Consumerist.com

This week was the first Personal Finance Online Summit, held on Wednesday to give personal-finance experts the opportunity to discuss with the president the major financial issues affecting both the country at large and individual households on a smaller scale. At the end, President Obama shared the tenets he says he personally lives by. Here it is:

1. “Don’t spend all your money.” In other words: live within your means. Econ4U has a number of resources to help you on that path; click here for more info.
2. “Some folks say that investment is just another term for spending. There’s an important distinction.” We agree. For example, putting money away for retirement may feel like spending in the short term — after all, once that money is in your retirement account, you will no longer have easy access to it for a while. But making strategic investments and using debt wisely (like to buy a home to finance an education to qualify you for top-paying jobs) is the best way to guarantee a comfortable future.
3. “The general public does not have all the information they need [about] the federal budget.” This is a biggie. After all, it’s in the trillions, and most people find it pretty difficult to wrap their heads around that many zeroes. But making a point to educate yourself about how tax money is being collected and what it is spent on is the only way to develop informed opinions about how the country is doing and what can be done to improve the national financial outlook.

MTV.com

On April 4, the IRS put liens on the Osbournes’ two Los Angeles-area mansions to cover tax debts of $718,948 from 2008 and $1,024,175 from the 2009 tax year. (Daughter Kelly was also slapped with a $34,000 lien last month.)

To the Osbournes’ credit, they promptly resolved the matter by cutting a check to the IRS last week. Sharon took to her Twitter page to explain the screw-up, which she said left even her accountant in the dark:

You can’t rely on anyone but yourself. You have to be on top of your own business affairs. My fault……..lesson learned

At more than $1.7 million, it was an expensive lesson indeed!

BlissTree.com

April 15 is traditionally tax day, but because today is a public holiday to celebrate Emancipation Day in Washington, D.C., the country is given three extra days to file their federal tax returns for 2010.

If you’re a wait-til-the-last-minute type, here are three commonly misunderstood deductions and how to claim them on your return:

• You can deduct health expenses only if your spending exceeds 7.5 percent of your adjusted gross income (AGI). For example, on an AGI of $40,000, you would need to spend more than $3,000 out of pocket on health-insurance premiums, payments for medical services not covered by your insurance, prescription medications, laser eye surgery and vision correction products, dental services, and ambulance transportation to hospitals. However, if you are eligible to participate in a subsidized health plan through an employer, you can’t count those premiums toward that minimum. (Note: In most instances you will save the most money by paying for health insurance, so you shouldn’t forgo health insurance to maximize your tax deductions.)
• If you have a home office, you can deduct the proportion of space that the office takes up in your apartment or home — assuming you meet the IRS’s two requirements. The first is that it is a room that used regularly and exclusively for your business, and it must be your principal place of business. That means if you put a desk in the living room, you can’t deduct the entire living room. For the purpose of avoiding an audit, it’s better to set up your office in an enclosed space, like a spare bedroom.
• Just because New Year’s is long gone doesn’t mean you can’t still save like it’s 2010. You have until April 18 to contribute to your 2010 IRA or Roth IRA — up to $5,000 if you’re under age 50. It can be an excellent way to reduce your taxable income and potentially turn a tax bill into a tax refund, assuming you have enough lying around in your bank account to make it happen.

FanPop.com

Here at Econ4U, when I catch a celebrity screwing up in a major financial way, I recap the story in our Famous Financial Flubs section. Not because I’m gleeful at someone else’s misfortune, but because it can serve as a valuable lesson for everyday people and help everyone handle their money better.

However, WalletPop columnist Lynnette Khalfani-Cox sees it a little differently. She says celebrities have several legitimate reasons that they so often seem to forget to pay their taxes:

Despite all the bling and the perceived glamor that comes with being an A-lister (or even a D-lister), the truth is that it’s tough being a celebrity and keeping your finances straight. …

So in effect, the IRS might look at a celebrity’s overall financial picture and say: “You’re making $1 million a year, you should have “X” amount of cash flow,” without taking into account that the celebrity has a $7,000-a-month mortgage — not the average $2,000-a-month mortgage, for example.

While she makes a fair point that being rich and famous can put a target on your back for the IRS, I think few Average Joes are going to empathize with someone who’s falling behind on a $7,000 mortgage payment on a multimillion-dollar home in Malibu.

And not all celebrities live beyond their means. I, for one, think The Office star John Krasinski’s 1,279-square-foot, two-bedroom house in West Hollywood is charming, and far more modest compared with the properties other popular television actors seem to be buying up. (Paging Eva Longoria.)

Do you have a lot of sympathy for celebrities who can’t seem to get it together financially?

MPTVimages.com

It may not be as big as the half-million tax lien that the IRS filed against Val Kilmer in January, but yet another movie star is finding himself in trouble with the taxman. And they’ve made him an offer he can’t refuse.

Gossip website TMZ.com reports that the Internal Revenue Service filed a tax lien against Pacino last month. The court documents say he owes $169,143.06 in back taxes for 2008 and $19,140.44 for 2009, totaling $188,283.50.

The good news is that Pacino is looking to do right by the government and pony up the difference. His publicist says the tax error was the fault of Kenneth Starr, the disgraced celebrity accountant who was just sentenced to 5 years in prison for defrauding his famous clients of more than $30 million.

We’re glad Pacino is making restitution. It teaches a good lesson: If you’re not doing your own taxes, it wouldn’t hurt to check the work before signing your name on the 1040, since you’re the one responsible for it in the end. And when you’ve found yourself in a financial pickle, the best thing to do is the right thing.

Update: Now another famous Kenneth Starr client, director Martin Scorsese, has been slapped with a $2.85 million IRS tax lien. It’s a dark day for the bank accounts of Hollywood.

FunkyBear.com

In 2010, the average filer’s tax refund was a whopping $3,036, reflecting some new tax credits to stimulate the economy. A fat check like that gives the average family a whole lot of cash to spend as they see fit. Of course, the smartest ways to use it may not be the most fun but they will give you the biggest benefits in the long run. Read on for our tips to make the most of a hefty refund.

1. Put it in a Roth IRA. Since Roth IRA contributions cannot be deducted on your taxes, it can be a lot harder to come up with enough after-tax income to sock away $5,000 a year. But a fat tax refund can go a long way to ensuring your long-term financial welfare.
2. Make an extra loan payment. Take a look at the interest rates on your student loans, mortgage, car payment, or credit cards, and apply the money toward the one charging you the most on your balance. Bonus points if you can wipe out the debt entirely.
3. Start a rainy-day fund. An emergency fund is a safety net, a cushion, peace of mind — pick your metaphor — that provides you with accessible cash in the event of job loss, unexpected car repairs, big medical bills, and any other strokes of bad luck. If you don’t have one, consider yourself lucky that you haven’t needed one yet, and then take your government check and tuck it away into savings in case you ever do.
4. Put it toward tax-deductible purchases for 2011. Got a home office? Spend the money on new furniture or equipment and you can deduct the cost on next year’s taxes. Or make a nice donation to charity. There are lots of ways to spend money that will help your tax bill next year.
5. Bring home a bigger paycheck. If you’re getting a big percentage of your income back in a refund, you’re paying way too much in taxes every month. Rather than loaning that money to the government, talk to your company’s accounting department to increase your federal allowances on your W-4 form. Yes, it means your refund will be smaller next year, but you’ll bring home more bacon in every paycheck.

TeenageMoneyMultiplier.com

From Extreme Makeover: Home Edition to Bridalplasty, American culture has hit a saturation point in our fascination with the makeover. However, focusing some of that reinvention energy toward a more staid subject — retirement — will reap benefits that will last a lifetime. (Or at least, longer than Botox and a fresh coat of paint.)

Here are five fast fixes to rejuvenate your retirement plan.

1. Ensure your allocation is age appropriate. The rule of thumb is to subtract your age from 100 and put that percentage of your retirement money in stocks, which historically earn the biggest return on investment. So if you’re 25 years old, that would mean 75 percent of your investments should be in stocks or mutual funds and the remaining 30 percent in lower-risk investments like bonds, CDs, and cash.
2. Stash away your tax refund. You can do a preliminary work-up on eFile.com’s tax-refund estimator to see what kind of check you can expect to get from the government. But rather than dreaming of the vacation you will take or the TV you will buy, stick that money into a Roth IRA. It’s not like you were missing it all year anyway.
3. Rebalance your portfolio. If you’re properly diversified, every year that you’re invested means fluctuations in how each of your investments perform. So if your IRA is split down the middle into two mutual funds, one might do better than the other and it now accounts for 60 percent of your holdings, which alters your risk. Rebalancing will reset your allocations back to your original investment strategy so you don’t accidentally assume more risk than you intended. You can do this easily by contacting your retirement plan administrator.
4. Talk to your significant other about your goals. It’s not the most romantic of conversations, but knowing where your partner stands on retirement planning is crucial when talking about the future together. Find out now if your loved one is a grasshopper or an ant and whether your long-term financial strategies are as compatible as you are.
5. Fix it and forget it. If you’re thinking about taking a loan from your 401(k) to come up with a house down payment, think again. If you leave or lose your job, you will owe the balance of the loan in its entirety. That’s not something you want to worry about when facing job loss. Also, some 401(k) plans will not allow you to contribute to your account until you’ve repaid the loan. Consider how long it will take you to come up with the money, the employer match you’d give up, and the compound interest you’ll miss out on in the meantime — you’re better off just saving up for a down payment in a dedicated house fund.

TheBrandsClub.com

Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.

You’re probably not thinking about tax season right now, but fall is a great time to revisit your tax planning strategies. Here are a few tips to make the most of your money before December 31 creeps up on you.

1. Stock up on health supplies. If you participate in a company-sponsored flexible spending account (FSA) for tax-free health expenses, start thinking about ways to avoid leaving money on the table. Stumped about what to get with your dough? Glasses or contacts, cold medicine, first-aid kits, ice packs for treating injuries, and heart-rate monitors all qualify. Drugstore.com even stocks a FSA store full of qualifying goodies. But do it fast: Starting in 2011, you won’t be able to run up a drugstore bill with your FSA dollars. The new health-care law prohibits spending FSA money on anything you don’t have a prescription for (with insulin as the exception).
2. Make your home more energy efficient. Holiday weekends (like the one three days from now) are a great time to buy new appliances at a steep discount. And through the end of the year, you can qualify for a 30 percent credit (up to $1,500) on approved doors, windows, and roofs as well as high-efficiency furnaces, water heaters, stoves, and heating and air conditioning units installed in your primary residence.
3. Save tax dollars when you refinance your home. If you’ve taken advantage of low mortgage rates this year to refinance your home, don’t forget that you can deduct all unamortized points on an old refinancing as well as points on the new loan.
4. Identify charities you want to support. Charitable donations are deductible through December 31 for the current tax year, but pouring money into worthy coffers can be a low priority at year end when you’re busy playing Santa. Make your annual donations now before your wallet starts feeling pinched by the holidays.
5. Begin to max out your retirement savings. If you qualify for an IRA or Roth IRA and haven’t begun making contributions for 2010 yet, start by socking away a little right now. The contribution limit is $5,000 if you’re under age 50, and you have until April 15, 2011 to get it all in there. So put away $625 a month for the next eight months to max the fund out — it will hurt a lot less than trying to come up with $5,000 on Tax Day.

But in case you haven’t, don’t worry, we won’t tell. There’s still time to get them done, and there’s no shortage of resources around the web to help you make it happen.

First of all, if your income for 2009 was less than $49,000, you are elderly, or serving in the armed forces, you qualify for free help from the Volunteer Income Tax Assistance program. To find the location nearest you, visit IRS.gov, or call 1-800-906-9887.

If you’re going to do your taxes yourself, it’s probably worth using a computer program to help make sure you don’t forget any important deductions or tax credits. For example, thanks to last year’s stimulus bill, if you were unemployed in 2009 you can deduct the first $2,400 in benefits you received. Intuit’s perennial best-seller, TurboTax Online Deluxe, is $50, but it could easily pay for itself by preventing any mishaps or mistakes. Other good options include H&R Block’s “At Home” program (also $50), and the no-frills Tax Act Deluxe, which is only $10.

If it turns out you owe more money than you can afford to pay right now, it’s important that you file on-time anyway. The penalty for not filing is far worse than for filing without paying.

Last but not least, don’t forget to file a state tax return in addition to your federal 1040. It’s a common mistake, and can mean missing out on a hefty refund (or, worse, getting nailed with nasty penalties down the line).

Then you might want to take a look at the Advance EITC (AEITC).  The IRS has made it possible for qualified taxpayers to receive a little piece of your yearly credit in every paycheck if you meet a few requirements:

1. You are working.
2. You expect your adjusted gross income and earned income will fall within the income limits for the year.
3. You expect to have at least one qualifying child.
4. You expect to qualify for the EITC.

With the Advance EITC you won’t receive all of your credit in your paychecks, but will receive part of the credit from your employer in that form. To get these advance payments you’ll need to use the W-5 Form found here.

Check out IRS.gov for full details on the AEITC requirements.