Lock in $11.90 price for TaxAct Premium Online

I’ve used TurboTax Deluxe Online (need Schedule C) in the past because I got it for free through State Farm, but it’s only offered to their banking customers now. Problem is TurboTax is really starting to jack up prices for State e-filing. TurboTax Deluxe with State is about $55 at Amazon and H&R Block’s At Home (formerly TaxCut) is a little cheaper. The problem is they charge you $30 and $20 respectively for a State e-file on top of the purchase price. Even if they go on sale for $35-40 you’re still looking at $60-70 to do both e-files.

I’ll give TaxAct a try this year and maybe test my return in TurboTax as a direct comparison. Nice thing about the online versions is you can plug in your numbers and see the results without having to pay for anything.

10085 Lesterford Ave Downey, CA 90240

Someone was actually able to get close to a $1,000,000 loan for this place. That’s about a $4500 a month payment before property taxes and PMI. Who wants to bet that this mortgage got bundled into a security now owned by Fannie and Freddie. The banks, brokers and Realtors© were able to push all the risk off to the taxpayer while reaping big commissions. This was done at the direction of Congress to loosen lending restrictions in the name of “affordable housing”.

Hey the upside is you can get this place with graffiti included for cheap now.

Price trend of Quill Condos in Downey using data from Redfin

I thought it would be interesting to look at the sale prices of condos in the condo complex where we rent in Downey, CA. The graph speaks for itself. Prices in Southern California were completely out of touch with reality. Look at the bubble in the early 90′s. Prices only went up by 50% and then declined for 6 straight years. In this last bubble, prices increased nearly 350% between 2000 and 2007. Much of those gains have been wiped out in 2 years since the bubble burst.

This graph is quite useful because it is comparing identical units (~300 sq. ft. max difference) in close proximity to each other. Expanding the comparison to Downey as a whole would introduce comparisons between dissimilar homes in substantially different neighborhoods. It doesn’t make much sense mixing the large sprawling homes of Northeast Downey in with the tiny houses south of the 105.

Does anybody really believe prices will continue to trend upwards with high unemployment, shadow inventory twice the size of what is listed and the upcoming wave of Option ARM recasts? Good thing Congress extended the $8,000 credit, wouldn’t want housing to be affordable.

The outlining I’ve done so far has the book broken into one part on saving for retirement and a second part on more general personal finance topics. There’s a lot of ground to cover, but each topic discussion would be concise and useful. For example, I would cover Roth and Traditional IRAs, the differences between the two and then provide enough analysis to help the reader figure out which fits them best. I think a big goal of the book would be to help people get a grasp on their financial situation and make smart, informed decisions with their money and about their future.

At this point I think a book would be the best option to contain everything I’m planning to cover. I thought about writing a running series of blog posts, but the topics are going to be tied together enough where it would be annoying to have to constantly say “remember what I talked about in this other post”. In a book format I’d know exactly what the reader has already read. I’d be able to build upon previous ideas and really tie things together when it comes to talking about strategies and the bigger picture.

So I guess my question is, would you be interested in reading a book about personal finance and investing targeted at a younger crowd who still has 30-40 years until retirement?

And so it begins. If you work in any position funded by tax payers I wish you luck.

The answer to the “should I itemize?” question is actually pretty simple: if you don’t have enough deductions to surpass the standard deduction then you don’t itemize. You take the larger of the two and be done with it because that’s what benefits you the most. Note for the married folks, if you file separately and one of you itemizes then the other has to too.

The standard deduction is great for people with very little to deduct and itemizing is great for people with lots to deduct. Once you get in the situation where your total itemized deductions are close to your standard deduction then things like the mortgage interest deduction aren’t really that valuable. The mortgage interest deduction is touted as one of the benefits of home ownership, but people like me wouldn’t benefit at all from it.

In our situation, if we owned a home we’d have to hand the bank around $6,000 in interest every year and pay $3,000 in property tax to simply break even with the standard deduction. It’s only after the $10,700 threshold that each additional $1 deduction would benefit from itemizing. Even then I’d only be getting about 20% of that back, so what is the benefit of giving away $9,000 a year and then spending $1 to get back $0.20 after that. In the future, the standard deduction will increase with inflation and we’d gradually pay less interest over the life of a mortgage making it less likely that we’d be over the standard deduction. So whenever I hear someone talk about the tax benefits of owning a home, I take it with a big grain of salt.

Most Americans Don’t Itemize on Their Tax Returns gives a pretty good break down of who itemizes. Those individuals with higher incomes have a greater incentive to itemize because the deductions are more valuable as you move up the tax bracket ladder and this is certainly reflected in the itemizing rates.

I did hear about a proposal to add an additional $1,000 to the standard deduction for people with mortgage interest that don’t itemize. Can’t find anything through Google right now so post a link if you know what I’m talking about.

There was some uproar from TurboTax customers this year when Intuit tried to introduce a $10 fee to just print more than one return. You got the first federal e-file free, you could print a state return or pay to e-file it, but then any other return you wanted to do would cost $10 to simply print. People were just absolutely hammering on them in reviews. They saw their error and now you get 5 free federal e-files and you can print as many other returns as you want. If I was paying for it I might have considered switching to TaxCut.

If I can get into H&R Block’s TaxCut to do a test return I might post some of my impressions and compare the two packages.