Settling in and cramming for the perfect Valentine's Day can take up a lot of our time around this time of year. The other big thing that is lingering around the corner is filing your taxes.

We are here to help you with both and to hopefully save you some time instead of trying to get everything done last minute. The more time you have to get your taxes done, the less likely you are to make mistakes.

You may never love doing taxes but hopefully we can give you a few tips to help you like it a little better.

 
 
 

Valentine's Day is fast approaching and we are here to provide, once again, some quick last minute tips that won't break your bank.

Take time off. If you both have some vacation time built up, put in for a day off and spend it together. Do some simple and purely fun things that you wouldn't ordinarily get to do. Cuddle together for a big chunk of the day and just enjoy each other instead of stressing out at work.

Make an elegant home cooked meal instead of hitting the town. Put in the time and make a wonderful meal at home. Put out a nice tablecloth, use a few candles, and make it a romantic evening at home instead of fighting the Valentine's Day crowds out and about.

If you're going out, do something unexpected. Lots of places will be crowded on that night, so do something unusual if you're going out on the town. Don't go to the high-dollar place – instead, ask around for something quiet and secluded and undiscovered. Not only will the meal be cheaper, it will also be more memorable and distinctive.

Try going somewhere low key that you both enjoy. Enjoy the quiet and comfort of your favorite bookstore. Find a couch in the back and sit together to catch up on some reading or find something you can read together. Try a book of love sonnets to take advantage of the spirit of the holiday. Maybe enjoy a coffee and share a snack as distress while other couples are fighting the busy crowds at the restaurants.

Flowers are always very popular on Valentine's Day, especially roses. You can save yourself some money by choosing to go with a flower besides roses. Red and White carnations are a beautiful substitute, as are daisies. You may even be better off by going with a houseplant. Maybe she will appreciate the fact that you bought her something different as opposed to everyone else in the office with their overpriced roses. Here's a quick idea for flowers. Buy half a dozen and leave a single flower for your valentine in various places. You can start with one to greet them in the morning while they are getting ready for the day. You can put one on the dash of the car or sneak one into their office.

Give a thoughtful gift. It's easy to just buy jewelry or chocolates for Valentine's Day, but it means more (and is less expensive) if you find a gift that truly has the recipient in mind. A gift from the heart will be long remembered after the flowers have died and the chocolates have been ate.

Write a note expressing how you feel to go with that gift. A little sentimental note means a lot more than some extravagance. Spend some time and try to express – in your own handwriting – how you actually feel about your partner and why that person is so important to you. No matter the gift, that note will be the part that is meaningful.

Look for free concerts. Many communities have free Valentine's Day concerts by municipal groups that don't get widely publicized. Take a look at your community calendar and see what's out there to do for free on that day.

If you don't have money to go out, have a picnic on the floor at home. Use some candles and lay a soft blanket on the floor. Put on some soft music and have a romantic Valentine's dinner on the floor. Use some white Christmas lights for additional romantic lighting!

Make a treasure hunt for your loved one. Start by mailing or e-mailing them the first clue. Then leave clues all over the house, yard, car or his office telling them where to find the next clue. End the hunt by making a picnic in the back yard or a park. Use your imagination and have fun. The simple things are the ones people remember.

Don't forget to stock up on Valentine's cards and other things for next year on February 15 when they're all marked down.



 

 

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Each year there are a number of changes introduced that may affect your particular tax situation. Here are a few you should watch for.

We will first start with the Income Tax Rates for 2011. The rates are the same from last year, but inflation has caused the brackets to increase.

tax brackets

Those who use a Flexible Spending Account (FSAs) to help pay for their medical expenses may no longer use the pre-taxed funds to purchase over-the-counter (OTC) medicines anymore, without a prescription from a doctor. Note though that insulin may still be purchased with FSA funds over-the-counter. No more using left over FSA funds to stock up on aspirin or cold medicine. Crutches, contact-lens, glasses, and pregnancy tests are just some of the items that are still included. Refer to IRS Publication 502 to see what is and isn't allowed to be covered by law.

2010 included a temporary two-percentage-point cut in the employee's share of Social Security taxes, saving a maximum of $2,136 per worker. There is no phase-out, and each partner of a married couple can get the rebate. This is set to expire at the end of 2011.
For most workers, this cut will come as an automatic adjustment to withholding. For the self-employed (whose tax rate falls to 10.4% from 12.4%), it will be built into a quarterly withholding worksheet.

Even though the energy tax credit was recently extended, it has been minimized and may not affect you if you have previously taken the credit. The amount of the credit is now $500 per taxpayer per lifetime. So, if you have previously taken the credit (a maximum of $1,500) than you will be ineligible to claim it again. This is set to expire at the end of 2011, though there may be a proposal backed by home builders and remodelers to expand the credit or drop it.

The estate and gift tax received a makeover, as the top rate is now 35% and there is a one-time exemption of $5 million per individual for estate, gift, and generation-skipping taxes. This may make it easier to move larger amounts of wealth. This provision is set to expire at the end of 2012.

The annual exclusion for tax-free gifts remains $13,000 per donor. A giver may make an unlimited number of $13,000 gifts, as long as they are to different individuals. Gifts of tuition and payments for medical care also are exempt.

The $400 ($800 if married filing jointly) Making Work Pay Credit will expire.

The American Opportunity Tax Credit of up to $2,500 for education expenses was renewed for 2011 and 2012. This will allow those eligible to qualify for the maximum annual credit of $2,500 per student. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.

The Teacher Classroom Expenses deduction was recently renewed for 2011. If you are an eligible educator, you can deduct up to $250 ($500 if married filing joint and both spouses are educators, but not more than $250 each) of any unreimbursed expenses [otherwise deductible as a trade or business expense] you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use in the classroom. This deduction is for expenses paid or incurred during the tax year.

 

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The definition of family has changed throughout the years. It used to be you would have a child and the wife/mother would stay at home with the child. Nowadays, many families consist of two working parents that bring in the necessary income to sustain a families' cost. More now than ever, the economic times has required both spouses to work full-time jobs (and in some cases more than one job each).

Many mothers (and fathers) would like the luxury of staying home to watch their children grow and are doing so regardless of their financial situation. If you are considering leaving your job to tend to your young children there are a few things to think about.

First off, take a look at your budget. Evaluate all of your monthly costs. Remember that your fixed expenses are going to remain the same from month to month, while other bills or flexible expenses may fluctuate each month. Calculate what your new monthly income will be without your contributions.

There are some expenses that you will be able to eliminate if you decide to stay home. You will no longer have to pay for daycare, which can be very expensive in some places. You may also be eliminating work related expenses like commuting, lunches out, and dress clothes. These are just a few things that you will not have to worry about paying for.

Talk with a tax professional to see if you can save on your taxes. Lowering your annual income can drop you into a lower tax bracket and lead to a smaller tax bill.

Of course, there are things that you will have to pay extra for now. You may have to pay for insurance or join your spouse's family plan. This can be expensive, but is absolutely necessary.

The best thing you can do is to plan ahead and practice. Start by asking family and friends who have been living off of one income. Their input can help you decide if the decision is one for you.

Try living on one income for a few months while you are both still working. Pay all of your bills and buy all of your groceries with your spouse's income to see if you can do it. By practicing for a few months you can afford yourself some mistakes and try and correct them before you do it for real. Use the saved income to help pay down some bills or to build up your savings for any emergencies.

There are some things that you can cut from your budget that may help you financially. You can downsize vehicles or even share one vehicle. If you do not have to commute very far than you can have the stay-at-home spouse drive you to work. It beats having to make an extra car payment.

Maybe you can cancel the newspaper or get rid of cable television and try and find a more affordable phone plan. Staying home to raise your child should be about spending more time with them and not watching daytime television. Even the littlest expenses each month can add up and make the difference between staying home or not.

When you choose to live off of one income you are taking a risk. If anything happens to the earner it can lead to many financial problems. If they have a job loss or injury there would be no income. That is why it is important to have and maintain a healthy savings account to bail you out until you can find more income. So if you cannot afford to put some money away into savings, then you might have to reconsider your options.

Another option you may consider is taking on a part-time job and working enough hours to stay ahead. You can look for work during the hours that your spouse can be home. That way there is always one parent with the child. This can be straining however as it will take time away from your spouse.

You can also look for some work that you can do from home. If you are currently employed, you may ask if they have any way for you to continue working from home.

In a perfect world, you would be able to take as much time as you would like to spend with your children, however there is a good chance that will probably never happen. So it is up to you to decide what is best for your family and with a thorough examination of your finances and a well thought plan you can decide what is best for yours.

 

READ & WIN CONTEST!
Answer the 3 questions below about articles written in this edition and submit your answers by March. 10, 2011. All correct responses will be entered in for a chance at $100 Visa Gift Card drawn on March. 11, 2011!

1. What does VITA stand for?
2. What is the amount of the teacher classroom expense deduction ?
3. Name one way you can be more frugal for Valentine's Day?

Two ways to enter:
Email your answers to: newsletter@pioneercredit.com

Mail answers to:
Read & Win Contest
1644 Concourse Dr.
Rapid City, SD 57703

Please include your name and a phone number to reach you at.
Congratulations to Julie Robinson of Siloam Springs, AR our $100 January winner!

 


Pioneer is not responsible for any advice given in The Pioneer Pilot. Everyone has a different set of circumstances that would determine if an idea or plan is the best one for them. Information provided should not be intended as legal advice.

 

 

 

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The IRS Volunteer Income Tax Assistance Program (VITA) and the Tax Counseling for the Elderly (TCE) Programs offer free tax help for taxpayers who qualify.

Trained community volunteers may help with special credits, such as Earned Income Tax Credit, Child Tax Credit, and Credit for the Elderly or the Disabled. In addition to free tax return preparation assistance, most sites also offer free electronic filing (e-filing). Individuals taking advantage of the e-file program will receive their refunds in half the time compared to returns filed on paper – even faster when tax refunds are deposited directly into one's bank account.

Volunteer Income Tax Assistance Program
The VITA Program offers free tax help to low- to moderate-income (generally, $49,000 and below) people who cannot prepare their own tax returns. Certified volunteers sponsored by various organizations receive training to help prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls, and other convenient locations. Most locations also offer free electronic filing. To locate the nearest VITA site, call 1-800-906-9887.

Tax Counseling for the Elderly
The TCE Program provides free tax help to people aged 60 and older. Trained volunteers from non-profit organizations provide free tax counseling and basic income tax return preparation for senior citizens. Volunteers who provide tax counseling are often retired individuals associated with non-profit organizations that receive grants from the IRS.

As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at more than 7,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income with special attention to those ages 60 and older. For more information on TCE, call 1-800-829-1040. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit www.aarp.org.

Military personnel and their families get free tax help!
The military also has a strong Volunteer Income Tax Assistance (VITA) Program. The Armed Forces Tax Council (AFTC) consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps, and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families.

Airmen, soldiers, sailors, marines, guardsmen, and their families worldwide receive free tax preparation assistance at offices within their installations. These VITA sites provide free tax advice, tax preparation, and assistance to military members and their families. They are trained and equipped to address military specific tax issues, such as combat zone tax benefits and the effect of the new Earned Income Tax Credit (EITC) guidelines.

Most service members file their tax returns electronically at their tax centers and, by selecting direct deposit, receive their refunds in as little as one week. This combined effort ensures that service members receive free tax assistance from well-trained and equipped military tax preparers.

Items to bring to the VITA/TCE site to have your tax return prepared:
Proof of identification
Social Security Cards for you, your spouse and dependents and/or a Social Security Number verification letter issued by the Social Security Administration
Individual Taxpayer Identification Number (ITIN) assignment letter for you, your spouse and dependents
Proof of foreign status, if applying for an ITIN
Birth dates for you, your spouse and dependents on the tax return
Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
Interest and dividend statements from banks (Forms 1099)
A copy of last year's federal and state returns if available
Bank routing numbers and account numbers for Direct Deposit
Total paid for daycare provider and the daycare provider's tax identifying number (the provider's Social Security Number or the provider's business Employer Identification Number)
To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms.

It is extremely important that each person use the correct Social Security Number. The most accurate information is usually located on your original Social Security card.

Information courtesy of www.irs.gov

 

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Taxpayers should be wary of anyone peddling scams that seem too good to be true. The IRS urges taxpayers to avoid these common schemes:

Return Preparer Fraud
Dishonest return preparers can cause trouble for taxpayers who fall victim to their ploys. Such preparers derive financial gain by skimming a portion of their clients' refunds, charging inflated fees for return preparation services and attracting new clients by promising refunds that are too good to be true.

Taxpayers should choose carefully when hiring a tax preparer. Federal courts have issued injunctions ordering hundreds of individuals to cease preparing returns and promoting fraud, and the Department of Justice has filed complaints against dozens of others, which are pending in court.

To increase confidence in the tax system and improve compliance with the tax law, the IRS is implementing a number of steps for future filing seasons. These include a requirement that all paid tax return preparers register with the IRS and obtain a preparer tax identification number (PTIN), as well as both competency tests and ongoing continuing professional education for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents.

Setting higher standards for the tax preparer community will significantly enhance protections and services for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.

Phishing
Phishing is a tactic used by scam artists to trick unsuspecting victims into revealing personal or financial information online. IRS impersonation schemes flourish during the filing season and can take the form of e-mails, tweets or phony Web sites. Scammers may also use phones and faxes to reach their victims.

Scam artists will try to mislead consumers by telling them they are entitled to a tax refund from the IRS and that they must reveal personal information to claim it. Criminals use the information they get to steal the victim's identity, access bank accounts, run up credit card charges or apply for loans in the victim's name.

Taxpayers who receive suspicious e-mails claiming to come from the IRS should not open any attachments or click on any of the links in the e-mail.

Filing False or Misleading Forms
The IRS is seeing various instances where scam artists file false or misleading returns to claim refunds that they are not entitled to. Under the scheme, taxpayers fabricate an information return and falsely claim the corresponding amount as withholding as a way to seek a tax refund. Phony information returns, such as a Form 1099 Original Issue Discount (OID), claiming false withholding credits usually are used to legitimize erroneous refund claims. One version of the scheme is based on a false theory that the federal government maintains secret accounts for its citizens, and that taxpayers can gain access to funds in those accounts by issuing 1099-OID forms to their creditors, including the IRS.

Abuse of Charitable Organizations and Deductions
The IRS continues to observe the misuse of tax-exempt organizations. Abuse includes arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or income from donated property. The IRS also continues to investigate various schemes involving the donation of non-cash assets including situations where several organizations claim the full value for both the receipt and distribution of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. The Pension Protection Act of 2006 imposed increased penalties for inaccurate appraisals and set new definitions of qualified appraisals and qualified appraisers for taxpayers claiming charitable contributions.

 
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We are diving into 2011 headfirst and it's been a busy start to the year already. First though I will share some observations from how we got through the holiday season.

Presents have never really been a big spending problem for us. We usually set a limit based on financial situation and have been really good at sticking to those limits. Same process for this year as we stuck to our gift budget pretty well (actually, probably better than ever), it just happened that all the other expenses seemed to add up more than usual.

We had one major expense that we had been putting off and it finally caught up to us right before the holidays, taking some of the wind out of our sails. We needed to replace the tires on our car, as all 4 were pretty worn out and with the winter weather and travel we needed to do we could no longer wait to replace them. We shopped around for a good price for a good set of tires and spent a few days researching and seeking advice on quality and finally finding a set we could afford and would also be safe.

$500 during a time of year where most of us are spending more money anyway can throw things for a loop. It didn't break us, but it didn't help either.

We also hosted an annual Christmas party for family and friends and even though party guests are always generous in bringing things to share we tacked on some extra expenses to our grocery bill (the white whale in our budget). The other major budget snafu was our restaurant or dining out spending. I've justified the reasons why we spent more in the last couple months of the year; it still doesn't mean that I'm happy with it. We had the best intentions to sticking with our weekly menu and grocery list and then life gets in the way. Running errands, sick kids, long work nights, classes, and really anything that took up more time than we anticipated and when that happens we too often opted for the easy route of grabbing some fast food or stopping at a restaurant.

These are the kinds of things that can get ignored when planning a budget, especially around the hectic holidays. Things happen and then your mind convinces you to balance out the hectic times with doing something easy to get caught up and often times it's your budget that if affected most. More discipline and better planning in the future will hopefully prevent this from happening in the future.

And yes, once again I think our priority will be containing our grocery and dining out budget, for a whole 12 months this year. We did pretty well, but had some hiccups every now and then. We will try and solve this by eliminating some of the reasons we went over in the first place. Personally, I was going out for fast food lunch more often. One reason was because I could only eat so many turkey sandwiches in a week and I would run to get a meal that was easy and different. This means I will try and make sure I have a lunch meal for the entire week and to mix it up a bit so I'm not tempted to go get something else.

Now that I confessed my financial hiccups that ended 2010, I might as well confess what may be my first questionable move of 2011. It happened so fast, but I guess that's how love works. It was Friday afternoon and I was looking forward to a weekend where we didn't have anywhere to go and more importantly nothing to purchase. That was until my wife came home and showed me a picture on her phone. Less than 24 hours later I had a cute little thing that was obsessed with licking my face and cuddling with me. We were the proud owners of an 8 week old Yellow Labrador. The puppy itself was free, but we all know nothing is free and a short trip to the pet store for supplies definitely proved that. Once again, we justified all the reasons why we could get the puppy and glossed over all the reasons why we couldn't. Time was also not on our side as we had to make a quick decision or the opportunity would pass.

There have been plenty of times in this section where you can learn from my examples and I'm sure this is one of those times. If I was writing an article I would tell you how it's important to do your research and comb through your budget to make sure you can afford everything that comes with a new pet. With that said, we love our new addition and are excited to share our experiences with her in 2011.



 
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