Sense to Save

Have a baby in 2008? Get $300 from Uncle Sam

Remember the economic stimulus checks many of us received during the spring/summer of 2008? If you had a baby in 2008, depending on your income, you might be able to file for a “recovery rebate credit” and get $300 back on your federal tax return.

When the stimulus package was rolled out, eligible singles got $600, married couples got $1,200, and each qualifying child added $300 to the parents’ stimulus checks.

Apparently, the $300 per child was intended for children existing in 2008 — even if they were born after the stimulus checks went into effect.

If your income meets the qualifications, look into the recovery rebate when you file your 2008 taxes. You’ll get your money as a part of your federal tax refund. If you will owe money, the recovery rebate will reduce your obligation by $300.

Also, according to the IRS, these people might qualify for the recovery rebate:

• Individuals who did not receive an economic stimulus payment.

• Those who received less than the maximum economic stimulus payment in 2008 — $600 per taxpayer; $1,200 if married filing jointly — because their qualifying or gross income was either too high or too low.

• Families who gained an additional qualifying child in 2008.

• Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008.

• Individuals who did not have a valid Social Security number in 2007 but who did receive one in 2008.

(Hat-tip to the Consumer Reports blog)

No garage, and no shoveling

This morning I caught myself grumbling about the wintry weather and thought about how nice it would be to live in a house with an attached garage instead of an apartment with a parking lot.

I then reminded myself that complaining won’t melt the snow and ice on our car, and I might as well look on the bright side.

Sure, our car lives out in the elements. But, if we had a house, we’d be responsible for shoveling our driveway and sidewalk. In our apartment, we don’t have to do any shoveling or sanding or salting.

Also, our apartment just has one external wall. We get ambient heat from other units, which no doubt translates into a lower electric bill than we’d have with a similar-sized house standing alone.

For now, I might as well remain a contented renter, since we’ll be renters for quite some time.

Maximize your money — review your tax exemptions now!

The Money Life Network is launching a series on jump starting your own economy. This is the first post. By the way, I’m just a tax payer — not a tax professional. Do your own research and consult with someone who really knows what they’re talking about, mmk?

Do you look forward to a large federal tax refund every year? I don’t. Instead of getting a big refund, I’d rather get a small (less than $200) refund, or owe a small amount.

Our take-home pay is a little bit more this way. It also means that we’ll avoid giving the government an interest-free loan while they wait around to give us our money back!

I’m sure you’ve heard about how the folks in California might get I.O.U.s instead of their refunds right away, since the state is so broke. I don’t know if that would happen on the federal level, but why risk it?

Some people prefer to have a large tax refund each year instead, so that they can apply the check toward debt reduction, savings or a large purchase. Otherwise, they argue, the money in each paycheck would just be absorbed into their daily spending and could be frittered away.

No matter how you view your federal income taxes, now is an excellent time to review your withholdings to make sure everything is as it should be.

If you’ve gotten married, divorced, or had a baby in 2008 you might want to change your exemptions. Also, if your child became a legal adult, you’ll no longer be able to claim him or her. You might want to “unclaim” him or her now, otherwise you could end up owing quite a bit of money to the government.

Use this calculator to estimate your federal tax obligation for the upcoming year and to see what an appropriate number of exemptions would be. If you like, you can look at the form W-4 to determine your exemptions. I think using the calculator is a bit easier to understand, though.

For 2008, we claimed one exemption. For 2009, we’re claiming four, although we could possibly do five and still be ok. Thanks to the birth of our son (yay, Johnny!!), our tax obligation for 2008 went way down, and we’ll get to keep an extra $150 or $200 each month now. I’m making it a point to be disciplined with this little surplus, and we’ll apply the amount to our car loan.

I earn a little bit of money from my blog and freelancing, and I’m going to set aside about 25 percent of each check I receive to cover my taxes. If I expect to earn over a certain amount during the year (I think it’s $8k, but don’t quote me on it), I’d need to pay taxes quarterly.

If you earn money from your blog, it’s a good idea to keep track of it as you go, rather than try to figure it all out at tax time. Visit MrsMicah to get some free spreadsheet templates to keep track of that money.

Have a tax question? Now through the end of the month, you can ask the experts at TurboTax one question.

For upcoming posts in this series, you won’t want to miss:

• Monday January 26th: BibleMoneyMatters.com will be delving into the topic of setting up your first budget.
• Tuesday January 27th: FreeFromBroke.com explains why we need a high-yield savings account.
• Wednesday January 28th: PTMoney.com helps us make some extra money (to put in that savings account).
• Thursday January 29th: MilkYourMoney.com dives into a mystery topic.
• Friday January 30th: MyInvestingBlog.com gives us tips to finding a fit financial helper!
• Saturday  January 31st:  Remodelingthislife.com explores how to prepare for a year of holidays.