Last Minute Tax Tips for Tax Year 2007

So you waited until the last minute to file your taxes, probably because you may have a tax liability, or maybe you are like many of us, simply a procrastinator. Well most transactions that could have helped you proactively lessen your tax liability had to be completed by December 31st, 2007, but you knew that, that’s why you will start planning for this year’s taxes right after you have filed the 2007 tax return, right?.

Money Tip:Credit Cards - Universal Default Clause

If you use credit cards, get out your contractual agreement with the credit card company. Does your agreement have a "universal default clause?" Of course the best option is not to have to use any credit card company at all, but if you do - try to find one that doesn't burden you with a "universal default clause."


The "universal default clause" allows your card company (we'll call it Company X) to raise your credit card interest rate, if it determines from your credit report that you have been late on another bill, (that bill could be another credit card, or say your utility bill, or your mortgage, among others), even if you are making timely payments on Company X's credit card. Company X now has the go-ahead to hike your rate into the interest rate stratosphere - often hiking rates as high as 24.99% and even 31%.


Check your interest rate each and every month, so if they have exercised their right, you can exercise yours and move to another credit card company, or better yet pay off the offending debt.

Let us know of your experiences with the "universal default clause."

Check the status of your 2007 Tax Refund

Check By Phone: You can check the status of your 2007 tax refund, by calling 1-800-829-4477 and pressing 1 for automated refund information or you may call 1-800-829-1954. Its reccommended that you wait at least 6 weeks from the date you filed your return (3 weeks if you filed electronically), however it is possible to receive your refund in less time. Of course the closer it comes to the return deadline, the more likely you will have a longer time to wait. You will need to have your 2007 tax return available as you will need to give:
-your social security number
-your filing status
-and the exact whole dollar amount of your refund.

Check Online: You can also check online to get the status of your own personal refund. Again, you will have to have the following information available:

-Social Security Number (or IRS Individual Taxpayer Identification Number)
-Filing status (Single, Married Filing Joint Return, Married Filing Separate Return, Head of Household, or Qualifying Widow(er))
-Exact refund amount shown on your return

Are You Making Debt A Habit?

As Charles C. Noble quotes "First we make our habits, then our habits make us," we can get into a habit of living on debt, maybe starting in our youth as college debt and carrying on into our elder years as we become accustomed to the lifestyle it affords.

The way debt is used at various stages in one's lifespan is discussed in this piece "Life-stages of Debt" from Bankrate.com's website. Insight into how the habit is acquired may give you the ammunition you need to break the habit.

Do you agree?

The Money Taboo: Breaking the Taboo – Part 2

Missed Part 1 - Find it here.

How can we change?

Follow our Youth. Our young people seem to be a lot less concerned about privacy on many levels, as seen by the gravitation towards the You-Tube and social-networking phenomena. While I am less likely to adapt to some of the freedom on those networks, personal finance blogs provide a forum for financial education and some confessions, allowing folks to talk about their problems, issues and plans with anonymity. A few blogs have gone overboard, giving excruciating personal finance detail, but we won’t complain. This is a step in the right direction to breaking money’s taboo status.

Financial Literacy. We all more than ever have to take responsibility for our own financial future, become financially literate and financially mature. If we aren’t financially savvy, we should seek out people in our group who are. Folks, who may have made a money mistake or two in the past, might be happy to pass on that information to you to avoid repetition of the error. We often by pass receiving that good information because we are afraid to broach the subject, and possibly show our lack of knowledge. Until we make the move however, we are destined to remain financially illiterate.

Managing our money wisely really requires that we become educated about it. Start talking about your money to your friends. Start a “money-group.” Use it to foster discussions about all aspects of your money. Talk about the fact that , e.g. there is a universal clause on most credit cards, which can raise the rates on all of your cards, if you are late on one card, it allows your other cards, if they so choose, to raise their rates, even if you are current and early on those other card payments. Think about it, if you fell into that trap, why allow your friends to fall in too. In this particular example, it is possible that if you are unaware of the clause – and you are not the type to check your interest rate each month (a lot of folks simply look at the due date and the payment due) you may not realize for several months that your interest rate has been hiked sky high, sometimes to 30%, and you have been taken for a pretty expensive ride. After all, as far as you knew, you are current on those accounts.

Why talk about it? It can be financially beneficial. Almost 2 decades ago, in a general conversation with a friend of mine, we started talking about our properties (my first home purchase) and as we talked, I realized that I had not been taking advantage of the homestead deduction on my property taxes, for probably 5 years. Now I am quite the reader, so it is certainly probable that at some point I would have come across that information, but it could have taken another 5 years. It should be noted, however, that as a student of “continuous improvement,” I am happy to talk about anything, particularly if it will ultimately improve my process or yours. My friend also did not consider money talk as taboo, and both of us came out of that conversation a little better off financially.

Talking about money could help you determine that what you thought was an excellent compensation package is not so wonderful after all. Of course, because no-one will talk, nobody really knows what the measurement gauge is. Be careful on this front, as some companies still have policies that prohibit salary disclosure among employees.

By not talking we often make money comparisons based on presumptions or specific misinformation, and cause ourselves more stress and financial problems than we really need to. If we try to keep up with the Joneses we often use debt to mirror a lifestyle that is financially out of our reach, but which we hanker for, because if it appears that our peers can afford it, we question, why can’t we? The ability to talk to someone about our finances, whether family, friend, clergy, or financial adviser about the instruments that we are thinking of using, can at the very least educate us, give us another idea, option, or can sound the alarm. Of course, there is no guarantee that anyone in your circle is anymore financially literate than you are, but two heads in my opinion is often better than one.

At some point, I am confident that we will come around to the realization that we carry around an unnecessarily huge burden when we isolate our money issues. The more we hide our money issues, the more problems or damage we are liable to cause ourselves. Actually as Shira Boss states in her book, most people are eager to hear the money details of others, they are just not that ready to share their own, and therein lies the rub, maybe we start by reverting to the childhood – "I’ll show you mine if you show me yours."

Share your opinion. How do you see it? Should money remain under our kimonos, or is it time to shake off the taboo?

The Money Taboo: 8 Reasons why Money is still taboo. – Part 1

When was the last time you had an open discussion about your salary, your mortgage payment, or your tax returns with anyone besides your partner or spouse? Many of us still aren’t even able to have those frank discussions with our partners and spouses. Discussing money openly may be the last taboo.

So exactly why won’t people talk? Money discussions are taboo for many reasons:

Belief that money is personal. Often there is a generational belief that money is not to be discussed, as noted in Jamie Johnson’s (heir of Johnson & Johnson pharmaceutical fortune) documentary "Born Rich." Watch the video excerpt on this page. His family was more than a little peeved that he chose to speak out about their money. Warren Buffet’s granddaughter (in-law) got a little harsher treatment, she was apparently disowned. Watch.

In speaking to an associate recently, she indicated that she would be most uncomfortable commenting to a family member about a particular financial transaction the family member had made. When I asked, what if your financial experience could provide a benefit? The response was, “that’s something that you just don’t do.”

Corporations have also long used a privacy policy on discussing one’s salary with others, to maintain their bargaining advantage, which also probably plays into an individual’s belief that money discussions should be personal.

Guilt. If you are financially set, you may feel a tad guilty that you have done much better than the other guy.

Superiority. You revel in your financial success and certainly don’t feel obligated to talk about it with folks who have been less successful, in fact you have a certain disdain for those who you feel can’t “get it together.”

Shame. If you are in a bad money space, you may have feelings of shame that you haven’t done better, whether it’s due to poor money habits, or because you feel that your opportunities are limited. This often causes some folks to “beg off” from attending those high-school reunions.

Inferiority. You may want to do a lot better financially, but just can’t figure out which of your habits are preventing you from progressing. Your income is competitive with your peers; they just seem to be doing better. You really just aren’t sure that what you earn, or what you have amassed is as acknowledgeable as you might feel it is.

Financial illiteracy. You feel that others around you are more financially savvy, and so you keep silent about your own financial situation. You won’t talk about the huge financial mistake you just made, for fear of ridicule, or for fear of showing your lack of knowledge of how money works. Lack of math skills could also have a part to play here.

Jealousy/Envy. You maintain an image, commensurate or ahead of your peers even though it has to be supported by massive debt, which you dare not disclose, as it would reduce or destroy your perceived status in your community. The interesting thing here is that it becomes a never ending tale of the dog chasing its own tail. Herd thinking fuels each person’s effort to out-spiral each other, when no-one can afford to. Obviously not much thought is given to the damage and debt that this causes.

In Texas, this is referred to as folks with a “big hat and no cattle,” being showy without any substance financially. One young student, stated in a local newspaper article, that she had no idea why her parents moved into a huge house in a great neighborhood, yet she was never able to participate in extracurricular activities, because there was never any money to support those activities.

Shira Boss in her book ‘Green with Envy: Why Keeping up with the Joneses Is Keeping Us in Debt', talks about how she miscalculated the financial status of their next door neighbor – by presumption, innuendo, and gossip. Their neighbor’s apparently “financially carefree” lifestyle basically made them feel somewhat inferior, until through a series of events and meetings they realized that the lifestyle they almost envied was supported by huge credit card debt, home equity loans, and mortgages.

Dishonesty. There are probably enough cases where folks would rather not talk about their finances, because of the existence of “under-the-table” components, which could include illegal sources of income, under-estimation of taxable income, or erroneous tax deductions. Here keeping silent avoids them tripping themselves up. If you have watched any of the episodes of CNBC’s “American Greed” the con men featured were rarely an open book.

So, should we change? We all have our own belief systems about money, mostly indoctrinated in our early years. But our inability to openly discuss the one item that we need almost as badly as we need air to survive, can be damaging. Like anything else open discussion brings more items to the table. We are charged more so now than at any other time in our history to be in control of our finances for a lifetime. Improving our financial literacy will only come with our ability to have frank and open discussions about our money.

Can we change? Yes we can. Change occurs even in the most unwilling situation when accompanied by crisis. Like every long-standing habit, change will be gradual, but the mortgage and credit card mess with its ability to potentially decimate the finances of a large percentage of the population, may cause us to remove more layers of the onion in a speedier fashion. In the effort to take control of our finances, we will be challenged to remove , or at a minimum lessen the taboo. Maybe we are on the brink of that change.

The Money Taboo: Breaking the Taboo – Part 2

Tax Tips: Purchased an auto, boat, aircraft or home in 2007? (Sales Tax)

If you did, do NOT forget to deduct the sales tax for these items in addition to the generic calculated tax on Schedule A. You have a choice which deduction to take, your sales tax deduction, or your state tax deduction. For states that do not have state taxes, e.g. Texas and Florida – you don’t have a choice – the sales tax deduction is the deduction available to you. However, you can only deduct the sales tax amount that is calculated with the same sales tax rate as the general sales tax rate. Here’s more detailed information.

Tell your friend about this blog, it could save them some money.

For more tax news, don't forget to check the IRS Newswire on the News Stand, located or the right hand side of the blog.