Welcome to the Yakezie Challenge Carnival!  The Yakezie is a network of personal finance bloggers who are dedicated to improving our individual blogs through selfless promotion and information exchange between fellow members in the group.  The Challenge, at least initially, is to raise our Alexa rankings.  When my site, MyMoneyMinute.com, first began the challenge, my blog was ranked well into the 3 millions; now, as of today, I am ranked #264,844 — and I owe it all to this great network of bloggers!

This Week’s Yakezie Highlights

Here’s some select posts from our Yakezie members:

Free From Broke gives us Different Bank Cards And Their Uses.

Not Made of Money shows us How To Save Money When Buying Plane Tickets.

Eliminate the Muda tells us about Health Care For Kids When You Can’t Afford It!

Jason from One Money Design submitted a video in a contest on how to Save Money Commuting To Work.

Jeff from Deliver Away Debt hosted a carnival of his own — 111th Money Hackers Carnival: Don’t Hassel-the-Hoff Edition!

The Millionaire Nurse gives you 8 Tips To Improve Your Credit Score.

The Simple Life In France asks: Do You Wish You Spoke Any Other Languages? I wish, but I only have to my credit two semesters of American Sign Language and the curse words in Spanish.  I should get moving!

College For 10k tells us How The iPad Could Save Money.

Zordane says Getting Into Debt Doesn’t Solve Another Debt.

Craig from Money Help For Christians gives us a double-dose of high-quality posts this week:  The Best Personal Finance Software for 2010 and Can Kids Open A Roth IRA?

The Yakezie, Death & Taxes!

April 15th was last week, which can mean only thing — taxes!  Here’s some great articles from the Yakezie archives that are tax-related.  Enjoy!

20s Money — What Is The VAT Tax?

Beating Broke — What We’re Doing With Our Refund

Bible Debt — Legalize Marijuana: The Answer To Our Budget Problems?

Buck$ome Boomer — How To Spend $1,100 On Medical Expenses…Fast!

Budgeting In The Fun Stuff — A Rebuttal to Washington Times article, 5 Myths About Your Taxes

Canadian Finance Blog — Book Review: Make Sure It’s Deductible

Car Negotiation Coach — Done With Taxes? Stop And Check Your Auto Finance Health

Christian Common Cents — What Is Tithing? (Okay, this is more of a God-tax, but I liked it.  If only Uncle Sam’s taxes were voluntary like God’s…)

Clarifinancial — Insurance Crucial In Irrevocable Trust

Conquering PF — PF Defined

Consumer Boomer — How To Check The Status Of Your Federal And State Income Tax Return

Cool To Be Frugal — Should I Put My Emergency Fund Into A Roth IRA?

Couple Money — Our Tax Return Plans

Credit Card Chaser — Are You Sure You Want To Pay Your Taxes With A Credit Card?

Darwin’s Finance — My Effective Tax Rate Is Under 5% – That’s Just Wrong

Downturn Living — Fifty Four Billion, Awww That’s Nuthin’!

Early Retirement Extreme — Marginal Earnings, When Working Is No Longer Worth It

Ending The Rat Race — Being Ready For Tax Season (Canadian blog)

Engineer Your Finances — Financial Lessons From Running

Eventual Millionaire — Highlights the Carnival of Personal Finance: Famous People With Tax Troubles

Evolution of Wealth — Gives you his Finale post in a series titled Tax Savings.

Financial Samurai — Tax Refunds Are Good For Most People, Because Most People Can’t Save

Fiscal Fizzle — Why Tax Refunds Are Bad

Foreigners Finance — Reader Question: Roth & U.S. Taxes While Working Abroad

Frugal Zeitgeist — Cheapest Places To Live: Texas

Girl With The Red Balloon — State Politics And Student Loan Repayment

Inexpensively — The Library – A Fantastic Tool For The Budget Minded

Learn Save Invest – Teach Your Kids About Money With The Family Tax

Little House In The Valley — Choosing A Neighborhood Based On Schools

Monevator — Do You Realise You’re Paying More Income Tax? (U.K.)

Money Beagle — Taxes Are Done

Money Crush — http://www.moneycrush.com/a-comedy-of-tax-related-issues/

Money Funk — Taxes 101: 3 Ways To Reduce Your Taxes

Money Reasons — The Catch With Winning A Free House

My Financial Objectives — 4 Part Series on Tax Savings

My Journey To Millions — Why Doesn’t Anyone Feel Remorse When It Comes To High Earners And Income Taxes?

Narrow Bridge — Would a 20% Tax Make You Give Up Candy And Soft Drinks?

Out Of Debt Again — I’m Surprised More People Don’t Cheat With Tax Problems

Peak Personal Finance — Can’t Pay Your Taxes? Get An Installment Loan From The IRS

Personal Finance By The Book — The Fair Tax: Is It Too Good To Be True?

Personal Finance Firewall — The World’s Worst Credit Card Spenders

Personal Finance Journey — Should I Tithe Off My Income Tax Return?

Personal Finance Ninja — Why You Don’t Need To Rush Out And Take Advantage Of The Expiring Housing Credit

Planting Dollars — How Much Will My Paycheck Be After Taxes?

Punch Debt In The Face — Taxes Are Funny!

Rainy Day Saver — Finally: Our Tax Refund Has Arrived

Redeeming Riches — What You Need To Know About Roth IRA Conversions

Saving Money Today — 7 Smart Things To Do With Your Tax Return

Single Guy Money — Taxes Filed – Results Not As Bad As I Thought

Single Mom, Rich Mom — If You’re Getting A Tax Refund, You’re Doing Something Wrong And The Government Is Playing With Your Mind

Stay At Home Mom CFO — Getting a BIG Tax Refund Was Keeping Us In Debt

Sweating The Big Stuff — Funniest Tax Return Ever? (LOL!)

The Amateur Financier — 10 Ways To Celebrate Tax Day!

The Centsible Life — You Win Some, You Lose Some

The Saved Quarter — Why It Doesn’t Pay For Me To Go To Work

The Debt Hawk — Opening A SEP To Lower My Taxes

Ultimate Money Blog — I Still Haven’t Finished My Taxes

Wealth Pilgrim — 9 Overlooked Tax Tips For Self-Employed Fools Like Me

Well-Heeled Blog — I Like Getting A Tax Refund

Young And Thrifty — Tiger Woods: Here Are 16 Last Minute Tax Tips For Year End (hey! same number as your mistress count!) [Canadian blog]

No Refund Needed

Read articles from my fellow Yakezie members – it’s the gift that keeps on giving!  Thanks for stopping by this week.  For an entire world of selfless personal finance bloggers, continue to follow my fellow Yakezie members.  Last week’s Yakezie Challenge Carnival was hosted by Don at Money Reasons, while next week’s carnival will be hosted by Austin from Foreigner’s Finances.

Stay tuned this week for some observations on personal finance from my recent trip to Washington, D.C.!

Follow MyMoneyMinute on Twitter

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Carnivals carnival, taxes, Yakezie

Reader Mailbag

Who doesn’t love giving their opinion? I’m no exception. I love the dialog that transpires on this and other personal finance blogs. If you have a personal, financial, or legal related question you’d like me to answer, hit me up on my Contact Page. And of course, remember – I don’t have all your facts. All content on my site is just that – opinion! I am not a professional financial advisor. Make sure you double-check all my sources and seek professional guidance, whether legal, financial, psychological, or otherwise

Ask J

Today’s question comes from a reader in California, my former home state where I was born & raised. As Dr. Dre & Tupac said, “California knows how to party” – but even rappers have to file taxes. Here’s what our reader asks:

Dear MyMoneyMinute:

I recently got married last October. In doing a trial run of our federal tax return, we get a bigger refund filing “Married – Filing Jointly”. However, in our State Tax Return, our refund is bigger when we file “Married – Filing Separate”!

My question is this — Am I allowed to use a different filing status for my federal & state returns, or must they be consistent?

Well my friend, as any good attorney would say, it depends! To find the answer to your question, I first contacted Kelly Phillips Erb, aka the “Taxgirl”, a tax attorney out of Philly. You can follow her on Twitter (@taxgirl) and read her tax musings on her website. In our Twitter exchange, we didn’t see why you couldn’t use a different filing status, BUT the issue would definitely be controlled by State law. In other words, “it depends” because there could be at least 50 different answers depending on where you live.

California Dreamin’

So the answer lies not with the feds, but the State of California. The answer to your question is found here: California Franchise Tax Board Publication 1051A. The 1st page, 2nd column, 3rd paragraph says:

“California requires you to use the same filing status on your California return as you used on your federal return.”

The relevant exceptions to this revolve around gay marriage and domestic partnerships, which the feds do not recognize and California courts did for a few months.

Mine, Yours, Ours

Another issue you may have overlooked is how community property affects your tax return in California. According to the FTB Pub. 1051A linked above, California community property rules mean that even if you file separately, you and your spouse must claim your income equally. You make $50k and she makes $10k? If you’re filing separately you both claim $30k in income. This forced equality would likely put the kabash on any plans for the lower-paid spouse to claim/qualify for any tax credits.

And That’s My Final Answer

Sorry my friend, looks like in California, the luck of the Irish is not with you today!

TurboTax Giveaway

A fellow member of the Yakezie blogging network is giving away a couple copies of TurboTax Premium Edition. If you want a chance to score free tax software and read some great content, check out Evan at My Journey To Millions. Evan is an Estate Planning attorney in New York, has great content on his site, and is a funny, funny dude. Read his post and follow his instructions on how to enter the contest.

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Follow MyMoneyMinute on Twitter

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taxes audit, california, filing status, income, income tax, IRS, marriage, taxes

Taxes have been filed, and a refund has arrived in the MyMoneyMinute household to the tune of about $360.  Last year, we were hit with about a $2,000 tax bill, so I was pleasantly surprised to end up on the receiving side this time around… but should I be?

Money Experts: “You Don’t Want A Big Refund!”

Many financial experts, including Dave Ramsey, frown upon a big tax refund.  Why?  Because the money you’re getting back was yours in the first place — it’s just been held hostage by the government for a year, interest free! The solution for them is to adjust your income tax withholding on your paycheck so that you receive more money each pay period.  Additionally, if you receive a larger lump-sum return, you’re more likely to spend it on a big-ticket item (electronics, vacation, etc.) rather than use it in a more financially responsible way, like paying off a car loan or credit cards, building up an emergency fund, or even for extra giving to your local church ministries.

For more on this argument, read articles by these two great bloggers:

Craig Ford from Bible Money Matters – 3 Reasons Why A Big Income Tax Refund Is A Horrible Thing.

Jason Price from One Money Design — Income Tax Refund: Is It Good Or Bad?

Me: “It’s Not So Cut & Dry”

In an ideal world, I agree with the guys above.  Unfortunately we don’t live in an ideal world.  If I lived in an ideal world, I’d never owe taxes or get a refund.  Then again, I also would never have charged money on a credit card, financed my life (cars, furniture, a home, and an education that cost even more than the home!).  Oh, and I’d have a stable job, an ideal salary, with predictable raises and bonuses too.

The 2 Major Reasons To Tolerate A Big Tax Refund

While aspiring for the ideal scenario above, there are reasons a big tax refund isn’t such a horrible thing after all.  Here are a few of them:

1.  You Suck With Money

Let’s face it.  If, instead of getting a big chunk of money in a refund each year, you got monthly slices of it by altering your withholding, it is almost guaranteed that money would be spent, and you wouldn’t even know where it went.  A few extra bucks each paycheck would be swallowed up by a restaurant here and a Starbucks trip there.  When you get one big check after tax season each year, you only have to make one financial choice each year, not 12 monthly choices to do the financially smart thing.  And hey, even if you make the wrong choice and blow the entire refund, at least you’ll get a really cool big-ticket item out of the deal, rather than spending it all throughout the year and not knowing where it went. If you’re gonna be stupid with your money, at least get a TV or an all-inclusive vacation to show for it.

The majority of us are financially undisciplined.  Until you get disciplined, a big refund can protect you from… you.  For a great analogy of this argument, check out an article written by Sam at Financial Samurai — Tax Refunds Are Good For Most People, Because Most People Can’t Save.

2.  The Danger of “Normal”: Risk Is Diminished

What my blogging friends didn’t discuss in this tax debate was this: we face problems adjusting our income withholdings because life is rarely “normal” or “ideal”.  Most people I know with a “stable” salary and tax structure are government employees.  In this economic climate, even those jobs aren’t safe.  People are underemployed and laid off in record numbers to the point where it is difficult to determine what your expected yearly withholdings should be.  Additionally, life happens too — you get married, buy a house, have children, buy a different house, someone gets injured on the job or gets pregnant — all these life changes affect your taxes, which means your withholdings may be off again.

For me, a limited return is ideal, but does not factor in the reality of risk.  From a risk standpoint, I’d much rather risk (1) giving the government my money interest-free for a year and get a big refund, rather than (2) miscalculate my withholdings and having to scramble to come up with an unexpected tax bill.

Conclusion

Currently, my life is just not stable enough to justify the risk of accidentally under-withholding to the point where I owe a big tax bill, and I suspect most people are in the same boat.  Perhaps down the road, life is a bit more stable and less in flux, I can spend the extra energy to get my withholdings down to a science.  But until then, I’ll err on the side of caution.

What Say You?

Don’t forget to read the articles by Craig, Jason, and Sam – then drop a comment below and let me know how you deal with your income withholding & tax refunds.

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taxes dave ramsey, refund, risk, taxes, withholding

Party Like It’s 1773!

Today, thousands if not millions of people are expected to turn out to local Tax Day TEA parties.  The Tax Day Tea Party is a national collaborative grassroots effort organized by Smart Girl Politics, Top Conservatives on Twitter, the DontGo Movement and many other online groups & coalitions.

TEA stands for “Taxed Enough Already”, and these grassroots protests are in response to reactionary and excessive tax & spend policies by the U.S. government prompted by the recent bailouts and stimulus plans passed by Congress & signed into law by President Obama.  The TEA Party is analogous to the Boston Tea Party of 1773, a protest over the American colonists being subject to British taxing policies without any representation.

Here’s the video that started it all:

CNBC\’s Rick Santelli\’s Chicago Tea Party

Where’s The Party?

Thousands of Tax Day TEA Parties are scheduled today in many cities around the country.  For more information on a TEA Party in your local area, visit the Tax Day Tea Party website.

I’m Busy, How Can I Follow Today’s Events?

There are many political pundits, bloggers, and organizations covering the events nationwide.  Here’s a few I’ve seen:

Twitter

Many people are covering local events real-time on Twitter:

• @johnculberson
• @NewtGingrich
• @LeadershipInst

You can also search Twitter for comments using the following search tags:

• #HHRS (Hugh Hewitt Radio Show)
• #TCOT (Top Conservatives On Twitter)
• #teaparty
• Tea Party

Facebook

Nationwide Tax Day Tea Party

YouTube

Do a search for “Tea Party”.  Plenty of attendees in numerous cities are posting their videos throughout the day.

Report Back to MyMoneyMinute!

Are any of you attending a Tax Day TEA Party today?? Please leave comments below about your experience, as well as links to pictures.  I may do a follow-up post if there’s enough reports generated.

photos by skye820

Politics, taxes bailout, boston tea party, Hugh Hewitt, John Culberson, Newt Gingrich, Obama, stimulus, Tax Day TEA Party, taxes

Welcome!

Welcome to those visiting my site from Prime Time Money!  Take a look around and feel free to subscribe or add me to your feed.  The following is a companion post to my guest post on What To Do If Your 1099 Form Is Incorrect.

What to do if your W-2 form is incorrect

As with my 1099-Misc issue, I called the IRS help line at (800) 829-1040, and here’s what I learned about pending W-2 issues:

Before requesting any IRS action, you must first attempt to remedy the situation with your employer by sending a request in writing to your employer to re-send a corrected W-2 form.  Include a self-addressed, stamped envelope with your correspondence.

If your employer is not cooperative, and it is past February 15th, contact the IRS help line at (800) 829-1040.  The IRS will initiate a Form W-2 complaint.

Form W-2 complaint procedure

When an IRS representative initiates a Form W-2 complaint, a letter is sent to your employer giving them ten (10) days to furnish a corrected W-2, and lists the applicable punishments & fines for noncompliance.

You will be sent a letter containing instructions and Form 4852, which may be used if your employer does not provide you a corrected W-2 form in time to file your tax return.  You can also download it from the following link:

• Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

Tax season sure can be stressful, but hopefully this and other tax tips will make this year a little easier on you!

Suggested MyMoneyMinute posts:

1. First Post: Inauguration Day — My Own Inaugural Ball
2. My dog Odie:  How Socks Can Affect Your Emergency Fund
3. The MyMoneyMinute Economic Stimulus Plan
4. Beyond the Paper: How Your Digital Imprint Affects Employment

photo by BallGame68

taxes IRS, taxes, W-2

U.S. House Passes One-Sided Economic Stimulus Bill

Yesterday, the House Democrats passed an $819 billion Economic Stimulus Bill.  Despite lobbying by President Obama for bi-partisanship & House Democrat leaders insistence on following party line, no Republicans joined in support of the bill, while 11 Democrats voiced opposition to their party’s wishes.  The final vote on H.R. 1 was 244-188.  A parallel bill is now in the Senate, which is expected to increase the size of the stimulus bill, which will already be the biggest federal expenditure in history upon passage.  In the 10-year plan, nearly two-thirds of the stimulus money will be injected within the first 18 months.

Highlights of the bill include:

• $90 billion for construction projects (roads & infrastructure)
• $142 billion to rebuild public schools (no money given to private schools)
• $54 billion for renewable energy
• Boost Medicaid & state law enforcement — $91 billion
• Extend unemployment benefits, and increase COBRA, WIC, and school lunch programs — $102 billion
• Tax cuts of $500/$1,000 per year for individuals/couples (capped at incomes exceeding $75k single/$150k couple); total cost $145 billion
• Increase to $250k the amount a small business can write off; estimated up to $17 billion savings

Okay, I’ve got to admit — I’m a political junkie.  It runs in my veins, and even when I’m not politically active, my political brain is always running on the back-burner.  First off, I have had a tough time digesting the rate at which our congress has spent money.  Increased revenues & the War on Terror notwithstanding, we have spent way to much over the last decade.

 

How Would YOU Diversify This Portfolio?

Currently, here’s how the House’s Stimulus Bill portfolio is diversified.  Click on each respective picture to enlarge:

 

 

 

 

 

 

 

 

Balancing Act

If a stimulus package is needed, government should use our money to create an environment where dependency is not further created on the government for more public jobs.  Rather, more of the stimulus money should be invested in private businesses, which can regenerate the money and use the free market to grow and expand upon ideas and serving their clientele.  Government construction projects seem like a one-time fix; yet another patch job on a huge problem.

While it is good to invest in public works and extend support to those currently feeling the economy’s effects, perhaps this stimulus bill needs to properly diversified between direct spending (safety net programs), public investment (federal & state spending), and private investment (individual & business tax policy).

Nearly 60% is projected to be invested on federal & state public works (not long-term jobs), 14.6% on safety net programs, and 26% spent on private-sector investments.  Just as if I were analyzing an investment portfolio, I would say too many eggs are in one basket, and that this stimulus bill needs to be re-balanced a bit.

How about you?  Would you “re-balance” the Economic Stimulus Bill?

Politics COBRA, congress, construction, democrat, economic, economy, Energy, medicaid, Obama, Politics, renewable, republican, school lunch, small business, stimulus, tax cuts, taxes, unemployment, WIC