I Hate Computer Viruses

Computer Viruses Suck!

I had a nasty visit from an unwelcome guest last night. My PC was hit by a virus and I spent all night dealing with the mess it has caused. I don’t really know when I was infected but the problems just started popping up last night. Hopefully I haven’t been harboring the sneaky sucker for a long time.

Luckily I had just backed up all my documents a week ago but I’m still working on getting the operating system up and running. When I setup the computer a few years ago I went through and created recovery CDs so I’m trying to use those to recover the PC back to the way it was out of the box.

I’m not exactly sure how the virus snuck onto my PC but I was behind on both my anti-virus updates and Windows updates so I imagine that had something to do with it. This was not exactly the way I was planning on spending my evening and morning, I absolutely hate wasting time on productivity black holes like this. I wonder how many hours of productivity are lost each year due to the effects of hackers and viruses?

Anyhow, it may be a day or two before I’m back up and going again. Needless to say there will be some upcoming posts on backing up your data, keeping current on your updates, and a review of the best anti-virus software 🙂

Stop what you’re doing and go back up your data!

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Five Ways I’ve Failed Myself (And What I’m Going to Do About it)

Our country is in transition, out with the old and in with the new.  As our nation’s leadership prepares to change, President Bush has been reflecting on the legacy he’s left during his tenure in the White House.  Last week I saw part of his press conference where President Bush talked about his biggest disappointments and I realized that I’ve made some mistakes over the last eight years that I need to correct.

Here are five ways I’ve failed myself during Bush’s terms and how I plan to change them during the upcoming Obama era.

Working Hard, Not Smart

One of my old boss’s favorite sayings was that he was never the smartest guy in the room but he’d outwork anyone else.  He would stay at work all night long to get the job done, sometimes working day after day with little sleep, and many times I was there right beside him.

I’m afraid I’ve had a similar mindset for most of my adult life; what I’ve lacked in experience or intelligence, I’ve tried to make up for with hard work.

I’ve put myself through a lot of unnecessary stress and missed out on some neat opportunities because I was convinced that I had to work that hard to be successful.

New Policy – Starting a new job at the end of last year made me realize that I always have alternatives to my current situation and that it’s in my best interest to identify and evaluate them. In the future I will be more dilligent with being aware of my best options.

A big part of working smart is setting goals and aligning my actions with those goals, if something I’m doing either doesn’t acheive those goals or seems a roundabout way to get there, I’ll re-evaluate those tasks.

Failure to Start

I shared a quote on Twitter the other day that really hit home for me:

“Success is going from failure to failure without a loss of enthusiasm” – Winston Churchill

If I don’t take the risk of starting something and failing, I will be no closer to success.  My problem is that sometimes I overthink things and spend far too long deciding whether to start a project and then how to implement it.  This site is a good example, I should have started it two years before I did but I was so busy researching which type of website to start that time just slipped away.

New Policy – If something fits with my strategy that I create while “working smart”, I won’t hesitate to start the project.  If I don’t have time to do it myself, I will find someone else to do it for me.

Lack of Focus

This has probably been my biggest failure over the last several years.  I tend to spread myself too thin and then spend so much time multi-tasking that nothing gets done. 

I find myself having so much to do that I get frustrated and overwhelmed.  I try staying up all night just to get everything done but I can’t keep that up forever, so instead I will focus in on the projects that fit my strategic goals.

New Policy – The action plan I set out in my New Year’s Resolution will help me focus on only a few projects at a time.  I have to be careful with my aboe policy on starting new projects.  I can’t commit to them until I have the resources lined up to carry them out.

Thinking Small

Since I’m the long-haul, hard worker type, I’m good at taking regular small tasks and just plugging away at them day after day. Of course this is a great way to build something over time, it’s probably why I’m such a good money saver, consistent and regular.

However, without a big picture I could be working in circles for the rest of my life.  It’s easy for me to keep doing the same thing over and over and optimizing it for success because that’s what I know.  BUT, in order to grow I need to push myself this year.

New Policy – Set some goals that scare me and seem unattainable, then figure out how to reach them.

Not Diversifying

Thank goodness for my wife.  When we first got married, I wanted to live in the smallest apartment we could find and plow all our money into the stock market for ten years.  I quickly learned that you don’t always get what you want in marriage and we ended up buying a house.

Let me say it again, thank goodness for my wife!  If we would have followed my path we’d be seriously weeping in our beer right now thanks to the recent stock market performance.  The real estate market certainly isn’t great but our home has held it’s value much better than our stock market investments would have.

The money we did invest was pretty diversified across industries and asset classes but it’s not just our investments that I need to diversify.

New Policy – Evaluate and pursue forms of investment in addition to the stock market, such as running our own business and owning rental property.

Those are the five ways I’ve failed myself during the terms of President Bush, with my new plans I will turn around my shortcomings during the Obama era.  What changes are you going to make?

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2008 Federal Tax Brackets Explained

Federal tax brackets, tax deductions, tax credits… why does it have to be so complex? Wouldn’t it be eaiser to just have a flat tax or a higher sales tax to wipe out the complicated tax code?

Yes, a bunch of accountants would be out of business, but February and March would be much more enjoyable for us! Of course, we have to live with the system in place for so today we take a look at the 2008 federal tax brackets.

2008 Federal Tax Bracket

Below are links for your tax brackets for 2008 if you’re married filing separately, married filing jointly, or single (you’ll need to have Javascript enabled in your browser to see them) Opens in new window:

• Married Filing Separately – Tax Rate Schedule Y-2
• Married Filing Jointly – Tax Rate Schedule Y-1
• Single Filing Status – Tax Rate Schedule X

Understanding Adjusted Gross Income

The tax brackets can be easy to follow, except some people make the mistake of thinking that the income level is based on their gross base salary for the year. This is not true.

The tax bracket that you fall into is based on your adjusted gross income. To calculate your adjusted gross income, simply take your gross income for the year and subtract all eligible tax code deductions from it to come up with your adjusted gross income.

Let’s say that my wife and I made $50,000 in gross income during 2008, and we elect to take the standard marrried, filing jointly deduction of $10,900 and personal exemptioos of $3,500 each.

Assuming we did not qualify for any other deductions, (which is highly unlikely because there are so many in the tax code nowadays) our adjusted gross income would be $32,100:

• $8,025 would be taxed at 10%
• $24,075 ($32,100-$8,025) would be taxed at 15%

Taxes owed would be $4,436.25 for an effective tax rate of 13.82%

In that example, whether I based it on $50,000 or $32,100, my tax bracket would not have changed, but if I simply computed my tax liability based on $50,000, it would have been higher, rather than the accurate tax liability of $4,436.25. It’s important to remember adjusted gross income and how to compute it, because that is the income you will pay taxes on, not your gross income.

What Happens When the Bush Tax Cuts Expire?

You better get the phone number to the office of your local congressman or congresswoman, because you many want to call them after I describe this scenario. Before 2002, the tax bracket for a married couple filing jointly was as follows:

• 15% for AGI up to $45,000
• 27.5% for AGI up to $109,250
• 30.5% for AGI up to $166,500
• 35.5% for AGI up to $297,350
• 39.1% for AGI above $297,350

compare that to the current bracket for a married couple filing jointly:

• 10% for AGI up to $16,050
• 15% for AGI up to $65,100
• 25% for AGI up to $131,450
• 28% for AGI up to $200,300
• 33% for AGI up to $357,700
• 38% for AGI above $357,700

As you can see, the Bush Tax Cuts of 2002, greatly affected middle and upper middle income earners between $45,000 and $131,450. Before 2002, they were paying 27.5% and 30.5% in taxes, but after 2002, they were paying 15 percent. These tax cuts are set to expire in 2010, and Congress has not extended them at this point.

This expiration of the tax cuts will greatly affect my family, because my tax liability will go from 15% to 27.5% unless Barack Obama passes his own tax bracket plan before 2010. How will it affect your tax bracket if the 2001 tax bracket is put back into affect in 2010?

Tax Reform?

I mentioned the part about the tax brackets changing in 2010 unless Obama and Congress change it, because it wiil greatly affect millions of Americans. A lot of people think our tax system needs simplification and reform, and I hope that the new administration realizes that the current tax code is too complicated for most Americans to understand.

Preparing Your Taxes

Of course in the meantime, this tax system is what we have to live with, and the best way to reduce your adjusted gross income, and your tax liability, is to take advantage of every tax deduction and tax credit you qualify for. 

Check out our other tax recent coverage on gathering your tax forms seeing if you qualify for free efile or online tax prep.

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Common Tax Forms to Gather For Your Tax Return

January is the month when you need to keep a keen eye on mailbox to make sure you don’t overlook any important tax documents coming in.  Online services, desktop software, and tax professionals can do the tax filing work, but the most important part about filing your taxes comes from you. 

You need to make sure you are gathering the appropriate documents with the relevant tax and financial information you need to file your taxes accurately.  If you recently moved or changed your mailing address, make sure your employer, former employer, financial institutions, school institutions, and anyone else who might be sending you a tax form knows your most updated mailing address.  Many financial institutions now provide the tax form online, so you can download it at your convenience.  

Here are some of the common tax forms that you might need to prepare your tax return this year.

W-2 Tax Form

This is likely the most important document that you need to file your taxes.  If you are employed by someone else, they should send you this form before January 31st, 2009.  It contains information such as your wages, salary, tips, commissions, federal tax withholdings, social security taxes, medicare taxes, retirement account contributions, and various other information.  

1099-S Tax Form

If you did any work as an independent contractor, the employer would send you this form reporting your wages/salary.  There should not have been any taxes withheld, because you are considered self-employed, and it’s your responsibility to do that on your own. The reason for this is because you were not an employee of that company or individual, so they should not have withheld any taxes from you.  

1099-SSA Tax Form

You will receive this form from the federal government in order to claim social security income if you received any SSA income at any time during 2008.  

1099-DIV & 1099-INT Tax Form

You will receive these forms from any financial institution where you hold a fund or account that paid taxable dividends or if you had taxable capital gains or losses.

1099-R Tax Form

This is a form that reports distributions from annuities, profit-sharing plans, retirement plans, IRAs, and pensions. Whoever holds the plan, (the custodian of the plan) sends the form to the owner of a plan if he or she has made distributions of $10 or more from the plan in a given year.

The form is mailed to recipients by January 31 of the year after the distribution was made. In some cases, the individual needs to attach a copy of Form 1099-R to his or her tax return. 

1098 Tax Form

If you own a home, your mortgage company will send you this, and it shows you the total amount of interest you paid on your mortgage for the year.  Only those who itemize their taxes need to use this form to report the interest paid as deduction.  

1098-E Tax Form

If you paid student loans throughout 2008, the institution that holds the debt will send you this form.  It shows how much you paid in student loan interest.  You will only use this information if you are itemizing your deductions.  

1098-T Tax Form

If you or your spouse took any higher education classes at an accredited college or university either for a degree or not for a degree, you will receive this form from that institution.  This information will show the amount of money you paid in tuition for 2008, and you can use it to claim the Hope or Lifetime learning credit.  

1042-S Tax Form

This form will be sent from your former or current university/college if you received any grants, scholarships, or fellowship money that qualifies to be taxed.  

Good luck with your taxes!

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College Students in Debt Find a Friend in MTV

Growing up as part of the MTV generation, I always thought of MTV as a source of entertainment that had an anti-establishment edge.  The videos they showed always seemed to push the envelope and were, in my mind, a good commentary on some of the latest trends in the youth culture. 

Now MTV is using their clout with the younger crowd to help start a discussion about fiscal responsibility.  Not very racy or controversial but definitely an important topic for college students. 

With a tagline of “We’re broke, let’s fix it”; they’ve launched a website for college students called Indebted. The partnership with the Peter G. Peterson Foundation has a goal to:

“raise awareness about the dangers of excessive personal and government debt, and to promote action to help stop the fiscal crisis in the U.S.”

How will they get college student’s attention?  Here are some of the dire facts they list on the home page:

• College students today have to spend more than double what the previous generation spent on tuition – and tuition costs keep going up.
• 15 years ago, half of college students graduated with student loans – now two-thirds of them do, with the average student loan debt being around $20,000.
• On top of individual debts, every American is carrying a burden of about $184,000 in government debt and unfunded obligations.
• Tax rates will have to more than double in our lifetimes for our country to get by.
• With increasing government and personal debt, young people today are set to be the first generation that won’t enjoy the same growth in standard of living as their parents.

I’m glad MTV is trying help to educate college students about debt and financial responsibility.  It may not be much help for the college senior who’s 50K in debt, but it could certainly help the incoming freshmen.

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Free eFile – Freefile & Online Free Tax Prep Options

Freefile and free eFile sites let you prepare your income tax return for free but can they be quality tax prep options if they’re free?

Today we’ll take a look at how you can file your income tax return online for free and share our experience with the service.

Free eFile

For the past five years, I have used online e-file services to prepare and submit my tax returns for free. I have never had a problem with my tax returns since I started filing them online. If I was receiving a return, the turn around time was typically 10 to 14 days, and the time and energy it saved me in convenience has been worth it.

I encourage everyone that I talk to who qualifies for filing their taxes online for free to take advantage of it, because it can save you a lot of money and hassle this tax season. The IRS expects about 138 million taxpayers to file their taxes online this year.

The first day for filing your taxes online is almost here, January 16th, so start gathering your tax documents now so you can get tax filing over with. Here is some information about filing your federal taxes for free online this tax season.

IRS Free File Service

Qualifications:

• Qualifications depend on which company you choose to file with
• Most companies require that your adjusted gross income (AGI) be less than $54,000 for 2008.
• Most companies that offer free e-file allow you to submit tax form 1040, 1040A, and 1040EZ as the main tax submitting document

How it works – The IRS themselves don’t offer the free eFile service, they have partnered with other companies to provide it for free.  You start at the IRS website, select from a list of companies that offer the freefile option, and you’ll be taken to their website where you fill out your tax return.

Free e-File Online

This is similar to the IRS Free File, but it is a program offered by all of the major tax preparation software providers such as Turbo Tax, Tax Act, and Tax Cut by H&R Block. These tax software companies and others offer a free online e-file option for bare bones e-filing web software.

These companies also offer premium services ranging form $9.95 and up, and the advantages are better step-by-step instructions about tax credits and deductions.

How it Works – You don’t have to go through the IRS website to use this option, simply use one of the links below, select the “Online Free Edition” version, and file your tax return.

• TurboTax
• TaxCut
• TaxACT

Why File Online for Free?

• It’s free!!!!
• No paper, which helps the environment
• Most companies are offering as low as an 8 day turnaround time for tax returns as opposed to up to 30 days to receive a paper check in the mail.
• Most people do not have complicated tax returns

Filing your taxes on your own and/or free filing is not for everyone. If you have a more complicated tax scenario, such as being a small business owner with significant income and assets, having complex investments, and/or you have a high net worth, it would probably be worth your while to pay a tax professional.

But, if your tax return is a simple, cookie-cutter filing and you meet the qualifications then free eFile can save you time and money.

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Top Tax Credits For Your Federal Tax Return

Some of the top tax credits such as the Child Tax Credit, the Hope Credit, and the Earned Income Tax Credit don’t apply to everyone but if you qualify for credits such as these you could save significant amounts on your tax bill.

Tax Refunds

While many people hope for a big chunk of money in the form of a tax refund each year, the best approach is typically to pay fewer taxes during the year and get a smaller refund so you have that money to use during the year.

If you received a huge return this year, be sure to re-evaluate the W-4 form that you filled out with your employer. If you’re withholding too much for federal taxes from your pay check you’re basically giving the government a free loan!  Making this change is one of the easiest ways to give yourself a raise next year.

On the flip side, some of you may owe more taxes than you withheld, and no one wants to write an unexpected check in April. To avoid this, make sure you’ve researched the available tax credits offered in the federal tax code.

Tax Credit vs Tax Deduction

Credits are better than deductions. Comparing a $1,000 tax credit to a $1,000 tax deduction, assuming a person earns $60,000 a year and is in the 25% tax bracket, the credit will let you keep $750 more than the deduction.

Tax Credit
If you owe $15,000 in taxes a $1,000 credit will reduce the amount you owe to $14,000.

Tax Deduction
A deduction, on the other hand, only reduces the amount of your income that can be taxed. So a $1,000 deduction reduces your taxable income to $59,000 and you still owe $14,750

Bottom Line
Tax Credit – $14,000 owed
Tax Deduction – $14,750 owed

Here are some tax credits that can cut your tax bill if you qualify:

Earned Income Tax Credit

A previous contributor on this site, Tina, had a personal experience with the earned income tax credit, read it for some more detail on what the credit is all about.  The IRS has an EITC Assistant program on their website to help you figure out if you qualify for the credit and how much you are entitled to receive.

The Child Tax Credit

You can receive a $1,000 tax credit for each child under the age of 17 born before the end of the year. See, having kids isn’t THAT harsh on your bank account! Keep in mind, this credit begins to phase out when your AGI exceeds $110,000 when filing married, jointly and $75,000 for single filers.

Hope Credit

This is eligible to students in their freshman and sophomore years of college at an accredited two or four year institution. You can receive up to $1,650 for the credit, and it is based on a percentage of the amount of tuition you paid throughout the year.

Lifetime Learning Credit

This credit is for any student past high school at any time of their life. You can use it if you are a junior or senior in college, or if you are just taking courses to improve job skills or personal knowledge.

You do not need to be working towards a specific degree to receive this credit. This is also based on a percentage of the total amount you paid for tuition throughout the calendar year. Remember, these credits also phase out depending on adjusted gross income, and you cannot claim the credit if you are still considered a dependent on your parent’s tax return or if you file married, separately.

Taxes can be Tricky

Always be sure to consult a tax professional such as a certified public accountant if you are unsure about qualifications of a tax credit before you claim it. We’re not tax professionals, we’re just offering up a review of tax credits, now it’s your job to follow up with some research. Don’t run the risk of taking a credit and then finding out later that the IRS wants the money back with fees and interest!

Happy tax credit hunting!

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FNBO Direct Online Bill Pay

As an FNBO Direct online banking customer, I get regular emails about their product and services and got one yesterday about thier online bill pay service.  I’ve been using a third party online bill pay service for years and absolutely love how much time it saves me; I literally spend only 10 minutes a month checking on and paying all our bills online.

Online Bill Pay and Interest

One of the things that’s not great about my current bill pay system is that it’s linked to one of our checking accounts so we usually have a big chunk of money sitting there waiting to pay bills and not earning interest each month.

That’s why the email below from FNBO Direct caught my eye, it would be nice to have that money in a high yield savings account and quickly accessible to transfer over when I needed it to pay bills.

Here is what they have to say about their online billpay service:

FNBO Direct Online Bill Pay

Direct deposit your paycheck into your FNBO Direct Online Savings Account. When bills are due simply transfer just what you need from savings to your FNBO Direct Online BillPay account. Whatever’s left over – whether it’s $25 or $500 – stays in your OSA and earns an interest rate that is higher than traditional saving accounts.

Adding a BillPay:

* Log into your FNBO Direct account.
* Click the “BillPay” tab.
* Choose the “Apply” button and proceed to fill out the application.

Setting Up Direct Deposit:

* Contact your Human Resources Department
* Provide them with your FNBO Direct Account number located on your online statement. To access your online statement login to your FNBO Direct account. The click on the View Statement button on the Account Detail page and choose the Save button in Adobe Acrobat Reader.
* Provide them with FNBO Direct’s routing number: 104000016

Timeframe
Transactions successfully requested by Midnight Central time will be credited to the destination account you selected within three business days.

If you’re interested in an FNBO Direct online savings account, and would like to try it out – Click Here.

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Suze Orman’s Free Book – Fixing Your Finances in 2009

Barack Obama’s speech warning of devastating unemployment levels and a lengthy recession was no surprise to most Americans.  Many people are feeling the bite of the economic downturn in one way or another and are worried about what will happen in 2009.

Suze Orman to the Rescue

Suze Orman just released a short book called “2009 Action Plan – Keeping Your Money Safe and Sound” that provides some common sense financial advice for the year to come.  True to the name, the book is mostly about different actions you can take for certain financial situations you may find yourself in.

After an introduction into the history behind the economic downturn, the book has 7 main sections:

• Credit
• Retirement Investing
• Saving
• Spending
• Real Estate
• College
• Protecting Your Family (Job, Insurance, Emergency Fund)

Each chapter starts off with Suze explaining how things will be different in 2009 and what you need to do this year.  For example, the general Credit advice for 2009 is:

• Make it a priority to pay off your credit card balances.
• Read every statement and all correspondence from your credit card company to make sure you are aware of any changes to your account, such as skyrocketing interest rates.
• Work to get your FICO credit score above 720.
• Be very careful where you turn to for help with credit card debt. Debt consolidators are often a very bad deal. The National Foundation for Credit Counseling is a smarter choice.
• Resist the temptation to use retirement savings or a home equity line of credit to pay off credit card debt.

Then she follows up the general advice with specific actions to take for a variety of scenarios that you might find yourself in.

You can download the book for free for the next week, after that you can buy it in book stores.  If you want to give it a read – Click Here.

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Tax Returns and eBay Tax Tips

Tax season is quickly approaching, actually it’s always tax season since we’re pretty much taxed on everything we earn and spend, but the due date to file your income tax return for 2008 will be here before you know it. 

Below are a few tax tips we published last year, over the coming days we’ll share some new ones on federal tax brackets, eFiling, and tax preparation software.  We’re still working on the “best of” series but wanted to squeeze in some coverage on taxes since it’s already January.

General Tax Tips

• Investment Tax Deductions
• What is the Earned Income Credit?
• Tips for Choosing an Accountant or Tax Preparer

Tax Tips for eBay Sellers

• Reduce Your eBay Taxes with a Home Office Deduction
• Do eBay Sellers Need to Pay Self Employment Taxes?
• Paying Taxes on eBay Income

 

 

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