Finance Tax Time

April 15th has come and gone and with it the tax season - at least for most people. I don’t know about you but I needed that two-day grace period. I can always use a little extra time. Think about it. Tax day happens at the same time every year. Some people are so prepared and organized they are ready before the deadline. Thousands more, however, procrastinate. In fact so many procrastinate that they stand in line with hundreds more just to put their tax forms into the mail at the eleventh houror should I say the 24th hour. Other folks wait so long that they have to file an extension just to give them “time” to pull things together.

For the first time in 15 years I decided to do my own taxes. I guess I just got tired of paying someone to type in all of my numbers into a computer program that would automatically generate my return and tell me how much I had to pay to Uncle Sam. I figured I could do that myself - for free. I have to admit though, that I still have a little anxiety about whether or not I inputted the numbers correctly.

Tax time kind of reminds me of how we sometimes approach life - actually, it may even be an extension of it. For instance, take a look at how some of the following tax attitudes mirror some of our attitudes of life.

Tax Statement: “I hope I have all the numbers where they need to go on my tax form.”

Life Statement: “I hope I’m doing things right so that right things will happen.”

Just as it doesn’t pay (literally) to blindly and randomly input numbers into your tax form, it makes no sense to live life randomly with no purpose or direction. It pays to do your homework. There is an old carpentry proverb that advises us to “measure twice and cut once.” That, of course, would be in contrast to measure once and cut twice. You get the point. Sometimes we too quickly make decisions without considering the consequences. Hope is a wonderful quality of life. But to have quality in life, knowing the facts can make a difference in whether or not our hopes come true.

Tax Statement: “I will wait until the last minute so that the government doesn’t get any more than what’s coming to them.”
Life Statement: “I am going to hang on to what I have for as long as I can.”

While me may grouse and complain about how it doesn’t pay to pay taxes (questionable statement at best), it does pay to be generous. There are so many needs all around us that need our attention. When our lives come to an end, what we have banked, stored, saved, and horded will not do us any good at all. The best thing to do with our stuff when we stop living is to give it away so we keep living through how we help others live.

Tax Statement: “I will just file and extension.”

Life Statement: “I can do this later”

When I was a kid I remember a Garfield (you know, the orange cat with an attitude) poster with a sarcastic saying that went something like this: “I am going to stop procrastinating and I think I will start tomorrow.” Right now, as these words pass through your eyes and into your brain you know there is something that you have been putting off. It may be as simple as balancing your checkbook and as serious as apologizing to someone for a grievous act you committed against them. It may mean putting your fears aside and making a decision to start that new business venture. It may be asking the girl of your dreams to marry you.

Here’s the difference between the tax statement and the life statement regarding procrastination: While the threat of the federal government to imprison you for not paying taxes is your main motivation to file each year, your only motivation to take action in your life is, well, you. However, the life outcome is similar to the tax outcome. If you choose not to take action you will go to prison. But in this case it will be the prison of “would have, could have, should have.” Many people are living a life sentence. Decide today not to be one of them.

We only get one chance to live the life we have been given. Let’s make the best of it. Decide today to take three positive actions toward taking charge of your situation:

1. Take time to do the research that will propel you into the most positive outcome

2. Make a decision today to give something away. Your money, your time, your love, your friendship, your talents. Find something that means something to you and let it mean something to someone else.

3. Refuse to allow fear to keep you from making your dreams come true. Take action today.

Tim Kellerman is co-founder of http://www.AbundantLifeProject.com and co-author of The Abundance Principle — Five Keys to Extraordinary Living.

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Well, most of us are through with our taxes for this year. And now is the perfect time to say what we will do differently next year.

Take the time to sit down and assess what worked and didn’t work for you. What cost you the most time? What did you dread doing the most? Take the time to reorganize your taxes for next year.

Start with looking at the basics. How do you organize your tax receipts? This is the part that most of us hate the most, adding up all those little receipts. There are many ways to cut down on this problem.

You could start by using a computer to track your expenses. There are several programs that help you balance your checkbook, track your expenses and make reports as to where your money is going. They make it so very easy to see exactly what you are spending on. I love them. When it is tax time, all you have to do is print out the record (make sure that you’ve stuck the receipts in a box, the IRS doesn’t take computer printouts as fact).

There are people out there that like the tangible ledgers and shoeboxes. My husband is like that, so we keep our records in ledgers and files. You can keep this simple. For example, we own a ranch. We keep an accordion file with a ledger in the front. When a receipt comes in, we right it down in the ledger and file it in the appropriate section, for example “feed.” At any time, we can pick up our books and know exactly what we have out in every section. This is important not only in taxes, but in business planning and viability.

Keep a tax file for the year. Stick every receipt that is deductible in this file. This includes medical expenses and the such. I write the receipt down on the outside of the file before I stick it in. Then I don’t have to sort through receipts when adding, just go down the list.

If you own your home, keep a home file. You will need the receipts from improvements to offset any profits when you sell the home. Stick every major improvement receipt in the file and you’ll know where they are when you need them.

Tax time can be as simple as grabbing a couple of accordion file folders and heading out the door. If you have few deductions, you may only need one simple folder. The key is keeping things together and organized. What takes you only a few seconds now will save you hours of searching when tax time is starting to wind down.

If you do your own taxes, being organized will help you get a jump start on working on filing next year. It is more motivational to sit down with organized papers than piles and piles of receipts in boxes.

If you have your taxes prepared by a professional, don’t leave it until last minute. If you are organized, you should be able to walk out the door at a minute’s notice. Start early in the year, so that you know what receipts you should be saving and what you don’t need to keep. In a few weeks, go talk with a professional and identify what you need to do for next year.

Martin Lukac, represents http://www.RateEmpire.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies! Visit http://www.RateEmpire.com today

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Legislation has been introduced into the US House of Representatives that would reduce the number of Americans subject to the estate tax.

The legislation, introduced by Rep. Bill Thomas (R-Calif.), will raise the pre-person threshold for the estate tax.

The Permanent Estate Tax Relief Act of 2006 would give individuals greater flexibility in making estate decisions during life, said Thomas. It will reunify the estate, gift and generation-skipping transfer taxes.

The included proposals would increase the exemption amount to $5 million per person starting January 1, 2010. The rate of tax on estates up to $25 million would be reduced to the capital gains tax rate. The capital gains rate is currently at 15 %, but is set to increase to 20% in 2011. Estates over the $25 million mark would pay twice the prevailing capital gains tax rate.

The bill would simplify estate tax planning by allowing married couples to take full advantage of the $5 million exemption. They would be able to carry over any unused exemption from the surviving spouse.

The legislation also includes a 60% deduction for qualified timber capital gains.

The estate tax rate is being gradually reduced due to 2001 tax legislation. However, it is set to be reinstated at the rate of 55% in 2011.

The Senate recently rejected a motion to debate a full repeal of the tax. Senate Majority leader Bill Frist has said he is willing to reach a swift and permanent compromise that would win the necessary 60 Senate votes.

The House is expected to take up the legislation this week. This could allow the Senate the ability to vote on the proposals before breaking for summer recess.

Martin Lukac represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate and mortgage rates. We specialize in daily updates, mortgage news, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

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