Don’t Touch My Money

Q.  My employer keeps pushing Direct Deposit on all their employees.  Why should I do that?  I don’t want my employer touching my bank account.

A. We all have issues trusting new things. In this case, unless you employer is Al Capone or Bernie Madoff, it’s probably safe to sign up for direct deposit.  It simply allows your employer’s payroll company to put your paycheck directly into your designated bank account.  Instead of you waiting for a check on payday and then driving it to a bank, you have access to the funds first thing on payday.  You can instantly see if there has been a mistake and can have your employer fix it much more quickly.  You are probably already getting your paystub online so this is just one more electronic way of reducing paper clutter.

Your employer may begin mailing checks the day before payday to show how much hassle it is to deal with a check.  If they do this, think about the delay.  You can’t get your check until the mail actually arrives.  You will then likely get to the bank too late to deposit it. Checks normally don’t clear very fast so you actually do not have official access to your funds until 1 or 2 days later.  Is that really good money management?

Reasons I hear why employees don’t like direct deposit include:

1) I don’t want my spouse to see what I make
2) I can’t get a bank account
3) I don’t trust banks and want to carry cash
4) I don’t have access to a computer so I can’t see if it was processed correctly.

Your employer can help you address some of these issues.  We’ll talk about pay cards for a solution to number 2 in a future post.  Go paperless!

Economic Stimulus Schedule

Now for the good part: How much do we get as part of the economic stimulus payment from the government and when does it arrive?

Let me remind you that you must file a tax return this year in order to receive your payment. That being said, the value that is on your Total Tax line on your 1040, 1040A or 1040EZ form dictates the amount of your payment up to the limits listed below. On the 1040 form that will be line 63.

Individuals: at least $300 and up to $600
Married couples: at least $600 to $1200.

Recently, the IRS issued a calendar as to when the payments would actually be going out. As usual, it is based on the last two digits of your Social Security number. Also, those who requested direct deposit will get their money before those who requested check refunds for their 2007 tax return. Following is a chart issued by the IRS for that schedule:

Important Update: The Treasury Department announced in late April that payments will begin 1 week earlier than originally scheduled. The dates listed above from the original IRS news release should be considered estimates now. Your payment will likely arrive earlier.

The Economic Stimulus Payment

Q. What about this tax rebate everyone is talking about? Is it real? How do I know how much I will receive?

A. It seems like everyone is excited about the prospect of getting money from the government. The IRS has begun issuing lots of guidance on exactly how to go about getting your share of this payment. Because this topic is so complex, I will discuss in two parts. Today, you get the first section.

The most important component is that you must file a Tax Year 2007 tax return in order to receive your payment. That means even seniors must file a return even if they normally fall below the filing threshhold. The IRS made the Free File system available for this class of citizen. Other stipulations include Read more »