What I’ve Been Up To

This Week In Your Wallet – March 15, 2011

“Houston, we have a problem!” This was the very best line from one of the very best Tom Hanks movies (ever, IMHO).  This time around it has another meaning.  Yesterday, the folks at Turbo Tax released their list of the top 10 procrastinating cities as far as doing their taxes.  Houston, as it has five years out of the last 10, topped them all, followed by Chicago, New York, Austin and San Antonio.  Makes you wonder what’s going on not just in the big H, but in the whole big state.  (If any of you readers want to Tweet me a rationale @jeanchatzky or post one at facebook.com/jeanchatzky I’ll reward those I like best with signed books.)

The Turbo Tax folks also suggested that these are the top tax deductions said procrastinators are likely to overlook.  As that can get expensive, I’m posting them here.

• Earned Income Tax Credit. If you qualify, the credit can increase your federal tax refund by up to $5,666, depending on your individual tax situation.
• Out-of-pocket charitable contributions.  Little things like mileage driven to and from volunteering, and stamps bought for a school fundraiser, can add up.
• Moving expense to take first job. Expenses incurred when moving for that first job are tax deductible, even for those who don’t itemize.
• State taxes paid last year. Claim the amount of state taxes paid last year, along with state income taxes withheld or paid via quarterly estimated payments.

And While We’re Talking Taxes…

Bob Scharin, a senior tax analyst at Thomson Reuters, pointed out a few pitfalls I hadn’t seen elsewhere.  I found them worth repeating.

• If you took the first time homebuyer’s credit on your 2008 return, you have to pay extra tax now.

“The credit was really nothing more than an interest-free loan that generally must be paid back over 15 years, beginning with the 2010 return.  This means a $500 repayment with your 2010 return if you claimed the maximum 2008 credit of $7,500.”

• If you claimed the energy efficient tax credit for 30 percent of up to $1,500 in 2009 and 2010, you may need to recalculate.  The $1,500 isn’t available each year – it’s available for both years combined!
• If you have a college student on the five- or six-year plan (and let me just pause for a moment to say when I first saw how high these numbers are I was astonished – on average only about 40 percent of students graduate in four years!) and you were planning on taking the American Opportunity tax credit, think again.  The credit is only available for the first four years of undergraduate education.  The lifetime learning credit (worth $2000 max rather than $2500) is available for an unlimited number of years.

And Speaking Of College…

If you have a child accepted to college who will be receiving financial aid, you’ll soon be receiving financial aid award letters – and you’ll have until May 1 to get back to the school to let them know whether your child will be attending.  Over the years, I’ve heard from plenty of sources that financial aid officers hate it when you call them to “negotiate” their school’s offer based on the others you’ve received.  So do not use that word.  But, advise the folks at SimpleTuition.com, do call (particularly if one offer doesn’t hold up next to the others) to see if more can be done.  In particular:

• Don’t procrastinate.  Aid is often given out first-come first-served.
• If you don’t ask, the answer will always be no.  A school isn’t going to give you more if you don’t raise your hand.
• If there has been a change in your financial picture, spell it out.  You’ve lost a job, someone is ill, if there is a reason you need additional money, ask for it.
• Explain that other schools gave more.  Just do it tactfully and carefully.  To say that this is a busy time of year for financial aid officers is an understatement.  Kindness is always appreciated.

Quick Stat: A survey by Mintel said that 93 percent of online banking customers would go elsewhere if the bank imposed a monthly fee of $5.  As someone who visits her banks online billpay center almost daily,
I’d be bummed about a fee like that, but I don’t know that it would move me out the door.  How about all of you?

Have a great week!!

Jean