The “Make Work Pay Credit”…what it means for you

We have all heard the word “stimulus” and a lot of us get a little happy feeling inside knowing that you are going to be getting back some of your hard earned money. This term is getting thrown around a lot, especially when it comes to our new President, Barack Obama. This week (January 12th) the House Democrats have been working on an 825 billion dollar bill called the “American Recovery and Reinvestment Bill” that will have a mixture of spending and tax relief for U.S. citizens. Since taxes is what we do here, we are going to focus on the most important piece for you, the average income consumer, and that piece of this bill is called the “Make Work Pay Credit.”

Whether or not you think so, you have heard of the “Make Work Pay Credit,” although maybe not by name. This concept was one of the primary focus’ of Obama’s Presidential campaign. At this time, the Democrats are negotiating $145 billion to go toward this program to help low and middle income Americans. Basically, as long as you are a working citizen, you are entitled to $500 per individual and $1,000 for couples in tax credit. This credit will be paid out in two ways. Either workers will have the amount added to their paychecks or their income tax return at the end of the year. Now, this credit may not be available until 2009 or 2010 and only those who make less than $75K a year are eligible ($150K for couples).
Here’s the kicker. The “Make Work Pay Credit” will also be refundable. That means that even those people who do not make enough money to file taxes would receive a credit.

There are a few other aspects of the “American Recovery and Reinvestment Bill” other than the stimulus checks too. They are talking of increasing the refundable portion of the “Child Tax Credit” meaning you will receive more money per child as well as attempting to expand the “Earned Income Tax Credit” which reduces the amount of taxes that low income citizens have to pay.

I don’t know about you, but all this sounds good to me! More money in your pocket means more ends met.

Tags: American Recovery and Reinvestment Bill, average income consumer, Barack Obama, child tax credit, earned income tax credit, house democrats, Make Work Pay Credit, Obama, President, stimulus

Fed to Cut Interest Rates Again

For the 10th time since September 2007, the Federal Reserve is set to decrease their interest rates. I can’t believe they are actually going to do it again. Currently at 1%, as early as next week we could be seeing .5% or even .25% interest on the funds our government is borrowing. That is good news for the auto makers who are begging for their “bailout” desperately trying to save their industry. Another benefit to our economy is when interest drops it leads banks to drop their prime rates, which influences the rates on your credit cards, home equity lines of credit and other personal/business loans.

However, does dropping the rate really boost the economy? Not really. All it does is stop the bleeding from getting much worse than it already is and try to stimulate government spending. Gotta spend money to make money, right? Dropping the rate in which our money is “loaned” to us doesn’t really stimulate the economy on the “Main Street” level. But if everyone keeps walking up with their hands out waiting for the government to help them fix their poor choices, at least their money will be cheaper to get from the Fed.

Tags: auto makers, bailout, bank rates, boost economy, business loan, credit card rates, cut, decrease, Fed, federal reserve, government borrowing, government spending, home equity line of credit, home equity loan, interest rates, personal loan, prime rates, september 2007, stimulate, stimulus

How Much Do I Have to Make Before I Must File?

So, you found yourself a little part time job to fill in the hours of the day. But how much do you have to make before the government is knocking at your door with their hand out for their cut? Here are some helpful numbers! (numbers are so considerately helpful…and from 2007!)

Starting with you under 65ers:
If you are single and make less than $8,750 (gross that is)–YOU DON’T HAVE TO FILE! YAY YOU!
If you can consider yourself head of house and make less than $11,250–YOU DON’T HAVE TO FILE EITHER!
Married and filing jointly? $17,500 is your number as long as BOTH of you are under 65. Only one? (Hugh Hefner anyone?) $18,550 is for you.
Married and filing separate? No matter your age…$3,400
Widows(ers) with a child have to make more than $14,100 before they have to file.

Over 65:
Single–$10,050
Head of House–$12,550
Married joint filing (both of you over the hill)–$19,600
Married separate filing (I don’t know why you want to do so much paper work at that age)–haha—doesn’t matter your age…still $3,400
Widow(er) but you must have a dependant child–$15,150
(numbers provided by the IRS Website)

Even if you don’t have to file because you didn’t make enough money…there are a few other reasons you may want to file anyway because you may be entitled to a refund.
1. You qualify for the earned income credit
2. You have had taxes withheld from your paycheck by an employer
3. You have a child who will get you additional child credit

So, some of you should be filing and aren’t, and some of you are filing and it is completely unnecessary. Which are you?

For more information on filing: check out Publication 501 (2007), Exemptions, Standard Deduction, and Filing Information on the IRS website.

Tags: additional child credit, do i file, earned income credit, exemptions, filing information, head of house, head of household, hugh hefner, IRS, married joint filing, married separate filing, publication 501, single, standard deduction, stimulus, taxes withheld

Tips for First Time Tax Filers

So you are on your own. First apartment, new car, just started the new job. And guess what! You have to do your own taxes for the first time ever. Now you could do what I did at first, beg mommy to continue to take care of your forms for extra visits and kisses, or you can step up to your new-found adult title and take care of it. But how do you go about it? What can you deduct? More helpful tips from TK!

Scary, scary. You want to get the most out of your tax refund. That’s an extra night out waiting for you in those forms! But don’t get too hasty. The first mistake a lot of us make is going the easy way out (and no, I don’t mean paying someone professional to do it, but if you have that kind of money, more power to you!) with the 1040EZ. This is great if you have no deductions or investments and need to do straight up income taxes. But a lot of you will miss out on the benefit of the student loan deductions and more. For those, you will need to put in the extra effort of the 1040A or the 1040 long form. They have a bit more involved, with more questions to answer and a few more papers for you to collect, but in the end, totally worth it when the check comes in the mail.

Don’t forget about the economic stimulus checks too! The government is trying to help out those of us in the middle classes with a small chunk of change. Make sure to check if you qualify. (also check out: Miss Out on the Stimulus? Here’s Your Chance!)

The nicest thing is that you are young and (if you are reading this) obviously have access to a computer and the internet. So, take my advice and e-file. There are a lot of great easy to use programs out there that will let you ”email” (sorta) your taxes right out. No trips to the mailbox!

For the best choices, check out Too Many Choices! The Right Tax Software and our Software Review sections on this site!

Tags: 1040 long form, 1040A, 1040EZ, e-file, economic stimulus package, first time tax filing, stimulus, tax deductions, tax reviews, taxprograms

New President…New Tax Plan? What Obama can do for you

We all cheered and clapped in Grant Park when Barack Obama was elected our 44th President of the United States. Staring at the Jumbotron, we knew a new America was coming. Even now, as the President-Elect, Obama’s team is talking tax reform. They want to boost the middle and lower classes, which could mean more money in your pocket.

Especially in this time with our economy in a rocky state, Obama wants to light a fire under congress to distribute another round of stimulus checks to those who need it most. Yes, it’s true that he wants to get the funding for this from the wealthier Americans, who, in turn, would be back to the tax rates they paid under President Bill Clinton. But isn’t that part of what America is about? Helping out those in need when they need it most?

Under Obama’s plan, 95% of us would be getting a break. Seniors would be totally exempt from taxes if they make less than 50K. If you own a home and don’t itemize deductions, you would be eligible for a tax break. Are you a student? Talk about a decrease for those pursuing a higher education. Obama also intends to try to extend the decreases on capital-gains tax. Isn’t it time we all save a little money?

Tags: 44th president, Barack Obama, checks, Obama, President, President-Elect, stimulus, tax breaks, tax plan

Miss Out on the Stimulus? Here’s Your Chance!

There is some good news though for those who have been laid-off this year, have taken a pay cut, or missed the first stimulus. With the economy in a recession, many people are struggling to make ends meet. The government claims to be trying to help the public with their “economic stimulus package” that was meant to help middle and lower class Americans. Unfortunately, when the time came and the checks arrived, many people were sorely disappointed having received little or sometimes, no help at all.

You may get a second chance at your rebate thanks to a small loophole in the law! The government has issued a “recovery rebate credit” for those people who’s economic status has changed during 2008. Income, family size, and a few other factors (such as the birth of a child) go into consideration for the February enacted economic-stimulus law, therefore even if you weren’t eligible for the rebate in 2007, you may be able to receive the recovery rebate in 2008/2009. Cha-Ching! So don’t fret…a little bit of help may be on the way.

To check on your check (lol!) or change/update your address: visit the “Where’s My Stimulus Payment?” on the IRS website.

Tags: check, economic stimulus package, government, IRS, law, payment, rebate, recession, recovery rebate credit, stimulus