PotteryBarnKids.com

While we can’t offer you respite from the heat wave oppressing much of the country, we can bring you good news of upcoming sales tax holidays to ease the burden on your back-to-school shopping budget. (Don’t have a household budget? This is a perfect time to create one and educate your kids about what all those new clothes, shoes, books, school supplies, and computers cost.)

Check out the following list to see if there is a tax-free shopping day coming to a state near you. (Live in Louisiana? Lucky duck!) And be sure to investigate additional discounts that stores may sponsor to coincide with the dates and get people through the door.

• Alabama (August 5-7): computers up to $750 per transaction, clothing up to $100, school supplies up to $50, books up to $30.
• Arkansas (August 6-7): clothing up to $100, no limits on school supplies.
• Connecticut (August 21-27): clothing and footwear up to $300.
• Florida (August 12-14): books and clothing up to $75, school supplies up to $15.
• Iowa (August 5-6): clothing and shoes up to $100.
• Louisiana (August 5-6): all purchases up to $2,500.
• Maryland (August 14-20): clothing and footwear up to $100.
• Mississippi (July 29-30): clothing and footwear up to $100.
• Missouri (August 5-7): computers up to $3,500, clothing up to $100, school supplies up to $50.
• New Mexico (August 5-7): computers up to $1,000, clothing up to $100, school supplies up to $15.
• North Carolina (August 5-7): computers up to $3,500, instructional materials up to $300, computer equipment and accessories up to $250, clothing up to $100, school supplies up to $100, sports equipment up to $50.
• Oklahoma (August 5-7): clothing up to $100.
• South Carolina (August 5-7): no limits on computers, school supplies, and clothing.
• Tennessee (August 5-7): computers up to $1,500, clothing up to $100, school supplies up to $100.
• Texas (August 19-21): clothing, backpacks, and school supplies up to $100.
• Virginia (August 5-7): clothing up to $100, school supplies up to $20.

(via the Federation of Tax Administrators)

BravoTV.com

The Real Housewives reality-television franchise has spawned more bankruptcy filings than pro sports and celebrity accountant Kenneth Starr combined. We wondered why, so we reviewed the most notorious examples of the “real housewives” living beyond their means.

• Teresa Giudice is one of the most combative Real Housewives of New Jersey, and with this group, that’s quite a feat. A year ago, she and her husband Joe filed for bankruptcy with liabilities approaching $9 million while their income was reported as only $79,000 between them. Yet in the season that’s currently on air, Giudice continued to shop ’til she dropped (or more likely, until her credit limit is lowered).
• Sonja Morgan cried during last night’s episode of the Real Housewives of New York City while discussing her recent bankruptcy filing, which disclosed $19.8 million in debt and $13.5 million in assets following her bitter divorce from John Adams Morgan, the grandson of financier J.P. Morgan.
• Alexis Bellino of the Real Housewives of Orange County — the original show of the franchise — nearly lost her $6 million home to foreclosure proceedings in December after her husband Jim, a real-estate speculator, filed for Chapter 11 bankruptcy proceedings. You can view the waterfront mansion here, which was taken off the bank’s hands in a March short sale for $3 million.
• Michele Salahi only appeared in one season on Bravo — in the now-defunct Real Housewives of D.C. — but it was long enough to reveal the company she owns with her husband Tareq has gone bankrupt.
• Taylor Armstrong from the Real Housewives of Beverly Hills likely knows full well that her husband Russell filed for bankruptcy in 2005 with less than $50,000 in assets and millions in debt, but that didn’t seem to stop them from throwing a lavish $60,000 party to celebrate their daughter’s fourth birthday last year.
• NeNe Leakes, the breakout star of the Real Housewives of Atlanta, was evicted from her five-bedroom rental home in 2008, owing $6,240 in back rent. That’s not all she and her husband Gregg owed, either: The Leakes family reportedly also owes more than $100,000 in unpaid taxes.

The question must be asked: Can’t Bravo scratch up some real millionaires for the casts of these shows, rather than glamorize these pretenders to wealth? Or does starring on reality television cause the featured families to lose whatever financial sense made them rich in the first place?

Either way, it can be tempting to watch the lifestyles of the “rich and famous” on television and want to mimic their lifestyles or spending habits. But the bankruptcy track records show that isn’t the best idea.

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?

FemTalks.com

We’ve written before about unintended consequences and banking restrictions or consumer credit. But there are plenty of other places where they show up. What if the new health-care law — meant by lawmakers to reduce medical costs for Americans — actually increased them for the average family’s household budget? An article in the Wall Street Journal suggests that that’s exactly what’s happening when it comes to getting a tax break for over-the-counter drugs.

Many of you may take advantage of a flexible-spending account (FSA) through your workplace, which allows you to spend pre-tax earnings on over-the-counter medical supplies ranging from Tylenol to contact lenses to ace bandages. It used to be that you could buy such things with a prepaid debit card or simply submit your receipts for reimbursement from your FSA manager.

However, legislation went into effect this year that requires all purchases to be authorized with a prescription, and the unintended consequences are creating hardships for consumers, reports the WSJ:

Patients are demanding doctors’ orders for over-the-counter products because of a provision in the health-care overhaul that slipped past nearly everyone’s radar. It says people who want a tax break to buy such items with what’s known as flexible-spending accounts need to get a prescription first.

The result is that Americans are visiting their doctors before making a trip to the drugstore, hoping their physician will help them out by writing the prescription. The new requirements create not only an added burden for doctors, but also new complications for retailers and pharmacies.

“It drives up the cost of health care as opposed to reducing it,” says Dr. Chung, who rejected much of a 10-item request from a mother of four that included pain relievers and children’s cold medicine.

The law means not only are patients faced with the prospect of making appointments (and taking off work) for trivial reasons, but health-insurance companies are being forced to pay out hundreds for unnecessary office visits so that health consumers can take advantage of a tax perk that used to cost just a few dollars.

Should the government return the law to what it was previously? Share your thoughts in the comments below.

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.

NBA.com

Just when you think playing for the NBA couldn’t get any better between the insane paychecks and adoring fans, here’s a new perk: If you’re a big enough star, your employer will even pay your way out of trouble with the Internal Revenue Service.

That’s what former Miami Heat point guard Tim Hardaway found out last month when his team bailed him out of tax trouble. By the time he retired in 2003, Hardaway was paid nearly $50 million over the course of his 14-year pro career, but the IRS says he owes $120,748 in unpaid income taxes dating back to 2005 and 2006.

Last year, the tax agency filed a lien against his 7,542-square-foot mansion outside Miami. But the Miami Heat has come to his rescue, buying the home for just under $2 million. The five-bedroom property (complete with swimming pool and private basketball court) is now back on the market for $2.5 million.

Unfortunately, financial illiteracy among pro sports players is nothing new. (This article from CBS Sports describes how rampant bankruptcy runs among retired basketball players, even as early as 5 years after they leave the game.)

If taking care of their own is a priority, perhaps rather than making a habit of bailing former headliners out of trouble, the NBA can focus more of its resources toward money-management classes for current players — before it’s too late.

IMDb.com

Val Kilmer may have played Iceman in Top Gun, but he’s not about to outmaneuver the taxman for the second time.

In April 2010, Kilmer settled a $538,858 tax debt with the IRS. But that wasn’t all he owed to the feds, because in November, the IRS filed a new lien — worth $498,165 — against the actor for unpaid income taxes dating back to 2008.

In jeopardy is the multimillion-dollar Pecos River Ranch that he owns in New Mexico. The 5,300-acre luxury property first hit the market in 2009 with an asking price of $33 million. But with Kilmer now facing another half-million in back taxes, he’s been forced to cut the price to $18.5 million to try to entice a buyer fast.

Moral of the story? Being an entertainer comes with many perks and a big paycheck, but without the most rudimentary good financial habits — like paying your taxes on time and having a liquid emergency fund in case major expenses come up — you won’t be able to live like Batman forever.

ToniBraxton.com

However, this isn’t Braxton’s first time in the repossession rodeo. She also filed for bankruptcy in 1998, at which time she also said she didn’t squander her money frivolously:

“It’s my life, and I have to take responsibility for it. People don’t understand this business; a lot of my personal money went into tours. You never get out of the red. Every light bulb, costume, band member, hotel, gas for the tour bus, airplane ticket–everybody has to be paid, and the artist has to pay them. In this business, the product–the artist–pays for everything, and then [we] get what’s left over.”

So how does a talented singer who’s sold 40 million records get tens of millions of dollars in the hole twice? For starters, shortly after her first bankruptcy filing in the ’90s, she signed a lucrative record contract with Arista worth $20 million, which should have gotten her out of debt for good.

But the lesson proved elusive, and she promptly spent hundreds of thousands on a lavish wedding. Braxton returned a leased BMW the last time she went broke, but BMW is once again on her list of creditors. She also has a bad habit of not paying taxes, and earlier this year the IRS filed a lien against her for nearly $400,000. In addition, she has $900,000 in bank loans she has yet to repay, and a $2.6 million home in Nevada that’s in foreclosure. And that’s not counting undisclosed amounts due to Tiffany & Co., Neiman Marcus, the Four Seasons, DirecTV, AT&T, and American Express, among others.

At the very least, we hope the judge overseeing her bankruptcy filing mandates financial counseling before she can simply write off the lifestyle she’s been financing for far too long.

Want more famous financial flubs? Check out our popular 8 Worst Celebrity Financial Mistakes slideshow.