Month: February 2010

Why Consider Filing Your Tax Return Through a CPA

Posted by Kelly Simms – February 17, 2010

It’s everyone’s favorite time of year: tax season!

Kidding.

For average people busy with jobs and not lots of financial minutiae to their lives, it may seem to make sense to step up and file your own taxes. Personal tax-filing software such as TurboTax and easy access to online IRS information makes it seem like only people with cash to burn would bother to pay CPAs (Certified Public Accountants) to file for them.

However, there are more reasons to hire a professional to file your taxes than procrastination and being math-challenged. Good CPAs makes tax law their lives 365 days a year. He or she knows the loopholes…(ahem!)…the opportunities, the exemptions, and all the little tricks to make filing your taxes as painless (and to maximize your deductions so you pay as little) as possible.

As a San Francisco attorney stated: “Filing a client’s tax return is manageable, but keeping up with tax law is my full time job.  With all the changes in the tax law, the average person may erroneously take deductions or not take advantage of tax credits.”

The tax laws change every year, so it’s important to stay on top of possible exemptions and credits. This year, you may be eligible to get money back under any of the following tax exemptions:

  • Making Work Pay credit
  • New Vehicle Purchase deduction
  • Residential Energy Efficiency credit
  • Earned Income Tax Credit
  • Additional Child Tax Credit
  • American Opportunity Credit
  • First-Time Homebuyer Credit
  • Health Coverage Tax Credit

This is not to say that there aren’t more exemptions, there are. Plus, don’t forget that you can claim a deduction for charity donations on your tax return, so if you gave to a cause such as Haiti, be sure to let your CPA know about it

If you really want to weed through all of this information yourself, see the IRS’s official web site at http://www.irs.gov/.

More importantly, a good CPA knows how to avoid the red flags that are likely to get you audited. For those of you that have been audited, you know what I mean. For those that have not, avoiding one is priceless.

How to Lower Your Credit Card Interest Rates

Posted by Kelly Simms – February 13, 2010

You’ve probably noticed that it’s not so easy to get a loan these days. However, if you have a reasonably decent credit score, there’s no reason to settle for unduly penalizing interest rates on the credit card loans you do have.

Here are a few tips for landing a lower credit card interest rate:

  • Ask. Yes, it’s that simple. Call your credit card company up and ask them (nicely) if they would consider lowering your rate. In 2002, the U.S. Public Interest Research Group conducted a national survey of consumers and found that about half who cold-called their credit card issuers were given lower rates. Mention that you have a history of on-time payments. (Of course, this needs to actually be true for you to be making this phone call in the first place.)
  • Be persistent. If the first customer service rep you talk to isn’t in a good mood that day, try again. They may say that it’s “not their decision” or that “the computer determines your rate”, but the bottom line is that an actual human—somewhere—is authorized to make decisions about your account.
  • You’re in an ideal situation if you carry a balance on your card but generally pay your minimum balance on time. This gives you leverage as a lucrative customer for the credit card company. They’re making good money off you every month, and they’d rather reduce that income by a little bit than lose you as a customer altogether.
  • This should go without saying, but in order to keep your interest rates low as possible, always, always pay your credit card bills on time or, preferably, early.
  • As a last resort, consider moving your balance to another card. Many banks offer extremely low interest rates, at least temporarily, to entice customers to transfer their balances over. The trick is to keep an eye on the end of that initial low-rate period. Often, the rate will boomerang back up to the high twenties once it’s over.

Automated monthly bill payment is a surefire way to make sure you don’t miss a payment.

  • Consider finding a local credit union to transfer your debt to. Their interest rates tend to be better than a giant conglomerate bank’s.

Yes, credit card companies make their money off of your interest (and yes, they are getting rich). But, they do have an interest in keeping you as a customer, so there is an incentive for them to make you happy—within reason.

Money-Sucking Bad Habits

Posted by Kelly Simms – February 3, 2010

Your New Year’s resolution was to start keeping track of where your money goes. On the off chance that you actually stuck with your record keeping through January (not to be cynical, it’s just that, statistically, it’s not likely)… what’s the next step?

Find ways to cut corners.

We all have our bad habits. But the really insidious ones are bad for both our bodies and our wallets.

This month, see if you can find one thing you regularly spend money on that you don’t really need. Here are some ideas:

  • That second latte of the day: While you might hate your job, and that second latte might be the only way you get through the workday, it’s keeping you imprisoned inside of your budget. At a rough average of $3.50 per latte, plus the dollar you tip the barista – let’s just round it up to $5—you could be saving a whopping $100 a month ($1200 a year!) on latte skimping alone. Can’t live without the afternoon pick-me-up? Try green tea. It’s cheaper, and better for you.

  • Infinite texting: Do you really, truly need unlimited texting on your phone? Or could those 950 texts you sent last month have been time better served thinking up ingenious ways to make money?  Consider changing your cell phone plan. There’s always email, and Skype, and IM. None of which have yet been proven to give you brain cancer.
  • Watching cable television: Haven’t you been wanting to start reading books again? You’re never going to do it with that flat-screen calling your name. Dump the unlimited cable.
  • Smoking: There has never been a better reason to quit smoking than the outrageously high tax applied to buying cigarettes in the U.S. According to MSN Money, the average pack-a-day smoker spends about $31.50 per week, or $1,638 per year. Cut it out! You’re only rebelling against yourself.
  • Paying your bills late: Have you ever added up just how much you spend on late fees and penalties? Paying your bills on time saves you money, and is better for your credit.

These are just suggestions. Would love to hear comments on more ideas!