I'm looking forward to warm weather, the kids' summer break and daylight that stretches past 8 p.m.
But there are a couple of hurdles first. My kids still have several months left on the school calendar. There's no doubt another snowstorm or two in our future. And then there's tax season — already in full swing.Even if you obtain outside help, taxes can be a daunting project to tackle. But this year, there are a couple of new twists that could throw you for a loop if you're not careful, starting with the one that everyone's talking about — the economic stimulus package.My inbox has already been flooded with questions about this plan, which President Bush announced in January in response to the dwindling economy. Most of you are wondering the exact same thing — what's the catch?So I got on the phone with the IRS to get the facts about not only those rebate checks, but a few other rules that have taken effect recently. Here's what you need to know.There is no catchTurns out, there isn't much of a catch to the stimulus plan after all. Beginning in May, checks are going out to about 130 million people in an effort to boost the economy. In other words, they want you to take the money and run — to the nearest department store. How much money are we talking about? According to Kevin McKeon, a spokesperson for the IRS, you can expect a minimum of $300 and a maximum of $600 per person, depending on your tax liability for 2007. You're most likely to get the cash if your income is under $75,000 if you're single, or $150,000 if you're a joint filer. A couple of important things to keep in mind: To receive your payment, you must file a 2007 tax return, even if you're normally exempt, but the payout won't be counted as part of your taxable income next year. If you opt to receive your tax return by direct deposit, your stimulus check will be paid out in the same way, so don't look for it in the mail. And remember that despite the government's wishes, this is your money. You don't have to spend it at the mall if you have pricey credit card debt or a dwindling savings account. In fact, I'd advise against it. Prove it
The rules for charitable donations have gotten tighter. The IRS requires that any material donations — clothing, furniture, appliances — be in good or better condition. It sounds subjective, and largely, it is. One tip is to ask yourself why you gave the item away. If you just no longer had a use for it, that's one thing, but if it was broken or ripped, leave it off your list of deductions (and next time, out of your bag of donations — things that need to be repaired often end up costing the charity more money). And from here on out, Bob DiQuollo, a financial planner in New Jersey, suggests snapping a picture before you load your trunk. "We don't know what the chances of someone asking you for that are, but these are new rules, and they do put an onus on whoever is going to take the tax deduction — you need to be aware."Ask for a receiptIf you made a contribution to charity, whether it was a few bucks to the Salvation Army during the holidays, $20 on a weekly basis to your church's collection plate, or $200 to your local library, you have to have it documented to claim it on your tax return. A canceled check, bank or credit card statement will work, as will a letter or receipt from the charity that specifies the date and amount you gave.
If you coughed up more than $250, only the receipt or letter from the charity is going to fly, and there is a new stipulation, says DiQuollo. "In addition to being able to support that you made the gift, you need a letter from the charity stating what, if any, goods or services you received in return for your gift." It also needs to include the value, because you can't deduct that amount. So if you paid, say, $500 to attend a charity dinner, you're not getting a tax break on the lobster you were served. Save on your foreclosureIf you got caught up in last year's real estate mess and lost your home to foreclosure, you'd normally be taxed on the amount of your debt that was forgiven. But because of a new law that was passed at the end of last year, McKeon says you can now exclude debt forgiven on your principal home if the balance of your loan was less than $2 million. If your eyes were bigger than your wallet and you splurged on a vacation house, only to fall behind a few months later, this isn't going to help you. But if you just couldn't keep up with your payments — maybe the interest rate on your adjustable-rate mortgage shot up, or you lost your job — the IRS is throwing you a life vest. To take it, fill out form 982 and attach it to your standard tax return.
Split your return
For many people, their tax return is the single biggest windfall they receive all year long, which makes for an excellent opportunity to save. This is actually the second year that the IRS has allowed you to direct-deposit your return in up to three different accounts, but many people still aren't aware of the option. Why not put half of it in your IRA or a high-interest savings account? If you can't swing that, at least use the money to pay down debt.
With reporting by Arielle McGowen.
Jean Chatzky is an editor-at-large at Money magazine and serves as AOL’s official Money Coach. She is the personal finance editor for NBC’s “Today” show and is also a columnist for “Life” magazine. She is the author of four books, including “Pay It Down! From Debt to Wealth on $10 a Day” (Portfolio, 2004). To find out more, visit her Web site, .