Life Times Newsletter

Winter 2007
Vol. 9, No. 1

Tax credits for saving energy: Do you qualify?

Rebecca Blocker, MS
Housing & Environmental Design Specialist

The new energy tax credit is a winĖwin opportunity. When you buy qualifying products to improve your homeís energy efficiency and lower your utility bills, the IRS will give you a tax credit of up to $500. The credits are only available for two years, so now is the time to make your home more energy efficient.

You may already have made purchases in 2006 that will save on your taxes this year. Energy-saving home improvements, including adding insulation, replacement windows, exterior doors, and high-efficiency heating and cooling equipment, may qualify for a combined maximum credit of $500 for the two years. Qualifying solar panels and water heating systems are eligible for a 30 percent credit up to $2000.

Energy saving purchases for your home must be put into service between January 1, 2006, and December 31, 2007.

Products that qualify for the tax credit must have a manufacturerís certification. You will find it provided with the packaging, or in printable form on the manufacturerís website. You do not need to send the certification in with your taxes, but you must retain it for tax recordkeeping.

Look for home improvement products with the Energy Star label, a sign of high-energy efficiency and quality.  Although they may cost a little more, they will pay you back in lower energy bills. Not all Energy Star-rated products qualify for the tax credit. The credits are only for the highest-efficiency products that may be more expensive. Even if an Energy Star product does not qualify for the credit, it will still save you money on utility bills in both summer and winter.

For more information, contact your local University Extension office, the IRS Web site on Energy Tax Credit (, the 2006 IRS Tax Guide, or Energy Star ( 

Expecting a tax refund? Donít pay to borrow your money

Sandra McKinnon, MS
Family Financial Education Specialist

Would you agree to borrow your own money at a rate of up to 1700 percent? Thatís what many tax payers are paying to borrow the value of an anticipated tax refund, according to the 2005 Refund Anticipation Loan Report from the National Consumer Law Center (NCLC). Over 12 million taxpayers got refund loans during the 2004 filing season.

Refund anticipation loans (RALs) are short-term cash advances to clients who expect refunds. The loan is secured by the taxpayerís expected refund. Refund loans are typically extended for less than two weeks. RALs are offered by paid tax preparers, check cashers, payday lenders, used car dealers and title loan lenders.

A nationwide survey of consumers commissioned by the NCLC found that 18 percent had taken out a refund loan at some point. Of these consumers, a startling two-thirds did not realize a refund loan is a loan.

Many refund anticipation loans go to low-income customers. The latest data shows that 56 percent of refund loan customers, or roughly 7 million families, received the Earned Income Tax Credit, the largest federal poverty assistance program. These cash-strapped taxpayers are typically caught in the vicious cycle of circumstances. Getting one of these loans can take a huge bite out of a tax refund.

Consumers paid an estimated $1 billion in RAL fees, plus an additional $389 million in administrative or application fees in 2003 to get quick cash for their refundsóessentially borrowing their own money at extremely high interest rates. The effective annualized interest rate for RALs, based on a 10-day loan period, ranges from about 40 percent (for a loan of $9,999) to over 700 percent (for a loan of $200). If fees are included, the rate could be 70 percent to over 1700 percent.

Itís not often necessary to turn to costly loans and services. Take advantage of todayís technology to get your tax refund quickly:

File your return electronically. Last year, almost 68 million taxpayers filed this way. Paper filers wait 6 to 8 weeks; electronic filers can expect their refunds in half that time.

Do even better by direct depositing your refund. Youíll see the refund in your bank account in 10 to 14 days. Plus itís added protection against lost or stolen refund checks sent via the mail.

If you do not have a bank account to take advantage of direct deposit, check out "Get Checking." This University of Missouri Extension workshop can help you to access checking account services. Having an account is less expensive than paying for check-cashing services and money orders. "Get Checking" workshops are available throughout east central Missouri. They offer the opportunity to open an account with a participating financial institution even if youíve had problems in the past. Call 636-970-3000 or visit:

Free tax preparation assistance available for qualified families

If your family has low to moderate income, you may be eligible to get free help to fill out and file your tax return. The Volunteer Income Tax Assistance (VITA) program, sponsored by the IRS, has trained volunteers to fill out and electronically file tax returns for low- to moderate-income families. Call 1-800-829-1040 to find the closest VITA site.

AARP Tax Counseling for the Elderly is available in many communities. AARP sites sometimes provide services to low- to moderate-income taxpayers.

Take small steps to better health

Linda S. Rellergert, MS
Nutrition & Health Education Specialist

The shortest route to better health comes in small steps rather than giant leaps. Little changes are easier than big ones, yet add up to great improvements over time. Each small step is movement in a healthier direction and far better than grand goals that prove too ambitious to attain.

The best place to begin is with the step that sounds the easiest. A quick success provides encouragement to keep going, and leads to more successes. Setting the bar too high is more likely to lead to failure.

Break lofty goals into small, manageable steps like the examples given below. Experts say a new habit requires at least 21 days to become established. Wait until this new step has become firmly rooted before taking another. One step will lead to moreóand to better habits that last for life.

Here are some small steps to try:

For healthier eating habits

For improved fitness

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University of Missouri Extension Editor: Roxanne T. Miller