The federal government will soon be returning 27 billion dollars to 130 million US households as part of the 2007 tax stimulus package.
Right. Well, let's put aside for the moment the fact that it was our money to begin with, and we'll also put aside that the federal government doesn't have 27 billion dollars to spare unless it dips further into debt to the Chinese by floating more bonds. That aside, Bush hopes this windfall will give the economy a "shot in the arm"--he obviously anticipates that that spend-happy consumers will fritter away the funds on consumer electronics, overpriced sneakers, fried snacks, or whatever useless junk Madison Avenue can shove down our throats.
Don't be a sucker. A tax refund like this is a blessing that doesn't come often. If you spend it on restaurants and ipods and Nikes, you'll be just the sucker the Bush administration is hoping you'll be. I say: take the money and run--straight to your bank, trustee, or brokerage and put that money away for the future. My family's $1200 is going straight into an asset-protected and tax-free 529 education plan we set up for my daughter before she was even born.
Here are 7 great things you can do with your tax stimulus refund--but be warned--these are prudent, healthy financial moves that aren't going to enrich the US retail industry, nor make you thinner, cooler, or more beautiful--only smarter and wiser.
1. Invest in a 529 Education plan. Quick definition: a 529 education plan is form of trust where you contribute money for the education of pretty much anyone (most folks set them up for children). Here's the kicker: the funds grow tax-free as long as they are ultimately withdrawn for "educational purposes". Another benefit: the funds belong to the trust, not to you anymore. Get sued? No problem, the 529 funds are protected. Declare bankruptcy? No problem, the 529 funds belong to the beneficiary, not to you. A $1200 investment, might grown to 20,000 dollars over 20 years.
2. Open (or fund) your IRA. IRA's are the steroids of the personal finance world. No single device offers so many benefits. Here are a few: IRAs are good for retirement (obvioulsy); IRAs reduce your taxes; IRAs enjoy a fair degree of asset protection in most states, and are completely protected from lawsuits in some states.
3. Open a Roth. Roth IRAs are strange creatures. The contributions do not reduce your taxes, but the money in a Roth grows tax-free. Roths do enjoy asset protection in some states.
4. Pay off your credit cards. Credit cards are the cancer of personal finance. They impose the highest interest rates, typically for the most casual and useless of purchases, and the interest accrued and paid on credit cards offers no tax benefit.
5. Improve your home. Okay, so for this one you'll have to pony up some dough at Home Depot or Lowes, but you'll get a benefit: you'll increase the value of your home.
6. Pay down your mortgage. Remember, you are always free to make a payment to the principal portion of your mortgage. You'll reduce your monthly payment, and pay off your home faster.
7. Get your car serviced, and bank the rest. You probably have ignored this one. Why not change the oil, replace the air filter, and get your other service done. Your car will run better, save you money on gas, and last longer.
What You May Not Know About Your Tax Rebate/Economic Stimulus Check
Have you already received your Tax Rebate check, or as they are now referred to, Economic Stimulus Check? Do you know the facts about this check? Do you know how yours will be delivered? Do you have important plans for your check? Just getting by? Paying off bills? No matter what you have planned our first concern is for the safe delivery of the check. With so many rumors floating around I decided to some research and find out more about the Economic Stimulus Check and dispel the myths surrounding it.
The Economic Stimulus Check is a tax rebate to taxpayers as a result of several income tax changes. Payments are sent out over the course of several weeks, with the mailing date to vary according the last two digits of the taxpayers Social Security number. For tax payers who filed electronically and had their tax refund direct deposited (or payment direct withdrawal) your income tax rebate will be direct deposited to your bank that was used for your deposit or payment. Taxpayers who submitted their income tax return via mail will have their checks issued the same day as those who filed electronically, however, their payments will be delivered via regular U.S. mail. If you have not paid your taxes or filed your return yet, your rebate will be held until that step is completed.
Many already know the amount to be issued to tax payers: $600.00 for individual taxpayer, $1200.00 for married filing jointly, and a possible $300.00 per qualifying child, born after December, 1990. However, many people do not know that they may not receive those amounts. It is possible that your Economic Stimulus Check may be offset by back taxes owed, unpaid student loans and several other government factors. How will this affect you? It is hard to tell, and you won?t know your exact amount until your check arrives.
With the availability of money and the use of technology, it is no wonder that a new phishing scam has been created regarding the Economic Stimulus Check. Phishing scams are emails that attempt to lure you to a website to gain personal or financial information. One of the newest scams is a message that appears to be from the Internal Revenue Service delivered to your email address. And like many other phishing scams this message appears to be authentic and legitimate, especially since many tax payers file electronically and use their email address to confirm their filing status.
This message is used to gain your name, address, social security and even bank account information and provides you with a link to a website and the instructions to ?
The Internal Revenue Service website requests that if you receive this message you forward it to Do not open it. Not only can this message be a phishing scam but it could also contain viruses harmful to your computer. The information stolen is all that is needed to intercept your Economic Stimulus check or even to steal your identity.
Many antivirus and email programs contain phishing detection, but if you don?t, or if you are worried about the quality of the messages you receive you may look into purchasing an antivirus software system that also provides phishing scam detection, such as Stopzilla, F-Secure Internet Security Suite, or AVG Internet Security (one of the for pay products) Trend Micro PC-cillin and many more antivirus products are designing their software to detect and stop phishing scams before they can do harm to your computer, information and credit. Have all your questions regarding your Economic Stimulus Check answered at the official IRS.gov website.
Not only does it offer a section of Frequently Asked Questions, but it also provides the opportunity to legitimately check the status of your check.
Are you looking for some inside information on income tax refund?
Here 's an up-to-date report from income tax refund experts who should know.
Those are the words that every taxpayer would love to hear, yes, you're receiving an income tax refund. For many individual taxpayers those refunds can be obtained through Earned Income credit, a real refund of overpayment of tax, or through an overpayment from previous years. Once you determine you're receiving a refund, there are several options for actually putting that money in the taxpayer 's hands. Standard paper filing, electronic filing with direct deposit, rapid refunds, and refund anticipation loans are the options we have the choice of exercising, and for many refund anticipating individuals, the rapid refund or the refund anticipation loan is the refund of choice.
Since the advent of the computer age, and the great invention of the internet, the Internal Revenue Service has been fairly quick to react to the benefit of electronic filing. The returns are filed much faster, refunds are made faster, and money due the IRS can be obtained faster. Let 's take a minute to look at the different refund options, and what each offers the individual taxpayer.
The standard paper filing, although many are more familiar with this method of filing, is slowing reaching obsolescence. There will soon come a time that the old system of paper filing will be entirely eliminated and replaced by the electronic filing methods. If you are still one of the dying numbers of Americans who files a paper return, you should anticipate receiving a refund in about 6 weeks; today, thanks to the great use of the internet, 6 weeks to receive a refund, seems like an extremely long time. If you find yourself confused by what you've read to this point, don't despair. Everything should be crystal clear by the time you finish.
The rapid refund, that is rapidly replacing the standard paper filing, is an electronic method used for filing your tax return, and allowing you to receive your refund in about 10-14 days. Much faster than the six weeks it used to take. There are usually no excess fees attached to this type of filing, and returns may be filed for free through many local, public access facilities.
The refund anticipation loan, however, is a little different. These must be administered by a tax professional through an established alliance with a financial and lending institution. There are several excellent choices available, and many qualified tax professionals to complete your tax return, you will however be required to pay a loan fee or a small interest fee for the opportunity to obtain an anticipation loan. There are several restrictions placed on receiving a refund anticipation loan, and some of the restrictions may affect many people.
For example, if you owe back taxes, back child support, or liens and judgments, you can't qualify for the refund anticipation loan. Most often, the individuals who apply for and use the refund anticipation loan are recipients of earned income credit, and their refunds are usually well into the thousands of dollars. The refund anticipation loan can be processed in as little as 3 hours, and back in the hand of the tax payer by late afternoon; this is provided everything works exactly as planned.
The higher interest rates charged by the bank product providers, and the higher processing fees charged by the tax preparers, equate to less money for the tax payer, but many of these individuals don't even blink when told how much it will be to process their return, they just want the refund immediately. This is just one more example of the instant gratification upon which our society chooses to operate.
Even for individuals filing with the electronic returns, and choosing to have their funds direct deposited, the turn around time is usually no more than 10 to 15 days. You would think that a turn around of less than 2 weeks would be quick enough for many taxpayers, but typically, the bigger the refund, the faster the necessary return.
It would seem to me, that this is just another way for the system to profit from the poor; as it is usually the poor that qualify for the earned income credit refunds, and these can be extremely large, especially for families with 2 or 3 dependents.
There 's no doubt that the topic of income tax refund can be fascinating. If you still have unanswered questions about income tax refund, you may find what you're looking for in our article directory.
