Tax Refunds May be Up, but How are Your Withholdings?

Tax credits launched under the Obama administration's economic recovery bill have boosted the average 2009 refund by nearly 10% from the previous year according to White House representatives.

The average tax refund for 2009 has reached $3,036, according to early data from the Internal Revenue Service.

The Obama administration officials said the increase reflects a growing number of taxpayers taking advantage of the benefits available under the $787 billion American Recovery and Reinvestment Act.

Under the Recovery Act, which was implemented last year to combat the economic crisis, taxpayers can take advantage of over a dozen tax benefits such as the making work pay credit, worth up to $800 for married couples filing jointly, the $8,000 first-time home buyer credit, and sales tax deductions on new car purchases.

The benefits are aimed at helping middle class families recover from one of the worst recessions on record, administration officials said.

The administration states that the nearly $300 billion in tax benefits will help jumpstart the overall economy by encouraging Americans to spend, which ultimately stimulates job growth.
However, some critics argue that the bigger tax refunds could be due to factors other than the Recovery Act credits, including a larger number of Americans withholding more last year due to unemployment or other economic hardships.

Individuals who work into the year and get laid off typically over-withheld while they are working, said J.D. Foster, a senior fellow specializing in fiscal policy at the Heritage Foundation, a conservative research group. That over-withholding can lead to larger refunds.

While, the new tax credits are great, please be sure your deductions are correct so as not to pay the IRS too much during the year. See my tax help blog entry regarding adjusting your withholdings.

For more information and full article go to http://tinyurl.com/ybd3h9l.

Housing Market Shows Some Signs Of Recovery

This week NPR posted an article with good news for the housing market. According to new studies home prices in cities like Boston, Chicago, San Francisco and Dallas were on the rise last month. Although in some parts of the country housing prices are stagnant or still on the decline, any increases in home values anywhere is a good sign. Yale University professor Robert Shiller even stated that "this is the first time in almost three years that we've seen price increases,"

What do Boston, Charlotte, Chicago, Cleveland, Dallas, Minneapolis and San Francisco have in common? They're cities where home prices rose recently.

That's according to the Standard & Poor's Case-Shiller Home Price Index, which shows that prices are actually starting to rise again in some parts of the country.

Other recent data show that there are some tentative signs that the real estate market may be starting to recover. The housing crisis helped propel the country into the worst recession in decades.

"This is the first time in almost three years that we've seen price increases," says Yale University professor Robert Shiller, who helped design the home price index. "So when we see a break in the downward trend that's definitely encouraging news."

For a long time Shiller was known as a pessimist about the housing market. And it turned out he was absolutely right.

But now, he's striking a different tone.

"Well, I think the worst is probably behind us — the worst pace of decline," he says. "We were going down at 2 percent a month for a number of months in a row nationally. That was really something. Now home prices relative to rents or construction costs are back at normal levels."

Shiller stresses that he doesn't think we're about to see another housing boom.

During this downturn, we've seen record drops in prices. And when it comes to new homes — it's been more than 50 years since we were building and selling so few of them.

But over the course of the spring, sales have been picking up.