Going Abroad? You Could Be Hit With A Double Whammy Hangover Of Currency Fees And Sales Taxes

Mr. and Mrs. Edge just came back from an awesome trip to British Columbia.  It's beautiful, trust me. While I was prepared for the potential currency exchange fees, and used a credit card that does not charge them, I was hit by the sticker shock of Canada's sales taxes: Goods and Services Tax (GST), Provincial Sales Tax (PST), Harmonized Sales Tax (HST), and Municipal and Regional District Tax (MRDT).  Yikes!  it's a wonder more people don't move, must be the "free" health care.  Worst of all, these sales taxes aren't refundable, according to my chat with the Canada Revenue Service yesterday. Only in certain circumstances, listed on their website, they are at least partially refundable.  But since we weren't exporting pieces of art, we got had  

O' Canada!  OMG taxes!

While you should definitely still travel to Canada, here's what you can do to help lessen some of the other bite that you might experience.  If you don't have one already, apply for a credit card which does not charge currency exchange fees.  What I mean by this is if you use a credit card in a foreign country, and it converts the transaction to the local currency, you might be assessed with a ~2.7% fee.  Think of it as yet another tax.

And, if you don't have a bank that refunds ATM fees, expect to be whacked by those, too.  Canada is pretty advanced when it comes to credit card use.  And, unlike the U.S., expect to be presented with a mobile credit card machine for you to swipe.  Kind of odd, but you get used to it.  But, like the U.S., you will still find the odd Mom and Pop shop that won't take them.  Search for a bank that does not have "foreign" ATM fees here.  This strategy will also work in the U.S., too.

-- The Edge

Tax Day Is Less Than 20 Days Away

To my readers, just a gentle reminder that your tax returns are due in less than 20 days.  Even if filing taxes is not that complicated for you, I highly recommend taking your tax return to H&R Block, or use tax filing software to see what breaks and credits might be available to you.  You never know unless you research.

H&R Block

If you are expecting a tax refund, you can feel confident that it will come in a timely manner.  Given the nation's fiscal mess, I was surprised to see mine in just a few weeks.  Of course, this means I gave Uncle Sam a free loan.  Next year, I am going to re-figure my withholding using the IRS Tax Withholding calculator to make sure that I am not having too much in taxes withheld.  If you got married last year, changed jobs, or had another significant life change, it's worth double checking.

More tax tips...

Reminder, taxes are due on April 16, 2012.  Make sure that you are accounting for all of your relevant tax documents when you begin filing your taxes.  It seems like every couple of days I am still getting long overdue 1099-INTs and DIVs forms when they were supposed to be mailed out in January.  Thus, it's easy to forget them if you aren't tracking carefully.  In a previous post, I have discussed using an aggregation site, such as Yodlee, in order to keep track of all of your accounts. A new(er) site, called HelloWallet, is another such tool.

Can't wait for the mail?  Check your brokerage, bank, mutual fund, or other financial institution's web site to see if they have posted documents online.  Firms such as Etrade are pushing customers towards online delivery of forms, and for good reason. Online documents save them money, can be delivered faster than U.S. Mail, and can be retrieved any time.  This is especially helpful for previous year's forms, which you may need on occasion.

Bottom line: a little careful planning now will help prevent having to perform a re-filing of your taxes if you forget about your accounts.  You don't want that refund to now turn into an unexpected tax bill.

Tax Time Tips

Income tax documents are probably already available to you to start completing your taxes.  One excellent source for tax records is your credit card statement--specifically the year end one.  I just got a notification from Chase that my 2011 year ends are available.

Here is why they are good to have:

1-Purchases are categorized, such as charity, travel, dining, and entertainment.  If you engaged in any of those activities on a volunteer/non-profit basis, and itemize your taxes, they are a good back up to your receipts.  Be sure to verify that the organization is in fact a registered non-profit.

2-In a pinch, you can reference these documents while filing your taxes.  Receipts are cumbersome and clutter your filing records.  Year end statements, saved to a computer, are much more efficient.

3-In an audit situation, handing an auditor a print out of neatly categorized purchases is much better for appearances than a stack of paper, odd-shaped receipts.  Think about it.

I am sure there are other good reasons to keep your year end statements for tax purposes and I would like to hear from you on them.  In general, they also help with tracking where you spent money and for what purpose.

In closing, a good strategy for filing taxes painlessly, and at little expense, is to use a service such as Tax Act Online.  I have been using it for years and there is a lot of basic functionality that is available for free that will help you on your way.  Helpful functions include instant calculation of the refund or taxes due, filing tips, simplified language describing complex tax topics.

Save money during tax season

It's everyone's favorite time of year---tax season. Depending on your situation, it can be quite cumbersome, or quite simple.  Regardless, you can take away some of the sting by filing your tax returns using free, or low cost software.  Here are some options:

1.IRS e-file, which is available to everyone.  Click here for more details.  The link also directs you to a page where you might be eligible to file for free.  The "gottcha" is that if you want to file state returns, that will likely cost a few bucks.

2.Linked on the e-file site are several IRS approved tax software programs, web and software based.  I use Taxactonline as it is user-friendly, keeps data from previous years' returns (which saves re-keying information), seamlessly integrates with state tax return preparation, and points out ways where you can save money on your taxes.

3.If you itemize deductions, write off tax preparation services on Form 1040, Schedule A.  It is a legitimate write off to deduct how much you paid for tax preparation.  Your individual situation may vary, however, if you don't normally itemize.

4.Coupon codes for tax software.  As with any purchase, check to see if there are any discounts for tax software.  One example, Taxslayer.com, has a coupon code on Retail Me Not for new customers.  There are many others, too.

Regardless of the options, file your taxes by April 18, 2011.

How To Cash In On Your Old Stuff

As the year draws down to a close, don’t forget about what you might be able to cash in on that’s sitting around your closet.  While you may think that you don’t have enough to get a tax deduction (if you don’t normally itemize your deductions on your taxes), you may be surprised how much your old possessions may be worth to Uncle Sam.  There are several “gauges” for valuing clothes donations, but I use the GoodWill’s estimating table to value my donations.  They are reputable and pretty conservative, so you won't get in trouble for overdoing it with their figures.

Here is a helpful link to GoodWill's Donation Guidelines, with some additional resource links for the IRS, too.  If you use Microsoft Excel, or even Google docs, (which has free spreadsheet, word processing and other tools) you can copy and paste the text into your spreadsheet program and make it more interactive.  This will come in handy at tax time for both cataloging and entering these donation items.  Tax software does usually come with similar tools, but this can help you any time of the year.

From the IRS guidelines, make sure your clothes are in good repair, and it’s essential that you take pictures of your clothes before they are donated to keep you honest and Uncle Sam off your back should a question arise in the future.

Free Entertainment That Pays

This past weekend, I participated in a local “Beautification Day” event to benefit area schools. My school was pretty close by, so an easy jaunt for me. One of the things that one can do when volunteering for a non-profit organization, all the while keeping one’s self occupied and exercised, is to write off certain expenses.

While I would recommend consulting the IRS first, transportation expenses, for example, can usually be written off from your income taxes. A good rule to remember though is to keep your receipts. While most volunteering won’t be terribly far from one’s house, and say the mileage incurred won’t be substantial, it’s a good idea to have documentation to show during tax day. Keep food receipts, too, but allowances for these are more restrictive. Also, it may be the case that if you don’t itemize your taxes, the volunteer work write off may be a moot point.