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How Much House Can I Afford?





Maybe you are a first-time home buyer and have no idea what you are doing, or maybe you’ve bought a home before, but this time you want to make sure you are being financially savvy in your decisions. Either way, there are so many things that go into buying a house that the overall process can be daunting. But by understanding how to budget for a home, and taking advantage of your local financial services, you can tackle the house-buying world and how it applies to you on an individual level.

The process for buying a house is not going to be the same for everyone. We all have different financial situations, incomes, salaries, bills, debts, expenses, and spending behaviors. We even all have different desires, wants, needs, and hobbies that go into how we spend our income and will therefore also affect our buying options when looking for a home. All of these variables should be carefully weighed and considered as you embark on your home-buying journey.

First let’s go over some key home-buying terms that you will want to be familiar with . . .

Definition of Key Terms

For an even bigger list of terms and definitions that you might need to know when buying a house, see the National Association of Home Builders’ (NAHB) Home Buyer’s Dictionary Page.

The Principal

The price of a home can also be referred to as the principal, especially by mortgage lenders. It refers to the base cost of the home, and does not include interest, fees, or closing costs. Many people use mortgages to pay for their home, meaning you’ll want to figure out how much mortgage you can afford when shopping home prices.

Down Payment

The down payment on a home is whatever the buyer can pay of the total price upfront. The less money put down in the beginning, the higher the interest rate on the mortgage will be, and the more the buyer will have to borrow from a lender. But the more you can put down in the beginning, the less you will have to borrow, and your interest rate will be lower as well. It is always advisable to pay as much for the house upfront as you can.

Homeowner’s Association Fees (HOA)

Some communities will be part of a Homeowner’s Association (HOA). Communities with an HOA are part of a planned community that often comes with communal benefits and amenities, like a pool, or snow ploughing. HOA’s also often come with certain rules for those who live in that community—rules about lawn upkeep and such—so make sure you understand the requirements and benefits of the HOA before committing to a house in their neighborhood.

Property Taxes

Owning a home and property will require you to pay property taxes each year. The percentage you pay in property taxes will depend on the location and value of your home. When looking in different locations for your home be sure to also look into what the property taxes are like in that area.

Mortgage

A mortgage is the loan and payment plan you go on with a lender to eventually pay off your home. Unless you can afford to pay the entire price of the home upfront (100% down payment), you’ll need to take out a mortgage with a lender to help eventually pay off your home through monthly mortgage payments instead of all at once.

Mortgages come with different time periods to pay back the loan. There are 15-year mortgages, 30-year mortgages, and a 5/1 Adjustable Rate Mortgage (ARM).

  • For a 15-year mortgage your payments are going to go up more and more each year and your payments are going to be higher in general. But you’ll pay less interest overall and pay off your mortgage quicker.
  • A 30-year mortgage is going to allow for smaller payments, but in the long run you will pay more in interest, and it will take longer for you to pay off your mortgage.
  • A 5/1 adjustable rate mortgage is another kind of 30-year mortgage, but your interest rate stays the same for the first five years of the loan. After that initial five years, your interest becomes subject to whatever market changes there are for interest rates.
Homeowner’s Insurance

Homeowner’s insurance is insurance for your home. It can protect you when disasters, natural or otherwise, affect your house. It can even cover some of the costs for damages caused by natural disasters or crime. It can also protect your possessions in these same scenarios and help you to replace whatever was lost or stolen. It is not illegal to not have homeowner’s insurance, but many lenders will require it. There are two kinds of homeowner’s insurance:

  • Cash-value coverage will help cover the costs of damages when they occur, but won’t usually be enough to rebuild your home should you need to.
  • Replacement-cost coverage is insurance that will cover the total cost of your house if you should ever need to rebuild it due to disasters. Most advisers will recommend you get this kind of homeowner’s insurance since it covers more.
Private Mortgage Insurance (PMI)

PMI stands for Private Mortgage Insurance. It is a form of insurance that lenders use to reduce their risks when a borrower can’t afford a down payment of at least 20 percent. Your lender will require a PMI when they are lending you more than 80% of your home’s total value. PMI is also a very costly form of insurance, but there are ways to get rid of it later by refinancing.

Interest Rate

Interest rate is a percentage of money added to your loan as payment to the lenders for borrowing a home loan from them. The interest rate you get on your mortgage will be determined based on your credit history and score. Usually the interest rate will be included in your monthly mortgage payments.

Credit History

Your credit history comes from your credit report and shows your history of paying debts and bills. It is meant to show how often you are on time or late in payments and your overall level of responsibility with your finances. Your credit history and score are what lenders will look at when deciding the interest rate they will put on your mortgage.

Credit Score

Your credit score differs from your credit history in that it is an overall score calculated from your credit history to show how much of a credit risk you are for the lenders. Instead of looking at an entire credit report or history, lenders can simply look at this score to get a quick, overall idea of your credit’s well-being.

Gross Income

Gross income refers to your total income before taxes.

Net Income

Net income refers to your total income after taxes. It is also referred to as “take-home pay.”

Understanding Mortgages

When applying for a mortgage, there are four main factors listed below that lenders will consider and that will influence the kind of mortgage and interest rate you can get:

  • Your income
  • Demands on your income, like debts, monthly bills, loans, and other expenses
  • Your credit history
  • Your credit score
Types of Mortgage Lenders

There are also five general categories of lenders that you can get your mortgage from, and each one comes with its own pros and cons.

  • Federal government agency lenders
    • Federal Housing Administration (FHA)
    • US Department of Agriculture (USDA): These mortgages can be for homes in more rural areas. The USDA can also be used to rebuild and rehabilitate old properties that qualify.
    • Department of Veterans Affairs (VA): These mortgages are for veterans. You can even use them to make your home more accessible.
  • State government lenders
  • Nonprofit lenders
  • Local lenders, banks, and credit unions
  • Larger banks and lenders

The 5 Steps of Buying a Home

Step 1: Look at Your Credit Score

When starting the house hunt many people like to begin with the fun part by getting on Zillow and browsing for the perfect home. But you can’t figure out how much house you can afford on Zillow. If you are serious about buying a home, then you should look at your credit score before you start looking for a home. While looking at your credit score you will want to keep your eye out for the following:

  • See where your credit score is at—how good or bad it is.
  • Check your credit report for any errors and have them corrected.
    • Get on this now because if you need to correct your credit report, the changes will take some time, even months, to correct.
  • Look for ways you can better your credit score.
    • Figure out the reasons your credit score is lower than you want and develop plans to fix those issues or habits.
    • Paying down your general debt will also help your credit score.
Step 2: Do Calculations and Budgeting

The big question most people want to know when looking for a home is how much can I afford? There are many methods for figuring out your own budget for buying a home. Which method you choose will depend on what feels most comfortable for you. But in general, financial advisers will tell you to spend 2.5 to 5 times your annual salary on a home. Again, it is ultimately up to you where you decide to land in this range.
Method One: Based on Your Savings
People are generally advised to pay at least a 20% down payment. In order to figure out the amount of house you can afford based on what you have saved for a down payment, use the following equation:

Method Two: Based on Your Annual Income
If you want a quick estimate of the amount you can afford for a house, below is an easy calculation you can do based on your annual income.

Method Three: the 28/36 Rule
The 28/36 rule is a recommendation that your budget has no more than a 28% front-end ratio and a 36% back-end ratio. Lenders will look at both these ratios to decide your mortgage loan, so it is important to understand where you stand according to this ratio because this is how most lenders will decide what you can afford to borrow from them. When budgeting for a home, you can use this ratio to see if you meet these requirements and to see how financially ready you are to buy a home.

  • Front-end refers to your total housing payments (PITI) to income ratio.
  • Your total housing payments is not just referring to the Principal, but also the Interest, Taxes, and Insurance (hence, PITI). This front-end ratio means that you should not spend more than 28% of your monthly gross income on your total monthly mortgage payments.

  • Back-end refers to your total debt to income ratio (DTI).
  • This back-end ratio means that you should not spend more than 36% of your monthly gross income on debts. Debts include credit card payments, child support, auto loans, student loans, and any other debts you may have.

Dave Ramsey’s Advice

Dave Ramsey has influenced and guided a lot of people in their financial affairs with his knowledge. Below is some of his basic advice for buying a home:

  • Pay a 100% down payment in cash when you can.
  • Choose a 15-year mortgage over a 30-year mortgage.
  • Keep your mortgage payments (plus insurance and taxes) no more than 25% of your take-home pay (net income).
    So unlike the 28/36 rule, Dave Ramsey advises that your front-end ratio be no more than 25%, instead of 28 percent. He also advises that you use this percentage on your net income, or take-home pay, rather than your gross income, because this will better reflect the money actually going to your account after taxes.
What to Remember When Budgeting:

The Mortgage:
Just because a lender qualifies you for a certain amount that does not mean you should use it all. How much mortgage you can qualify for is very different from how much mortgage you should use. The maximum loan amount that your lender is willing to let you borrow, does not reflect your personal budget and what you actually want to be paying each month. This is why being able to do your own budgeting and calculations is important because then you can see and decide for yourself how much you are willing to borrow.
The Down Payment:
When preparing to buy a home, what you really want to be doing is preparing for the down payment. The higher a down payment you can afford the better.

Your down payment should be at least 20% of the total price of the house. But, you can find loans that accommodate lower down payments if that’s what you require:

  • Fannie Mae, Freddie Mac, the Federal Housing Administration, the USDA, and the Department of Veterans Affairs are just a few options for low down payment mortgages.

Other Costs and Fees Associated with Buying a Home:

  • Closing costs and fees. Some examples of what may be included in the closing costs are appraisal fees, loan fees, attorney fees, and house inspection fees. Closing costs and fees will vary and depend on local tax laws and the cost of your home. If you want to estimate how much your closing costs might be, they generally range between 2 and 5% of the cost of your home.
  • Taxes, insurance, and HOA fees for certain neighborhoods.
  • Home maintenance, upgrades, and repairs: Homes need regular maintenance, remodeling, normal upkeep over the years, and repairs when emergencies and damages suddenly occur.
  • You’ll need to potentially buy appliances, furniture, and decorations.
  • You’ll be responsible for paying all your utilities, which can include, heat, electricity, water, sewage, trash removal, cable television, and telephone services.

Your Other Financial Goals:
Buying a home is a big financial goal and dream in life, but you probably have other financial hopes and dreams as well. Don’t forget to factor these in as you budget and look for a home. Some of these other goals may include general savings, saving for retirement, buying a new car, raising children, paying for their college, starting a business, vacations, trips, and any other hobbies, interests, or personal endeavors that may also require a place in your budget.
Know Yourself:
It is important to understand the kind of spender you are. This is another reason doing your own budget for your future house is a good idea, because then you can thoroughly be aware of your spending habits and therefore be more realistic when it comes to budgeting in a mortgage as well.

But you also need to be mindful of how you handle debt. For some people, being in a certain amount of debt can be stressful, while others don’t mind it so much. Be aware of whether having a larger mortgage on your hands is going to bother you or negatively impact your internal well-being. This will also factor into what you decide to do financially about budgeting for a mortgage.

You can also hire a personal financer to look over all these factors for you and take a more personal, detailed look into all of the many costs involved for you individually. Hiring a professional may be wise if you do not have the time or patience to look into these variables yourself. It is less wise to rely solely on a lender’s analysis because they will only look at income and credit history, and not consider your personal, bigger picture.

Step 3: Find Your Agent

Buyer’s Agent
A buyer’s agent is the kind of agent you want to be working with directly because they are meant to work with the buyer (you) and will thus work to get you the best price you can get.
Seller’s Agent
This is not who you want to be working with directly because they will be trying to get the best price for the seller. Though usually the buyer and seller agents will mediate offers and agreements and work alongside each other in that way.

Now it’s time for the fun part—the home search! After you’ve done all your budgeting and have all your ducks in a neat, planned-out row, you can begin to search for the home that fits your wants, needs, and budget!

Remember all the budgeting calculations you did above when you are filtering in your price range. It’s recommended to select a price range 10% above and below your calculations as a cushion when you are searching.

What to look for in location:

  • A healthy economy: low unemployment rates and good incomes
  • A good real estate market: look at whether the homes in the neighborhood are selling well, meaning they sell close to or above their asking price.
  • A healthy community: look for a range of ages in the residents and families nearby.
  • A good school district: even if you don’t have children, being in a good school district will help your home retain its value and make selling your home easier should you need to sell later down the road.
Step 5: Enter Your Contract and Close the Deal!

Once you’ve made your choice you can work with your agent to make an offer to the sellers. If all goes through, your agent will draw up the papers and officialize a closing date, which is usually 45 to 60 days after the offer was accepted by the sellers.

When entering into a housing contract you will first want to make sure you have the following common contingencies in your agreement. This means that your contract relies on these personal requirements being met first:

  • obtaining a mortgage
  • getting a home inspection

Buying a home is a big deal and naturally you want to be as knowledgeable and savvy about the basics as possible. By applying these basic rules you will know how to buy a home in the smartest way possible.


READ MORE
Visit the Department of Housing and Urban Development (HUD) for seminars and counseling about buying a home.


Visit the HUD’s common questions page for even more answers to your home-buying questions.


Use an online “How Much House Can I Afford” calculator to plug in your numbers and quickly see how much house you can afford.


Listen to NPR episodes about home-buying to learn more about the home-buying world.


FEATURE IMAGE BY BRENO ASSIS

The Top Tax Scam of 2015 to Watch Out For

Online scammers never sleep and it looks like that’s the case for the 2015 tax season as well. Last night local news station KSL 5 did a report about a phishing email that has been going around claiming to be from the IRS and trying to get a hold of people’s personal information with promises of “unclaimed tax money” or “hundreds of dollars in additional tax returns.” The promise of free money has already been enough to convince some victims to fall for this phishing scam.

These online scammers seem to be pros at catching people in a moment of weakness and convincing them to give up just enough information to leave themselves susceptible. In this case they’re timing their email just as people have started filing their tax returns and have made their email look just trustworthy enough to bait victims into clicking on the perilous link in the email.

With phishing emails, timing is everything. These online scammers know that it’s the time of year when people are filing their taxes and anxiously awaiting their tax refunds so they’ve changed their tactics to try to capitalize and take advantage of those that would be open to their message.

Here’s how this latest scam works:

1. Scammers send out a phishing email.
The email that has been circulating in recent days says something to the effect of, “We’ve determined that you are eligible for a tax refund under section 501(c)17 of the internal revenue code.” The hope of these scammers is to build enough hope, and trust to get people to take their email seriously.
phishing_definition
2. They convince you to click on a link in the email.
Once they’ve built up trust, their whole goal is to get you to click on a link they’ve provided in the email. Sometimes links in these phishing emails will take you to a website that is made to look like an official IRS website. Once on these websites you’ll be asked for additional personal information. This tactic has been used for years because these scammers like to piggyback off the trust and credibility of the IRS. By entering your information you’ll be giving these criminals just enough information to possibly steal your identity.
In the latest case of phishing though, the scammers haven’t even tried that hard because once the victim clicked the link in the email it took them to a shady online gambling site and a virus started downloading immediately. Once this virus has downloaded, these hackers now have access to your computer.

3. Take control of your computer.
Once the virus has started downloading to your computer, it takes control of everything and disables your ability to move the mouse and shut off the computer via the start menu. The victim in this article was smart and turned his computer off manually once he saw that he lost control.
If you find yourself in this situation it’s best to disconnect your computer from the internet completely. At that point you can either start your computer up yourself and assess the damages (while still disconnected from the internet) or you can take your computer to a local computer repair technician where they can scan your computer for viruses, trojans, malware and any other programs that could be skimming information from your computer.
Remember to it’s critical to leave your computer unplugged from the internet once your computer is infected because if you’re connected to the internet the hackers can do any number of things including skim personal information and even use your computer to attack other computers.

Important Reminders:

  • The IRS Never Sends emails, texts or tweets about a refund out of the blue.
  • Make sure any email you received ends in an official @irs.gov
  • Don’t click on any links. As with this case, once the link in the email was click, it was too late.

If the email looks official, don’t click on any links or do anything further. Call or visit your local IRS branch in person.
Consider hiring a tax professional. Hiring a tax professional like those at Check City will add an extra layer of protection. Check City takes care of all the filing and can either have your return direct deposited to your account, get you a Check or we even offer tax refund anticipation loans so that you can get your money quicker.

If you know of any other tax return scams that our readers should be aware of, please leave a comment below!

Protecting Yourself from Tax Theft

Well if you haven’t already done your taxes, today is the day. Post offices around the country and keeping their doors open until midnight so that tax payers can get their returns stamped in time to avoid any late payment penalties. If you haven’t done your taxes yet and don’t feel comfortable doing them yourself, it’s not too late to stop by any Check City location to have one of our tax professionals help you out. In the spirit of tax season we wanted to cover a topic that is new to a lot of people, but is definitely something you need to watch out for this tax season. It may come as a surprise to some, but as the world continues to move towards online services and tech, so do the criminals.

Last year one of the major street gangs in Miami was brought down for a crime that is sweeping the nation and bringing in billions of dollars for criminals that are able to successfully pull it off. But it was not a new drug or imported weapon that is making these gangs rich, it is our taxes.

Tax Theft is on the Rise

Tax return theft has become one of the major crimes of the past few years with the number of reported instances tripling since 2010. Every year, millions of Americans fall victim to these evolving criminals and have their tax returns stolen, exposing them to a grueling process of retribution and a seemingly endless road to recovery.

With the coming of the electronic age, criminals have successfully engineered a way to merge identity theft and tax theft to produce their ability to file fraudulent tax return claims in the names of their victims. With the understanding that a claim on a return of over $9,000 dollars will cause red flags in the IRS, criminals routinely target hundreds of individuals and file fraudulently tax returns in order to strike it rich.

The criminals and criminal organizations that enact these instances of tax fraud are extremely well versed in their crime and are very effective at its execution, which means that everyday people need to start doing more in order to protect themselves from the onslaught of tax return thieves. Luckily, there are several precautions and steps of safety that people can take to ensure that they are not one of the millions of victims this tax season.

Tips for Avoiding Tax Theft

First and foremost, the primary way in which criminals are able to pull off their tax return fraud is through securing individuals Social Security numbers and committing identity theft. So those who are able to protect their personal information are far less likely to fall victim to tax return thieves.

People should especially be cautious concerning their Social Security number, as this is the typical way in which a criminal will be able to steal a person’s identity. Keeping your Social Security card in your wallet is an extremely bad idea as a simple pick pocket could turn into a huge headache if the criminal uses your Social Security number to file a false tax return or access your bank account.

Know Your Tax Professional

Next, you will be able to protect yourself from all forms of tax fraud if you have a good and trustable relationship with the person who prepares your taxes. Walking into a random office and going over your personal and tax information with a stranger is opening yourself up for crime, so instead consider asking friends and relatives for suggestions on who they see to help file their taxes and go with someone you trust.

Beef Up Your Security

Finally, you can beef up your electronic security by adding access codes to all accounts and devices, as well as changing these codes and passwords regularly. By enacting a few of the above changes, you will be able to safely file and receive your tax return.

Most Frequent Tax Mistakes

We all know that your greatest fear is to wake up and find an ugly man from the IRS hovering over you just ready to make your life a living nightmare. If this is something that you definitely don’t want to happen the listen up! Tax laws can be like rocket science in complexity and everyone can make mistakes. Here are some tax mistakes that the tax experts at Check City see a lot of people make when they try to do their taxes on their own.

Unemployment Benefits

You may have been out of a job for that year but you might still be getting unemployment benefits. If this is you, you still need to be paying taxes on your income. The IRS considers it wage income and that is just the way it goes.

Divorce

This may have been an even worse year for you as you had to end your marriage. You may get a good settlement with regular checks coming in from your ex but if you forget to pay taxes on them, you are wrong! If it is just child support money, it isn’t taxable. The thing that you need to pay taxes on is the alimony. If you are the one paying the alimony, there is some good news! Those checks are all tax deductible.

Debt forgiveness

You may have been told that your credit card bill has been cut in half. Well congratulations! You now have much less worrying to do, but before you start doing your victory dance, make sure you have your taxes in order. That’s right! To the IRS, you just earned some money, so make sure you are paying taxes on it. This is not always true as some have received debt forgiveness that is not taxable.

Prizes

Hurray, you just won $10,000! What are you going to do next? Before you say, “Im going to Disneyland” you should probably put some of that aside for taxes because when you win so does Uncle Sam. Winnings are considered another form of income and this isn’t just in reference to cash prizes either. You will have to pay taxes on any property you win based off market value.

Social Security

You might be saying to yourself right now, “you are kidding me right! I paid social security taxes for years as I slaved away at my job and this is what I get in return, more taxes?!” Before you strain your milk you need to know that this is not required of everyone. If your sole income is from social security then it is tax deductible. If you have another income on the side though, you may end up paying as much as 85% on all of those government checks. That is just the way the cookie crumbles.

Make sure you are keeping all of your ducks in a row and understand what needs to be taxed and what you don’t have to pay taxes on. As the old sage once said “knowledge is power, especially when you are dealing with the IRS”. Keep things in order and get on top of it all by starting your taxes early this year!

Do Not Leave Thousands of Dollars on the Table This Tax Season

1 in 5 eligible people fail to claim the Earned Income Tax Credit, which is like leaving thousands of dollars on the table!

The federal government has been siphoning money out of your paychecks all year long. It’s up to you to fight for as much of that cash as you can. You hunt down all the deductions and credits you can find—if there’s any way you can reduce your taxable income (legally, or course), you’ll find it.

Yet millions of people are just letting the IRS keep the money that they rightfully deserve back. In fact, 1 in 5 people miss the biggest tax credit of them all: the Earned Income Tax Credit (EITC).

You’re entitled to some of your money back, and that’s what getting a fat tax refund is about. The EITC could single-handedly double or triple your refund, so don’t let it slip away if you can help it.

Get a bigger refund with the EITC

The EITC could translate into quite a big chunk of change. It’s been helping ease the tax burden of working class families for quite a while: the EITC first started back in 1975.
In 2013, the average credit was $2,200, but for this year it could be worth as much as $6,143! With the EITC, it’s even possible to get a larger refund than the amount that’s already been withheld from your wages.

How much money can I get back with the EITC?

The amount you get back is based on your income and number of dependents. The more eligible children or dependents you can claim (up to 3), the bigger the credit. For example, here are the maximum credit amounts for:

  • A family with 3 qualifying dependents: $6,143
  • A family with 2 qualifying dependents: $5,460
  • A family with 1 qualifying dependent: $3,305
  • A family with no dependents: $496

That kind of money could make a huge difference in the lives of millions of Americans, if they only know how to get it.

Am I eligible for the Earned Income Tax Credit?

If you are married, you have to file jointly to be eligible for the EITC, but a single person can be eligible as well. Your earned income and adjusted gross income must be lower than the following:

  • $46,997 ($52,427 married filing jointly) with 3 dependents
  • $43,756 ($49,186 married filing jointly) with 2 dependents
  • $38,511 ($43,941 married filing jointly) with 1 dependent
  • $14,590 ($20,020 married filing jointly) with no dependents

How can I make sure I’m eligible?

The IRS has made a point of going after fraudulent claims for the EITC, so you need to be certain that your income is correctly reported and that your children qualify as dependents. The IRS’s website, www.irs.gov, provides a helpful tool called the EITC Assistant which can help you determine your eligibility.

The best way to make sure you’re eligible for the EITC is to meet with a tax professional. Don’t be afraid to claim this fat tax credit! Call Check City today and find out how our tax professionals can help you get the biggest refund possible!

The Smart Way to Spend Your Tax Refund

Every year when you file your taxes away, you look forward to the big chunk of money you’ll be getting back afterwards. You could do anything with that much money! But you’ll probably end up just spending it on food and movies and clothes. This is why many of us come to abhor the tax refund, and would much rather get that money over a long period of time than all at once. Here’s how to take care of your tax refund when it comes.

By the Numbers

In 2011 the average tax refund was close to $3,000. If that money had been divided up over the year, Americans could have been taking home, on average, about $250 more a month. The only way to keep this money safe in your wallet is to start your taxes early, and work with a professional to fill out new W-4 forms and have the proper amount of tax money pulled out of your paycheck.

Keep Count

Before you accidentally spend your entire refund this year on just eating out, keep track of the money that you get back. Put it in a separate savings account while you create specific goals for it. Plan to spend it to help you get out of debt, or to pay for your schooling. Plan to use it for study abroad or buy the car you’ve been eyeing.

Keep Your Eye on the Ball

Once you have made a goal for yourself, stick to it. Do not be tempted to spend a dime elsewhere. As long as your goal is responsible, let yourself achieve it by saving money and spending it at the right time. During that time of year there are many deals available as businesses are aware that people are starting to get their refund money back and have more money to spend. However, do no settle for a deal that may take away a substantial amount of your money.

Emergency Fund

Do not underestimate the power of an emergency fund. Even if you have insurance, it is important to always have back-up money for any reason. You never know what could happen and you would hate to be caught in a tight spot with limited options. Give yourself a fall back plan that you can contribute to and rely on every year.

Contact the Professionals

If you have trouble saving large amounts of money, it would be in your best interest to contact a tax professional in order to get started on avoiding tax refunds in the future. You will instead be able to save this money over time, giving yourself more options all year round, not just in April. One of the services offered at Check City is access to these professionals that can change the way you budget entirely. Contact us today to find out how you can be saving money all year long, or how to prepare yourself for a large tax refund this year.

4 Reasons Why You Need to File Your Taxes Early

It’s already February and the deadline for filing your taxes is creeping up fast. If you wait too long, the eve of April 15th will spring upon you, putting you in a mad rush to get everything filed.

Rather than waiting for a tax crisis to hit you in mid-April, you’ll be better off taking the situation into your own hands. Here are 6 excellent reasons for filing your taxes early, which I know will help motivate even the biggest procrastinators.

Get rid of that feeling of dread

Maybe you’re putting off your taxes because you don’t want to deal with the stress. Even though you’re avoiding your taxes in order to reduce stress, as the deadline approaches there’s a feeling of dread eating away at the pit of your stomach.
By waiting till the last minute, you’re letting that horrible feeling fester away. You’re only going to stress yourself out more in the end because you’ll have to hurry everything up. However, when you file your taxes early, your dread will be replaced by a feeling of self-satisfaction, and you’ll be able to focus on the happier things in life.

Avoid the tax-filing rush

April is a busy month for accountants. Their offices are swamped with tax filings for all the procrastinators.
If you file your taxes in April, and you expect it to be done quickly and to receive your refund fast, it’s kind of like going to a busy restaurant on a Friday night, without a reservation, and expecting to be seated right away. Not only will your tax professional be too busy to push things through in a hurry, the IRS will be even busier processing all the last-minute taxes.

On the other hand, if you file your taxes several months early, your tax preparer will be more available to file for you, and you’ll receive your refund sooner.

Get a bigger refund, and get it sooner

If you file early, you’ll be able to focus on getting the biggest possible refund. You’ll be much less likely to make the mistakes that could cost you thousands of dollars, or result in a dreaded tax audit.

Once you get your fat refund, you can pay off debt faster, and use the extra cash on the things most important to you.

Avoid potential tax fraud

Tax fraud is one of the biggest forms of identity theft, and the best way to guard against it is by filing your taxes early. Tax fraud works this way: someone gets a hold of your personal information and files a fraudulent tax return. They claim a refund, and when you get around to filing your real tax return, the IRS informs that they’ve already processed a tax refund for you.

Oh, the hassle and paperwork! It can take months and even years to dispute a case of identity theft. When you file your taxes early, you beat the identity thieves to the punch. That way, when they try to file a fraudulent return, you’ve already got your refund and it’ll be much easier to deal with.

So tackle your taxes head on, and go see a tax professional today! When April 15th finally comes along, your taxes will be but a distant memory.

Why You Really Need to Use a Tax Professional

Preparing your own taxes is a really brave thing to do. It requires a certain amount of confidence to take on a powerful institution like the Internal Revenue Service; the kind of institution that has the ability to ruin your finances and drag you down into the depths of a time-consuming audit.

But most people these days aren’t really filing their taxes themselves—they’re using software programs that guide them along and summarize the process for them. While this can speed things up, electronic filing services aren’t really prepared to cater to your specific tax needs. They have a kind of one-size-fits-all mentality.

Check City offers one-on-one tax preparation with a professional, which is really the best option if you want to get the maximum refund possible, and if you want the peace of mind that comes with trusting in our expertise.

A Tax Professional will save you time

The IRS estimates that it takes an average person 16 hours to complete the tax form 1040. With your busy lifestyle, do you really have 16 hours to spend pouring over your taxes?

With all the distractions of family life, the home isn’t really ideally suited for tax preparation. It’s more likely that you’ll miss an important detail with your kids running around the table, or blasting the television.

Our office offers you a calm place to sit down with one of our tax professionals, where you can focus on the important details that you might overlook on your own. Once we have all the information we need from you, we’ll carry on without you so you can get back to the things that really matter in your life.

A Tax Professional will save you a headache

There have been nearly 5,000 changes to the tax code since 2001—are you sure you can keep on top of all those new rules?

It’s your tax professional’s job to know all the ins and outs of the tax code, so that you don’t have to sweat it.

Changes in your life can have big tax implications

If you’ve recently moved or changed jobs, you’ll need a tax professional to help you navigate the various tax implications these events can have.

When you sit down with a tax professional one-on-one, he or she gets to know you as a unique individual. And then your return can be filed with your personal situation in mind. These are the things that tax software can’t offer you—a computer can never get to know the real you.

Using a Tax Professional gives you peace of mind

There’s a 3-year statute of limitations, excluding cases of fraud or underreporting, for when the IRS can come after you with an audit. When you trust a tax professional to prepare your taxes, you really are covering all your bases.

Don’t forget: Tax Professionals get you more $$$!!!!

A tax professional knows all the little deductions and tax breaks that add up to a bigger refund. You can even deduct any tax preparation fees on next year’s taxes, so there’s really no reason not to seek out our tax preparation services.

Walk into any Check City office today, no appointment necessary, and sit down with one of our tax professionals. You’ll be surprised how much money, and anxiety, we can save you this tax season.

Having a Positive Attitude about Taxes

As tax time comes around again, no doubt you’ve heard a lot of grumbling. Perhaps you’ve done some complaining yourself. But instead of making this year’s taxes a miserable experience, here are a few tips to keep your attitude positive and your spring care-free!

Do Taxes Early

First, the quicker you can get the whole process over with, the better. Putting off taxes makes you think/worry about them longer, drags down your spirits, and results in more last-minute panicking if you run into troubles on April 15th. If you’re not sure how to do your taxes, don’t let that stop you from taking action, seek out a tax professional to help you get them done quickly.

Stay Organized

Another preventative measure is to keep all your financial documents in one place. Don’t let all your receipts, bankbooks, W2 forms, etc., scattered around your home and/or office. If you have everything you need in one place and have kept track of all your finances throughout the year, you should have no problem getting your taxes done quickly and pain-free.

Get Help

If just thinking about doing your taxes stresses you out, consider getting help with your taxes this year. Turn to a parent, a sibling, a neighbor or community organization that is capable and willing to help you out with your taxes. Schools, cities, AARP, and other organizations offer free tax-help to their demographics. See if you qualify for their help. Or, hire a professional tax worker to do them for you.

Accept It

Rather than getting angry or annoyed about having to do taxes again, simply accept it as a part of life. Sometimes that’s all it takes. Just like having to eat to live or sleep to rest, change your attitude to accept taxes as a natural part of life. Once you do, you won’t feel so imposed upon or aggravated. Sure, it is a little unpleasant and troublesome, but hey – it’s life!

Dig Into Your Patriotic Soul

If what bothers you is all that money that’s being taken away from you – stop and think about why those taxes are there. Perhaps some of them don’t make sense to you, but think about the others. You pay taxes to help keep roads nice, to provide neighborhood security, to help kids get a good education, and so on.

Think about all the financial trouble our country is in, and be grateful that you can do something to help out. Try to set aside your anger or disagreements with whatever political battle is going on, and remember that we’re all trying to get through this mess together.

Be Grateful

Be grateful that you have to pay taxes. Why? Because it means you have an income, a home, or whatever else. Some people aren’t lucky enough to have those things. And also remember that you’ll be getting some tax returns! Hooray! Try not to remember that it was taken away from you to begin with, and just think of it as free money for being a good citizen. Sure, it’s just a mind trick – but for lots of people, it works!

If you have any other ideas for making tax season a little easier, share with us below!

What To Do With Your Tax Refund

Tax season is here and while there will be a lot of hair pulling; nail biting, and headaches, for some there will be a bright spot at the end of it all with the potential for a tax return. The big question is: what to do with that extra cash? Have some extra money is always an exciting thought, sometimes you just can’t wait to get that tax return check in the mail.

If you are the kind of person that doesn’t like waiting around to get your hard earned money back from the government, you should check out the tax loans that Check City is offering right now. Whether you get a tax loan or wait for you check to come in the mail, here are some ideas of how you can use that tax refund wisely (and still have some fun)!

Pay off those Debts

First things first, get out from under your debt. You may or may not be able to pay off all your debts with your tax refund, but using that tax-back money to ease the burden will certainly lift your spirits. If it’s hard to dedicate that money to something as practical as paying your debts, try not to think of your tax return as a “bonus” of sorts, but rather think of it as a debt-break from the government. Having the right mindset can make all the difference.

Save For Retirement

If you’re starting to put on a few years, there’s nothing wrong with starting to save up for retirement. Whether it’s putting money in the bank or investing, that tax refund can bloom over the years and create a nice financial cushion for your future.

Rainy Day or Mad Money

Saving is always a good idea. If you need a little financial backup, shuttle that tax refund into your savings account and forget about it. When those rainy days come you’ll be prepared! You really never know what is going to happen and having a solid savings account can make all the difference in an emergency.

Invest in Yourself

If you could use a more steady income, consider using the money you get back from your taxes for a trade class. Pick up a skill or hobby that can either get you ahead in your career or develop into some kind of side-income. Learn to carve, paint, sculpt, bake, design, or photograph and once you get good enough, sell your products or services. It’s a great way to make a little money go a long way!

Donate

If you feel financially comfortable, consider donating some of your funds to a good cause. Fund research, help the homeless, save the whales, or invest in whatever cause you wish. It’s a little way for you to give back and make a difference (however great or small) in your community, or the world.

Have Some Fun

If you took care of any financial needs and still have some cash to spare, there’s nothing wrong with having a little fun. Buy something you need around the house. Or buy something a want you’ve had an eye on over the years. Take a family vacation or treat yourself out to a night on the town. Your options are endless. Just make sure you don’t over-spend and put yourself into a worse financial situation than before you got your tax refund back. Just be sensible and spend wisely.

The list of fun things or good investments runs on. What ways have you spent your tax refund in the past? What do you plan on doing with yours this year? Share your ideas with us below!

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