My CFO on the Go!

You Won’t Be Getting a Tax Rebate Check

Henry Paulson, the Unites States Treasury Secretary announced on Friday that Congress has approved the $167 billion, debt financed, Economic stimulus package, and that the IRS will be working through the tax season in order to send out the “rebate” checks starting in May of 2008.

I hate to break the news to everyone, putting the country even further in debt isn’t going to provide any long term stimulus to the economy,  the IRS has enough trouble keeping up with tax season without adding the task of sending out  millions of rebate checks, and technically these are not rebate checks, they are prepayment checks, there is a difference.

While everyone in Congress and the media are talking about Rebate checks, when you visit the Internal Revenue Service they are referring to “advance payment checks”. Is there a difference? Yes! Quite a bit. A rebate is generally understood to be a “giving back” of funds that were already paid. If these were true rebate checks, they would be a refund of taxes previously paid. But in fact, the checks will be prepayments of tax refunds. Details are sketchy right now, but I would expect that with the prepayment checks going out in May, there will be fewer and smaller tax refunds in early 2009.

It is also unlikely that he so-called rebate checks will help the economy. The idea behind the checks is that the people would run with the money to their nearest store and spend it on some type of “stuff”. This would give retailers a boost and keep the economy from falling into recession. Yet, when prepayment checks were issued in 2001, over half the recipients used the money for savings or paying down debt. It sounds like this time won’t be any different. According to the surveys I have seen, most people plan to use their rebate check to pay down debt.

For me, I’ll be sending my check right back to the IRS. It will help towards paying my quarterly estimated tax payments. What will you be doing with your prepayment check?

Entrecard and Taxes?

I’ve just recently become involved with Entrecard. Entrecard is a networking site for bloggers that involves “dropping” your card on websites and having cards dropped on yours. Sort of like the calling cards of old. I have found Entrecard to be a great marketing tool and it has already brought tons of traffic to my site.

Thanks to Entrecard I have also found plenty of interesting sites that I might never have found otherwise! I’ll be featuring some of them in another post, in my newly added Off-topic category!

Now on to taxes. At Entrecard you earn “credits” (some are now calling them entrecredits) by dropping your card on sites, and by selling ads on your site. You can then use those credits to buy ads on other sites. Simple enough so far. But a whole economy is springing up where people are buying and selling other goods and services using entrecredits. Today people are selling advertising, web consulting, and even cookie recipes using entrecredits. That brings up an interesting question, are these taxable events? Do the sellers need to report taxable income when all they have received are entrecredits? The answer is a surprising probably! continue reading »

Tips for Choosing a Tax Preparer

If you pay someone to prepare your tax return, choose that preparer wisely. Taxpayers are legally responsible for what’s on their own tax returns even if prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare personal returns. Most return preparers are professional, honest and provide excellent service to their clients. Here are a few points to keep in mind when someone else prepares your return:

• A Paid Preparer is required by law to sign the return and fill in the preparer areas of the form. The preparer should also include their appropriate identifying number on the return. Although the Preparer signs the return, you are responsible for the accuracy of every item on your return. In addition, the preparer must give you a copy of the return. continue reading »