H&R Block Snafu Delays Refunds
…mandatory field on tax form left blank
Marketwatch.com — H&R Block, the nation’s largest tax preparer, confirmed that its software failed to fill out a mandatory field on Form 8863, which is used to claim educational credits. The IRS would not say what percentage of the roughly 600,000 faulty returns came from H&R Block (US: HRB), but the company received thousands of complaints on its Facebook page and on Twitter.
I have to tell you, I would be pretty mad if this had happened to us. My wife and I used TurboTax to prepare and file our tax return; we have for the last 5 years or so, and have never had a problem. I used H&R Block when I was younger and all I remember was an expensive “loan” in order to get my return immediately. I thought the days of those short term refund loans were over but they are not. Now there is what is called a RAC / RAL or Refund Anticipation Check / Loan.
RALs are those short-term loans usually at outrageous interest rates, for the amount of an expected refund. Tax prep fees are usually deducted from your return amount also. A “good” RAL might have an APR of 40%; a bad one can end up costing 10 times that much.
When combined with other the cost of the RAL can approach loan-shark levels.
Thankfully, this might the last year people need to be warned about RALs. That’s because the RAL industry is getting squeezed by federal regulators, who are cutting off bank funding to the biggest RAL lenders, and by the Internal Revenue Service, who is making it easier to get refunds quickly and without crazy fees.
You know, what’s really problematic is the fact that you have to pay H&R Block something like $150 for 30-40 min of time with their “tax consultant”. If I’m paying for an “expert” to prepare my taxes, I would expect there to be no errors. I realize the “tax consultant” is a human, prone to making mistakes, but this goes farther than the individual tax preparers, the fault falls on H&R Block for failing to stay up-to-date with the IRS and failing to properly train their “tax consultants”.
H&R Block explained that a form had changed, Form 8863 relating to student tax credits, and that in previous years, five lines on the form could be left blank for a “no” answer. Starting this year, preparers must enter an “N” in those fields or risk a delay.
H&R Block said it learned about the tax form change after it had submitted hundreds of thousands of tax returns. The IRS said it was aware of the problem and it is continuing to review the situation and work with “affected software companies to assist in the processing of those tax returns.”
You know, I was always instructed when filling out any form, to never leave a “blank”. If it’s a “no” answer, mark it “no”. If something doesn’t apply, use “n/a”. You would think that H&R Block’s highly trained tax preparers would follow this thinking just from common sense, especially if you are dealing with the Government.
I feel sorry for Mr. & Mrs. John Q. Public who filed their tax return and is expecting their refund only to find out it’s going to take at least 21 days for the IRS to figure everything out and issue the refund.
Now, my good friend TurboTax is not exempt from errors either. Last week, the Minnesota Department of Revenue warned taxpayers against using TurboTax to file their state income taxes, finding 10,000 returns had problems. In a terse statement, the Minnesota Department of Revenue said it would stop processing tax returns filed through Intuit (the company that operates TurboTax) if the problem is not fixed.
Well, I don’t live in Minnesota so it doesn’t affect me but if I did, I wouldn’t be as upset with TurboTax since I know full well that I am filing my return on my own with the help of a computer program. There’s not a $300 an hour “Tax Consultant” using their knowledge and expertise to make sure my return is done correctly.
If you want to insure your taxes get prepared correctly, seek out an Accountant or Bookkeeper certified to prepare tax returns.
… Often times you get what you pay for.
College Towns Lure Boomers
Is retirement in a college town right for you?
A USA Today report looks at how Baby Boomers are choosing other than traditional places to retire. The generation that defined so much of American culture also demands more when they call it quits, and some are beginning to discover that college towns offer some really good — and low-cost — places to retire these days.
Of course most people that retire stay in the houses they have lived in for years, but the AARP shows that Baby Boomers, being an especially adventurous and mobile generation, have realized that they don’t have to spend $500k for that dream retirement home on the golf course.
I would think that with the economy the way it is now and with the hit we have all taken to our 401(k) s, this thinking “outside of the box” may be just what the person retiring or considering retirement needs.
Instead of the typical Florida or Arizona for retirement, these seniors are opting for college towns like Athens, Flagstaff, Gainesville, FL, Tallahassee and many more.
Mike and Helene Krupa just closed on their dream retirement home in Athens. They moved from southern New Jersey, where they lived for 20 years. “I didn’t want to live in Florida with the higher heat and the hurricanes,” said Mike Krupa, 55. “We wanted to live someplace with moderate temperatures.
And weather is not the only advantage to a college town, according to the Krupa’s, their property taxes dropped 50% for a home the same size as their previous home. Homeowners insurance dropped 40%. Their health insurance also dropped. The only thing that increased was auto insurance. Reason: all the inexperienced drivers around them, according to their insurance company.
Considering the cost of housing in and around college towns, it’s possible to find a very reasonably priced home, townhome or apartment for the retired couple to live in. As long as when retiring these seniors remain the active outgoing people they have always been.
If you plan on being that grumpy old man when you retire, sitting on your front porch yelling at the kids for walking on your grass or banging on the walls because your neighbors music is too loud, then retiring to a college town would be best left to someone else.
If on the other hand, you are outgoing, cheerful and still full of life, then a college town just might be the best place for you to retire. Think about it. College towns always have part-time jobs with a high turnover, so if you want a little extra cash it’s likely you could land a nice part-time job with a flexible schedule.
Among financial perks there are other benefits to consider. There is never a shortage of places to eat in a college town; you can attend major college sporting events on the cheap. If you need help around the house there are always college kids looking to make some extra money.
Heck, if you happen to purchase a house with an extra room, or even a whole duplex (buy both sides) you could have a tenant and supplement your income.
I think it’s a great idea for seniors to retire to a college town, and I’m not the only one. There are developers that have built or are planning retirement communities especially for those seniors who want to retire to a college town.
Cheap homes, a reasonable cost of living, livability and lots of culture and sports, what more could you ask for when retiring?
I think it’s possible that the worst thing for old people is to just be around old people.
How to Create a Budget with Your Spouse (And Stay Married)
Written By Erika // Budgeting, How To Guide, Personal Finance
For the past three to four months, we’ve actually been budgeting together, and it’s been working! We changed the way we handle the budget and this is what’s worked for us.
Start With A Clean Slate
We began a new approach to the way we budget. We swiped clean what we had been doing, since what we had been doing obviously wasn’t working. And we started fresh. We created a budget from scratch that suited both our needs and both our wants. Starting over meant we both got to have input into how our money is spent.
Patience
There were many times during our budgeting process that we would start to feel our temperatures rise and our cheeks flush. It was important to keep our emotions in check. It helped to plan our budget with a glass of wine to calm the nerves. And it also required a lot of understanding. A long-standing sore subject in our marriage is the amount of money he spends on food. I pack my lunch every day, whereas he is forced to pay for lunch and dinner every day per firehouse rules. It’s not his fault it’s a requirement. But it puts a big dent on our budget.
Allow Fun Money
We both came to the agreement of Fun or Free Money–money that can be spent any way we please and the other partner can’t say anything about it. If I want to go to happy hour with friends, I use my fun money. If Eric wants to spend his money on fast food even though we have perfectly good organic food at home, he’s free to do so and I can’t say anything about it–not one little thing. Obviously I’m not bitter about his choices, right? Of course.
Create Duties
We each have our own duties now when it comes to the budget. I budget the day to day in a notebook, and every week or two, we get together and my husband manages the monthly and yearly budget in our Excel Spreadsheet, making sure we’re on track. Having him in charge of the spreadsheet means he feels included in the process, rather than before when I would simply spew the numbers at him.
Remember Your Goals
We always like to set financial goals for ourselves. It helps us stay on track in those moments where we’re fed up of being frugal and really just want to splurge. Because of sacrifices we’ve made, we’ve been able to stick to a good portion of our financial goals, such as paying off credit card debt, contributing to our 401Ks, and paying off student loans.
Money is often cited as one of the number reasons for divorce. Don’t let finances ruin your relationship. Remember that you were both put on the same team to win. It’s not a contest or a his vs. hers. As they say, keep calm and carry on.
Start Investing Early
By Clarky Davis
When it comes to saving money and investing for your future, it’s never too early to start. Investing, though, at any age can be intimidating. You don’t have to be a financial expert to make the wisest investment choices, but you do need to take responsibility for your money and educate yourself.
The best investment decision you can make is to get going when you’re young! If you’re fresh out of school and have started a new job, your top priority should be enrolling in an employer-offered 401(k) plan. Even at age 21, you need to be thinking about your retirement. It’s not how much money you have at this stage, rather its how much time you have to invest and grow.
What’s your 401(k) all about?
A 401(k) allows you to select from several different investment vehicles, usually a choice of mutual funds that offer a mix of stocks, bonds and money market investments. In many cases, you also have the option to purchase the company’s stock.
Just to clarify, a mutual fund brings together monies from thousands of small investors. A mutual fund manager uses that money to purchase stocks, bonds or other financial securities. Your contribution to a mutual fund buys a stake in all its investments.
A stock is a small portion of ownership in a company. A bond is a loan usually to the federal or state government, local municipality or corporation that is paid back on a particular date with interest.
When you first start to invest in your 401(k), your employer will likely offer workshops at your office to help you understand how to invest your money. Take advantage of this opportunity. You will also get a retirement investment kit at this time. Go through this information carefully to help you make the right investment decisions for your lifestyle.
How Should You Spend Your Money?
In addition to saving and investing, it’s also important to be smart about how you spend money. While you’re setting aside money in your 401(k), you also need to set aside funds in a short-term savings account. You’ll want this to support unexpected expenses or life events (like a job loss). Hopefully, this will prevent you from dipping into your growing retirement account.
One of the worst financial moves you can make is withdrawing money from your 401(k). You will be required to pay a 10 percent tax penalty, as well as paying taxes on the balance. As you move up the career ladder and switch jobs, you can roll your current retirement savings into a new employer’s plan or into an Individual Retirement Account.
Buying Stock Outside of 401(k)
If you’re interested in purchasing stock outside of your 401(k) investments, there are two options to consider: a full service or discount broker. The full service broker is the pricier option, as they provide financial planning and advice. The discount brokers depend on the buyer to do their own research and have their own investment strategy for making purchases.
Keep in mind that you don’t want to be swayed into purchasing a stock because it’s being hyped in the media. Do your research. You want to make smart investing decisions.
Clarky Davis is the author of the Debt Diva Blog and the Debt Diva’s 2008 Financial Guide.
401(k) Changes to Encourage Saving
Last week I mentioned the possibility that 401(k) limits might be reduced in 2010. This week, I wanted to highlight some proposed retirement savings changes that President Obama outlined in his weekly radio address. Here they are:
Auto-enrollment in retirement plans. The administration plans on clearing up some of the bureaucratic hurdles that make auto-enrollment a challenge for small and medium-sized employers.
Tax refunds as savings bonds. To encourage savings amongst those who receive a tax refund, you’ll be able to elect to receive your refund in the form of savings bonds.
Convert unused sick/vacation days to 401(k) contributions. The White House intends to make it easier to convert unused sick and vacation days into 401(k) contributions.
Note that these changes aren’t forcing anything on employers, they’re just clearing the roadblocks that might be discouraging employers from doing these things. Moreover, these are largely technical changes, and thus don’t require legislative approval.
As for the changes themselves… The first and third sound great. The second one, on the other hand, seems kind of pointless. While it won’t hurt anything, I can’t imagine very many people taking advantage of it.
Source: The Five Cent Nickel
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