Beating Broke

Personal Finance from the Broke Perspective

Stimulus Bill Tax Credit, Isn’t.

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With the passage of the huge “stimulus” bill a couple weeks ago, one of the things that has been talked quite a bit about by both the media and the President is the reduction in the taxes that are taken out of our paychecks.  Some $13 or so dollars on average will be left in our paychecks each week for us to spend, spend, spend.  Isn’t that great?  (can you taste the sarcasm?)

What they aren’t telling you is that it isn’t really a reduction.  Sure, they’ll be taking less out of each paycheck.  But they didn’t reduce the tax bracket rates any.  All they’ve done is reduce the percentage of your wages that will be withheld from your paycheck.  You’ll still owe the same amount on your taxes at the end of the year.

Here’s how it will work.  If you got a return this year, and are planning on getting one next year, it will be reduced by the extra taxes that didn’t get taken out of your check.  $13 less withholding dollars means $13 (or more) less refund.  Where it could really hurt people is where the person is already expecting to send a check with their tax forms.  Their check will have to be much bigger because of all this.

Now, to avoid all of this, you could instruct your payroll department to take that $13/week out anyways.  You could adjust your withholding on your W-4 so that more is taken out.  Or you could take that $13/month and stuff it away in a shoebox so you’ll still have it to pay Uncle Sam with come next April 15.

Any way you shake it, it comes down to a publicity stunt to make all the other needless spending in the bill look better.  It’s the proverbial spoonful of sugar to make a whole lot of pork go down.

Taxes Done?

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Have you done your taxes?  Or at least dropped them off at the accountant?  For the last several years, I’ve done my own taxes online.  There are several places you can go.  I use TaxAct.com, but I know people who’ve used the others like Turbo Tax.

In any case, I managed to get mine all finished up last week and filed them all.  Last year, I ended up short and needed to pay in so I waited until much later to file so I could hold on to my money a little longer.  This year, I made a few changes to my W-4, and as a result, ended up with a small return coming my way.  And there’s no reason to not file if they owe you money.

North Dakota was amazingly fast with the refund.  I got it back on Wednesday.  I filed on the previous Thursday.  Less than 4 business days to go from my computer to the state and back to my account.  And a EFT deposit takes at least a day from start to stop, so they had to have initiated the transfer on Tuesday.  Less than three days process time.  Very nice.  Of course, I haven’t really heard much from the Feds, so not sure if I’ll be seeing that back anytime soon or not.  I’m sure they’re a little more swamped than the state is, but you’d think they’d have a bit higher capacity too.

How about you?  Taxes done? Did you get a refund or did Uncle Sam drain you a little drier?

What Luck!

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Jim at Blueprint for Financial Prosperity has a nice YouTube video posted on his site today.  Go and watch it.  (it’ll open in a new window)

They guy is horribly lucky, but am I the only one who’s first thought was to wonder how much the taxes are on something like that?  This is what being a frugal personal finance blogger will do to you!  It ruins all the fun stuff with reality!  Don’t buy into it!  Ignore your finances and spend like there is no tomorrow!  You’ll enjoy it a lot more than making a budget!

Ok, I’m just kidding.  You shouldn’t buy into it.  You should keep very good track of your finances and, while you likely won’t enjoy it too much, you do need to do a budget.  Besides, he’ll likely be able to pay most of the taxes with the 26k in cash, but I’m wondering if it isn’t going to be more than that.  Any experts in prize taxes out there?