Day 26: Give More Regularly

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Improve Your Financial Life in 31 DaysWelcome to day 26 of the 31 Days to Improve Your Financial Life series.

Here’s a challenge I’m setting for myself this year: giving more regularly. I typically wait till the end of the year and do a “catch-up” give.

The problem is that the organizations I support have expenses throughout the year, not just at the end. Additionally, I’m not showing much faith by waiting till it’s safe to give. Thereby stealing some of the thunder for positive things to happen as a result of my giving.

The isolated act of giving money away doesn’t improve your financial life, in the sense that it directly adds to your net worth. It’s what goes along with giving that helps you financially in the long-run.

By giving regularly, you practice the discipline of sacrifice more regularly, not just when it’s convenient. I think this translates itself into an ability to give to other areas of your life (e.g. future needs). It also means you are probably paying closer attention to your finances.

Giving regularly also gives you perspective on the needs of others. When you get beyond yourself and your own needs you become, in my opinion, a happier, healthier person. I believe these types of people have financial success in the long-run.

Lastly, giving to qualifying organizations means you get a slight tax break. The charitable contribution deduction is taken on Schedule A (itemized deductions) on your tax return.

Do this today: Make a list of the organizations that you’d like to support this year. Be sure to check your list against CharityNavigator.com to ensure you’re giving to an efficient organization. Come up with a monthly amount you want to give. As with any financial effort, start small and automate if you can. Most organizations take donations online and automatically, so take advantage of the technology to make this a regular occurrence.

Resources:

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H&R Block At Home Online 2012 Review

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H&R Block has long been known as the largest tax service company. They actually prepare 1 out of every 7 tax returns that are filed in the U.S. They do it with physical branches and with their online and offline tax software products. H&R Block meets you where you are at and gives you the choice: do you want to meet face-to-face with a tax professional, or do you want to do it yourself, either at home or online. If you need a local branch, odds are there is one within 5 miles of you right now.

If you just need tax software, you can quickly get it on their website at www.HRBlock.com. Increasingly, customers are taking them up on both services at once, as H&R Block features a “best of both” service where you get to complete your return using their online software and you follow it up with a tax pro just before filing. Their suite of products and services shows that H&R Block is committed to being the tax preparation provider that you choose each year.

H&R Block At Home Online 2012 Review

I used their software to prepare my 2008 tax return. The name has since changed (used to be called TaxCut), but the product is still the same, and the software is continually updated with tax law changes. The one knock I have against H&R Block is that they aren’t in the business of just tax software. So while they have a good product, it isn’t their only (nor primary) focus. They are first and foremost your local tax services branch. But I guess that has it’s advantages for some as well.

Their At Home product works just like you would think. You are required to enter in your personal information, then you are asked a series of questions to help you complete the return. You can stop and start and save your work. You can also jump around to various sections. There is a final error check, and then you are ready to file. Free e-file comes with each of their packages, but there is a fee to file your State return, like other tax software products.

Four Different Editions of H&R Block At Home Online

H&R Block At Home Online Free Edition (Free) – If this is your first time filing a tax return, or if you don’t mind entering all of your personal and important prior year information in again, then choose this edition. This version is aimed at those filers with a simple tax situation (i.e. no house, investments, or small businesses). E-file your State return for an additional $27.95

H&R Block At Home Online Software Basic ($19.95) – If you’ve filed with H&R Block last year then you will want this service. It comes with the ability to import your prior year information, so you are half way done with your return right from the moment you do the import. Like the Free edition, you really shouldn’t use this edition if you have a difficult tax situation involving a business, home, or investments. E-file your State return for an additional $34.95

H&R Block At Home Online Deluxe ($44.95) – This edition is aimed at the taxpayer who is also a home owner, or who owns investments (not including real estate). This edition will help walk you through the various itemized tax deductions like home mortgage interest, property taxes, and charitable contributions. If you have self-employment income, this still isn’t the edition for you though. E-file your State return for an additional $34.95

H&R Block At Home Online Premium ($64.95) – Finally, if you have self-employment income or own a business, or if you have real estate investments, you will need to step up to the premium edition of At Home. This is by far their best value. It not only contains the software to handle your difficult return, it also comes with one free session with a live tax professional (a $19.95 value). E-file your State return for an additional $34.95

At Home Guarantees and Audit Support

H&R Block goes to far as to provide guarantees for their At Home product. They guarantee that they will provide accurate calculations on your return or they will pay penalties and interest charges. They also provide a guarantee that you will get the biggest refund. If you get a bigger refund with another provider, they will refund your purchase. Finally, H&R Block offers free audit support to all of their online customers. So if you are ever audited, they will be there for you through the process right up until the actual audit meeting, and you can even hire them to help you there.

Customer Service

H&R Block proudly displays their customer support hotline (1-800-HRBlock) on their main support page. They also have the unique advantage of having local offices nearby to guide you through difficult questions. This can run you $19.95 though, unless you purchased the Premium edition. In that case, you get one free meeting. Their online portal has plenty of documentation to help you through the technicalities of using the online product.

H&R Block At Home Coupons

There are various ways to save when buying H&R Block At Home. You can always save 15% on all H&R Block At Home Software. For a limited time (till Feb. 28th, 2012) you can:

Have you used H&R Block’s online product? What did you think?

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An Update on the Suze Orman Prepaid Debit Card Fiasco

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I’m late in updating this information, but I just got some new info (as of yesterday) so I thought a full recap was due.

After I posted my review of Suze Orman’s new Approved Card, Briana from 20 and Engaged retweeted my post saying she was disappointed in Suze. Suze then called me an “idiot” on Twitter which caused a bit of a stir.

Several others blogged about both the Approved Card and Suze’s odd reaction.

Then, the Willis Report ran a segment (with Ryan Mack) citing the “idiot” tweet. Suze went on to say she would talk with Ryan, but to my knowledge that never happened.

The big media outlets started waking up from their slumber and you finally saw a few honest reviews pop up.

Later on, after of twist of her arm, Suze apologized to me.

Suze Orman Apology

Suze Orman's Twitter Apology

In my opinion, she’s still not addressing the questions raised about her card. It’s as if she wants us all to just go away and give her a pass on this.

Suze Won’t Talk to Gerri Willis

I’ve heard through a source close to the matter that Gerri Willis has been repeatedly called and emailed with criticism from Suze Orman’s PR firm over the reports she’s done surrounding the issues with Orman’s new pre-paid credit card.

I’m no stranger to this approach as I was labeled the idiot and I’ve seen suspect comments on my original post. But all this denial without much backing makes me question, why not just go on a national platform and engage your critics?

If the card is really as great as Suze says it is, wouldn’t we all benefit from an explanation from her?

Apparently Gerri Willis asked this same question, but was denied. Willis also reached out to the parent company, Bankcorp for a comment on the card, which got back to the PR firm who hit Gerri again saying, “I guess you don’t want to hear the facts, huh.”

So, Willis took to Orman’s favorite communication medium, Twitter, to request an appearance on her show as well. Last I checked, there was only one quasi-response to Gerri.

Gerri Willis Response Tweet

Response from Suze about lack of Willis Report appearance.

Willis took to her show last night to explain why Orman has not appeared on the program to give her side of the story.

With so many consumer and finance reporters and bloggers now questioning the positives of the card, let alone the conflict of interest Orman now finds herself in – promoting a pre-paid credit card for which she’ll earn a percentage – it makes no sense that she wouldn’t want to set the record straight.

I’m hoping Suze changes her mind and once and for all, explains the full details behind the card.

Ultimately, I hope she pulls the card. I’ll tell her the same thing she told the Kardashians back in 2010, “pull it off the market and put your name or image to something that is great.”

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TurboTax 2012 Review

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My TurboTax 2012 review hardly needs an introduction. These guys are the best-selling tax preparation software program year-after-year. Their software walks you step-by-step through the process of preparing your taxes. They take care of yearly tax updates and understanding the confusing tax code. All you need to do is decide which of their versions to use, then complete a series of questions, and file. Depending on the complexity of your tax situation, this can take anywhere from 15 minutes to 2 hours.

TurboTax 2012 Review

TurboTax provides their software in both offline (CD or download) and the increasingly popular online versions. Their software is perfect for the person who is fairly confident in preparing their tax forms, but who might need just that extra piece of assurance. Their software also allows you to complete your taxes at your own pace. Save your progress and return to complete it later. TurboTax is a product of Intuit, the same company that owns Mint.com, Quicken, QuickBooks.

Right up front I can tell you that I’ve used TurboTax in the past and I enjoy their product. But I know they are not for everyone. If you require the face-to-face time with a professional (as many people do), then you aren’t going to get it with TurboTax.

Other tax preparation software providers have physical branches where you can actually meet with a tax professional. TurboTax doesn’t offer that. Their focus is on the software alone. In addition, TurboTax generally isn’t going to provide the level of service that a CPA or Enrolled Agent can.

But if all you need is a piece of rock-solid, do-it-yourself tax preparation software, then you’ll be hard pressed to find a better product than what TurboTax can offer you. TurboTax offers four different versions of their product aimed at personal filers. Here’s a quick rundown of what each edition contains:

Different Versions of TurboTax

TurboTax Free Edition (Free) If you plan on filing a 1040EZ, 1040A, or simple 1040, then you might qualify for their free edition, regarless of your income. This version is very straight-forward: asks you a series of questions, checks for any errors, and then helps you e-file for free. If you have to itemize your return because you have a mortgage, child care expenses, charitable donations, or medical expenses, then you shouldn’t use this edition. This version comes with the same support and guarantees as the other paid versions. While the federal preparation and e-file is free, to e-file your State you will have to pay $27.95.

TurboTax Deluxe ($29.95) This edition is aimed at the average tax filer without investments, rental property, or self-employment income. This version will help you complete your itemized decuctions and find available credits. It also comes with ItsDeductible®, Audit Risk Meter™, and Audit Support Center (in case of an audit). Finally, it comes with a new feature: you can import prior year tax data or documents, even from other software packages. You can also import data from Mint.com with this edition. State filing with this edition will cost $36.95.

TurboTax Premier ($49.95) The Premier edition comes with everything you get in the Deluxe edition plus support to help you complete your tax forms related to investments and/or rental properties. Helps you quickly find deductions associated with your rential units. Also, you are able to quickly import your investment data from various institutions. State filing with this edition will cost $36.95.

TurboTax Home & Business ($74.95) Finally, if you have self-employment income, then you would be wise to consider the Home and Business edition of TurboTax. This edition will ask you different questions depending on the type of business you have setup: sole proprietor, 1099 contractors, single-owner LLC. It will help you zero in on business-related decutions like travel and your home office. This edition has seen some improvements in the following areas: deductions by industry notifier, W-2 and 1099 preparation for employees and contractors, help with depreciation method choices, and expense input on one screen, verses a page at a time. State filing with this edition will cost $36.95.

Confused about which version to choose? Review this comparison chart to find out which TurboTax is right for you.

Various Guarantees

TurboTax didn’t become the most popular tax software by accident. They put together a good product and they stand behind it. They want their customers to be satisfied. They make a committment to their customers to not only be easy and 100% accurate, but to also provide the maximum (biggest) refund. All of their versions come with a money-back guarantee. All of their online versions are free to use up until the point that you actually file. So there’s not harm in giving them a spin. If only to see what you’ll be ending up with this year.

Customer Support

Customer support will never match the services offered by a paid professional. But like I said above, TurboTax isn’t in the professional tax support business. That, however, doesn’t stop them from providing excellent customer service. They have four primary channels for you to use to contact them about their software or even tax and filing questions.

TurboTax Support Options

I tested out their online chat support. Even though it said it would take up to 30 minutes, I was instantly connected with a support person via chat who quickly answered my questions.  Share your experience with TurboTax in the comments below…


TurboTax is Easy, Free Edition, Fast Refund

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Stay Out of the 401k Penalty Box

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Penalty Box - Penalties for Withdrawing from 401K Early

The Penalty Box

High sticking in the NHL will get you a minimum 2 minutes in the penalty box.

Same rules apply for cross-checking. In more severe cases, the penalty can be doubled that.

The bright side to all that is after the penalty time expires, you are allowed back on the ice to play again.

Hopefully, with no harm to the team.

In retirement planning, this is often not the case, especially when it comes to your 401k.

If you find yourself in a financial emergency, you might consider withdrawing money from your 401k.

It might seem logical to use your own money to help yourself out of a financial bind, but there are penalties and taxes to be paid on money withdrawn from a 401k before retirement age.

Before considering this option, it is wise to be familiar with the taxes and penalties that will be charged.

Penalty for Early Withdrawal

The government considers a 401k strictly for retirement funding. Therefore, they charge heavily for early withdrawal to discourage people from taking their money before the age of 59 ½. The government charges a 10% penalty on any money taken from the 401k early.

There are a few exceptions to withdrawing from your 401k penalty free, including withdrawals made after ending employment with a company if you are over age 55, withdrawals made by your beneficiary after your death, in a divorce settlement, because of a permanent disability, or in financial hardship situations due to medical debt.

A quick note on financial hardships: To qualify for a 401k hardship withdrawal is tough. Typically, your employer will make you jump through hoops to qualify. If you do qualify, you then have to wait a minimum 6 months before you can restart contributing to your 401k.

If you are well under 59 1/2 and none of the above exceptions apply to you, this would be considered a “major penalty” in hockey terms. In fact, if you are even considering it, you might as well sit in the penalty box and contemplate your actions.

Tax Penalties

When you invest in a 401k for retirement, that is tax free income that you invested. When you withdrawal the money, you are responsible for paying the taxes.

The federal government charges anywhere from 15% to 35% based on your income bracket. You can look at your previous years tax return to determine what your tax bracket is and how much you will be charged.

The state government in the state where you live also charges tax when you withdrawal from your 401k. Generally state tax rates are much lower then the federal taxes, typically around 5%.

Additional Tax Penalty

Money you withdrawal from a 401k is considered income for the year. Depending on how much you withdrawal, this could move you into a higher tax bracket. That means you will pay even more taxes on that money during the next income tax year.

Doing the Math

Imagine you need to borrow $10,000 from your 401k for your financial emergency. If you withdrawal $10,000 you will pay $1,000 for the early withdrawal penalty, assume a 20% federal tax rate which would amount to $2,000, and a 5% state rate which would be $500.

That amounts to $3500 in taxes and penalties. That means you are only ending up with $6,500. So if you really need $10,000, then you need to withdrawal about $16,000. Of course the taxes and penalties on that $16,000 are about $5600, $2000 more than withdrawing $10k.

Most of us wouldn’t take out a loan that charged 50% interest. Withdrawing from a 401k is essentially charging yourself that much interest on the loan. Another consideration is that anything you withdraw obviously reduces the amount that you will have for your retirement which is never a good idea.

Withdrawing money from your 401k early (and even borrowing from your 401k) should be a last resort.

Jeff Rose, CFP® offers 401k plan reviews and Illinois term life insurance. He loves Crossfit workouts, writes about personal financial planning and craves In-N-Out burger. You can find him at Good Financial Cents and Soldier of Finance or follow his updates on Twitter: @jjeffrose.

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The Costa Concordia Tragedy and the Need for Travel Insurance

It’s likely that the photo of the Costa Concordia luxury cruise liner lying capsized in the water off the coast of Italy will become one of the iconic images of 2012. We’ve all been glued to the news as the heartbreaking and bizarre story continues to unfold. Vacationing via cruise ship has always seemed to [...]

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American Express Personal Savings Account Review

If you’ve taken a look at the best high yield savings accounts, you know that interest rates are just pathetic.  Three years ago, I owned an ING Direct account which offered close to 4% APY and now it’s impossible to find anything greater than 0.90% annually.  Only two banks today offer that kind of “quality” [...]

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Traditional and Roth IRA Contribution Limits for 2012

The 2012 IRA contribution limits have not changed from last year. The main culprit seems to be that we haven’t experienced inflation. Traditional IRA and Roth IRA These Individual Retirement Arrangements or Accounts (IRAs) were created to provide a tax incentive to save for your own retirement. They are both excellent tools to help you [...]

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