Filed under Taxes by Elizabeth | 2 comments
My taxes are finally filed. I was a little late getting them done this year because they ended up being more complex than I thought. I filed electronically with the help of free Turbo Tax from State Farm.
The good news is I estimated my taxes almost perfectly. Despite having a full-time job in the beginning of last year, and then having two low-paying part-time jobs later in the year, and being a full-time student (which equals tax credits) I finagled it to only get $180 back from the feds and owe $7 to the state. Considering the year before I was in a similar boat (with tax credits and various jobs) and got over $1000 back, I’m quite pleased.
I realize this doesn’t make sense to some people: how can I be more excited about getting only $180 back than getting over $1000 back? Because that means that this year I had that extra money to save over the course of the year to earn interest on. And I’m just pleased that I was able to estimate so precociously. Actually, it was the IRS who helped me with this. Their tax calculator is quite accurate (as I suppose it should be).
If you think you may have extra deductions this year and want to withhold the proper amount, use the IRS’s tax withholding calculator.
Filed under Taxes, Twenty-Something Finances by Elizabeth | 0 comments
Queercents has an awesome post about taxes for twenty-somethings. If you still have yet to think about your 2006 taxes check out this post.
Filed under Taxes, Retirement by Elizabeth | 0 comments
Ever notice how high Roth IRA mutual fund minimums are? (And Mutual funds in general.) At Vanguard, most Roth IRA minimums are $3000; which is 75% of the maximum yearly contribution ($4000). Because of financial uncertainty, I chose not to max out through automatic contributions last year. Thus, I still have about $2000 that I can contribute to reach the $4000 max for 2006. I have this money in savings and am planning on contributing up to the max. But, I would also like to open a new fund so I can keep my savings diversified (my current Roth is an international fund, and I would also like to have an index fund that is more US focused).
The problem is that because Vanguard sets their minimums to $3000, I can’t couldn’t open a new fund in 2006 because legally I could only contribute $2000 more to a Roth for that year. But, between now and tax filing I can contribute for both 2006 and 2007. I called Vanguard just to check and they told me that when I open a new fund it will ask me to specify which year I want my contributions attributed to. So, I can contribute $2000 from 2006 and $1000 from 2007 and I will have reached the $3000 minimum without running into any tax issues. Genius!
Filed under Taxes by Elizabeth | 2 comments
Good news: the reports are true– if you are a State Farm Insurance customer you can use Turbo Tax online for free. We use State Farm for our Renter’s Insurance and I set up my account so that I could view it online. Once you do this there is a link to Turbo Tax. You are able to use either the Basic or Deluxe and both the federal and state filings are free. There are two of us on the Renter’s Policy and we were both able to set up individual accounts in order to both have access to Turbo Tax. The overall value of this is $56/person. Thus, for our household we got $112 worth of Turbo Tax software for free.
(True, it’s not really free considering we have to pay for Renter’s Insurance. But our Renter’s Insurance policy is only about $150/year.)
Filed under Taxes by Elizabeth | 1 comment
The Turbo Tax Free File Rules have changed. Last year I qualified because they had a $50,000 AGI limit, but they’ve changed it this year. Apparently now you have to have an AGI of $27,000 or less (or be military with an AGI of under $52,000 or less or qualify for an earned income credit.) So, I’ll be checking out my options for a different free file this year.
The IRS has a cool new tool to help you figure out which free-file service you qualify for.
I ran it and my two best options look like:
H&R Block’s TaxCut
TaxACT
From what I’ve read, TaxACT is very good for simple returns; but TaxCut is just a little bit better for more complicated ones. With jobs, internships, scholarships, and schools I may lean towards TaxCut. The downfall? It’s only $12.95 to e-file my state return with TaxACT, but $24.95 with TaxCut.
I’ll play around with both of them and see which I like better. Maybe I’ll end up doing my state taxes by hand this year.
Filed under Taxes by Elizabeth | 0 comments
The IRS is set to release their list of Free File Software next Tuesday (the 16th). This is software provided free by tax software companies for people whose
Adjusted Gross Income is less than $52,000. According to the IRS:
“That means 70 percent of all taxpayers – 95 million taxpayers – can take advantage of the Free File program.”
Last year I used Inuit’s (Turbo Tax) Free File Software. I was very pleased with it and will be using it again this year.
The only catch is that with most (if not all) of these programs you have to pay for state taxes. (That is: Federal Tax Preparation=free; State Tax Preparation=$$). I think I paid around $10 or $20 last year for the state service. Alternatively you could just have the software do your Federal taxes and with that information fill out the State taxes yourself.
For me using tax software was well worth it. I could have probably done by taxes by hand, but I had more confidence using the software and got a better deal in the long run. (It found a tax credit I qualified for that I wasn’t aware of). This year my taxes will be even more complicated because of going back to school and working multiple part-time jobs; thus the software will benefit me even more. Also, because of all these life changes I have no idea if I owe or if the Government owes me. If the IRS owes me you can bet that I will be filing right away. If I owe them, well, I’ll wait until late-March/early-April to file.
UPDATE: TurboTax doesn’t have the same offer this year. You have to have an AGI of $27,000 or less unless you’re active military or qualify for an Earned Income Credit.
