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A common question that Veterans have is “My rate is higher than what I see being advertised, but I might move in the next few years. Should I refinance?”

This is a great question and the answer is “It depends!” I know that is not the answer some people might want to hear, but it really does depend on a handful of factors:

• What is your current interest rate?
• When do you realistically think you will move?
• If you do move, will you consider renting this current home?
• Is saving money now more important that having a little extra equity or cash in your pocket when you sale?

These, along with others, are questions that need to be asked and answered honestly. The life of a Veteran can be hectic at times. The job can take you to places you didn’t expect at times you didn’t expect. So answering some of the questions may be a little difficult.

The saying “If you save at least 1% on your interest rate when you refinance, then it is a worth doing” is a common rule of thumb that a lot of Veterans go by. At first glance that does make sense but it is all relative, especially when you may move soon.

In my mind, it really comes down to the “Break Even” of the closing costs. Basically, how long is it going to take you to recoup the closing costs that were charged for you to get the loan based on the savings that you were able to get? You might save the magical 1% on your interest rate and save $100/month, but if it cost you $7,000 in closing cost to get that loan then you break even is 70 months. If you are going to move in 3 years this might not be the best loan for you, even though you saved the 1%.

So instead of getting caught up on saving a certain percentage on the loan, a Veteran would be better served to answer the above questions as accurately as possible and then shop for an interest rate-closing cost combination that has a break even before the “move/sale date” of the home.

Understanding how interest rates and closing costs work will help you find a loan that makes sense. Most loan officers don’t take the time to explain or maybe don’t even want the Veteran or home owner to understand how the relationship of the interest rate and closing costs works.

Basically, the lower the rate you go the more the closing costs are going to be. If you take a slightly higher rate the costs will be less. As you go still higher with the rate, the bank starts to pay the loan officer for giving you that rate. So there is a balance of the rate actually costing the loan officer (you have to pay discount points), the rate being “par” (doesn’t cost the loan officer), and the rate starting to pay the loan officer money.

An ethical loan officer that specializes in VA Loans will take the time to explain this balancing act of rates and costs and will help you match up a loan scenario that will make sense for your remaining time frame in the home.

If you have a short time frame left in the home but need some immediate savings and the ability to not have to make the next 1-2 mortgage payments, a higher interest rate than what might be advertised can make a lot of sense.

For example, the lowest rate advertised is always going to be the most expensive. You are going to have to pay discount points to get that. Let’s say that rate is 4.75%. If you went a little higher to 5.0% that may be the par rate, and still higher 5.25% is paying the loan officer. It might make the most financial sense to take the higher rate. You will pay a lot less in closing costs and have a refinance that makes sense.

In summary, knowing your personal time frame in the home and financial needs before you start shopping for a VA refinance will have you prepared to make the right financial decision. Don’t make the mistake of turning down a loan because the low rate has too much closing costs but the higher rate isn’t the magical “1% savings”. Sometimes saving.5% or.75% on your rate can be a much better refinance.

With the deadline for filing for 2009 tax season fast approaching, you may be wondering which tax tools will be the most beneficial for your particular situation; in fact, this question may have kept you from filing yet. If you are expecting a refund, you still have plenty of time to file. The IRS certainly doesn’t mind if you wait if they owe you money. But, if you are going to owe the IRS, you better get on the stick. They are much less forgiving, though filing an extension will buy you a little bit of time as long as you are paying what you figure your tax bill will be at the same time that you file the extension. The extension, contrary to what most of you might believe, is only an extension on getting your ducks all in a row and getting the paperwork filed. It does not relieve you of the responsibility of paying your taxes on time and you could be faced with additional fines and interest charges.

Another word to the wise: regardless of if you file by mail or file electronically, check the box for direct deposit. Your refund will be in your hands weeks sooner and you don’t have to worry about your refund check getting lost in the mail or someone stealing it from your mailbox. Also, if you don’t have a computer, look into asking a friend to use theirs or check with your local library. As tax time approaches you may find the library has a waiting line, so call ahead and find out the best times to come, or if there is a sign-in to schedule time.

So, what questions should you ask yourself when deciding which tax software to use and when should you decide to go to a tax professional or accountant?

• Are you a beginner? If this is the first time filing your taxes but you don’t expect to have deductions, examples of which would be mortgage interest paid or charitable donations, then most of the free tax programs will work for you. Just search free tax tools or free 1040 to locate any of a number of them. Even the IRS has free tax software for preparation. These should all allow you to file Earned Income Credit, the Childcare credit and the new hefty credits for Education. These credits do not require Schedule A for itemizing deductions. Be prepared to pay a small filing fee for some, while others are completely free. Also research to find out if you can also file your state income tax return at the same time. The best software may cost a little but is most often well worth the expense as they will check for errors, they will ask pertinent questions to make sure you are getting the maximum refund and will stand behind their accuracy.
• Do you need the Deluxe or Business edition? Most tax software companies have several different editions and may even ask you a set of questions to determine what forms will have to be filed along with your taxes in order to determine the edition best for you. Free tax software is usually restricted to the straight 1040 or 1040EZ forms, so be prepared to pay for upgraded editions. If you are a pro at this, then you can choose a less expensive program that does not contain the guides that a less expert preparer may need, so research your options thoroughly before laying out the bucks.
• Are you feeling bumfuzzled? If you are totally stressing over the whole thing and you have complicated tax issues, such as stocks, bonds, losses and gains or refinancing or selling and buying a new home, then you may want to use the services of an expert. The deluxe or business edition of tax software may cost you around $100.00 and the skills of an expert may cost you two to four times that, but when you consider the time involved, which can be hours or days, and the possibility of paying more taxes than you actually owe, or worse-the possibility of making a mistake in your favor and having to pay additional penalties, it may be well worth the expense. A reputable tax preparer will also stand by your side if an error is made or if you are called up for an audit. If you are going to one of the chain tax preparation companies, definitely ask this question up front. It may cost you more to have audit support and someone to share the blame with, but that is also a judgment call and one to consider carefully.

As a whole, tax preparation software should make it much easier to file your taxes. The really good news is that in most cases you can now start and prepare your return without paying a dime, only paying when it is time to file. If, in the middle of the preparation you find that your taxes are too complicated, you still have the option to go to a professional, though if you’ve waited to the last minute, finding an available pro may be a challenge in and of itself.

Sooner or later, most people get off the tracks. When it comes to taxes, this usually refers to people who for whatever reason haven’t filed tax returns for a few years. The question they face is what to do if they want to get back on board? Let’s take a look.

The filing of a tax return is a key event in the world of taxes for obvious reasons. There is also a less obvious reason that most taxpayers do not know. The filing of a return starts the clock running on when the IRS can pursue audits and investigations. The general statute of limitations is three years from the date of the filing of the return unless there is under reporting of income or fraud which then extends the period significantly.

Why does any of this matter? Well, the clock does not start running if you never file a return. This means most non-payers are a sitting target for the IRS. The agency can levy anything the taxpayer owns. The agency can just swoop in and take all the money in your bank account any day it chooses. Have a job? The IRS can come in a garnish your wages. It is pretty much the stuff of nightmares.

If you haven’t filed tax returns for a few years, there are a couple of steps you need to take. The first is to get professional help. A CPA would be best. The next is to get together all the information you can find on your finances for the lost years and have the CPA prepare tax returns for each year. The returns should then be filed with the IRS. Assuming you owe money, the CPA should contact the IRS to work out a payment plan. You will then need to stick to that plan and pay of f the debt.

This approach will get you back in the system with a minimum of fuss, something both you and the IRS will be happy to achieve.