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If you’ve already commented to enter my TaxCut Online giveaway, you can also enter these contests as a back-up:

Last Minute TaxCut Giveaway at Mrs. Micah.

24-Hour TaxCut Giveaway at Money Saving Mom.

If you haven’t yet filed your taxes yet, this is your chance to use TaxCut Online Premium + State + efile completely free! I have one code for the full online software package (a $59.95 value) to giveaway to one lucky reader.

Since we’re only ONE WEEK away from tax day, I will email the winner the code on Thursday night. All you have to do to enter is post a comment below (use a valid email address, which only I will see. If you’re not familiar with the software, I posted an extensive review of TaxCut Online.

Which do you prefer come tax day, and why?

• Receive a big refund
• Owe nothing, receive nothing
• Owe a couple thousand dollars.

I prefer to owe nothing and receive nothing. That means I paid my taxes exactly right, without loaning the Feds a dime.

Since we’re short on time, I’d also appreciate it if you helped spread the word.

This giveaway is now closed and the winner has been notified.

Many people treat a tax refund as “found money” or “free money.” What they don’t realize is that it’s their money, and always was. The money was an overpayment of taxes owed, which the government was happy to receive as an interest-free short-term loan.

Once you start thinking of your tax refund as a portion of your income, and not as free money, you’ll rethink the way you spend your tax refund. Rather than wonder, “Why is my refund so low,” you’ll think, “Yay, my refund is low!”

Five Good Ways to Spend a Tax Refund
Here are my top five ways to spend a tax refund:

1. Don’t receive one! The best way to spend your refund is to never receive one in the first place. No, I’m not suggesting you donate your refund to the government. I’m suggesting that you adjust your tax withholding http://www.soundmoneymatters.com/tax-withholding/ to ensure that you only withhold what you owe. This year my husband and are receiving less than $200 from our federal and state tax refunds because we managed to pay almost exactly what we owe. (It was an accident this year, but we intend to do it again.)
2. Pay down debt. If you owe any debt, use your refund to pay it down. That’s where our tiny tax refund is going.
3. Boost your emergency fund. If you don’t have any high-rate debt, then use the money to boost your emergency fund. Even adding a little bit to an interest-bearing savings account can help you out in a pinch.
4. Invest it. The average family receives a $2000 refund. If you’re one of them, that’s a pretty sizable investment. If you were to deposit $2,000 in a Roth IRA at age 35 and average an 8% return, you would net $20,125 by age 65 without adding another cent.
5. Spend a little and save the rest. If you’ve been frugal all year long, reward yourself with a nice bottle of wine or a nice night out, then save the rest. Don’t overdo it, but spending $50-$100 is a good way to treat yourself every now and then.

Five Bad Ways to Spend a Refund
I have to admit that I’ve been tempted to waste tax refunds in the past. Especially when I didn’t have any debt - I just spent it whenever I felt like it. Now I know better. Here are five bad ways to spend a refund:

1. Blow it on a vacation. Many people use their refunds as vacation funds. There’s nothing wrong with taking a vacation if you can afford it, but it shouldn’t depend on whether or not you receive a tax refund. Instead, adjust your withholding to the correct amount and save the additional money you receive in your paycheck. Simply divide the amount of your previous year’s refund by twelve and deposit that amount into a savings account every month. Even if you only earn $20 in interest, that’s $20 more than you could have spent on vacation if you’d simply used your refund.
2. Blow it on clothes. We all need clothes. No one needs a $2000 pair of shoes. Buy new clothes if you need them, but don’t go on a shopping spree just because you got a refund.
3. Blow it on a big screen TV or another large, unnecessary purchase. If you wouldn’t buy it without the refund, then don’t buy it because of the refund. Instead, save up for it. If you still want it after months of saving, then go ahead and buy it.
4. Fritter it away. Even if you don’t set out to waste it, not having a plan for the money could be just as bad. If you think, “It’s only $10. I got that refund, so it’s fine,” those purchases will add up quickly. You could wind up spending more than the refund.
5. Stick it under your mattress. My friend’s father didn’t trust banks (he was from WWII Germany). When he died, his family found over $30,000 in cash tucked away in boxes and stuffed under the mattress. Imagine how much more money he would have had it if he’d put it in safe investments or a savings account.

Now that I’ve shared my tax refund strategies, how do you plan to spend a refund? Have you ever wasted it? Do you have any good ideas for spending it? Tell me in the comments.

As I mentioned yesterday, I prepared my taxes using two online tax software programs this weekend. Yesterday I presented the first of my tax software reviews: H&R Block’s Tax Cut. Today I’ll cover TaxAct Online. If you want to use it, here’s a link to their offer: Do Your Federal Taxes Free

Tax Act Online has been my preferred service for several years. The main reason is because it’s the cheapest one that seemed reputable. I found it through the IRS e-file referral service after inspecting several of the options they recommended. Over the years, I’ve had good experiences with their customer service reps and never had a problem with my returns.

Tax Act Online Cost

You have three options from the start:

• Free Standard Online for $0
• Deluxe Online $9.95
• Ultimate Online for $16.95.

If you also have to file a state return, Deluxe and Ultimate actually cost the same because of the way they tack on the state cost. If you live in an income tax state, you might as well click the Ultimate button just to keep it simple. The Free Standard Online option is only for free Federal returns.

All versions include free online support. The two pay options also include telephone support.

Tax Software Interface

The Tax Act interface has a more formal feel than the H&R Block software. It lacks the soft edges and soothing green colors. The design seems to be focused on efficiency and clean lines rather than comfort.

This is the entrance screen after you register:

The site allows you to save and exit at any time. Once you log back in, this is the screen you see:

Like H&R Block, it also offers the progress indicator in the upper right. This is where they show you what you owe or what you will be receiving back.

Additional help is available below the fill-in boxes. The questions are geared toward the section you’re working on at the time.

If you opt for the paid versions, they also offer a section on Life Events. You click the bubbles for life events that have occurred in the last year, and then the software takes you through a series of questions to ensure that all possible tax implications are covered. For example, if you had a job change and made more than $97,000 total, you may have overpaid your social security tax. TaxAct will check to make sure you haven’t.

Small Business Help

If you have a small business, I recommend using the Deluxe or Ultimate software to ensure you get the detailed help for your Schedule C. TaxAct takes you through a series of detailed questions to properly complete all the forms.

Negative Aspects

TaxAct is more streamlined and less intuitive than H&R Block. The software is efficient, but you do have to look in a few places for additional help if you need it. I found some of the wording clearer on the H&R Block software, but was able to understand what TaxAct was asking most of the time.

TaxAct uses Alerts to flag any potential problem areas. After you correct an alert, you may not be immediately taken to the next alert, but instead have to click through the whole section. You can avoid this by using the top navigation to return to the alerts, but it is annoying. Once you complete the alerts, you’re then offered an opportunity to check them one more time.

I also wasn’t able to find anything on the site that indicates that they provide audit support should you be audited.

Use or Don’t Use?

As I said, I’ve been using TaxAct Online for years, so obviously, I’m a fan. I’m comfortable with online interfaces and know how to use them. I don’t need much handholding. TaxAct does offer an online tour for first-time users if you’re not comfortable with the process.

Overall, I find the TaxAct software to be much more affordable and I’m impressed with the wealth of information available for the low price. I feel that TaxAct may be more thorough than H&R Block because of the Life Events section.

Final Tip: Whichever program you use, always print the return and review it before filing. This year, I discovered I had incorrectly entered some small business income in two different sections, which increased my income. Correcting that saved me some money!

This weekend, I did my taxes using two online tax software packages. I’ll post tax software reviews for each today and tomorrow. Today I’ll start with H&R Block’s Tax Cut Online. I was fortunate to win a free federal return from The Digerati Life, but anyone can use the software for free. You won’t be able to print out and review your turn without coughing up a credit card, though.

I’ve been using online tax software for about ten years now, so I have experience with these programs. I started with Web Turbo Tax, then went in search of other programs when I lost free access to that. This was my first time with Tax Cut Online.

Tax Cut Online Cost

You have three options from the start:

• Basic + e-file for $14.95
• Premium + e-file for $19.95
• Premium + State + e-file for $49.95.

The latter two include on Ask a Tax Advisor session. All three come with their Worry-free Audit Protection.

Tax Software Interface
I really liked the gentle interface. It was welcoming, comforting, and easy to use. Everything was clearly explained and information or answers were easy to find. It was a very intuitive program.

This is the entrance screen after you register:

The site allows you to save and exit at any time. Once you log back in, this is the screen you see:

I found the design welcoming and comforting. It is branded in the H&R Block colors, but in a soothing palette. My favorite feature of any tax software is the progress in the upper right. This is where they show you what you owe or what you will be receiving back. H&R Block also shows you the most common questions related to the section you’re working on in the right-hand pane.

They ask questions in a basic format, as you can see in the filing status question:

In some sections, such as your wage and withholding information, you can watch a movie about the section. They also provide a list of all the documents you need to gather:

Small Business Help
If you have a small business, I recommend using the Premium software to ensure you get the detailed help for your Schedule C. H&R Block takes you through the detailed questions to properly complete all the forms.

Negative Aspects
Although I found the H&R Block interface easy to use and the software was detailed and accurate, there were three aspects that were off-putting

1. A request to use my information to sell me other services
2. An offer to have a pro review my taxes

If I’m entering detailed personal information into their tax software, I don’t want them using it to sell me other products and services. I checked the “no” box, but I was still very annoyed that they even asked.

At another point during my return preparation, the software offered to have a pro look at my return for an extra $50. If their software is that good, why would I need to have a pro review it? I’m certainly not going to pay someone to push the “send” button for me.

Edited: As you can see in the comment below, H&R Block doesn’t sell customer information to anyone, so I removed that from my review. They also don’t sell refund anticipation loans in TaxCut (which is good).

Use or Don’t Use?
In all, I found the Tax Cut Online tax software to be easy to use. I didn’t however, feel that it was worth the extremely high price once the state software was included. I was also very turned off by the shilling for their loans and other services during the process.

If you want to use a name-brand and are very concerned about being audited, then Tax Cut Pro may be good for you. If you live in an income tax state, then I would use a different service. Tomorrow I’ll review TaxAct Online, a good alternative for personal and schedule C forms.

It’s mid-February and my taxes are already done. Not only are they done, but I’m actually getting money back, which came as a surprise. Part of that is because I used free online software to prepare my taxes. The services found deductions that I might have missed. This year, it took me twice as long to prepare my taxes - two hours instead of one - because I used two services as a comparison. More details on that tomorrow. Today, I focus on how filing taxes online saves money.

Remember, even if you don’t owe taxes, you must file a return this year in order to qualify for the tax rebate being provided by the government this summer.

File Taxes Online Free with the IRS
The simplest way to file federal taxes online is to go to the IRS website and click the Free File button. If you owe taxes and adjusted gross income was less than $54,000 this year, then this system is for you. Unfortunately, this system is not currently available for those filers who don’t actually make enough to owe taxes but need to file for the rebate. Check back in early April to see if it’s available then. Or you could file form 1040A on paper now. Personally, I’d give the IRS a little more time to update the software before resorting to paper.

File Taxes Online Free with Other Services
If you don’t qualify for the IRS free file program, review their list of e-file partners. Several offer free federal e-filing, although they do charge for the state. Go down the list and click through to view the offers. Spend a little extra time at each site to see if there are other offers that don’t appear on the splash page. For example, TaxAct show their fee-options on the splash page, but if you click over to the main page, you’ll find the free option.

The IRS Free File program doesn’t complete state taxes. If you live in an income tax state, check with your local tax board to see if they have free online tax software. If not, you can paper file in your state or pay to use the software.

Compare Prices and Pay to File
California is an income tax state and a complicated one at that, so I use the pay software to also complete my return. However, I don’t use the most expensive service. When it comes to these services, they’re generally equal (as you’ll see tomorrow), but their prices are not. I would look for a reasonable offer from a robust site and use that one. If you’re concerned that it won’t be up to the task, you can usually use the software without paying. Prepare your taxes once on the cheap site and once on the expensive site. If the returns are the same, use the cheaper option.

Use the Same Service Annually to Save Time
As a bonus time saver, use the same service every year. If you’ve used them in the past, the system will copy over your old information. So, if you haven’t moved, changed employers, or changed your dependents, you can simply click to confirm that information is still accurate and then enter new wage and withholding information. If your information has changed, updating it is simple.

Run Through the Deluxe Q&As
Some services provide tax Q&A screens if you’ve had major life events. I’ll show you more on that tomorrow, but it’s always worthwhile to check the boxes for your major changes and run through the questions. You may discover that you’re owed deductions or credits you wouldn’t otherwise be aware of. Common deductions include medical costs, moving expenses, excess social security deposits, adoption fees, and more.

Avoid an Audit
Finally, these services help you avoid an audit by checking your return for errors and flags. Now, this doesn’t save you money directly, but you will have to miss time at work and travel to an IRS office if you do get flagged for an audit. The screens reduce your chances of being flagged for an audit, unless of course you lie on your taxes.

Never Accept a Refund Anticipation Loan
Refund anticipation loans are rip-offs of the same order as payday loans. When you file online and use direct deposit, your refund will appear in your bank account within five to fourteen days. In some cases, it can take that long for the anticipation loan application to process, and you’ll have to pay additional fees and interest on that loan. Even if you get approved immediately, you still have to pay exorbitant fees of $30-90, plus interest of 178-700%.

Filing taxes is never fun, but with online software it almost feels that way. I love watching that little refund number in the corner go from red to green. This year it meant that we paid almost exactly the right amount in withholding, which means we didn’t loan the government much money. That’s the best savings of all!

As I said yesterday, voters in six states have had their say on the 2008 presidential candidates. As always, the presidential election is important, but voters this year face very serious issues. No matter where you stand on the issues, it’s important to consider all the candidates and then choose the one who best matches your beliefs.

In advance of Super Tuesday, I’m presenting summaries of the candidates’ statements on economic issues. Candidates are listed in alphabetical order. In order to be included on my list, they must still be in the race and be listed in the national polls at RealClearPolitics. In general, that means they’re polling above 2% nationally.

Most of these are copied from the candidate websites directly, although I had to search the internet for some statements. I relied on CNN’s election center and OntheIssues.org for most of the answers I couldn’t find on the candidates’ sites. Some statements are rephrased for length or clarity (or to cut the campaign rhetoric). I haven’t injected any personal commentary.

Mike Huckabee

Taxes

• Eliminate all federal income and payroll taxes
• Supports the FairTax, which will replace the Internal Revenue Code with a national sales tax
• Provide monthly rebate for sales taxes on purchases up to the poverty line.

Healthcare

• Make health insurance more portable from one job to another
• Expand health savings accounts to everyone (currently limited to those with high deductibles)
• Make health insurance tax deductible for individuals and families
• Provide tax credits for low income families buying insurance.

Retirement

• Provide personal retirement accounts proposed by Bush.

Economic Stimulus Package

• No immediate plan available

Foreclosure

• Pressure lenders to refinance loans so rates will rise more slowly and affordably
• Increase regulation of the mortgage industry
• Ban low teaser rates and stated income loans.

Rudy Giuliani

Taxes

• Make Bush tax cuts permanent
• Repeal estate tax
• Tie Alternative Minimum Tax to inflation.

Healthcare

• Provide tax deduction of up to $15,000 for families without employer-based health coverage
• Institute Health Insurance Credit for low-income Americans that can be coupled with other revenue sources such as Medicaid and employer contributions to make coverage more affordable to millions who are uninsured
• Require availability of low-cost insurance options
• Repeal state regulations that limit coverage options and increase costs.

Retirement

• Expand tax-free savings accounts
• Eliminate the double taxation of individuals’ current savings.

Economic Stimulus Package

• No plan available

Foreclosure

• Supports government assistance for victims of predatory or fraudulent lenders.

John McCain

Taxes

• Repeal the Alternative Minimum Tax (AMT)
• Make the Bush income and investment tax cuts permanent.

Healthcare

• Eliminate the tax code bias toward employer-sponsored health insurance
• Provide all individuals with a $2,500 tax credit ($5,000 for families) to purchase health insurance
• Allow individuals who buy multi-year policies that cost less than the full credit to deposit remainder in expanded health savings accounts
• Allow families to purchase nationwide insurance to increase competition and reduce costs
• Allow individuals to buy insurance through any organization or association that they choose
• Promote preventative care.

Retirement

• Supplement the current Social Security system with personal accounts.

Economic Stimulus Package

• Cut the corporate tax rate from 35 to 25 percent
• Allow first-year deduction, or “expensing”, of equipment and technology investments
• Establish permanent tax credit equal to 10 percent of wages spent on R&D.

Foreclosure

• No plan available

Ron Paul

Taxes

• Exempt members of America’s armed forces from income taxes
• Pass the Liberty Amendment, which repeals the 16th Amendment (income tax amendment)
• Repeal capital gains and dividends taxes
• Repeal estate tax
• Repeal taxes on tips
• Adopt the FairTax plan, which replaces income tax with national sales tax.

Healthcare

• Institute medical savings accounts where consumers can save pre-tax dollars
• MSA would be used to pay for health care expenses, with the patient negotiating directly with the physician of their choice for the care they choose
• Ensure major-medical insurance policies remains available and affordable for catastrophic care
• Allow families to claim a dollar-for-dollar tax credit for the rising cost of health insurance premiums
• $500 per child tax credit for medical expenses and prescription drugs that are not reimbursed by insurance
• $3,000 tax credit for dependent children with terminal illnesses, cancer, or disabilities.
• Waive employee portion of Social Security payroll taxes (or self-employment taxes) for individuals with documented serious illnesses or cancer and suspend Social Security taxes for primary caregivers with a sick spouse or child.

Retirement

• Ban government borrowing from Social Security trust fund
• Allow young people to stop contributing to social security
• Reduce contributions and allow people to invest money themselves
• Repeal taxes on social security benefits.

Economic Stimulus Package

• See tax and foreclosure plans.

Foreclosure

• Repeal tax on mortgage debt discharges (currently, forgiven loan balances are taxes as income)

Mitt Romney

Taxes

• Repeal tax on interest income, dividend income, or capital gains earned by people earning less than $200,000 a year
• Make Bush tax cuts permanent
• Reduce lowest tax rate from 10% to 7.5%
• Repeal estate tax.

Healthcare

• Encourage states to eliminate the cumbersome insurance regulations that increase costs and reduce competition
• Make all health care expenses tax deductible
• Reduce uninsured emergency room expenditures
• Use savings from reduced emergency room expenditures to help the needy buy private insurance
• Support tax deductions to help individuals buy private insurance.

Retirement

• Support personal retirement accounts
• Would consider indexing social security benefits to prices rather than wages.

Economic Stimulus Package

• Institute immediate 100% expensing of equipment for two years
• Permanently reduce the corporate tax rate
• Introduce immediate retroactive tax credit reflecting the lower 7.5% tax rate for 2007 earnings to employees who earned less than $97,500 in 2007.

Foreclosure

• Reform and expand Federal Housing Administration (FHA) loan portfolio limits to allow larger loans to homeowners
• Reduce required down payment
• Allow FHA to help nonprime borrowers who may not be able to meet the current requirement
• Raise the maximum loan amount for borrowers in higher-priced areas
• Expand NeighborWorks foreclosure avoidance initiative.

This morning, several news organizations announced that the White House and Congress have come to a tentative agreement on the economic stimulus plan. The main part of the plan is tax rebates for singles earning under $75,000 and couples earning under $150,000. Each person will receive at least $300, plus an additional $300 per child. There will probably be a cap in the range of $1200 per family. Some sources say the checks could be as high as $600 per individual, with the cap still at $1200. You would have to have earned a minimum of $3,000 in 2007 to qualify.

According to a report I saw on Good Morning America, the IRS says it could be May or June before the checks start going out. They haven’t said if they’ll need to do it in batches like they did with the rebate in 2001. If they do, that could mean I won’t have my check until July or August. That’s fine with me, but I don’t see how eight months down the road is “emergency stimulus.”

Personally, I also don’t see how this will truly stimulate the economy. This probably isn’t enough to save anyone from foreclosure. I plan to use the rebate for debt payments, as do most people I know. That means it’s not money flowing back into the system. Other families may choose to add it to their household budgets and spend it on food, fuel, energy, and other household costs. I doubt many people are going to buy big screen TVs or go on a shopping spree.

I’m leary of the whole idea of using consumer spending to save the economy. Isn’t consumer spending the very thing that dug us into this hole in the first place? If we truly want to fix the economy, we need to reduce consumer debt, reduce the national debt, and balance the budget. Stopgap measures are just political mumbo jumbo meant to make us feel good about our politicians.

This does still have to pass the House and Senate. It’s expected to easily pass the House, but the Senate may want to do some tinkering. It could be up a month before the final bill is passed.

So far, voters in six states have had their say on the 2008 presidential candidates, but there are some big votes coming. Super Tuesday is just eleven days away, and that could crown the nominees on both sides.

No matter where you stand on the issues, it’s important to find the right candidate for you and vote accordingly. I won’t say whom I support; I will simply urge you to vote. To help you choose, I’ve compiled summaries of the candidates’ statements on economic issues. You may have other issues that are more important to you, but whoever becomes president will have an impact on several economic issues that affect each of us directly.

I’ll start with the Democratic presidential candidates today and cover the Republicans tomorrow. Candidates are listed in alphabetical order. In order to be included on my list, they must still be in the race and be listed in the national polls at Real Clear Politics. In general, that means they’re polling above 2% nationally.

Most of these are copied from the candidate websites directly. In some cases, I had to search the internet to find the answers. Some statements are rephrased or reworded for length or clarity (or to cut the campaign rhetoric). I haven’t injected any personal commentary.

Hillary Clinton
Taxes

• Repeal Bush tax cuts for the top two brackets and restore 1990s tax rates for upper-income Americans
• Extend earned income tax credit, middle class tax relief, the child tax credit, and marriage penalty relief
• Reform the AMT
• Maintain the estate tax exemption at $7 million (2009 level).

Healthcare

• Guarantee healthcare for all Americans
• Provide all Americans with choice of maintaining current coverage or accessing same program available to members of Congress
• Reduce hidden taxes and fees that increase healthcare costs
• Offer incentives for employers to provide coverage
• Offer tax credit to help individuals pay for coverage
• Limit coverage costs to percentage of income
• Modernize the system and promote prevention to reduce costs.

Retirement

• Introduce American Retirement accounts that will permit individuals to contribute up to $5,000 per year on a tax-deferred basis
• 401K plans offered by employers will still be available
• Provide matching refundable tax credit for the first $1,000 of savings by every married couple making up to $60,000. 50% match on the first $1000 for couples making between $60,000 and $100,000. Credit phased out after that
• Plans will be administered in the private sector
• Automatic savings through employers unless employees opt-out.

Economic Stimulus Package

• $30 Billion Emergency Housing Crisis Fund
• 90-day moratorium on subprime foreclosures and an automatic rate freeze on subprime mortgages of at least five years
• $25 billion in emergency energy assistance for families
• $5 billion in energy efficiency and alternative energy investments
• $10 billion to extend unemployment insurance.

Foreclosure

• Institute “Save our Home” program for two years
• Temporarily increase Fannie Mae and Freddie Mac’s portfolio caps by 5%
• Help homeowners at risk replace adjustable-rate mortgages with fixed-rate mortgages
• Temporarily modify the Mortgage Revenue Bond (MRB) program to allow it to refinance mortgages (currently only for new mortgages)
• Increase the cap on the MRB program by 25%
• Temporarily increase federal loan limit. Index the limit to median regional prices and cap it at $650,000.

John Edwards
Taxes

• Institute a new “Get Ahead” tax credit to match up to $500 a year in savings for families earning up to $75,000
• Tax credit funds could be used for retirement, college education, buying a home, investing in a small business or during a financial or medical emergency
• Institute new “Work Bonds” to offer additional targeted savings incentives for low-income families
• Credit will be refundable for low-income families and the size of the credit will be reduced for families with higher incomes
• Expand the Child Care Credit to pay up to 50 percent of child and dependent care expenses up to $5,000 and make it partially refundable
• Triple the Earned Income Tax Credit for single adults
• Cut the marriage penalty
• Raise capital gains tax rate to 28 percent for wealthiest Americans
• Repeal the Bush tax cuts for the highest-income households and keep the tax on very large estates (above $4 million for couples)
• Close unfair loopholes like the tax breaks for hedge funds and private equity fund managers and unlimited executive pensions.

Healthcare

• Require employers to either cover their employees or help finance their health insurance
• Make insurance affordable by creating new tax credits
• Expand Medicaid and SCHIP
• Reform insurance laws
• Create regional “Health Care Markets” to allow Americans to purchase an affordable, high-quality health plan, increase choices among insurance plans, and cut costs for businesses offering insurance
• Promote preventative care.

Retirement

• Create Universal Retirement Accounts
• Require employers to offer a new universal retirement account to all workers without another pension
• Businesses will be encouraged to automatically enroll workers in a 401(k)-type portable retirement account, with automatic paycheck deductions and employer contributions.

Economic Stimulus Package

• $25 billion now to investing in clean energy infrastructure, increasing federal aid to states avoid cutting programs that help families through hard times, reforming unemployment insurance and tackling the housing crisis
• If necessary, $75 billion for additional state relief, additional spending on a new energy infrastructure, accelerating investments in schools, roads, and bridges and temporary tax cuts targeted to the low-income and middle-class families.

Foreclosure

• Any freeze on interest rates must keep rates low for seven years
• Ensure right to individual assistance from lenders - such as converting to a fixed-rate mortgage, capitalizing delinquent payments, reducing the interest rate, or forgiving a portion of the loan
• Create a Home Rescue Fund to help families move into affordable mortgages
• Allow bankruptcy judges to rewrite mortgages
• Institute a central reporting system to keep track of lenders’ progress in modifying loans and to facilitate fraud and predatory lending investigations.

Barack Obama
Taxes

• Protect tax cuts for poor and middle class families
• Reverse most of the Bush tax cuts for the wealthiest taxpayers.
• Create a new “Making Work Pay” tax credit of up to $500 per person, or $1,000 per working family. Offset the payroll tax on the first $8,100 of their earnings
• Create a universal mortgage credit for all tax filers
• Earned Income Tax Credit up to $555 for full-time workers. An additional $1,110 for workers with children
• Eliminate all income taxation of seniors making less than $50,000 per year
• Make the Child and Dependent Care Tax Credit refundable and allow low-income families to receive up to a 50 percent credit for their child care expenses.

Healthcare

• Create a National Health Insurance Exchange to help individuals purchase a private insurance plan
• Create rules and standards for participating insurance plans to ensure fairness and to make individual coverage more affordable and accessible
• Ensure affordable coverage for all
• Require employers to offer coverage or provide meaningful assistance in purchasing private coverage
• Employers that do neither of the above will be required to contribute a percentage of payroll toward the costs of the national plan. Small employers that meet certain revenue thresholds will be exempt
• Mandatory coverage for children
• Expand Medicaid and SCHIP
• Accommodate existing state plans.

Retirement

• Automatically enroll workers in a workplace pension plan
• Employers who do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account
• Employees may opt-out if they choose
• Match 50 percent of the first $1,000 of savings for families that earn less than $75,000. The savings match will be automatically deposited into designated personal accounts.

Economic Stimulus Package

• $250 rebate for 150 million low and middle income workers
• $250 rebate for seniors earning under $50,000 as a Social Security supplement
• Establish a $10 billion fund to help “responsible” families avoid foreclosure
• Establish $10 billion fund for states facing budget shortfalls
• Expand unemployment insurance

Foreclosure

• Create a fund to help people refinance their mortgages and provide comprehensive support to innocent homeowners
• Assist individuals who must sell their home by providing offsets of selling costs and offer additional time to sell
• Waive certain federal, state and local income taxes that result from an individual selling their home to avoid foreclosure.

If you overpaid or underpaid your 2007 federal or state tax, then clearly you need to adjust your 2008 withholding. You can also change your withholding now to take advantage of deductions you won’t be eligible for until later in the year.

Fixing Withholding
Last year, my husband and I wildly underwithheld both our state and federal tax because our income doubled after I finished grad school and returned to work, but we failed to do the math. We corrected the situation by having extra money withheld in December, but it was annoying to scramble at the end of the year. This year, we’ve already calculated what we will probably owe using the IRS tax withholding calculator and filed new 2008 W-4s for the correct amount. Then we’ll file quarterly payments if we get any unexpected money. We tried to do California, too, but their calculator is confusing, so we’ll just fix it at the end of the year if it’s wrong.

If you receive a sizable refund every year, then you’re overpaying. You should also adjust your withholding to the proper amount. Use the calculator to find it and then submit a new W-4. That way you’ll have access to the extra money all year long.

Adjusting for Future Deductions
Life changes can also have a huge impact on your taxes next April, but you can take advantage of those changes now by adjusting your withholding. For example, if you’re pregnant now, re-run the calculator with the additional dependent included. If your child is born by December 31, the IRS assumes it’s lived with you for the whole year. If you’ll be closing on a house soon and know how much interest you’ll be paying for the rest of the year, you could also adjust your tax withholding now to include the new deduction.

Basically, any deduction you’ll have on your taxes for next year can be factored in now to reduce your withholding to the proper amount. That includes:

• Tuition deductions
• Childcare expenses
• Dependents
• Mortgage interest

When you experience life changes throughout the year, like a new job or financial windfall, you should also double-check the calculator to confirm that your withholding is still correct. The sooner you get it right, the more money you’ll have throughout the year.

• Links

  • Cheap Healthy Good - Mmmm… inexpensive food
  • Consumerism Commentary - Money, Investing, and More
  • Five Cent Nickel - Because Money Matters
  • Get Rich Slowly - Personal Finance that Makes Cents
  • Home VoIP Business VoIP
  • Lifehacker
  • Mighty Bargain Hunter
  • PFBlogs.org - Ad-Free Aggregator
  • Saving Advice
  • The Digerati Life - Money, Personal Finance, and Geeks
  • The Simple Dollar - Financial Talk for the Rest of Us
  • Wise Bread - Live Large on a Small Budget