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2011 Free Tax Filing Options Available For Some

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Last year was my third full year of blogging, and as such will be my third year with a tax situation that will be a little bit more complicated than it is for some. I'll have side income to report, as well as having to pay estimated taxes throughout the year.  In fact I just paid my last estimated tax payment of the year a week and a half ago.

The last couple of years I've thought about going to a CPA just because my tax situation has become so much more complex, and I want to make sure that I get the most of my deductions, and that I'm not missing anything.  I just don't want to pay the big fees though.  Luckily, there are a lot of great tax software out there that make it a whole lot easier for the average Joe to file their taxes, and still make the most of their deductions.

If you file your own taxes I suggest using a software like TurboTax and e-file to send in your taxes. Your tax return will be processed a lot faster than if you send in a paper tax return. You can also get a refund in as little as 8 days with e-file, but it can take a month or more to receive a refund via check.

Also, if you met certain income restrictions in 2010,  you can file your federal taxes for free!

Can I File My 2010 Tax Return For Free?

The IRS has a Free File program that allows you work with a number of tax preparation software companies in order to get free tax preparation.   What are the requirements?

  • You have to have an adjusted gross income (AGI) of $58,000 or less in 2010.  That applies to both single and married filing joint filers. Some free-file companies may have lower AGI requirements, however.
  • Other eligibility criteria may include: age, state, eligibility for the Earned Income Tax Credit, and military status.

Some of the companies will have a lower AGI threshold than others, but in general most will offer free e-file along with having a free tax preparation option.  The IRS gives a quick rundown:

Each participating company sets its own eligibility requirements and not all taxpayers will qualify for all companies. Individual company offers may be limited by AGI, geographic location, specific states and include other criteria, so it's important to review the criteria before you choose

Where Can I File My Taxes For Free?

There are a lot of companies where you can file your federal taxes for free. Below I'll list some of the best ones that I recommend.

NOTE: The required maximum AGI and other eligibility requirements for free filing will vary from company to company.

Click on the company name to start your return for free -regardless of income!

Free File Options

TurboTax Free Edition – TurboTax is one of the better known names in tax preparation, and the company that I’ll be using this year. They offer:

  • FREE preparation, FREE printing, FREE efiling for your simple tax return
  • Guides you like a GPS through your simple tax return
  • Double-checks your return to make sure it’s accurate

CompleteTax Free – Complete Tax offers a free file option, and I’ve heard from others that the software works pretty well:

  • 1040EZ Federal form only
  • Earned Income Tax Credit (EITC)
  • Single, and Married Filing Jointly filing status
  • No children or dependents

H & R Block at Home Free Edition– H & R Block took the Tax Cut software and rebadged it in their H & R Block at Home Free Edition. They offer the following with their free file service:

  • Step-by-step guidance
  • Double-checks for errors and guaranteed accurate.
  • Easy for first-time users
  • Ability to add state program
  • 1 federal e-file

Tax Act Online Free Edition –2nd Story Software Another great tax software that I've heard great things about. Free federal filing, and add state for only $17.95!

  • Prepare, Print & E-file FREE for Everyone!
  • Get your maximum refund guaranteed
  • FREE e-mail and audit support
TaxSlayer Free Edition – TaxSlayer.com I've used the Taxslayer software in years past, and have been happy with it.
  • Prepare, Print, & E-file for Free
  • Free Email Support
  • Quick and Easy to Use
  • Maximize your Refund

QuickTax Free Online Edition – QuickTax is my token Canadian option I’ll mention for our friends to the North. Their software offers:

  • Free support by email
  • No downloads and no software to install – do your taxes in your Web browser
  • Your info is totally safe! QuickTax uses the same security features major banks do

Do you have your own tax software that you prefer to these options? Tell us which one you use in the comments!

Discover Bank Review: High Yield Savings Account

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Over the past year or so I've done quite a bit of research on online savings accounts. During that time we ended up opening an account with Ally Bank that we've been quite happy with. While their rate is no longer the highest, using them has been easy and pain free.

Only now after I had opened my Ally Bank account did I discover that another bank actually had a higher rate than I had realized, and we could have gotten better returns there.  On top of that, from what I'm reading online people are relatively happy with them as well.  That bank is Discover Bank.

Discover Bank History

Discover Bank was originally known as Greenwood Trust Company, and it first opened it’s doors in Greenwood, Delaware in 1911.   They were renamed as Discover Bank in 2000.

Up until just recently they only offered a money market account type, but since then they’ve expanded their offerings to include a full online savings account, along with several other account type options.  Since doing so – and since their rate is near the top of current offerings, they’ve quickly become one of the industry leaders in the high yield savings account sphere.

Is Putting My Money With Discover Bank Safe?

With Discover Bank your money will be safe and sound because the bank is FDIC insured, and has been since 1934.  If you deposit your money and the bank goes under, you’ll be fine – as long as you don’t have more deposited than the FDIC insurance will cover.  Currently that amount is $250,000 per depositor.

Features Of A Discover Bank High Yield Savings Account

Discover Bank’s High Yield Savings Account has a good number of features. Here are a few of them:

  • Low opening deposit ($0) plus no minimum balance
  • Set up automatic transfers from any checking or savings account
  • Rated 5-star Safe & Sound by Bankrate.com
  • Bankrate.com Top Tier Winner for consistently high yields
  • Fast and free online money transfers
  • 24/7 live customer service
  • FDIC-insured to $250,000 per depositor

Opening An Account With Discover Bank

Opening an account with Discover bank sounds like a pretty simple process.  Their website claims that you can open in “minutes”.    Here’s how it works:

Open A Discover Account
  • Step 1:  You select the account type that you’re choosing, along with whether it is a single or joint account.  Enter your personal information including social security number.
  • Step 2: Enter your linked bank account information and enter how much you’d like your opening deposit to be.
  • Step 3: Verify trial deposits and your account is ready to go.

Doesn’t sound too hard!

Open a Discover Bank account. Click here to get more details now!

Other Discover Bank Account Options

In addition to it’s competitive high yield savings accounts  Discover Bank also has other options available including classic CDs, money market accounts, IRA CDs and their traditional credit card offerings. All of their offerings seem to have rates that are currently very competitive or near the top of the bunch.  For more details about their other account options, click here.

Conclusion

At the time that I wrote this, Discover Bank has some of the highest interest rates in the country (higher than my Ally Bank account unfortunately) and all of their accounts are FDIC insured.  Add to that their other solid account options, no fees or minimums, good security and 24/7 customer service and you have a solid bank offering.

If you’re looking for a good high yield savings account where you can put your money, I think Discover Bank should definitely be on your short list.

Do you have any experience with Discover Bank? Are you using them, and how do you like them? What are the pros and cons of their accounts? Leave us a note in the comments!

Annual Percentage Yield (APY) is accurate as of 3/14/2017. Applies to personal accounts only. Fees could reduce the earnings on the account. Rates may change at any time without prior notice, before or after the account is opened. No minimum balance to open.

Education Tax Credits Can Help Pay For College Costs

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A lot of people aren't aware that there are education tax credits available to help you offset the costs of paying for a college education for you or your dependents.   So if you're paying college costs, please keep reading as we'll be talking about the American Opportunity Credit and the Lifetime Learning Credit, and how to take advantage of it.

Education Tax Credit Eligibility

There are eligibility requirements that you must meet for both of the tax credits.  For either credit you must pay post-secondary tuition and fees for yourself, your significant other or your dependent to be eligible. The credit may be claimed by the parent or the student, but not by both, so don't even try.  If the student was claimed as a dependent by their parents, the student cannot file for the credit automatically.

For each student, you can choose to claim only one of the credits in a single tax year, but not both. For example, you cannot claim the American Opportunity Credit to pay for your child's tuition charges and then claim the Lifetime Learning Credit for $2,000 more of their school costs.  However, if you pay college costs for 2 or more students in the same tax year, you can choose to take both credits, one for each student, each year.  So, if you had 2 sons, you could claim the American Opportunity Credit for one and the Lifetime Learning Credit for the other.

The American Opportunity Tax Credit

The American Opportunity Credit can be for up to $2,500 for an eligible student, and is available for the first 4 years of post-secondary education.  Other guidelines for the tax credit, and stipulations you must meet – from the IRS:

  • Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
  • The student must be pursuing an undergraduate degree or other recognized educational credential.
  • The student must be enrolled at least half time for at least one academic period.
  • Qualified expenses include tuition and fees, coursed related books supplies and equipment.
  • The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.

Lifetime Learning Tax Credit

The Lifetime Learning Tax Credit can be for up to $2,000 for an eligible student, and is available for all years of post-secondary education – and for courses to acquire or improve job skills.  Other guidelines for the tax credit, and stipulations you must meet – from the IRS:

  • The maximum credited is limited to the amount of tax you must pay on your return.
  • The student does not need to be pursuing a degree or other recognized education credential.
  • Qualified expenses include tuition and fees, course related books, supplies and equipment.
  • The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return.

You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For more information about these credits see IRS Publication 970.

Have you claimed either fo these tax credits for your education costs?  How much were you able to claim?

7 Creative Ways To Save Money On Your Vacation

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In today’s economy, it’s already hard to enough to scrounge up enough spare funds to take a trip. Then to make matters worse, higher oil prices have sent the cost of airline tickets into the stratosphere and of course driving is no longer an affordable alternative, either. However if you get creative, you still might be able to afford a trip once in a while. Here are 7 ways to save money on vacations – some common while others you might not have thought of!

#1. Skip the restaurants and head for the grocery store
It’s been drilled into our minds that vacations = eating out. But is that really necessary? Even if your hotel doesn’t have a kitchenette, you can still save money by hitting up Trader Joes or a cheap supermarket for some premade dishes – or better yet – bring food with you from home packed in a cooler (if you’re driving). Even if you only do this for half the meals during your trip, you will be saving a tremendous amount of money.

#2. Venture where others don’t want to go
With all the violence in Mexico, package deals for traveling there are looking mighty good these days. Of course, there is a risk/reward thing here, but many claim as long as you stay at the resort you should be pretty safe. If that works for you, then it might be a lot cheaper than traveling to one of those hot Caribbean tourist destinations.

#3. Discounts for students, seniors, military, etc.
If you’re going to a touristy area in the United States – such as Orlando – there’s a good chance that many of the amusement parks, transportation services, and even some restaurants accept discounts for various groups like senior citizens, military, students, AAA members and so forth. So make sure you bring all your cards with you!

#4. Milking a credit card signup promotion
First of all, I would like to say that anyone who has a tendency to get into credit card debt should avoid this tip! That being said, if you can use a credit card without raking up a balance, then there are tons of offers out there for airline and hotel credit cards that might save you some money. For example, the Hyatt credit card is offering 2 free nights at any Hyatt hotel with no restrictions whatsoever. Their rooms can easily run $300 to $500 a night, so the dollar value of the Hyatt credit card offer is significant. For a complete comparison of offers, check out Smart On Money's credit cards page!

#5. Group travel deals
We all know sites like Groupon,  LivingSocial and Moolala are all the rage right now for buying restaurant gift certificates and the like. These group buying sites now offer travel packages too, but I must warn you, they are a hit or miss. Sometimes what’s offered truly is a good deal, while other times it’s only a discount on an inflated price that no one pays anyway. Regardless, they are definitely worth checking out. In addition, you can also snag some great deals through more traditional group travel venues, like Apple Vacations (over the years I have personally got a couple amazing offers through them that were not found on any of the travel websites).

#6. Home/apartment swapping
Even the cheap hotels cost a lot these days (in my opinion at least) so why not consider a house or apartment swapping arrangement? There are a number of websites available where you can arrange to either rent someone’s unused room/apartment/house – or – you can do a trade arrangement where both parties will literally switch homes for a week or so. As far as the latter option, I’m not sure I would feel comfortable having strangers in my own apartment, but I wouldn’t mind paying to rent someone else’s if it was cheaper than staying at a hotel!

#7. Avoid souvenirs and shopping!
When I was a kid, we would go on a family trip once every couple years and I would always buy a bunch of junk wherever we went. Do I have any of that stuff now? Nope! Just goes to show what a huge waste of money it was. But fortunately, it taught me early on what a waste it is to spend money on trinkets and other crap that you don’t need (and really has little to do with your vacation spot since it’s probably made in China). The best souvenirs are memories and if that’s not good enough for you, then take a bunch of pics using your digital camera!

This post was written by Michael from CreditCardForum.com, which is a forum and blog for all things credit, including reviews of the best travel rewards credit cards.

When A Roth IRA Will Cost You

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One of the big reasons (aside from the tax advantages) that so many personal finance writers like the Roth IRA is due to the fact it is possible to withdraw money early from the account without penalty. It is true that you have to meet certain conditions in order to make a penalty-free withdrawal, but the option is still there. The temptation to withdraw from a Roth to fund a college education or put a down payment on a house is tempting, so it is important to make sure you are meeting the Roth IRA withdrawal rules. Otherwise, your Roth IRA could cost you.

Early Withdrawal Fees and Penalties

The age at which you can begin making withdrawals is 59.5. If you withdraw from your Roth IRA before them, without meeting one of the exceptions, it is going to cost you a 10% early withdrawal penalty. On top of that, you will have to pay taxes on your earnings if your withdrawal is non-qualified. This amount will be taxed at your income rate. Finally, your plan holder/manager might impose its own fee for early withdrawals. All of that starts to add up.

Of course, it is worth noting that you can withdraw your own contributions to your Roth IRA at any time. Withdrawing your original contributions is usually not a problem — unless your original contribution is part of a conversion from a Traditional IRA to a Roth IRA.

Roth IRA Conversions

One of the popular retirement planning moves lately has been converting to a Roth from a Traditional IRA. Last year, anyone could convert. That policy has been extended, and it is possible to continue converting a Traditional IRA to a Roth IRA. However, it is important to note that converting to a Roth IRA will cost you. Since Traditional IRA contributions are made before taxes, you will have to pay taxes on the conversion amount. Those who made the conversion in 2010 can spread out their tax payments over two years, but those making conversions starting in tax year 2011 will have to pay taxes the year of the conversion. The cost of taxes is an important consideration when deciding whether or not to convert.

Five-Year Rule

It is also important to remember the five-year rule when considering the Roth IRA. If you don't follow this rule, you could find yourself paying penalties for taking unqualified, early distributions. You are not to take distributions from the earnings (your original contribution is another matter) in your Roth IRA account until five years have passed. The good news is that the five years starts on January 1 of the year of your first Roth IRA contribution, so periodic contributions made later don't start the clock over again.

If you convert, though, each conversion you make has its own five-year requirement. You have to have the assets sitting in the Roth IRA for five years, or until you turn 59.5 (whichever happens first). If you are older than 59.5 when you make the conversion from a Traditional IRA to a Roth IRA, you can access your original contribution at any time. The earnings, though, have to wait five years — or you are subject to a penalty.

Before withdrawing money from a Roth IRA, it is a good idea to consult with a tax professional or financial planning professional to get a better of idea of how you can avoid the costs related to a Roth IRA.

Have you ever made a withdrawal from your Roth IRA,and did you follow all the rules?

Stricter Auto Lending Standards Means Deals For Some, Not For Others

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In 2008, when the government announced plans to bail out the auto industry, many Americans were surprised to learn that the industry has reached such a low point. At the time the big American auto companies were all ailing from economic woes,  and faced all out bankruptcy.  The reasons?  Non-unionized competition from overseas, huge pension costs,  and the inability to fund jobs and benefits.  Thanks in no small part to the economic stimulus, the American automotive industry has come back from the grave, streamlined their business, and cut excess costs.  They're now coming back with what will hopefully be stronger strategic plans.

Good Time To Buy A Car?

Now that the big 3 manufacturers are slowly coming back, many are encouraging Americans to buy back into the auto industry by buying new car.  MSN reports that if you have a relatively good credit history, then you can probably receive a pretty low rate on a car loan.

Folks with untarnished credit will find good rates, eager lenders and some amazing deals as increasingly desperate car manufacturers try to revive sagging sales.

With many lenders eager to work with consumers and a car industry highly motivated to keep sales alive for American-made products, you can get some great savings towards the purchase of a new car.

On the other hand, people with low credit scores are having a hard time getting the same kinds of deals as those with stellar credit histories. While these customers can still receives loans to buys cars, the rates are much higher, which puts the customer at risks for not being able to make the monthly payments.

Folks with troubled credit will find higher rates, increased scrutiny and warier lenders, but they won't face anything like the trouble they'd experience if they were shopping for a mortgage.

Lending standards from the automakers have been made much stricter since the crash as they now know the inherent risks in lending to those with big credit risks, and they didn't want auto lending to become the next sub-prime lending crisis, as it did in housing.

Finding A Better Deal On Your Loan And Insurance

In order to stave off this concern lenders are currently more likely to work with consumers who have a positive burrowing history. If you’re concerned about your loan application, check your credit score and  consider talking to a lender about finding a better rate, and options for cash rebates or savings.  Also consider finding a loan through a credit union or other bank before going to the dealership, and ask the dealership to beat the best rate that you find.

Control the things that you can, like improving your credit history.  Pay off all installment loans on time,  dispute incorrect statements on your credit, ask companies to remove things from your credit file, and pay off debts that you may have.

When it comes time to actually purchase your car, also make sure to get and research free insurance quotes online to get the best deal on insurance as well.  Don't forget to look up ways to get a reduction in your insurance rate, like multi-car discounts, and companies that give discounts for good drivers.

Conclusion

While the automotive industry is back on it's legs, things aren't completely back to where they were before.  Lending standards are now stricter, and if you've got a dent in your credit, you may not find it as easy as before to find a deal.   The key is to do what you can to improve your credit, shop around for the best deals on cars and insurance, and in the end you'll find what you're looking for.

Have you found recently that buying a car was a bit tougher? Tell us about it.