Tuesday, January 26, 2010

Turning Your Tax Refund to a Series I Savings Bond

Are you anticipating a tax refund from the Internal Revenue Service? You can choose to use that money to purchase U.S. savings bonds. I usually try not to have refunds since I do not like the government to use my money, but sometimes my estimates can be wrong.

For some the savings bonds idea may be a good idea. If even a small percentage elect to receive bonds instead of cash, then the United States government will have created a new way of helping to fund its deficits. Is this a novel way of helping people save or a way of funding the US deficit?

Currently, an I Bond provides a higher return than other low-risk investments, Bonds purchased between November 2009 and April 2010 pay an annualized earnings rate of 3.36%, vs. an average rate of 1.5% for a one-year certificate of deposit and 1.03% for a money market fund. The earnings rate for I bonds is a combination of the fixed rate and the inflation rate. The fixed rate is critical because it stays with the bond for its 30-year life. The current bond has a fixed rate of 0.3%. That means you'll get just 30 basis points above inflation on an annual basis as long as you own the bond. The adjustable inflation component changes every May and November. For more information on rate information visit the Treasury Department's Website.

Whatever you may decide, here is some information you may find useful about using your federal refund to purchase savings bonds.

1. You may use a portion of your refund to purchase up to $5,000 in U.S. Series I Savings Bonds.

2. The total amount of saving bonds purchased must be a multiple of $50. Additional refund dollars over the specified amount must be deposited into another financial account – such as a checking or savings account.

3. The bonds will be issued in your name. For married taxpayers filing a joint return, the bonds will be issued in the names of both spouses.

4. You will receive the U.S. savings bonds in the mail.

5. You normally select this option by filing Form 8888, Direct Deposit of Refund to More Than One Account.

6. You must hold an I bond for 12 months before cashing, except in cases of certain emergencies. If you cash before five years, you'll forfeit the last three months' accumulated interest.

7. Savings bond interest is exempt from state and local income tax. Savings bond interest is subject to federal income tax; however, taxation can be deferred until redemption, final maturity, or other taxable disposition, whichever occurs first. You also have the option of claiming interest annually for federal income tax purposes.

Monday, January 25, 2010

Haiti Relief Donations Qualify for 2009 Tax Deduction

People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card. The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both. Be sure and read the full set of rules on the IRS website (linked above).

Sunday, January 17, 2010

Martin Luther King Day

Tomorrow is a holiday when we honor the memory of Martin Luther King Jr. He delivered The Drum Major Instinct Speech at Ebenezer Baptist Church, Atlanta, Georgia, February 4, 1968.

I read part of his speech again, and I couldn't help but be inspired. I also thought about the Haitians and what we could be doing to help.

Here is an excerpt:

If any of you are around when I have to meet my day, I don’t want a long funeral. And if you get somebody to deliver the eulogy, tell them not to talk too long… I'd like somebody to mention that day that Martin Luther King, Jr., tried to give his life serving others. I'd like for somebody to say that day that Martin Luther King, Jr., tried to love somebody. I want you to say that day that I tried to be right on the war question. I want you to be able to say that day that I did try to feed the hungry. And I want you to be able to say that day that I did try in my life to clothe those who were naked. I want you to say on that day that I did try in my life to visit those who were in prison. I want you to say that I tried to love and serve humanity. Yes, if you want to say that I was a drum major, say that I was a drum major for justice. Say that I was a drum major for peace. I was a drum major for righteousness. And all of the other shallow things will not matter. I won't have any money to leave behind. I won't have the fine and luxurious things of life to leave behind. But I just want to leave a committed life behind. And that's all I want to say.
If I can help somebody as I pass along,
If I can cheer somebody with a word or song,
If I can show somebody he's traveling wrong,
Then my living will not be in vain.
If I can do my duty as a person ought,
If I can bring salvation to a world once wrought,
If I can spread the message as the master taught,
Then my living will not be in vain.

Friday, January 15, 2010


Most often, I think that Twitter is just "Noise," and a waste of time. And usually I don't like to be cryptic, which is how I view the text in Twitter. But I read this great blog post today entitled "80 ways to use Twitter as a SMB Owner." -- That's Small Business Owner (SMB). This is well worth the read.