Handling Finances

Yes, I know, it’s not technically “free” as it comes out of our taxes, but filing a tax return is a small price to pay for $300 or more. In the next few weeks, the IRS will be sending out letters telling taxpayers that you must file a 2007 tax return to get a stimulus rebate check.

While most of the 130 million Americans who qualify for the rebate check will be filing a tax return anyway, between 10 and 20 million are eligable to receive the rebate, but do not earn enough to be required to file taxes. The majority of those who qualify for the rebate checks but are not required to file taxes are Americans who receive social security or veteran’s benefits. This is considered income and can push citizens over the $3000 income limit. The key is that it must be included on a tax return or it won’t be counted toward the stimulus rebate checks.

If you filed a tax return but didn’t include social security or veteran’s benefits as income, be sure to amend your return to make sure you can qualify for the rebate check.

Filing taxes can be quite a hassle, and it’s very convenient to be able to skip filing when your earnings are low. This year, if you can claim income of $3000 or more, it’s worth the effort — file your return and qualify for your rebate check.

Check out the official IRS article for more information.

Corporations have no guaranteed rights. Corporations are simply legal constructs that allow people to limit their taxes and to limit their liability in business arrangements. Corporations are also not inherently evil, but as citizens with constitutionally guaranteed rights, we have to be careful not to treat corporations as if they’re more important than citizens.

What’s the big deal?

When I see how much corporations are contributing to political campaigns (and not toward one political position) I worry that the corporations have become as influential or perhaps even more influential than citizens in our political system. It’s often argued that strong corporations help the masses through a strong economy, but I think that misses the point. As corporations are owned by citizens, it’s really strong citizens who are willing to invest in business that produce a strong economy.

One thing that consistently bothers me is when corporations are handed money from our government when they perform poorly. We are essentially rewarding inefficiency — if a company can become large enough that bankruptcy would negatively affect a large portion of a state’s employees, that company no longer has to worry about efficiently producing a product. It can simply threaten to lay off thousands of citizens and we are happy to give them our tax money to keep them employed. Instead of rewarding inefficiency, wouldn’t it be much more effective to allow poorly-run companies, or companies that make unwanted products to go bankrupt and put that money toward helping unemployed citizens find and become trained for new jobs?

Similarly, when we pass laws to make it much more difficult to declare bankruptcy or limit the amount of money that can be awarded in negligence lawsuits, we are again saying that the corporations should have more protection than the citizens. Do we really think that there are more citizens trying to fraudulently declare bankruptcy than there are banks that are selling loans they know their customers can’t afford?

I’m not saying corporations should be powerless, or that citizens are blameless. However, corporations are much better organized and focus much more of their resources toward favorable laws than citizens. As citizens, it’s just important to remember that while we have rights given by the constitution (in America anyway), if we fail to exercise those rights through understanding the issues and voting, we can give those rights up to non-entities that only care about profits and shareholders.

What can we do?

In the upcoming elections, consider the implications of giving rights to corporations in your decision to vote and be sure to vote no matter how disillusioned you are with politics. Unless citizens band together and become better organized and better funded than corporations (something I find highly unlikely) our greatest tool toward preserving our rights as citizens will be our votes.

Comments?

I’d love to hear other views on this subject — especially ones that disagree with part or all of my conclusions. I’m far from certain where the best balance between citizen rights and corporate protection lies so although I might have some basic opinions, I think it’s incredibly important to keep learning and listening so my votes can be as informed as possible.

As I was finishing up my taxes for the year (using TurboTax) I was once again invited to e-file for the low, low price of $19.99.  I was indignant that the IRS should still be charging us to make their job of data entry easier… and then I learned that the IRS charges no fee for e-filing!  I still think it’s a horrible deal, but I’m not nearly as annoyed by the IRS as I used to be.

E-filing is actually a great idea.  It reduces errors as there’s one less time somebody has to type the numbers into a computer, it reduces cost as the IRS no longer has to pay that person to type numbers into a computer (not to mention the reduced mailing costs) and to top it off, the taxpayer receives proof that their tax information is received within 48 hours, and tax refunds are sent much faster!

 So why isn’t e-filing free?

TurboTax is asking me to shell out $20 on top of the $75 I already paid for the program (the basic version is much cheaper, but my convoluted and changing investment decisions require the more capable Premier version).  How can they get away with it?  Well e-filing is only available to a select group of tax preparers and taxpayers who make under $54,000 a year and prepare their taxes for free through www.irs.gov/efile

I assume that the IRS has good reasons to limit access to their e-filing program, and I appreciate that they offer it free to lower-income taxpayers, but since e-filing must be done through a tax professional, that means that most of us simply have to pay whatever our tax-preparers (or tax preparing software) charges.

Don’t Spend a penny on e-filing!

If you have your taxes professional prepared, you’re probably paying a couple of hundred dollars already and very often e-filing is included in the price.  If it’s offered as an option, however, it just doesn’t make financial sense to pay the preparers $20 to get your refund a month sooner!  Even if your refund is $2000, you’d have to be making 12% a year on your money to make e-filing worth the cost, and you’re further encouraging the tax preparers to charge for a service that costs them very little.

The simple solution is to do as millions of taxpayers have done for decades — send your tax returns by mail.  If I were to e-file through TurboTax today, I would be rewarding TurboTax for overcharging for this basic service and while I firmly believe they have a right to make money by charging for e-filing, I would rather pay more for the basic package than get hit with fees when I’ve finished my tax preparation.

There might be circumstances where you need your refund money ASAP which would make the e-filing a good option for you.  I just suggest that you keep track of your finances, and if you encounter similar emergencies year after year, consider changing your tax withholding and your spending habits instead of paying your tax preparer for the ‘privilege’ of receiving the yearly illusion of temporary financial relief.