Millions of Americans can still fatten their checks from Uncle Sam.

Look for free money to arrive in your mailbox (or bank account) soon. And, no, this is not a scam. Compliments of this year’s Economic Stimulus Act, most single filers will get a $600 rebate and married couples $1,200. Parents will get an extra $300 for every dependent child under age 17.

The first checks go out in May; if your tax refund is deposited electronically, your rebate will arrive that way, too. In fact, the money may show up in your account even before you’re notified that it is on its way.

Most likely, you don’t need to do anything extra to get your rebate; it will come automatically after you file your 2007 tax return. But even if the filing deadline has passed, there are plenty of things you can do to ensure you’re getting as big a check as possible and to make the money stretch further.

IRS Timetable for Rebate Payments

Here’s the government’s plan for making the economic stimulus payments for taxpayers whose 2007 returns are filed and processed by April 15:

How Much Will You Get?

The rebate amount starts to phase out for single filers whose 2007 adjusted gross income is more than $75,000 and for married couples filing jointly whose 2007 AGI is more than $150,000. The rebate is reduced by $50 for every $1,000 you earn above the income limit.

For a single filer without children, that means the credit phases out entirely at $87,000; for joint filers without children, $174,000. The upper limits of the phaseout zones rise depending on the number of children you have. Children who are claimed as dependents on their parents’ returns won’t get a rebate, even if they work, file a return and pay taxes.

In general, the rebate amount can’t be more than your net tax liability, which is your tax liability before subtracting refundable credits and child credits. But even if you have no net tax liability, you can still qualify for a rebate of $300 as a single filer or $600 as a joint filer if you have at least $3,000 in income from a job or self-employment, or from Social Security or veterans’ benefits.

What to Do

To get a rebate, most people need only to file their 2007 tax return. (If you request an extension, you won’t get your check until after you file.)

But about 20 million people will have to take an extra step to get their money. Low-income seniors and disabled veterans (and their widows) who have more than $3,000 in income and don’t generally file a tax return need to file to qualify for the partial rebate.

If you (or your elderly parents or relatives) are among those affected, filing the 1040 won’t affect your tax bill. It’s just the mechanism by which you prove that you qualify for the rebate (it doesn’t even matter if the April 15 filing deadline has passed).

But note that you can’t use the simplest tax form — the 1040EZ — because you can’t report Social Security or veterans’ benefits on it.

To figure out which numbers to include on the tax return, you should have already received Form 1099-SSA reporting your Social Security benefits. If you receive Railroad Retirement benefits, consult Form 1099-RRB. And if you received disability compensation, a pension or survivors’ benefits from the Department of Veterans Affairs, you can estimate your 2007 benefits by adding up your monthly benefits for the year.

Enter your 2007 total on line 20a of Form 1040 or line 14a of Form 1040A. (It doesn’t matter that the line is designated for Social Security benefits.)

If you have already filed a 1040 but did not report some of these qualifying benefits, you can file a Form 1040X to amend your return. Listing the additional benefits will not increase your tax liability but could help you qualify for a rebate.

A Second Chance

If you don’t qualify for the maximum rebate based on 2007 income, you get another shot for 2008. The law provides a one-time tax credit for 2008; but because it was intended to get money into people’s hands as quickly as possible, Congress ordered the IRS to distribute the money in 2008 rather than wait for people to file their 2008 tax returns. As a result, the IRS used 2007 tax returns as a guide.

It’s possible, however, that your 2008 income will drop below the cutoff. Or if you otherwise qualify for the rebate, you could get an extra $300 if you have a child in 2008. (Don’t worry: If you qualify for a lower rebate based on your 2008 return, you don’t have to give money back.)

Plus, you still have plenty of time to reduce your 2008 taxable income. For example, contributing to a 401(k) plan or a flexible spending account, making a tax-deductible contribution to your IRA, and selling stocks or mutual funds for a loss in a taxable account can all lower your adjusted gross income and boost your rebate.

If you had no income-tax liability for 2007 and don’t meet the $3,000-minimum-income threshold to qualify for the partial rebate, you can take several steps to increase your gross income in 2008 and your tax liability. For instance, you may be able to sell stocks, bonds or mutual funds for a profit, convert funds from a traditional IRA to a Roth IRA if you’re eligible, or take a dis-tribution from a traditional IRA, says Bob Scharin, senior tax analyst with Thomson Tax & Accounting. If you are retired and work part-time, you could boost your hours.

Keep in mind that the rebate itself is not taxable and will not affect the refund you might otherwise receive for 2008. But if you get the maximum rebate this summer, you won’t get it again when you file your 2008 tax return.

Stretch Your Check

A few smart moves can make your check even more valuable. The purpose of the rebate is to help stimulate the economy, so Uncle Sam would like you to spend the cash. But it wouldn’t be totally unpatriotic to use the money to rev up your own finances.

For instance, if you haven’t been able to max out your 401(k) contributions, now may be the time to do it — especially if you can get free money from an employer match. If you get the full $1,200 rebate, you can actually afford to increase your 401(k) contribution by $1,600 if you’re in the 25% tax bracket. That’s because your contributions lower your taxable income, so investing $1,600 lowers your take-home pay by only $1,200.

Invest that $1,600 now and you’ll have an extra $16,000 in your account in 30 years if your investment earns an annual return of 8%. And if your employer matches 50% of your contributions, you’ll be investing a total of $2,400, which could grow to $24,000 in 30 years.

If you qualify for a Roth IRA and contribute $1,200 to your account, you’ll end up with an additional $12,000 in 30 years, assuming that same 8% annual return. And you’ll be able to withdraw the money tax-free when you’re 59 or older and have had a Roth for at least five years.

by: Kiplinger Magazine

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In the world of brick-and-mortar retailing, finding the best price is simply a matter of driving to a discount chain store like Costco or Wal- Mart. But in the Web marketplace, hundreds of retailers and mom-and-pop stores are fighting one another and user reviews can offer the best intelligence.

So before you plunk down hard-earned cash on anything, see which stores are offering the best deals, say Money Magazine writers Joe Light, Ismat Mangla and Pat Regnier, who offer three strategies for finding the best price.

1. When you’re on a bargain hunt, hit the “Hot deals” forums at FatWallet.com and Slick- Deals.net. Though both sites have a particular emphasis on pricey electronics, users regularly uncover and post discounts that run past 50 percent of the retail price on all sorts of items.

The catch: The better the deal, the quicker forum users will wipe out a Web site’s inventory.

2. When you’re researching a product, check out the reviews at Amazon.com. Pay particular attention to posts written by users who have a badge under their names designating them a “top reviewer.” You can be more confident that their reviews are legitimate and not written by a seller. You want a critical mass of reviews — at least 25 or so. Another good source of customer reviews is Epinions.com.

3. Once you know what you want, start at comparison shopper PriceGrabber.com. Search for your item and you’ll get back quotes from major retailers and small outfits. Make sure you disclose your ZIP code, so the site can factor in tax and shipping. Note the two or three lowest listed prices, then go to SlickDeals’ coupons section and check to see whether any discounts are available that would cut your price further.

And if you’re truly industrious, you can even earn a small rebate on your purchase by buying through the Cash Back section of Ebates.com or FatWallet.com. Merchants pay those sites a commission, which they share with you. Expect to save another 1 percent to 5 percent, depending on the store.

 By Marshall Loeb - MARKETWATCH

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Saving money is an ongoing challenge for most people. Paychecks, dividends, and an occasional bonus go only so far. Therefore, it’s worthwhile to develop some money-saving strategies, such as the 10 listed below.

1. Track spending and evaluate results. By tracking your spending habits, you’ll get an idea of where you spend your money. By evaluating the results, you can see if you’re using money for things that aren’t really necessary. For example, do your monthly membership fees go to a gym you never have time to visit? Do you buy coffee every morning when it’s available in your office for free? Look at all the places where you can save money; even small outlays can add up.

2. Pay yourself first. This idea is certainly not new, but it’s a strategy that starts a consistent savings program. Unless your entire paycheck is earmarked for monthly bills and necessities, you should be able to put money into savings every month. If you get a raise, add that money to what you’re putting aside.

3. Company savings plans. Many companies offer 401(k) plans. Take advantage of them. If one isn’t available, open an IRA. Use direct deposit for these retirement savings accounts so you’re not tempted to spend the money elsewhere.

4. Forget the plastic. Limit yourself to one or two credit cards with the best rates, and use them for only major purchases or emergencies. Also, pay off your credit card balances monthly.

5. Learn how to shop. The Internet provides a very easy way to compare prices. Look for lower prices, discounts, sales, and coupons. Check out price comparison Web sites, such as AllBusiness.com, Shopping.com, and BizRate.com. Avoid paying surcharges, late fees, and other fees for convenience. Shop from lists rather than browsing the aisles, and establish a firm “no impulse buy” policy.

6. Look to save on your home. Look for lower mortgage rates and refinance. Also, while paying off your home mortgage each month, round up. You can pay off the loan a little faster, and save a surprisingly high amount of the interest over time.

7. Save on utilities. Review the offers from competing phone and electric companies. Look for energy-saving appliances, and save some money by opening windows when it’s warm, and using a second blanket when it’s cold.

8. Be car smart. Find a mechanic you can trust before paying big bucks for unnecessary repairs. Don’t buy a second or third car that will hardly be used or will sit at the train station. Look for lower gas prices in your neighborhood, and keep your engine tuned, trunk uncluttered, and tires properly inflated to save on gas.

9. Get everyone onboard. Discuss ways of saving money and establishing good spending habits with everyone in your household.

10. Read the fine print. Review your bills carefully, including your credit card statements. Errors in billing cost customers millions of dollars each year. Also, in this new age of warranties included with every major purchase, read the fine print carefully, and buy only what will be valuable for those products most likely to need service.

By AllBusiness.com

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It can cost you as little as $5 per day — who knew?

You know the old saying — money can’t buy you happiness. It makes some sense. After all, lots of very wealthy people are unhappy, while many poor people are happy. Still, just about all of us would welcome being happier — it’s even a part of our Declaration of Independence: the pursuit of happiness.

Fortunately, we needn’t flounder alone. There’s a growing body of research on the topic — and much of it can be applied to our financial lives.

Friendly impact
For starters, the University of Chicago’s National Opinion Research Center has reported that “those with five or more close friends are 50% more likely to describe themselves as ‘very happy’ than those with smaller social circles.” In other words, it’s worth investing in human relationships — by joining clubs, entertaining, going out for meals with friends, or just hanging out with buddies.

Having a circle of financial buddies is also valuable. You can bounce ideas and experiences off each other. Perhaps you have decided to buy umbrella insurance for your home. Tell some friends about it, and they may, too, possibly preventing a massive future loss. You might even consider forming an investment club — that way you can share research into companies and discuss the merits of various investments. You can stop short of actually pooling your money, too, if you want.

The power of giving
Meanwhile, at the University of British Columbia and Harvard Business School, researchers have found that spending money on someone else can boost happiness — even as little as $5 per day.

What should you do with that information? Well, as a longtime advocate of saving and investing for retirement, I can’t suggest that you give away massive chunks of your income. You’ll need much of it one day. But you can (and arguably should) consider being generous toward those in need.

At The Motley Fool, we’ve raised millions of dollars for some wonderful charities, and we recently dedicated our Foolanthropy efforts to ridding the world of financial illiteracy. I invite you to click in and learn about some very effective organizations that are turning many people’s lives around, including many young people. Food and clean water are always vital. But financial ignorance can ruin lives, too.

More tips
Would you believe you might also buy happiness at Starbucks? That was suggested in a Money magazine article: “Don’t discount the satisfaction you can get from something as trivial as a good cup of coffee. Furthermore, casual encounters with familiar people like the barista at your local Starbucks or the guy at the newsstand have a bigger effect on your happiness than you might realize.”

Want another tip? Get a pet. Yes, a pet will cost you money, but four-legged and furry friends have been shown to boost happiness.

One more? Have experiences — they tend to offer more happiness than possessions. Travel. Have adventures. Yes, Coach (NYSE: COH) might want you to think that you’ll be a happier person with some fancy leather luggage, but spending that money on a Carnival (NYSE: CCL) cruise or a trip to Paris might make you happier. (Not many people seem to realize this, though — Carnival shares have underperformed the market for most of the past decade, while Coach shares have been all over the map — up nearly 130% in 2003, and down nearly 30% in 2007.)

Here’s a sneakier way to get happier: Relocate. Some have suggested that one way to be happier is to live in one of the nicest homes in your neighborhood. Realtors probably agree, as it doesn’t bode well for your property values, but as you drive home each day, you’ll feel good — comparatively speaking.

Secure security
Finally, here’s a very Foolish way to get happier: Get your financial ducks in a row. We tend to be happier when we feel safe and secure. It’s hard to feel comfortable and secure when we know we haven’t contributed to an IRA in several years or we’ve got $15,000 sitting in a savings account, because we haven’t gotten around to putting it in that amazing mutual fund we found.

So go ahead and do what you have to do. Dig yourself out of debt. Buy those stocks you want to own. Build an emergency fund. Consult a financial planner and make up a detailed plan for a secure retirement — or do it on your own, with our help, via our Rule Your Retirement newsletter service, which you can try for free. All these things will help you sleep better at night and be happier.

Remember the words of The Partridge Family: Come on, get happy!

by MotleyFool.com

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1. “A big name doesn’t always mean better service.”

Roughly 135 million Americans file tax returns, and of those, two-thirds pay for help. While solo acts like CPAs and so-called enrolled agents have plenty of clients, almost 20% of taxpayers go through a big franchise like H&R Block, Jackson Hewitt or Liberty Tax Service to get their refund — last year an average $2,255 per return. Problem is, tax preparation and advice depend on the preparer, and in a system of franchises, that means thousands of seasonal employees and limited quality control.

The results can be dangerous. When staffers from the Government Accountability Office went undercover to get returns done by the big chains, they found “nearly all of the returns prepared for us were incorrect to some degree,” according to the report. Worse yet, recently filed lawsuits allege that the owners of 125 Jackson Hewitt franchises cost the government $70 million in tax fraud and created an environment “in which fraudulent tax-return preparation is encouraged and flourishes,” according to the Department of Justice. Jackson Hewitt says it stands behind its compliance procedures as well as its nationally standardized educational curriculum.

2. “You wouldn’t believe what I get away with.”

Complaints about tax preparers, including allegations of inaccuracies and returns that weren’t filed on time, are up 80% in the past five years, says the Council of Better Business Bureaus. But when it comes to the IRS policing problem preparers, “the lifeguard is asleep,” complains Sen. Chuck Grassley (R-Iowa), who took the agency to task for inaction last April. (The IRS had no comment.) Less than 1.5% of returns get audited, and while that may pacify nervous taxpayers, audits are the primary way to catch bad tax pros. The GAO found that a year after it reported poor preparers by name to the IRS, the agency had failed to audit a single one.

Professional organizations, like the American Institute of Certified Public Accountants and the National Association of Enrolled Agents, pack even less of a wallop because they often wait for the IRS to act. Then the AICPA will strip membership and report bad accountants to the relevant state-licensing group, says Tom Ochsenschlager, the association’s VP of taxation. How to find out if your CPA’s been disciplined? Visit the agency’s web site at aicpa.org/TheCPALetter.

3. “You’d be better off without me.”

Maybe you’re hiring a tax preparer because you’ve got better things to do with your weekend or numbers make you dizzy — more power to you. But if you’re hiring a pro because you think he’s smarter than you, think again. On average tax preparers make more mistakes, and costlier ones, than Josie Taxpayer does. According to a study of IRS data, 56% of professionally prepared returns showed significant errors, compared with 47% of those done by the taxpayer. And audited taxpayers who used preparers owed an average of $363, while those who filed themselves owed $185.

Of course, tax preparers often see more-difficult returns, which could lead to more errors. But the bottom line? “For one W-2, mortgage interest and a couple of kids, TurboTax is just fine,” says Kerry Kerstetter, an Arkansas CPA. If, on the other hand, you’re attaching a schedule for self-employment income or capital losses, consider getting help. And even then, if a return is made complicated by a one-time event — say, the birth of a child or the acquisition of a rental property — you might need only one year’s worth of advice. “If nothing changes, you should be able to copy it from year to year,” says Ochsenschlager.

4. “What are my qualifications? Well, I’m real good at Sudoku.”

Every April, Sen. Grassley calls IRS officials before the Finance Committee to grill them on taxpayer protection. He’s increasingly concerned about unethical, unlicensed tax preparers and what he calls “sharks in the water.” “Anyone can call himself a tax preparer,” Grassley laments. Many do. There’s no mandatory national licensing, and Oregon and California are the only states that require tax pros to take a test. That means as many as 600,000 tax preparers are unregulated, according to the National Taxpayer Advocate, the taxpayer assistance wing of the IRS. Some may set up shop in a local real estate office, but many work for the big chains: H&R Block alone hires 120,000 people to prepare returns through tax season.

Translation: There’s no universal standard for qualification. Licensed preparers, who are usually CPAs or enrolled agents, are tested and must meet ongoing education requirements. Unlicensed preparers do neither. In general that’s fine — no harm, no foul. But in the worst case scenario — say, a tricky audit — only a pro with a license (or a lawyer) can represent you before the IRS. At stores like H&R Block, you’ll pay extra for representation.

5. “If it’s February, you’re too late.”

A savvy tax pro may be able to cut your tax bill or juice your refund. But don’t expect to find one come Feb. 1. From that point through April, tax pros are generally too busy to talk to new clients. So if you don’t already have a preparer lined up, by the time you actually have your W-2s in hand, “you’re not going to get good service,” says Frank Degan, an enrolled agent in Setauket, N.Y. “In the fall, though, tax preparers will give you their full attention.” That means you should be talking to tax preparers in October and November. They’ll have time to answer questions, look over your old returns and suggest changes.
Not only that, but talking to a tax pro in the fall means you still have time to plan. If you wait until you have all your W-2s, you’ve locked in all your income for the year. But in the fall a good preparer can help you figure out ways to manipulate your income by increasing your 401(k) contributions, deferring a bonus until the new year or taking taxable losses. Wait until spring and a professional can help you make small decisions, like whether to itemize or think about different deductions, says Bob Scharin, an analyst with Thomson Tax and Accounting, but you’ve lost most of your flexibility.

6. “You hired me, but your return is being done by some guy in India.”

Some accounting firms have begun outsourcing return preparation, says Rich Brody, a University of New Mexico accounting professor. That means your data might be sent as far away as India — or as close as a local H&R Block, since the chain contracts with CPA firms to do returns. Either way, your accountant isn’t obliged to tell you. “It’s very scary,” Brody says. “Your most sensitive information may have gone halfway around the world, and you have no idea.” Indeed, sending Social Security numbers, names, addresses, birth dates and account numbers overseas electronically makes some people uneasy. For while the origins of identity theft are often hard to pinpoint, says Beth Givens, director of the Privacy Rights Clearinghouse, returns contain so much “in one bright, shiny package — that’s a great gift to the identity thief.”

The number of outsourced returns is still small, but they’re becoming increasingly common. An overseas company can process a return overnight for as little as $50, much less than a CPA’s hourly rate. CCH, which provides such services, estimates that 240,000 returns will be outsourced in 2008 — up 20% from 2007.

7. “Taxes, shmaxes — let me see what else I can sell you.”

The real money in tax prep has nothing to do with 1040 forms and W-2s. For the big-chain preparers, as well as your local accountant, the register really lights up only when they persuade you to take a loan, open a retirement account or buy insurance.

Chances are you don’t need what they’re selling, but the sales pitch may blur the issue. GAO staffers reported that when they visited the big-chain tax preparers, loans were described as “options” or “bank products”; on one visit a customer was asked to sign a loan application without being told what it was. Worse, these extras can do more harm for consumers than good: More than 80% of those who opened an “Express IRA” at H&R Block, for example, paid more in fees than they earned in interest, according to a lawsuit filed by the New York attorney general. (H&R Block says most Express IRA accounts opened between 2001 and 2005 have yielded “positive net tax savings benefits and interest earnings,” even as the company “has lost money operating this program.”) CPAs, too, are in the sales game, ever since the AICPA allowed members to sell insurance products. When commissions can be $20,000, says Terry DeMuth, an insurance wholesaler in California, “it’s easy to get greedy.”

8. “If I screw up, I’ll pay up.”

Worried about an audit? H&R Block and Jackson Hewitt are happy to ease your mind — for a price. Both offer the option of buying a souped-up guarantee that promises to cover any back taxes you owe, plus interest, fees and penalties. Here’s what they don’t say: You don’t need the extra protection. If it turns out you owe back taxes, the big chains’ basic (read: free) guarantee already covers fines, penalties and interest. Many CPAs and enrolled agents will do the same; they often have insurance for that very purpose. Just be sure to ask about it before one does your return.
But what about the back taxes? True, they could amount to a bigger expense than the fines and penalties, which may be why some chains can sell that extra guarantee. But H&R Block and Jackson Hewitt will cover you only up to $5,000 and exclude the most complicated returns. If you’re tempted, know there may be an unintended consequence: If someone pays your taxes, the IRS considers that taxable income. In other words if you buy the guarantee, and H&R Block ends up paying your back taxes, expect to get a 1099 next January.

9. “Tax preparation is an art, not a science.”

A recent law tightened penalties for tax preparers who play fast and loose with the tax code, taking far-fetched positions because they know 99% of returns never get audited. That said, for anyone with a complicated or unusual financial life, there’s still lots of wiggle room, says Kerstetter, the CPA: “It’s about 10% black, 10% white, and everything else is in the middle.”

Chances are good you have room to maneuver if you have income in a category the tax code treats flexibly — you’re self-employed, for example, or own rental property. Ditto if you’ve earned big capital gains or incurred high or unusual medical expenses. In short, Kerstetter says, if you’re attaching a schedule to your return, a good tax preparer will pay for himself.

Now, that may mean raising a red flag with the IRS, and a good preparer should explain if he’s taking risky positions, says Fred Giertz, of the National Tax Association. If you can’t stomach the specter of an audit, you’ll want a pro to err on the side of caution. And think twice before paying someone to look for loopholes if your income picture is relatively simple. “If you’ve got one W-2, you don’t need someone fancy,” says Kerstetter. “There’s not a lot we can do for you.”

10. “You could find a much better deal if you’d only shop around.”

There’s no standard price for doing taxes. Some preparers charge by the hour, others by the form; either way the cost depends on where you live, the complexity of your situation and the qualifications of your tax pro. Consider: The average H&R Block customer pays about $150; a CPA may charge 15 times that. Jay Adkisson, a California lawyer who specializes in helping people protect their assets, says, “People rely too much on word of mouth; they don’t shop prices.” If they did, they might be surprised. A licensed local pro may not cost much more than a national chain. Nadine Smith, an enrolled agent in Florida, charges by the form, and a simple return could cost just $200 — not much more than what you might pay at a big chain.

Even among franchises prices vary. The return that cost $90 to prepare at one big store cost more than three times that at another, according to the GAO study. To be fair, it may be hard to know what your return will cost before the preparer actually spends time on it. Ask for estimates using last year’s return — that’ll give you a point of comparison to find the best price.

by SmartMoney.com

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