I wrote a post quite awhile back on my Savings Advice blog about checking your withholding, especially if you generally receive very large refunds. The post is on this blog too, here . I think tax season is a good time to evaluate whether getting a large refund is really worth it. We have had our share of them over the years. In the beginning, I just couldn't figure out how to avoid them. It just happened it seems. Well, in truth not really in most cases. It really comes down to knowing how to calculate how much you should have withheld based on your expected salary and other factors. The IRS has a calculator to help you figure this out. And it is free!
If you are trying to take control of your finances and get out of debt, this change to your withholding could actually mean more money in your pocket each time you are paid! That means you would have MORE money to work with each month to pay down those debts. It could mean getting a debt paid off sooner, and paying less interest on that debt. That would be a huge relief to me personally.
Now, I'm going to call you out. Somebody reading this is saying to themselves "but I won't have a big refund in February, and I wanted to buy X." Really? You want to stay in debt and have more stuff? Yes, I get a new sofa, bathroom makeover, vacation, Playstation, or carpet all sound really good. But you really, really need to look and see if that item is something you would have bought at any other time of the year. Would you have spent the amount equal to your refund last June for that same thing you want? Why not? Oh, you are in debt and don't have any money? Who's money do you think this is that is coming to you in this big lump sum? It is YOUR money. You do have that money, but you have been sending it to the government who doesn't need it for free each month and letting them hold it for you, again for FREE. Banks actually pay you interest if you park money with them.
The average tax refund is $2,651. If you had that money in your pocket each month you would have an additional $220.92. Nice huh? What would you do with it if you were receiving that much EXTRA each month? I suppose some could go to that debt goal you might be working on. Maybe you could increase your emergency fund with a little. Or even save some for that thing you want to get. If there were four goals you are working on, you could just divide that extra in fourths and use over $55 each month towards meeting each of them at the same time.
I challenge you to consider how you could plan your finances if you had that extra refund money in your hand each month. It's okay to dream about it. Think and ponder it. Mull it over. Get excited! Okay, and a little scared knowing there probably won't be a big refund the next year. If you get an emergency fund set up, you will have money to fall back on every month, rather than waiting for that one time per year to save you. There really is freedom and security in having less debt, and more savings. Again, I dare you to at least try the process on paper of changing your withholding (on the W4) and planning your budget with more money in your pocket each pay period.
Tell me about how it goes. Did it make you feel motivated with your goals? Were you excited or scared?
P.S. If you need help calculating your net paycheck amount based on the new withholding amount, check out Paycheck City for a free calculator for hourly and salaried workers.
Friday, January 24, 2014
Tuesday, January 21, 2014
Free and Low Cost Tax Filing Options
Isn't it bad enough that we have to file a tax return in the first place, but it has become so complicated we need software to file many types of returns and generally have to pay for it? I'm really not complaining, but it does seem it has become more complicated and more costly.
First of all, if you income is below $58,000 per year you actually shouldn't be paying anything in order to file your taxes. The IRS has offered Free File in the past and is doing so again this year. The best way to find the free programs you are eligible for is to link directly to the IRS and click on the Free File tab. Or here is the link where that tab will take you. You definitely get to e-file your Federal return for free. It could be a different story based on your state, so look over your options closely before you get started.
If you are military, there are often options available specifically for you that may be entirely free. There may be some caveat that you need to have served in a combat zone, so make sure the free option really applies. If you aren't military, it is good to consider if your bank, professional organization, church or community offers a service for free preparation and filing. Do your homework...google lots of possibilities!
For those of us with incomes over $58,000 per year, there are still relatively inexpensive ways to prepare and file your income tax returns. Most of them are online services. In fact, I would completely avoid any in package software discs you might find in the store, unless you do not have internet access or the software comes with a rebate lending the software free! I have used TurboTax, TaxAct, HRBlock, and several other services. I know some people don't like to switch because last years information is often imported if you use the same service. I personally am happy to switch if I can get the service free or cheap. It doesn't take much time at all to input the information again.
Last year I was tipped off about another service called FreeTaxUSA (I don't get any referral bonus for saying this). The charge was free to complete and efile the federal return, and just $9.99 for the state. This year the Federal return is still free, but the state return is now $12.95. This is a very good price, but you can get it lower! If you use a coupon site, check to see if there is a coupon that will reduce the price you pay for this or tax service you end up using. I happen to know that Ebates has a coupon for 25% off FreeTaxUSA, with coupon code FREETAXUSA25, good all the way until November 1, 2014 (yes, even available for you late filers!). And if you connect through your Ebates account, you can also get 25% cash back. If I did my math right this brings your final cost after the rebate to $7.28. That is pretty good if you want the software and ability to efile your return. If you don't have an Ebates account, you can sign up here.
Right now I plan to use FreeTaxUSA, unless I find a better deal. If I do, I'll let you know!
Do your homework. Look around for the least expensive way to do your taxes that you feel comfortable with! Do you have any other good tax preparation services to share with others? Please leave them in the comments for others to check out.
First of all, if you income is below $58,000 per year you actually shouldn't be paying anything in order to file your taxes. The IRS has offered Free File in the past and is doing so again this year. The best way to find the free programs you are eligible for is to link directly to the IRS and click on the Free File tab. Or here is the link where that tab will take you. You definitely get to e-file your Federal return for free. It could be a different story based on your state, so look over your options closely before you get started.
If you are military, there are often options available specifically for you that may be entirely free. There may be some caveat that you need to have served in a combat zone, so make sure the free option really applies. If you aren't military, it is good to consider if your bank, professional organization, church or community offers a service for free preparation and filing. Do your homework...google lots of possibilities!
For those of us with incomes over $58,000 per year, there are still relatively inexpensive ways to prepare and file your income tax returns. Most of them are online services. In fact, I would completely avoid any in package software discs you might find in the store, unless you do not have internet access or the software comes with a rebate lending the software free! I have used TurboTax, TaxAct, HRBlock, and several other services. I know some people don't like to switch because last years information is often imported if you use the same service. I personally am happy to switch if I can get the service free or cheap. It doesn't take much time at all to input the information again.
Last year I was tipped off about another service called FreeTaxUSA (I don't get any referral bonus for saying this). The charge was free to complete and efile the federal return, and just $9.99 for the state. This year the Federal return is still free, but the state return is now $12.95. This is a very good price, but you can get it lower! If you use a coupon site, check to see if there is a coupon that will reduce the price you pay for this or tax service you end up using. I happen to know that Ebates has a coupon for 25% off FreeTaxUSA, with coupon code FREETAXUSA25, good all the way until November 1, 2014 (yes, even available for you late filers!). And if you connect through your Ebates account, you can also get 25% cash back. If I did my math right this brings your final cost after the rebate to $7.28. That is pretty good if you want the software and ability to efile your return. If you don't have an Ebates account, you can sign up here.
Right now I plan to use FreeTaxUSA, unless I find a better deal. If I do, I'll let you know!
Do your homework. Look around for the least expensive way to do your taxes that you feel comfortable with! Do you have any other good tax preparation services to share with others? Please leave them in the comments for others to check out.
Monday, January 20, 2014
Tax Prep
I have been doing my own taxes since I had my first job at sixteen. I had to use paper forms, instructions and a pencil. I think I may have lucked out and been able to do the EZ form a couple times, but at some point I switched because of investment income. At least that is my memory...I could be wrong.
This time of year, I start keeping my eyes open for available tax forms in the mail, or notifications of availability by email. For those that arrive on physical paper, I have a file labeled 2013 Taxes (original I know). I also have a folder on my laptop with the same label, where I download donation receipts and tax forms. Both of these files were likely started sometime in 2013. Ideally, I should have started it right at the beginning of the year. It just doesn't always happen. In fact, I don't yet have a 2014 file.
I will admit I am a little partial to my physical folder. I usually write on the inside of the file folder a checklist of documents needed for filing. Once I have all of them in hand, I know I can start our taxes without much delay. My list this year includes the following:
My intention is to file online, as I have been doing for many years now. It makes it so easy...at least if the software is set up correctly. I've had at least two years where I have had to switch companies before filing because their software didn't do the calculations correctly. That sure doesn't give me faith to try them again in the future. I hope to have our return completed by the end of the week, as I am expecting I will have all the documents I need at that point. If we owe, I will not be too quick to send in our money early!
Do you have a system in place for getting your taxes ready for filing? Do you file your own taxes? Anyone still file by snail mail? Come back tomorrow, and I'll write up a few tips for finding low cost or free tax filing software.
This time of year, I start keeping my eyes open for available tax forms in the mail, or notifications of availability by email. For those that arrive on physical paper, I have a file labeled 2013 Taxes (original I know). I also have a folder on my laptop with the same label, where I download donation receipts and tax forms. Both of these files were likely started sometime in 2013. Ideally, I should have started it right at the beginning of the year. It just doesn't always happen. In fact, I don't yet have a 2014 file.
I will admit I am a little partial to my physical folder. I usually write on the inside of the file folder a checklist of documents needed for filing. Once I have all of them in hand, I know I can start our taxes without much delay. My list this year includes the following:
- My husband's W2
- 1099 - INT from all banks we earn interest from
- 1099 - R (for a rollover of IRA money...will not be taxable)
- 1098 from mortgage company with interest and real estate taxes paid
- Donation receipts
- Vehicle property tax amount
My intention is to file online, as I have been doing for many years now. It makes it so easy...at least if the software is set up correctly. I've had at least two years where I have had to switch companies before filing because their software didn't do the calculations correctly. That sure doesn't give me faith to try them again in the future. I hope to have our return completed by the end of the week, as I am expecting I will have all the documents I need at that point. If we owe, I will not be too quick to send in our money early!
Do you have a system in place for getting your taxes ready for filing? Do you file your own taxes? Anyone still file by snail mail? Come back tomorrow, and I'll write up a few tips for finding low cost or free tax filing software.
Saturday, January 18, 2014
Low Spend Update
I'm guessing you are here because you want to know how my low spend week is going. Not too bad. It could always be worse. Thursday was a no spend day, which I'm happy for. The spending started about 4pm yesterday. The afternoon munchies hit my daughter. She knew we didn't have much at home she wanted to snack on. This resulted in a stop at Super Target. We bought 11 items. Some were basic junk food, but I did buy mushrooms and another ingredient for a soup I will make tonight. I also bought a bottle of semi cheap wine...definitely not a need. Our total for that trip $27.25.
You would think the spending would have stopped there for the day, but it seems I fell for some marketing. I received a Pizza Hut email offer for two medium pizzas for $5.99 each. It just sounded good for a Friday night. I wasn't in the mood to cook, even though the plan was simple pancakes. I spent $12.82 with tax on the two pizzas. We ate them for dinner last night and finished up the leftovers for lunch, so the expense was not wasted. This is not an expense that I should be having during a low spend week!!
No that wasn't the last of the spending for Friday. We wanted to watch a movie. One of my daughter's and I looked for nearly 30 minutes on Amazon for a free movie we could download. If it was just me, I think I could have found something. Yes, I am blaming this expense on my daughter! We ended up renting Mr. Holland's Opus for $3.99. You would think the price would be far less considering how old the movie is. It was an enjoyable movie. We even cried tears at the end!
Our Friday spending alone was $44.06. I'm glad I wasn't spending this amount every day this week. Today, I did have to buy gas for one of the vehicles. I was out driving around and the light indicating I was low on fuel came on. Considering it is snowing and the roads are deteriorating I figured it really was time to buy fuel. I spent $58.01 to fill the tank up. And yes, that is the rest of the spending for today. We don't need any food. We don't need to rent another movie as we really do have plenty of free entertainment options.
The total from last Sunday through today, Saturday is $183.90. I don't think I could have whittled this down too much further. I know there were things that could have been skipped entirely, like the wine, pizza and movie, the car wash and a snack item or two. I would have still spent about $150 without those items. I'm actually really pleased with the results.
I'd like to try for another week, but I don't know that I would get similar results. We may be having guests one or two nights this week, so that could change my meal plan slightly. I think I can keep expenses pretty low through Tuesday, if I work on it. I know I will be going to the store before then. I might as well give it a shot to buy only needs for the next few days. Then I guess instead of a low spend week, we could call it a 10 day money fast. :)
Did you attempt to keep your spending low this week? Or maybe you just told yourself no to some of those things you buy nearly everyday? Tell me about it.
You would think the spending would have stopped there for the day, but it seems I fell for some marketing. I received a Pizza Hut email offer for two medium pizzas for $5.99 each. It just sounded good for a Friday night. I wasn't in the mood to cook, even though the plan was simple pancakes. I spent $12.82 with tax on the two pizzas. We ate them for dinner last night and finished up the leftovers for lunch, so the expense was not wasted. This is not an expense that I should be having during a low spend week!!
No that wasn't the last of the spending for Friday. We wanted to watch a movie. One of my daughter's and I looked for nearly 30 minutes on Amazon for a free movie we could download. If it was just me, I think I could have found something. Yes, I am blaming this expense on my daughter! We ended up renting Mr. Holland's Opus for $3.99. You would think the price would be far less considering how old the movie is. It was an enjoyable movie. We even cried tears at the end!
Our Friday spending alone was $44.06. I'm glad I wasn't spending this amount every day this week. Today, I did have to buy gas for one of the vehicles. I was out driving around and the light indicating I was low on fuel came on. Considering it is snowing and the roads are deteriorating I figured it really was time to buy fuel. I spent $58.01 to fill the tank up. And yes, that is the rest of the spending for today. We don't need any food. We don't need to rent another movie as we really do have plenty of free entertainment options.
The total from last Sunday through today, Saturday is $183.90. I don't think I could have whittled this down too much further. I know there were things that could have been skipped entirely, like the wine, pizza and movie, the car wash and a snack item or two. I would have still spent about $150 without those items. I'm actually really pleased with the results.
I'd like to try for another week, but I don't know that I would get similar results. We may be having guests one or two nights this week, so that could change my meal plan slightly. I think I can keep expenses pretty low through Tuesday, if I work on it. I know I will be going to the store before then. I might as well give it a shot to buy only needs for the next few days. Then I guess instead of a low spend week, we could call it a 10 day money fast. :)
Did you attempt to keep your spending low this week? Or maybe you just told yourself no to some of those things you buy nearly everyday? Tell me about it.
Thursday, January 16, 2014
No Money, But I Need to Buy....
I'm having this low spend week, just to keep things in check. It is good to take a break and make a conscious effort to watch spending. Sometimes we even need to do it by necessity. I've noticed this week, that I still have thoughts of spending. Those just don't seem to go away even when the goal changes. Darn it!
Depending on the item I have thought about buying, I think about my choices and options. One was laundry detergent. I still have some, but I can tell we are low. It most likely can wait. But what if I realized I'm on my last load of detergent tomorrow, but I have three baskets full of laundry? It is human nature to first think, we MUST go purchase detergent. But after that thought, I realized I could sort the three baskets of laundry to find the most needed items to be washed and narrow it to one load. I could even wash a few items by hand with dish or bar soap. That does depend on the item, as I'm pretty sure I couldn't get jeans clean with dish or bar soap! Although I would be willing to try if necessary.
Do you shop online? It seems so many things are just far cheaper online. And often for the very same thing! Combine online shopping codes, rebate sites like Ebates, free shipping and credit card rewards, the deals are amazing. The disadvantage of online shopping is that you can't get the item in the next 15 minutes. But with some advanced planning you can purchase ahead of time and avoid that extra run to the store. I've noticed that we purchase cat food every two months. I actually have a note on my email calendar to remind myself of this purchase. Once I have the reminder sent a week or so before the food is needed, I have time to be looking for the best price on the food we purchase. It also has time to be mailed. I'm pretty good keeping stocked on toilet paper, vitamins, hair product, furnace filters and cat food.
I'm not an expert in timing all the needs our family has by any means. Not long ago one of my daughter's need a cowboy hat for a concert. The notice was very short. Just a couple of days. Unfortunately I had just donated a cowboy costume hat the week before! Ack. I did ask my neighbors if they had any to borrow. No such luck. But we were able to find one at a thrift shop for less than $2. I don't know my true savings on this item as I don't know what I would have paid at a costume shop, but my guess it was significantly more than $2!
Another thing that seems to come up that can derail spending or my need to go to the store is running out of an ingredient while in the middle of cooking or baking. So frustrating! I know I recently was making a soup that had many different spices in it. I was completely out of one. I ended up leaving it out and it still tasted just fine. It was not worth going to the store for. I will put it on my list for the next time I'm at the store. But what if it is an important ingredient? That is where looking online for substitution ideas or calling a neighbor might be the best choice. Did you know in baking you can substitute applesauce for an egg? Or add lemon juice to milk to make a buttermilk substitution?
It really does pay to stop and take moment before you run off to buy something whether there is another option. One that is free or cheaper and meets the need just as well can be quite satisfying! Do you have an example of a way you have saved recently that might be considering thinking outside the box?
Depending on the item I have thought about buying, I think about my choices and options. One was laundry detergent. I still have some, but I can tell we are low. It most likely can wait. But what if I realized I'm on my last load of detergent tomorrow, but I have three baskets full of laundry? It is human nature to first think, we MUST go purchase detergent. But after that thought, I realized I could sort the three baskets of laundry to find the most needed items to be washed and narrow it to one load. I could even wash a few items by hand with dish or bar soap. That does depend on the item, as I'm pretty sure I couldn't get jeans clean with dish or bar soap! Although I would be willing to try if necessary.
Do you shop online? It seems so many things are just far cheaper online. And often for the very same thing! Combine online shopping codes, rebate sites like Ebates, free shipping and credit card rewards, the deals are amazing. The disadvantage of online shopping is that you can't get the item in the next 15 minutes. But with some advanced planning you can purchase ahead of time and avoid that extra run to the store. I've noticed that we purchase cat food every two months. I actually have a note on my email calendar to remind myself of this purchase. Once I have the reminder sent a week or so before the food is needed, I have time to be looking for the best price on the food we purchase. It also has time to be mailed. I'm pretty good keeping stocked on toilet paper, vitamins, hair product, furnace filters and cat food.
I'm not an expert in timing all the needs our family has by any means. Not long ago one of my daughter's need a cowboy hat for a concert. The notice was very short. Just a couple of days. Unfortunately I had just donated a cowboy costume hat the week before! Ack. I did ask my neighbors if they had any to borrow. No such luck. But we were able to find one at a thrift shop for less than $2. I don't know my true savings on this item as I don't know what I would have paid at a costume shop, but my guess it was significantly more than $2!
Another thing that seems to come up that can derail spending or my need to go to the store is running out of an ingredient while in the middle of cooking or baking. So frustrating! I know I recently was making a soup that had many different spices in it. I was completely out of one. I ended up leaving it out and it still tasted just fine. It was not worth going to the store for. I will put it on my list for the next time I'm at the store. But what if it is an important ingredient? That is where looking online for substitution ideas or calling a neighbor might be the best choice. Did you know in baking you can substitute applesauce for an egg? Or add lemon juice to milk to make a buttermilk substitution?
It really does pay to stop and take moment before you run off to buy something whether there is another option. One that is free or cheaper and meets the need just as well can be quite satisfying! Do you have an example of a way you have saved recently that might be considering thinking outside the box?
Wednesday, January 15, 2014
Savings Update
I mentioned my plan to participate in my own 52 Week Savings Challenge back in December. I have made two deposits since then of $57 each. My total in the challenge is now at $181. It is moving along just fine since I made the transactions occur automatically!!
My low spend week is definitely working so far. I have spent only $15.35 since I mentioned my plan on Sunday. I just spent that money today. I mailed a package at the post office for $2.24. This was for a child, so I didn't think it should wait. I also made a run to Target to purchase a few food items: cranberries, romaine lettuce, spinach, large container of vanilla yogurt, frozen mangoes, and 3 pack of gum. I stuck to my list. I was tempted to grab a soda and a cliff bar, but I refrained. Yea me!!
I can see the fuel in the vehicles dropping each day. I'm really hoping to make it through Sunday, but I have a feeling that I may end up filling at least one of the vehicles up before then. I still have a fabric purchase to make, but I keep putting it off as I have another project I need to complete first. And I'm procrastinating that one! I guess that means procrastination is saving me money. That is not always the case, such as paying a bill late.
If you are doing any type of savings challenge this year, it is not too late to start or get back on track. Just pick up where you left off. Keep up the good work, if you have made all your goals so far.
My low spend week is definitely working so far. I have spent only $15.35 since I mentioned my plan on Sunday. I just spent that money today. I mailed a package at the post office for $2.24. This was for a child, so I didn't think it should wait. I also made a run to Target to purchase a few food items: cranberries, romaine lettuce, spinach, large container of vanilla yogurt, frozen mangoes, and 3 pack of gum. I stuck to my list. I was tempted to grab a soda and a cliff bar, but I refrained. Yea me!!
I can see the fuel in the vehicles dropping each day. I'm really hoping to make it through Sunday, but I have a feeling that I may end up filling at least one of the vehicles up before then. I still have a fabric purchase to make, but I keep putting it off as I have another project I need to complete first. And I'm procrastinating that one! I guess that means procrastination is saving me money. That is not always the case, such as paying a bill late.
If you are doing any type of savings challenge this year, it is not too late to start or get back on track. Just pick up where you left off. Keep up the good work, if you have made all your goals so far.
Tuesday, January 14, 2014
Don't Throw Money Away!
I was doing my daily Swagbucks and saw an article about throwing away money. It focused primarily on those items we purchase only to throw them away. Some examples were paper plates, plastic wrap, paper towels, and tissues. The point was to not buy these disposables in the first place if there is a reusable alternative because it can save you money! Buying them is essentially throwing money in the trash. Now who would ever actually throw real money in the trash? Not me!
We have quite a few reusable items in our home. Some were bought with the intention of saving money, while others are more convenient or better for the environment. In our home we have rechargeable batteries, reusable grocery bags (primarily obtained free), glass containers for food storage, reusable sandwich and snack bags, reusable water bottles. We use rags for most cleaning, including on our Swiffer which we use both dry and wet.
I do purchase toilet paper, tissues and paper towels. I personally rarely use the paper towels, but I do see that my husband it quick to use them for cleaning and one daughter uses them to wipe her hands and face. I buy the select a size, so I think we are going through the paper at a slower rate.
If you are looking to trim expenses, it is good to take a look at what you are buying and throwing away. There may be an alternative that is less expensive, and maybe even better for the environment! Do you buy any disposables that could be replaced? Have you invested in some reusable items? What other items do we Americans buy that could be replaced with a reusable version which could save us money?
We have quite a few reusable items in our home. Some were bought with the intention of saving money, while others are more convenient or better for the environment. In our home we have rechargeable batteries, reusable grocery bags (primarily obtained free), glass containers for food storage, reusable sandwich and snack bags, reusable water bottles. We use rags for most cleaning, including on our Swiffer which we use both dry and wet.
I do purchase toilet paper, tissues and paper towels. I personally rarely use the paper towels, but I do see that my husband it quick to use them for cleaning and one daughter uses them to wipe her hands and face. I buy the select a size, so I think we are going through the paper at a slower rate.
If you are looking to trim expenses, it is good to take a look at what you are buying and throwing away. There may be an alternative that is less expensive, and maybe even better for the environment! Do you buy any disposables that could be replaced? Have you invested in some reusable items? What other items do we Americans buy that could be replaced with a reusable version which could save us money?
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