A Bit More About Bartering

The other day, I saw a very welcome sight; someone mowing my neighbor’s three-acre pasture.

The reason this made me happy is simple. My neighbor lets me put my three Miniature Horses in that pasture during the spring and summer, something which saves me a lot of money on hay.  She also lets me train my driving Mini, Jewel, on the pasture’s hills.  (If you want to do combined driving, you have to condition your horse to drive on hills.) 

I usually will pay a small amount for the privilege, $30 a month or so, but for the last year, the pasture has been all but unusable. Weeds had grown so high I couldn’t mow them with my lawn tractor and the elderly gentleman who had mowed the pasture once a year for a very reasonable price just couldn’t physically handle the work anymore. And my friend couldn’t afford to pay more.

So the pasture was transformed into a get-out-your-machete plot of weeds that no one could really use. (That can happen very fast in Texas climate, where the weeds are much more drought tolerant than most grass.)  So when I saw it getting mowed, I was delighted

.

I called my friend. How had she managed it?

In a word: barter. 

The man with the tractor needed an ad done for a horse publication. My friend is a whiz with both Photoshop and the latest in layout programs. She did a camera-ready ad for him and gave him $25 for gas; he attacked the weeds.  Two problems solved, and except for the $25, no money out of pocket for either of them.

I wrote a post about barter some time ago, but in this era of increasingly tight cash and tighter budgets, I think it’s worth reminding people that they shouldn’t rule out barter as a way to get what you need. Right now, I need some driving lessons from an expert. I know an expert “whip” (that’s what you call someone who drives horses) who needs some video of her well-trained gelding being driven to use as a marketing tool. I have a video camera and I know how to use it.  If we can set this up, we’ll both get what we need with no money required.

To barter successfully, take stock of what you have in the way of knowledge, skills or unwanted items. Then look around to see who has what you need and might need what you have.  Can you swap?  A skill for an item, labor for training, expertise for expertise?  Make sure when you’re setting up the trade that you both understand what you expect to receive and what you’re offering by making a list of specifics.  In my friend’s case, she was willing to do a certain size ad, containing a certain number of pictures, created to fit the requirements of a specific publication and she agreed to a deadline. Her barter partner had seen the land he would be mowing, had a good idea of how much gas he’d need and was willing to do the job within a stated length of time.  Nailing down such details can help guarantee that both parties to the barter are satisfied.

Where do you find people willing to barter? Check online. Here’s a helpful article from Planet Green to get you started:

http://planetgreen.discovery.com/tech-transport/online-bartering-websites-tips.html

One final tip: Keep in mind that the IRS usually considers the “fair market value” of what you receive in a barter as taxable income. For more information on the government’s bartering rules, start with this article at irs.gov.

http://www.irs.gov/businesses/small/article/0,,id=188095,00.html

Time Spent Now Means Being Less "Taxed" Later

We are now about five weeks away from that headache-inducing, bleary-eyed, just-kill-me-now period known as the tax season.

Oh, joy.

For those of you who feel that your head will explode if you even think the words "April 15th" I have a suggestion. Before you pay big bucks for a computer tax program or hand over allthe details of your financial life to a tax "expert" with four weeks training ...try this.

Do your taxes yourself. But do them in easy-to-handle stages and start right now.

Unless your taxes are incredibly complicated (in which case, I imagine you already have an accountant standing by) you can probably handle them yourself. But like anything done at the last minute, waiting until the second week in April to begin will likely cost you, in terms of both money and aggravation.

So begin now. Right now. Break the chore up into easy stages, which will also give you time to collect all the forms, receipts and information you need.

Stage One
Sometime this week, take an hour to pull last year's tax return and go over it. Make note of any
tax-affecting changes in your life during 2008. For example:

• Did you gain or lose a dependent?
  
• Did you buy or sell a home?


• Did your employment situation change?


• Did you accrue medical expenses?


• Are you now paying college expenses?


• Did you buy or sell stock, or contribute to to a 401K or other retirement plan?

I suggest you stash that list in a large manila envelope marked "2008 Fed. Taxes" or label a storage box the same way and put the list in that. (File folders, at least for me, tend to disappear into the nearest pile.)

By now you should have received your 1040 packet, plus W-2s, 1099s, investment
statements and any documents relating to income or deductible expenses. Add those to your "tax box" as well. If you don't already have every document you need--if something's missing, such as a property tax receipt or a dividend statement--starting now means you have time to request a duplicate.

Also, now's a good time to note any extra IRS forms or instructions you may need, based on your list and last year's return. Check to see if you have them in your 2008 1040 packet; if not, you can download them from irs.gov. It's a good idea to download more than one copy of any form. (Make photocopies of the forms included in your 1040 packet, including the 1040 form itself.) You'll find these extra blank copies useful later.

Stage Two
Spend an hour or so next week organizing your documents according to how you'll need them. Your main categories will probably be Income and Deductions; sort things into smaller classifcations within those two categories. For instance, you may want to divide your Deduction documents into such subcategories as Retirement, Medical Expenses, Dependents, Taxes, Business Expenses and so forth.

Even if you normally take the standard deduction, spend a little time checking these things to make sure you're not short-changing yourself. A few more deductions added in 2008 (the first child sent to college!) could give you a higher total than you think. You can also use the internet to get additional ideas for deductions, but make sure the IRS recognizes them by double-checking them at irs.gov. (One example of something new? In 2008, even if you take the standard deduction, you can now also deduct as much as $1000 worth of your property taxes. Nice!)

Stage Three
By this time, you should have all the documents and forms you'll need. Now make a rough estimate of your taxes. Do it using your photocopied forms. If you make mistakes on these forms, you can simply cross them out and note the corrections.

This is a good way to double-check that you have all the paperwork you need and it's also the time for you to get an idea of how much tax you'll owe, another piece of information that's better known well before April 15th!

Stage Four (Aim to complete this by April 10th.)
Fine tune everything. Make clean copies of all the forms and do a final check of all your math. Then fill out one last photocopied version of your 1040 and all relevant IRS forms. Hopefully, you've reached this stage a few days before April 10th.

Wait a few days, to let your over-taxed brain cool!--pun intended--then recheck everything one more time.

Now you can fill out your actual 1040. Double check that you've included your Social Security number and signed the form. (Failure to do so are two of the most common mistakes taxpayers make.) Fill out your final versions of any additional forms needed, attach them to the 1040, make sure you've included your W-2 and any other necessary documents, add a check (hopefully a small one) make copies of everything and have your completed tax package ready to send to the IRS with days to spare. (If the IRS owes you money, check into e-filing your return. You'll get your refund a bit faster.)

Now all you need is a stamp.

No rushing, no drama, less strain, less pain....and because you're doing the job yourself instead of hiring someone, less expense.

A few more tips.
You can actually fill out an online 1040 at irs.gov. It's in the PDF format, so you'll need Adobe Reader. (Download it for free here.) You can save what you do and make printouts, but unlike computer tax programs, you have to do the math yourself.

You can also fill out tax forms for free at Turbo Tax, but for any return more complex than the 1040EZ, you'll have to pay between $29.95 to $109.95 to actually e-file your return or print it out.

Still, you might use this service as a guide, or as a way to find extra deductions.

Good luck! (I'd add "Have fun" but--geez--we are talking about doing your taxes here!)