Even though the words “income tax return” may send a chill up your spine, there is at least one reason to look forward to tax day. Several resturaunts around the country will be giving out discounts or freebies as comfort food. I’m not sure if it’s to help ease the pain of filing your taxes or if it’s to celebrate not having to think about them again for another year but either way, if you enjoy eating out here are some great deals to take advantage of.

P.F. Chang’s Discounts – The P.F. Chang’s chain is keeping it simple with a 15% discount for folks who dine at its 193 restaurants on Tax Day.

Free Groceries - Food emporiums accross the country will be participating in a tax day promotion for the first time by handing out freebies today, but I’m not sure exactly what they will be giving away free. If you find out, please let me know.

Free ice cream. MaggieMoo’s Ice Cream and Treatery will give away single-scoop servings to customers at 200 stores in what it calls an “e-cone-omic ice cream stimulus package.”

Free sweets. Snack chain Cinnabon will give out Tax Day Bites, free bite-size cinnamon rolls usually known as Classic Bites, from 5 to 8 p.m. at its 700 outlets on tax day. Mmmmmm…Free Cinnabons……

Free tacos. At its 275 restaurants in the West, Taco Del Mar will run a promotion: “Taxes Suck. Tacos Don’t.” People can register at the Taco Del Mar website for an e-mailed coupon for a free tax day taco.

Free gift cards. T.G.I. Friday’s will give Tax Day customers $5 Bonus Bites gift cards for food and beverage purchases of $15 to $25 and $10 cards for those who spend more than $25. Members of the 1,000-outlet chain’s frequent-customer program also will get double points.

If you haven’t filed your 2008 taxes yet, today is the deadline. If you’re just finishing up they won’t be considered late if they are post marked for today. For those of you who are waiting until the last minute, here are a couple of sites that will help you do your own taxes and e-file online.

www.TaxAct.com

www.TurboTax.com

www.HRBlock.com

www.RapidTax.com

And if you like to work your taxes out on pen and paper, don’t forget that you can still e-file your federal return for free on the IRS site www.irs.gov/efile/.

Also, if you are mailing your taxes through snail mail, they won’t be considered late if they are post-marked for today.

          The most common reason that people give for not saving money is, “I just don’t make enough”. From a perspective, this is almost always true. It’s been said that your lifestyle will rise to meet (or exceed) your income. If that’s the fact, then no one really ever makes enough money, and they never will. But those of us who are conscience about our finances understand that it is important to budget savings first and then live within our means. Otherwise, there is never enough left over. I’ve done some simple math to compare the virtues of cutting expenses vs. making more income, so if you’re one of those people who are just waiting until your next pay raise to start saving, you may want to pay attention.

          Let’s assume that Person X is currently making a steady salary. He finally has his life in order and his budget is perfectly set so that he has exactly what he needs to pay his bills. He is only waiting until his next pay raise so that he can start saving. Let’s also assume that person X also has the uncanny ability not to be tempted to increase his lifestyle when the raise comes. That super power alone is enough to show that person X better belongs in a comic book than in the real world, but still, let’s just assume. At the beginning of the year, Person X is given a salary raise of $10,000 per year. Utilizing his super powers, he puts %100 of his pay into savings. But there is one problem, taxes. Person X doesn’t get to keep everything that he makes. Assuming that he gives 20% of his income back to the government he only gets to take home around $8,000 more per year.

          Now, let’s assume that Person Y is in the same situation. The only difference is that instead of waiting for his next pay raise, he changes his lifestyle to allow him to start saving now. He sells his newer car and buys an older model for cash; he cancels his satellite TV and subscription to “Yacht Magazine”, he starts clipping coupons and buying only what he needs and at the end of the year, he is able to budget $10,000 per year to go directly into savings. Sense his budget was based on his take home pay and not his salary; he doesn’t have to figure taxes into the equation. He has effectively given himself a 20% return on his savings over person X, and the only difference is the taxes that he didn’t have to pay on the money he saved.  As much as I would like to start computing the interest that each person earns over the years, I think that it’s clear who is going to come out ahead.

           The numbers that I chose for this example were picked to make the math simple but the point is clear. A penny saved is worth more than a penny earned because you don’t get to keep the entire penny that you earned. In fact, depending on your tax bracket, a penny saved may be worth 1.1, 1.15 or even 1.4 (or more) pennies earned, and when those pennies turn into dollars, the difference is astounding.

There has been a lot of debate over the last few months on whether the new stimulus package is necessary or even moral. One of the biggest objections that I have heard is that people don’t want the government spending “their money” (that the government collected through taxes) on things that they don’t believe in or support. I fully understand this point of view and being fairly conservative would appreciate the government letting me support my own causes with the money I earn. But I was reading the Gospel of Matthew the other day and came upon chapter 22 where the Pharisees tried to trap Jesus in his words by asking if it was right to pay taxes to Cesar or not.

But Jesus, knowing their evil intent, said, “You hypocrites, why are you trying to trap me? Show me the coin used for paying the tax.” They brought him a denarius, and he asked them, “Whose portrait is this? And whose inscription?” “Caesar’s,” they replied. Then he said to them, “Give to Caesar what is Caesar’s, and to God what is God’s” (Mathew 22:18-21)

It reminded me again how little ownership we really have. As stewards, we understand that the possessions, talents, and gifts that we have are all given to us by God to manage. But we forget that the money we use on a daily basis is minted and given value by the government. In fact, according to Matthew 22, the government owns the money that we use every day. Now this obviously does not supersede Gods ownership of everything on earth but it does show us that the money that the government collects for taxes was never our money to begin with. Just as we are to give to the Lord from our first fruits, what is already his, Jesus tells us that we are to give to Caesar what is Caesars. It doesn’t matter if we agree with what the Government is doing with the money because it is theirs to do what they want with. The stewards that are in charge of it, will be judged accordingly just like in the parable of the talents. God will not hold us responsible for what is done with the taxes collected.

So while we may agree or disagree with the way the Government is spending tax dollars, we have to remember that it was never ours to begin with. We are fortunate enough to live in a time where we can choose who will be in charge of spending our money but that is the extent of our tax accountability. If there are any other opinions out there I would be glad to hear them.

I’ve wanted to do a post on taxes for the last few weeks and I think this is a good time. I found an interesting article on cbsnews.com about whether you should hire a tax professional to prepare your taxes or if you should do it yourself. I’ve prepared my own taxes for the last five years and this is the second year that I’ve been offering my services to clients so I have a pretty good grasp of when things have gotten a little more complicated than the average non-financial-industry individual is comfortable handling.

Most people with a couple of free hours, and the desire to learn can prepare their own return. Using computer software like taxact.com or turbo tax only makes it easier. But taxes are not something that you want to learn through trial and error. If things get beyond your typical W-2’s and 1099’s you may want to consult an expert. The good news is, you probably know someone that does their own taxes and would be willing to answer your questions for free. Just make sure they know what they’re doing.

The article below gives a few examples of when it might be good to hire someone to do your tax preparation. While it’s not all encompassing, it’s a good start.

Do it Yourself or Hire a Tax Pro?

The IRS estimates that about half of all tax returns are prepared by a tax professional.

The most common reasons individuals cite for using a professional tax preparer are not having the time, willingness or ability to prepare their own. With times as tight as they are today, a lot of folks may be tempted to try to save a few bucks, forgoing the tax preparer’s fees, and prepare and file their own tax return.

But that may be penny wise and pound foolish.

Examples Of When To Consider Turning To A Professional Tax Preparer For Help:

·        Short Sale: If you sold a home through a short sale last year — a transaction in which the lender allowed you to sell the home for less than the mortgage balance and cancel the remainder of the debt — you will need to report the sale. A temporary tax law effective for such sales from 2007 through 2010 allows individuals in this situation to avoid reporting as income the amount of the debt that was cancelled. A tax pro can help to ensure you report this properly.

·        Rental Income: Many homeowners who cannot sell their homes have turned to renting their house, in the hope of waiting out the decline in home prices and selling later, when the market improves. If you’ve received rental income, you’ll need to report it on Schedule E, Supplemental Income or Loss (from rental real estate, etc). The rules for rental property deductions are complicated, especially when you lived in the house part of the year and rented it out for the remainder. To be deductible, some expenses must be apportioned over the rental period and other expenses — such as repairs — need to be classified as repairs or capital improvements, which affects how they can be deducted.

·        Recovery Rebate Credit: Last year, the government issued the “recovery rebate credit,” checks that totaled $600 per person, or $1200 for couples, or more. While eligibility for receiving the rebate check is based on your 2008 income tax return, since this was done last year, Congress based the initial round of checks on 2007 tax returns as a way to get the money into the hands of folks more quickly. Since the rebate was really a credit against your 2008 taxes, many folks who did not receive a rebate check in 2008 may be able to claim it when they file their 2008 tax returns. If, in 2008, you lost your job and will report lower income, had a child, graduated college and were no longer claimed as a dependent, or are a retiree who did not file a 2007 tax return, then you may be eligible to claim an additional “recovery rebate credit” on your 2008 taxes. See an experienced tax pro to help you figure this out.

·        Self Employed Income: If you are self employed, there are a lot of tax deductions and complicated tax issues to consider. While you can deduct business-related expenses, this is an area in which a lot of folks are likely to go too far, and the IRS is on the lookout for that. Also, computing and reporting the correct amount of self-employment taxes is tricky – just ask Mr. Geithner!. A tax pro with experience in reporting self-employment income and the unique and legitimate tax strategies of your specific work or situation can also help you maximize your tax savings.

·        Investment Sales: If you report sales of stocks or mutual funds in non-retirement accounts, you’ll have to compute the capital gains or losses from the sales. You’ll need to complete Schedule D – Capital Gains and Losses. But to calculate your gains or losses, you’ll need to figure out your cost basis, which includes what you originally paid plus any reinvested dividends. And if you sold shares of stocks or mutual funds you’ve owned for a long time, then you may have a hard time doing that, especially if you cannot locate all your records. A tax pro with experience in reporting investment income can help track down the information you need, or come up with a good faith estimate that the IRS will accept.