement savings plans, with all those different rules.


Contributions to traditional IRAs often are tax-deferred. But sometimes already-taxed money goes into these accounts, too. What happens to your taxes when you reach 59½ and start taking money out?


That depends in large part on your record keeping.


Business considerations
If you operate a small business, from a moonlighting job to a small operation with several employees, dealing with records becomes a bit more complex. But even then, it doesn't have to overwhelm you.


Pick a system, any system
Once you've identified critical records, the next step is to decide how to keep the data. Electronic bill paying can help keep track of your financial and tax life, but so can a plain old check register, as long as expenditures are entered faithfully.


It doesn't matter if it's a filing cabinet, cardboard boxes or a complex computer program. The key, says organizational expert Barbara Hemphill, is find your record keeping comfort level, pick a system and stick with it. …


Tax record keeping tips at Bankrate.com

Monday, April 16, 2007

10-point tax return checklist

Don’t send in your return until you have checked it for these 10 things from Bankrate.com




1. Use the peel-off label, even if it's wrong. About half of taxpayers still send in paper returns. If you're one of them, use the label. If anything on it is wrong, simply strike through the bad information and make corrections right on the label. If you don't have the label, write in the requested information clearly.


2. Be sure to enter your Social Security number in the box provided on the return. It is not there, the IRS won't process your return. If you and your spouse are filing a joint return, enter both tax ID numbers.


3. Check only one filing status. And make sure it's the status that gives you the most tax advantage.


4. Count all your allowable exemptions. Each dependent you claim on your return directly translates into an exemption, a specific dollar amount you can subtract from your adjusted gross income. The lower your income amount, the less there is for the IRS to tax. And be sure you include each listed person's correct Social Security number. Without it, the IRS could disallow an exemption -- and the $3,300 deduction that goes with it.


5. If you're filing a paper return, attach all of your W-2 wage statements, as well as any 1099 forms if they show you had tax withheld from those accounts. If you e-file, make sure you correctly entered the amounts from these forms. If you're e-filing, make sure you enter the information correctly in the computer software program. The IRS will be checking your payment statements it receives from your employers against what you enter on your 1040.


6. If you're filing a paper 1040 or 1040A and have used schedules with them, assemble them in the right order. Each attachment has a sequence number in its upper right-hand corner. Put them in that order and staple them to your return.


7. Do you owe tax? Make your check or money order payable to the United States Treasury, not the IRS. Also put on the check, your name, address, Social Security number, daytime phone number and note in the memo area that it's payment for 2006 Form 1040 (or 1040A or 1040EZ). Put your payment (along with the voucher from your tax package if you're a 1040 filer) in your return envelope, but don't staple it to the return itself. The IRS cashes your check before it examines your return. That means your check is removed and sent to one office for deposit, while your return goes to another for review. When a stapled check is pulled off, other attachments could come loose, too. Tracking them down will slow the processing of your return or force the IRS to come back to you for duplicates.


8. Sign and date the return. If you file a joint return, both spouses must sign, even if only one had income. Both signatures are required on paper forms and e-filed returns.


9. Provide a daytime phone number. It could speed the processing of your return if the IRS has questions. Joint filers can use the contact phone number for either spouse. If you paid a professional to do your return, make sure that person's contact info is complete. And you can now refer questions about your tax return to anyone you choose, tax pro or not. Simply fill out the third party designee line (name, tax ID number and phone number) to give the IRS permission to call that person for answers.


10. Use the envelope included with your tax package to mail your return. In the last few years, as the IRS has reorganized and consolidated its services, some of its return processing and service center locations have changed. If you aren't using a pre-addressed IRS envelope or label, make sure you are sending your return to the proper place. Use the IRS' locator map to double-check the centers' mailing addresses in your state.


10–point checklist via Bankrate.com

Thursday, April 12, 2007

10 quick ways to upgrade your home

Home improvement usually means a ton of money to be spent on upgrading various part of your home. According to Bankrate.com, it doesn’t have to be that way. Here is their list of the top 10 ways you can improve your home on the cheap.

1. Make your kitchen really cook.
The kitchen is still considered the heart of the home. For a few hundred dollars, you can replace the kitchen faucet set, add new cabinet door handles and update old lighting fixtures with brighter, more energy-efficient ones. If you've got a slightly larger budget, you can give the cabinets themselves a makeover. …


2. Give appliances a facelift.
If your kitchen appliances don't match try ordering new doors or face panels from the manufacturer. Many dishwasher panels are white on one side and black on the other. It can be as simple as removing a couple of screws, sliding the panel out and flipping it over. …


3. Buff up the bath.
Next to the kitchen, bathrooms are often the most important rooms to update. They, too, can be improved without a lot of cash. Simple things like a new toilet seat and a pedestal sink are pretty easy for homeowners to install, and they make a big difference. …


4. Paint.
New paint makes everything look clean and bright again. And don't forget the ceiling. Paint the trim a contrasting color. …


5. Step up your storage.
Old houses, particularly, are notorious for their lack of closet space. If you have cramped storage areas, add do-it-yourself wire and laminate closet systems to bedrooms, pantries and entry closets. …


6. Mind the mechanics.
Spending a few bucks on nitty-gritty stuff. "It's often very worthwhile to hire an electrician, plumber or handyman for a couple of hours to look over your electrical services, wrap or fix loose wires, fix any faulty outlets, and check for and fix any water leaks," Perry says. "Those details tell a buyer that someone has really taken care of the home and can really influence its price."


7. Look underfoot.
Carpeting is another detail that can quickly update a home and make it look cleaner. A professional carpet cleaning is an inexpensive investment, especially if your rugs are in good shape and are neutral colors….


8. Let there be light.
If you have boring recessed lights in your dining and living rooms, consider replacing one of the room's lights with an eye-catching chandelier. …


9. Reframe your entry.
It's the first thing you, and your guests, will see. Repaint of refinish that front door and if you have a basic steel front door that has gotten dented, consider replacing it with either another inexpensive steel door or a fiberglass, wood grain door for slightly higher cost. …


10. Consider curb appeal.
Although it sounds obvious, a nicely mowed lawn, a few well-placed shrubs and a swept walkway makes a great first impression. As the saying goes, you never get a second chance to make a first impression. What buyers see when they first drive by your home is tremendously important. …


10 cheap ways to upgrade your home

Wednesday, April 11, 2007

How much do you have saved?

According to a new survey, almost 50% of all workers in the US have less than $25,000 saved. That is not going to be enough for retirement, no matter what angle you look at it from. Here’s the scary part from the Money.com article about the survey:



Overall, 40 percent of respondents said they are not currently saving for retirement while 34 percent said they didn't have any retirement money saved whatsoever. A full 25 percent, meanwhile, said they had no savings at all - retirement or otherwise.


Have less than $25K in savings? Get in line

Thursday, April 5, 2007

One week left to do taxes

If you still haven’t completed your taxes, here’s a nice step-by-step guide to get them done before the deadline on Apr 17.



Day 1 Gather data.
Day 2 Reduce taxable income.
Day 3 Find your forms.
Day 4 Fill out your forms.
Day 5 Take a break.
Day 6 Check your work.
Day 7 Sign, seal and deliver.






Bankrate's 7-day tax-filing plan

Tuesday, April 3, 2007

9 Great Reasons to Own Funds

Mutual funds are the best way to diversify, buy stock in small and large firms, and also get the knowledge of the fund manager for a price.


    1. Cash in on big returns: Over time, stocks of big companies have made about 10% per year, on average, and stocks of smaller companies, about 13% a year. Compare that with the sub-5% return from a bank account or even short-term Treasury bills, and funds that invest in stocks and bonds blow away the competition. …

    2. Hire top-notch help: When you invest in a mutual fund, you hire professionals. These pros don't dabble in stock picking on evenings and weekends; they do it full-time. …

    3. Diversify for cheap: Managing a big portfolio of individual stocks and bonds is expensive, and trading costs can quickly eat up your profits. By comparison, funds are cheap. …

    4. Spread your wealth: Dividing your money among different types of investments is called asset allocation. Studies have shown that investing in different types of assets is even more important to your wealth than the specific investments you own. …

    5. Start small: Don't have a lot of cash to start your nest egg? Several fund families, including Ariel Funds and T. Rowe Price, let you begin investing in their funds for only 50 bucks a month, if you contribute monthly. …

    6. Expand your horizons: With mutual funds, you can venture outside your realm of expertise to make money. …

    7. Ease yourself in: A technique known as "dollar-cost averaging" means that you invest small amounts periodically -- say, once a month or once a quarter -- instead of investing a lump sum. …

    8. Make a quick getaway: When you need your money, you can sell mutual fund shares for free any day the market is open. …

    9. Delegate your portfolio: Even a good fund portfolio needs to be tweaked from time to time. If you don't want to bother, target retirement funds will do the tweaking for you. …

Read complete article at Kiplinger.com: 9 Great Reasons to Own Funds

Monday, April 2, 2007

Six Key Principles of Saving for Retirement

A nice article by Ben Stein, yes, that Ben Stein, on the basic principles of saving for retirement. He keeps it simple, maybe too simple for some people. Everyone has their own unique situation to deal with while trying to save for a comfortable retirement. So take this with a grain of salt, and tweak to your own situation.



The Six Principles


1. How much you save.


2. How long you give your savings to compound.


3. How you allocate your assets.


4. How much your investment returns annually.


5. How low you keep your fees and costs.


6. How closely you keep an eye on taxes.

Six Key Principles of Saving for Retirement

Write off taxes you paid

You can deduct property taxes you paid in 2006 on your 2006 tax return, if you itemize. You can also deduct state income taxes or sales taxes, whichever will give you more money back.


You can find tables estimating the sales taxes paid by people in your state on http://www.irs.gov/. If you are looking for recommendations on what software to use, check out this post: Tax software reviews.

Sunday, April 1, 2007

25 Rules to Grow Rich By

Money.com lists 25 basic things you should and shouldn’t do, if you want to be ‘rich’. How many of these are you following?





    1. For return on investment, the best home renovation is to upgrade an old bathroom. Kitchens come in second.

    2. It's worth refinancing your mortgage when you can cut your interest rate by at least one point.

    3. Spend no more than 2 1/2 times your income on a home. For a down payment, it's best to come up with at least 20%.

    4. Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%.

    5. Never hire a roofer, driveway paver or chimney sweep who is going door to door.

    6. All else being equal, the best place to invest is a 401(k). Once you've earned the full company match, max out a Roth IRA. Still have money to invest? Put more in your 401(k) or a traditional IRA.

    7. To figure out what percentage of your money should be in stocks, subtract your age from 120.

    8. Invest no more than 10% of your portfolio in your company stock - or any single company's stock, for that matter.

    9. The most you should pay in annual fees for a mutual fund is 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund.

    10. Aim to build a retirement nest egg that is 25 times the annual investment income you need.

    11. If you don't understand how an investment works, don't buy it.

    12. If you're not saving 10% of your salary, you aren't saving enough.

    13. Keep three months' worth of living expenses in a bank savings account or a high-yield money-market fund for emergencies. If you have kids or rely on one income, make it six months'.

    14. Aim to accumulate enough money to pay for a third of your kids' college costs. You can borrow the rest or use some of your income to help out when your child is in college.

    15. You need enough life insurance to replace at least five years of your salary – as much as 10 years if you have several young children or significant debts.

    16. When you buy insurance, choose the highest deductible you can afford. It's the easiest way to lower your premium.

    17. The best credit card is a no-fee rewards card that you pay in full every month. But if you carry a balance, high-interest rates will wipe out the benefits.

    18. The best way to improve your credit score is to pay bills on time and to borrow no more than 30% of your available credit.

    19. Anyone who calls or e-mails you asking for your Social Security number or information about your bank or credit card account is a scam artist.

    20. The best way to save money on a car is to buy a late-model used car and drive it until it's junk. A car loses 30% of its value in the first year.

    21. Lease a new car or truck only if you plan to replace it within two or three years.

    22. Resist the urge to buy the latest computer or other gadget as soon as it comes out. Wait three months and the price will be lower.

    23. Buy airline tickets early because the cheapest fares are snapped up first. Most seats go on sale 11 months in advance.

    24. Don't redeem frequent flier miles unless you can get more than a dollar's worth of air fare or other stuff for every 100 miles you spend.

    25. When you shop for electronics, don't pay for an extended warranty. One exception: It's a laptop and the warranty is from the manufacturer.


25 Rules to Grow Rich By

Read these!