Friday, March 19, 2010

Age-old Tax-time Tips

Yesterday, Lubby and I had an appointment to have our taxes done. We've always done them ourselves before, but since we have a first-time home buyer credit in the mix this year we wanted to have a professional work on it. We went in with our tax forms and about half an hour later we walked out expecting $9,500 back from old Uncle Sam.

I learned a few things and was reminded of a few things regarding taxes in light of this experience.

1. There is nothing wrong with hiring a professional. Although I've been accustomed to doing our taxes myself, it was a nice break to let the pros do it. With the amount we're getting back it was well worth the $200. With 3 W-2s a piece, my home based business, Lubby's school tuition and our FTHB credit it was a pretty complicated return for the money.

2. Dave Ramsey's Endorsed Local Providers (ELPs) are great. Well, at least this one was. He really did make us feel at ease and even took the time to explain to us that Lubby's future career as a minister will give him a window of opportunity to opt-out of social security.

3. You do not want a tax refund. I know we're celebrating, but we honestly couldn't have kept the government from taking what they did. Most of that refund is from the house, which is a huge exception to the rule of "a tax refund is not a gift from the government." We only actually paid about $750. It's much better to keep the money every month than to get it a year later with not interest!

In my classroom, I have my students provide us with "three good things" to start off each class. One day a student's good thing was that she just got a new game and flat screen TV because her daddy got a tax refund. Another student chimed in and said that he can't wait to grow up and pay taxes so he can get a refund! I just had to laugh!

4. If you are getting a tax refund, decide how you will spend it now. It does you no good to get a few thousand dollars back if you blow it all. Pay off some debt, pad your emergency fund, or invest it. Just don't blow it!

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