An online tax software program such as Turbotax Online 2008, 2009, does more than just prepare and file your taxes. It offers advanced tools to help you pay the least amount of tax possible. It also provides an extremely accurate tax return to file with the Internal Revenue Service (IRS). These important tools are something you should be aware of before you begin your taxes.

Let’s take a look at a few of these tax tools

Tax Return Calculator – Use this handy tool to figure out how much of a tax refund you can expect to get back from the Government. Just enter your information as prompted, and the tax return calculator will quickly complete your tax refund estimate. Home Mortgage Calculator - All you have to do is enter the amount of interest you paid for the year and the mortgage calculator will show you your tax savings. Be sure to add in any points you might have paid. The Deduction Maximizer – Tax preparation software such as Turbotax 2008 Deluxe, has a built in tax deduction maximizer. As with the tax return calculator, you just enter your information and the tax deduction maximizer will determine what deductions you should take. Tax Articles and Tips – Common, and not so common tax questions are answered in the tips and articles section of the tax program. If you want to learn about tax deductions, self-employment, child tax credit, medical expenses, mortgage interest, and a multitude of other tax subjects it’s there to help you.

Let’s face it not many people enjoy doing their taxes. However, tax software designers are working to make tax preparation and filing software, as hassle-free and money-saving as possible. Having a set of useful tax tools on hand can make the job of (doing your taxes) a little easier and oftentimes, profitable!

Tax Deduction Checklist

The best tax deductions checklists are found in three places:

Your past years’ tax returns; With your tax professional; and Through an online tax website

Past Years’ Returns

Just by looking at the deductions you have been able to take in the past, you will get a good idea of what deductions you can take this year. If you had mortgage interest, real estate taxes, IRA contributions, and charitable contributions last year – you probably have them this year as well. The same is true of medical expenses, various taxes, that safe deposit box you keep, and if you are required to pay certain expenses, like alimony. Finally, any business deductions you have taken in the past, for a home office, travel, mileage, etc. is likely to follow a pattern you have created and budgeted consistently.

Tax Advisors

Tax professionals are great at helping you identify deductions for one time occurrences and helping you organize your records and thoughts on how to approach the deductions that are available. You may need advice on issues that you have never faced before and those that run the risk of gaining or losing large sums of money. If so, your tax advisor is a great resource for addressing these issues.

Online Help

TurboTax Online, for example, has exceptional checklists for going over everything you need to consider before preparing your return and making sure you don’t miss anything important. It asks interactive questions, points out possible deductions you may forget, and reminds of the things you need to have or consider when taking a specific deduction.

When planning your tax strategy for the year, you’ll be glad to know that you can significantly lessen (or even eliminate) your income tax liabilities if you know what deductions and credits are available to you. For example, retirement planning can have a net positive tax impact. Similarly, owning your own home has positive implications for you. And, although college is more expensive now than ever, you can send your children to college and garner substantial tax benefits at the same time.

Here are some things to consider:

Let’s assume for the purpose of discussion that you’re married, with three kids (two in college) and you’re employed full time. Your annual income is $76 thousand. And let’s assume that you are making these plans at the beginning of the tax year, so that you have an entire 12 months to implement it.

One significant tax break you can get is by putting money into a 401k Plan.

If both you and your spouse each put five thousand dollars into your 401k account, that would reduce your annual taxable income by ten thousand dollars. This means that your adjusted gross income is $66 thousand. That will yield a substantial tax savings. Another significant tax break comes to you when you buy a house — and itemize all your deductions.

Let’s say you paid mortgage interest to the tune of $16 thousand. In addition, you paid real estate taxes of five thousand dollars. You also made charitable donations totaling $3500 to your church, synagogue, mosque or some other eligible organization. For purposes of discussion, let’s say you live in a state that charges you income tax and you paid three thousand dollars.

Your itemized deductions equal $27,500. Now, your adjusted gross income is down from $66 thousand to $38,500.

If you claim 5 personal exemptions, your taxable income is reduced another $15 thousand to $23,500. Your income tax bill is going to be approximately three thousand dollars.

Now, let’s see if we can whittle that down some more. How about using some relevant tax credits? Since two of your kids are in college, let’s assume that one costs you $15 thousand in tuition. There is a tax credit called the Lifetime Learning Tax Credit — worth up to two thousand dollars in this case. Also, your other child may qualify for something called the Hope Tax Credit of $1,500. Consult your tax professional for the most current advice on these two tax credits. But assuming you qualify, that will reduce your bottom line tax liability by $3500. Since you owed three thousand dollars, your tax is now zero dollars.

Not bad!

Lastly, since we are planning this strategy at the beginning of the tax year, you should go ahead and adjust your withholding amounts.

Since you’ve effectively done the planning ahead to reduce your tax liability to zero, you can go ahead and adjust your withholding to zero as well. But don’t stop there: open up a Roth IRA (both of you) and put the excess cash there before you even have a chance to spend it. And if you have anything left over, set aside some money for your third child who isn’t due to enroll in college for a few years yet.

Conclusion

With some help from the Federal tax code, you can reduce your income tax to zero. It just takes some knowledge, planning and action.

You can use a mortgage refinance calculator to find out your savings if you switch to a new mortgage. The new calculator will help you determine whether the new plan that you are considering is suitable or not.

Advantages

You may wonder: what is the use of a mortgage calculator? The mortgage calculator will help you project the amount you will be paying over the loan term. This will help you decide if you should take a new mortgage or not. If your current mortgage has high interest rates, and you wish to take a second mortgage with lower interest, a calculator will help you find how much you can save.

Prerequisites

The calculator will ask you for information regarding the current loan amount, loan term and interest rates. You also need to provide information regarding how long you have had this mortgage, and the remaining loan term. You also need to provide information about your new loan, such as loan term, interest rate etc. What you need to do is provide all the information to the calculator, and it will do the hard work for you.

Finding A Calculator

Thankfully, the mortgage refinance calculator is just a mouse click away. You can make a search for it online. Once you find a website that hosts a calculator, you can fill in the information and wait for it to come up with the results.

Pay attention to the break even date. This is the time when cost of the new mortgage is recovered through the savings on it. You do not want to go in for a scheme where you cannot recover the cost through savings – it would be a loss-making proposition for you.

If your break even date falls after the loan term expires, it might not be a good idea to take the loan. If the opposite is true, then the loan can help you. If you think the loan figures do not add up to your liking, you can do the math again by putting in different figures. This will help you arrive at interest rates and loan terms that will help you.

A mortgage refinance calculator will help you find the best rates. It will give you an estimate of how long it will take for you to clear your debts. It will also help you plan your finances according to the loan term. This invaluable tool is easy to access, easy to use, and is free. What else can you ask for!

The typical American household budget percentage breakdown looks like the list below. For most of the categories a range is shown. A range makes more sense to help you see where your personal budget fits (or doesn’t fit.) If your budget doesn’t fit the typical American household budget, rejoice! The average American household budget is jacked up – we carry too much debt and we just don’t save enough. We’re so worried about our neighbor’s new pool, our co-worker’s new car and our friend’s new designer shoes that we spend more than we earn to try and keep up. But take heart! Review the percentages below, compare your household budget and then read on to find out how you can move yourself into the elite minority of Americans who have mastered where their money goes.

Typical Household Budget Percentages

33-38% Housing (59%-66% of this is on shelter – mortgage interest, property taxes, repairs, and rent, and other items) 15-19% Transportation (up to half of this is vehicle purchase – 2 cars per household average) 13-14% Food Budget (55% at home, 45% away) 0-2% Alcohol 0-3% Tobacco and related products 0-2% Caffeine related products 4-5% On clothing and related services (drycleaning) 4.5 – 6% on out of pocket Health Care 9% Personal Insurance and Pensions (breakdown: 1% life and other personal insurance, 7.5% Social Security, .5% investment 5% Entertainment 2.5% Charitable Contributions 2% Reading and Education 1% Personal Care products and services 2% Miscellaneous 4% Credit Card, Consumer Loan Interest

If your budget closely matches the above, here’s what you can do to fix that. Do these in order. Do not proceed to the next step until you’ve addressed the current step:

Stop using your @#!&*! credit cards! Make a down and dirty budget right away! Don’t worry about it being right at first…you can perfect it over time. Just do it! Cut back on your easy to identify, frivolous spending habits (3 dollar lattes, magazines, 450 extra satellite channels, etc.) If you’ve got some expensive habits you’ve wanted to quit for some time, now’s the time. For example, if you’re a hard-drinkin’, chain smokin’, coffee drinkin’ fool, you can reap a windfall of up to 7% or more of your income! Just cutting back to 2 drinks per day, only drinking coffee from home and quitting the cigarettes will net you a nice amount of extra cash and add years to your life! Refine your budget after eliminating what you can. Reduce your 401K and other investment payments (if you have any) to the minimum allowable to keep your 401K and/or other investment accounts open. If your employer has a stock matching plan, keep that in addition to the minimum to keep your investments accounts open (but only up to the minimum you need to get all the matching money.) You’re going to reap a whole lot more return on paying off your debts than you can ever hope to reasonably get from traditional investments. If you’re paying into a college fund for your kids – keep doing that – if you’re not and you really want to, hold off until step 6. Refine your budget to reflect the extra income available, if any. Build an emergency fund equal to 2% of your gross annual income. It should be a little hard to get to (like a separate checking account or mutual fund), but not too difficult (Certificate of Deposit.) Work this into your budget – it’s very important. You will not believe the amount of stress that will melt away when you do this. Pay off your debts – everything except mortgages. And don’t just move your revolving debt into a second or third mortgage – that’s bad. Pay them off using a rapid debt paydown system. Pay off any student loans (for future reference, these are a bad idea.) Pay off your car(s) too. If you’re not upside down on a car loan (your car is worth more than you owe) you can sell it and get a cheaper, paid for car. Throw a small (inexpensive but fun) party for yourself and your loved ones every time you pay off a debt. Take all the money you WERE spending to pay off your non-mortgage debt and start putting it into those investment accounts you put on idle. Make sure you’re investing at least 10% of your gross income. If you followed steps 1-4 exactly, you should have lots of breathing room in your budget now. If this is true and you want to invest more than 10%, go ahead, but be sure to reward yourself too and live a little. Grow your emergency fund to a level you’re comfortable with (2 or more months of income is a good start.) If you have young kids and you want to send them to college, start putting money into a college fund of your choice for them, if you haven’t already. Throw a bigger party than usual when this is done. Pay off your mortgage and throw your biggest party yet! You can start towards this by refinancing to a single fixed rate mortgage (your credit should be in pretty good shape having paid off all your other debts.) If it’s a 30 year mortgage, pay more than your monthly payment to dramatically lower the amount of interest you give to the bank. If it’s a 15 year fixed – wow! That’s excellent! When you’re totally debt free, regularly give away whatever you think you can afford. It’s good for the soul!

Easy? Not. Worth it? Doing the above will pay dividends in your life in many more ways than just dollars and cents. You will assure yourself a dignified and financially secure retirement. Do this well and you will also build a way for your kids and your grandkids to enjoy prosperous lives, and they will remember you with fondness and respect long after you’ve moved on to the other side. Now get started!