The U.S. government contradicts its own advice about Social Security numbers

Posted by Caitlin on July 2nd, 2008

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The Federal Trade Commission and the Social Security Administration warn, “Protect your Social Security number. Don’t carry your Social Security card in your wallet or write your Social Security number on a check.” But at least 44 million Medicare insurance cards include the beneficiary’s full Social Security number.

Charlene Frizzera, chief operating officer of the nation’s Medicare agency, said it would be too expensive to change the existing system. “Our advice is, don’t carry it with you unless you know you’re going to need it,” Frizzera said of the government insurance card, despite the fact that the back of the card itself reads, “Carry your card with you when you are away from home.”

8 million Defense Department identity cards used by active duty and reserve forces and their dependents, as well as ID cards issued to military retirees also display Social Security numbers. The Pentagon plans to remove the numbers by 2014.

And when taxpayers use the mail to file their taxes, rather than e-filing, the Internal Revenue Service instructs them to write their Social Security numbers on their checks. While the IRS states that it will not reject checks missing the Social Security number, it has no plans to change the instructions.

A Social Security number alone is all a criminal needs to open fraudulent credit accounts using a victim’s identity. An identity theft protection service is the best way to prevent and detect identity theft. Monitoring your credit report is another way to determine whether an identity theft has opened accounts in your name. And online tax preparation services eliminate the risk of mailing checks to the IRS. When your Social Security number or other sensitive personal information is compromised, you run a far greater risk of having your identity stolen. Taking preventative measures is the best way to avoid becoming a victim.

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Early filers prefer efile says IRS

Posted by Joe on March 6th, 2008

Those Americans that have filed their taxes in the first two months of 2008 are more likely to efile their returns then ever according to statistics release by the Internal Revenue Service this week.

Over 38 million people have filed their 2007 tax returns as of the end of February 2008 which is a 5% increase of last year.  Additionally, nearly one third of early filers submitted their taxes return online which is up 14% from 2006 returns.

The IRS is happy to see the efile trend grow as officials work to move the organization to full force into the digital age.  according to IRS Acting Commissioner Linda Stiff:

E-filing continues to be the preferred way to file your tax return

Taxpayers are also seeing a bump up in the money they are getting back from the government so far this year.  The average tax return for early filers is $2,708.  Last years average tax return was $2,655.

There are many reasons to prepare and file your taxes online.  Learn more in our free guide to online tax preparation and efile.

• Save time, money and hassle with online tax preparation
• Top ten reasons to prepare your taxes online and efile in 2008
• Economic stimulus and your 2007 tax return
• $800 million in tax benefits go unclaimed
• USA Today selects TurboTax as top online tax preparation service

USA Today selects TurboTax as top online tax preparation service

Posted by Joe on March 1st, 2008

National newspaper USA Today published a head to head review of two of our top rated online tax preparation services in their Friday edition this week.  Their testing gave TurboTax a slight edge over H&R Block’s TaxCut, while they also gave honorable mention to TaxAct.

All three of the services mentioned in the USA Today article achieved five star rankings in our online tax preparation guide which launched in January 2008.

One important TurboTax feature discussed in the USA Today article which hadn’t been available when we completed our original reviews of online tax preparation services was a detailed introduction and FAQ to the economic stimulus package recently passed into law by President Bush.  While most tax payers won’t have to do anything to earn their stimulus rebate it is helpful that TurboTax has added this feature since many consumers have questions about the program.

We are glad to see a national publication like USA Today focus on the many great options available to consumers who want to take advantage of the simplicity of preparing and filing their taxes online.

For more info check out our guide to online tax preparation services and our top ten reasons to preparing and efile your taxes in 2008.

• Save time, money and hassle with online tax preparation
• Economic stimulus and your 2007 tax return
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• $800 million in tax benefits go unclaimed
• Early filers prefer efile says IRS

Economic stimulus and your 2007 tax return

Posted by Joe on February 27th, 2008

Earlier this month President Bush signed the $168 million economic stimulus package into law. For those not familiar with the program it will mean that most tax payers will receive $300, $600 or $1200 rebates plus $300 per child. The goal of the program is to provide relief to tax payers and stimulate economic activity by putting some cash in the pockets of Americans.

There are some important tax implications and related questions that consumers may have about the stimulus package and Amy McAnarney, executive director for H&R Block’s Tax Institute, recently provided some answers and insight for consumers.

Will this affect the tax return I have to file before April 15?

No. However, the amount of your rebate depends on how much money you earn this year and information from the 2007 tax return you’ll file before April 15.

How soon can I get my rebate?

Checks should be distributed during a 10-week period starting in May.

If I file my taxes earlier, will that speed up when I receive my rebate?

Checks will not be distributed until May, regardless of when you file, but taxpayers who file for an extension might receive their rebates later than those who file by the April 15 deadline.

What if I don’t have to file a tax return this year? Will I still get my rebate this year?

Taxpayers who want to receive their rebate this year should file a tax return this year. H&R Block is among the most affordable choices for Americans who want their rebate but who otherwise would not have to file, with discounted, professional tax preparation starting at $35 in our offices and do-it-yourself options, such as TaxCut Online, for as little as $14.95.

Will the rebate money I get be considered income, and will I be taxed on this next year?

No, and no. The rebate is an advance credit for tax year 2008, based on a tax cut in the economic stimulus bill.

Are there any limits on which taxpayers are eligible to receive a rebate? What are they?

To qualify for the rebate, the taxpayer must have earned income of at least $3,000, which can consist of income and benefits from Social Security or veterans’ disability, and have a valid Social Security Number. The rebate is also phased out at adjusted gross incomes above $75,000, or $150,000 for married couples.

To learn more about preparing your taxes online and efiling for your 2007 tax return please visit our online tax preparation guide.

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Top ten reasons to prepare your taxes online and efile in 2008

Posted by Joe on February 18th, 2008

Preparing and filing your taxes can be stressful and confusing.   But, many reputable companies provide online tax preparation and efile services that will take much of the complexity and worry out of preparing your tax returns.

There are many reasons to use an online tax preparation service.  Below are ten of the most compelling benefits of online tax preparation and efiling.

1. Many online tax preparation services offer free or discounted Federal tax returns.  This is particularly beneficial if you live in tax-free states such as Washington, Nevada, Alaska, Texas, Florida, South Dakota or Wyoming.
2. Customized filing of specific returns from every state are available from most online tax preparation services.  Every state has different tax rules, deductions and procedures.  Online tax preparation services can help you navigate the specific of your state tax return.
3. Online tax preparation services have access to the most recent IRS forms.  Whether you just need a simple 1040ez or have complex itemized deductions on a full 1040 form, you will be able to find the right tax return for your situation through online tax preparation.
4. Most online tax preparation and filing services include deduction maximization features that will help you identify items that could increase your tax refund or reduce your tax payment.  Tax preparation service H&R Block estimates over $800 million in tax benefits go unclaimed because consumers are unaware of their eligibility for certain tax credits.
5. Online tax preparation allows you to complete your tax returns at your pace.  Most online tax preparation services let you save your tax return in progress and comeback later without losing your previous work.  This is particularly useful if you want to work on your taxes in multiple locations, such as home and work, or if you realize you don’t have immediate access to important tax documents while you are completing your taxes.
6. Qualified experts are available to help you complete your tax return online.  All major tax preparation services offer some level support in completing your tax returns.  This ranges from email support to live chat to phone based consultations with tax professionals.
7. Efile, or electronic filing of your tax return, is much quicker than mailing your paper returns to the IRS.  This means that those consumers who anticipate a tax refund will receive it significantly quicker through an efiled return than through traditional postal mail filing of their taxes.  According to the IRS 57.4% of all tax returns, or nearly 80 million tax returns, were efiled in 2007.
8. Not comfortable with efiling your taxes?  That’s OK because most online tax preparation services will allow you to prepare your taxes online and print out the completed returns.  You can simply mail these paper returns directly to the IRS where they will be processed as usual.  In many cases, you can prepare and print your tax returns for free.
9. Can’t wait for your tax refund?  Most online tax preparation services will not only efile your 2007 tax returns but will also provide you with refund anticipatory loans.  These tax refund loans will give you expedited access to funds in the amount of your anticipated tax refund (less any processing and other fees which vary by provider).
10. The IRS is auditing more tax returns than ever.  Recent IRS data showed that about 1.25 million tax returns were audited in 2005 which represented a 21% increase in tax audits over the previous year.  Many online tax preparation services offer audit protection for your efiled tax returns.  This means they will provide assistance if your tax returns are audited by the IRS.

To learn more about online tax preparation services visit the free online tax preparation and efile guide at NextAdvisor.com.

• Save time, money and hassle with online tax preparation
• Early filers prefer efile says IRS
• USA Today selects TurboTax as top online tax preparation service
• $800 million in tax benefits go unclaimed
• Economic stimulus and your 2007 tax return

H&R Block offers tax refund loan to the military

Posted by Joe on February 18th, 2008

Many online tax preparation services offer so-called “refund anticipation loan” that payout a consumer’s anticipated tax refund much more quickly than the IRS typically will. However, due to a 2006 law to help protect members of the military community, those loans are very difficult for military service people to find.

The law in question is meant to prevent companies from charging inflated APRs on loans to members of the military community and caps those rates at 36%. However, most tax refund loans have APRs in the range of 50% or more because they also cover processing and fees associated with providing the service. As a result, many companies that provide tax refund loans cannot afford to offer them to members of the military because their costs are potentially greater than the maximum allowable APR that can be offered.

H&R Block, one of our top rated online tax filing services, has begun offering a “military refund anticipation loan” that is capped at the allowable 36% APR. The loan charges a flat rate of $1.07 per $100. For example, the cost for a $3,000 loan would be $32.10.

In general, we believe that most consumers, whether in the military or not, would be better off waiting the approximately two weeks to receive their tax refund from the IRS because of the additional fees associated with tax refund loans. But, because we also believe choice and options are important, we applaud H&R Block’s move to provide this loan option to members of the United States military.

Visit H&R Block’s website to learn more about their military refund anticipation loans.

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$800 million in tax benefits go unclaimed

Posted by Joe on February 5th, 2008

H&R Block estimates that that nearly $1 billion dollars in potential consumer tax credits are overlooked each year by people that aren’t aware of their eligibility for these benefits.

Alan Bennett, H&R Block’s CEO stated:

Our research shows that three out of four taxpayers aren’t aware of potential tax filing delays created by some last-minute changes in tax law.  Other statistics show that about $800 million a year in tax benefits go unclaimed.  People need us.

Bennett expects confusion to be compounded by recent changes to the alternative minimum taxes, or AMT, that were made by congress late in 2007.  These changes are expected to impact 3 to 4 million households and are likely to make filing taxes on your own more confusing than ever this year.

We suggest that consumers use an online tax preparation and efile service such as H&R Block in order to simplify tax filing and making sure that they are benefiting from all possible deductions and credits.  You can read more about online tax preparation in our free online tax prep and efile guide.

• Save time, money and hassle with online tax preparation
• Top ten reasons to prepare your taxes online and efile in 2008
• Early filers prefer efile says IRS
• USA Today selects TurboTax as top online tax preparation service
• Economic stimulus and your 2007 tax return

Job hunters may be eligible for bigger tax refunds then they are getting

Posted by Joe on January 23rd, 2008

According to the New York Times, a number of job hunting related expenses are actually tax deductible and could lead to higher tax refunds or lower tax bills.

The article states:

Job hunters may be eligible for can take the following deductions, says Jackie Perlman, a senior tax-research analyst at H&R Block, in Kansas City, Mo.:

• travel expenses

• employment-agency fees

• resume-preparation fees

• career-counseling expenses

• the cost of advertising your services

• newspapers and other periodicals purchased for their help-wanted ads and

• legal fees paid to an attorney to review an employment contract.

We recently published a free online guide that compares online tax services and found that many of these efiling services will actually help you identify even more tax deductions.  Check out our online tax preparation guide at NextAdvisor.com.

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Save time, money and hassle with online tax preparation

Posted by Joe on January 16th, 2008

Nothing is certain except death and taxes, but thanks to online tax preparation and filing services we are certain that preparing your tax 2007 tax returns and filing them with the IRS can be easier than it ever has been. We just launched a new comparison of online tax preparation and filing services just in time for tax season as a resource for our readers.
The IRS electronic filing service, or efile, was launched in 1986 but really took off in the late 1990’s. Now over 60 million individual tax returns are efiled each year. What do some many people efile their taxes? There are several reasons:

• Those that efile typical receive their tax returns quicker than those that use traditional methods. This is because efiled tax returns are submitted immediately to the IRS versus having to spend days in the mail and then having to be sorted through upon receipt by the government.
• Online tax services are typically much cheaper than using an accountant for filing your tax returns.
• For those that complete their own federal and state tax returns and online tax preparation service gives access to hundreds of potential deductions that will maximize their refund or decrease their overall tax payment.
• Online tax preparation and efile services offer the convienence of the Internet, so your returns can be completed and filed anywhere and anytime.

There are literally dozens, if not hundreds, of online tax preparation services available and we have found that the quality and features of this services vary widely. Check our our free online tax guide and see how we compare online tax preparation services.

• Top ten reasons to prepare your taxes online and efile in 2008
• Early filers prefer efile says IRS
• USA Today selects TurboTax as top online tax preparation service
• $800 million in tax benefits go unclaimed
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