We recently purchased a sheet-fed scanner, the Fujitsu ScanSnap S300, to help organize our financial records and this purchase is easily one of the top ten I’ve made in my adult life. We went from having a few banker’s boxes of documents down to just a few in about a week. Using a sheet-fed scanner, versus a flat-bed scanner like a copier, can save you a ridiculous amount of time and the ScanSnap will save your document into a PDF. It’s a big pricey but definitely worth it if you’re looking to save things electronically.

One of the benefits of storing documents electronically is that it makes the “how long should I keep financial documents?” question a bit obsolete. Data storage is cheap so you can save documents forever, but I think it’s still important to know how long to keep documents because it gives you a better understanding of finances. Knowing why you should keep tax records for seven years gives you a better understanding of the tax process.

So how long should you keep financial documents? It depends.

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The mortgage interest deduction is one of the most celebrated tax deductions in all of tax deduction-dom. It’s cited as one of the benefits of homeownership, right behind “you’re not throwing your money away,” and that fact is repeated over and over again. Unfortunately, I believe it’s misrepresented. It’s not as good as you think and I’ll explain why.

To claim the mortgage interest deduction, you have to itemize your deductions. For those who aren’t familiar with the idea of claiming itemized vs. standard deductions, you have two options when you file your return. You can either list all of your deductions, such as the mortgage interest deduction, or you can just claim the “standard,” which requires no proof.

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Last week, Rich Preece, Director of Product Management for TurboTax, gave me a quick run through the new features of TurboTax for the 2009 tax year. Since I haven’t been using TurboTax to prepare my returns (I use an accountant because of the business), I wanted someone at TurboTax to walk me through the features that were different from last year. While the bulk of tax preparation doesn’t change from year to year, features change, move around, and in order to capture the important ones, I’ll need the help of someone who plays with it everyday.

To Rich’s credit, it was a very straightforward demonstration of the features with an explanation of why things were done a certain way (for example, why they added flagging/bookmarking) without any cheerleading or attempt to paint things more favorably.

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When you go to do your taxes this year, you will have the option to give three of your tax dollars to the Presidential Election Campaign Fund. $3 isn’t deducted from your refund or added to your tax bill, $3 from your taxes is simply allocated for the fund. The money is used to in the party nominating conventions, presidential primaries, and then the general election every four years. It was created by Congress in the 1970s as a matter of campaign finance reform as candidates who accept financing have to follow certain fundraising and total spending rules. If you remember, it was a big deal when then presumptive Democratic nominee Barack Obama opted out of public financing.

If you want to learn more about it, I may recommend the Federal Election Committee website where you can find all sorts of campaign finance gems.

My question to you is do you check off $3 to the Presidential Election Campaign Fund? When I first started filing my taxes, I didn’t because I erroneously thought it meant I would be personally donating $3. After I learned it wouldn’t actually cost me $3, I thought it was absurd that we would give even more money to spend on political campaigns. However, as I read more, I realized that forcing candidates to take public financing puts a cap on how much they can spend. I don’t claim to be an expert but I think that’s a good thing.

What do you think?

Now that the income limitations have been lifted and anyone can convert a tax-deferred Traditional or Rollover IRA into a tax free Roth IRA, a lot of blogs, gurus, and news sites have been celebrating the Roth IRA conversion. I have always held the Roth IRA in high regard because it’s a fantastic retirement investment vehicle that offers a little more predictability. I pay taxes on my contributions today and I get all the appreciation tax free, what’s not to love about it?

Unfortunately, whether or not you should convert a Traditional or Rollover IRA to a Roth IRA is not as clear cut. There are a lot of important factors many people are overlooking when it comes to Roth IRA conversions. While you may gain some tax benefits in your retirement assets, it does come at a cost to your overall financial picture. To ignore those could be extremely detrimental. Let’s take a look at the four major factors to consider before you convert to a Roth IRA.

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American Express announced today that you could pay your tax bill using Membership Reward points. For every 200 points, you could pay $1 in taxes through Pay1040.com or OfficialPayments.com. You’d be assessed transaction fee but you could pay for that fee with points as well.

While it may sound appealing, 200 points for every $1 values each point at half a cent each. If you remember from my review of the American Express Membership Rewards program, half a cent per point is remarkably low. While there is no cash option for AMEX points, their recent “everyday expenses” program lets you pay everyday expenses using points that value them at 0.60¢ per point.

Official Payments charges a 2.35% fee for federal tax payments with a credit card, with a minimum of $3.95. Debit cards are charged a flat $3.95 fee.

I think this is mostly a PR move, considering the conversion rate is so low, but if you were contemplating this, consider another option.

I was poking around on the internet the other day when I saw one of those morbid life insurance policy ads. You’ve probably seen them before too. They usually have someone kneeling at a grave or a kid wearing all black at a funeral. They ask you the pointed question of – “If you died today, who would take care of your family?” I suspect they’re trying to tap into your fear of the unknown, how your kids won’t be able to fend for themselves or how your husband or wife is going to be lost without your financial support.

First of all, my lovely wife is quite capable and she can take care of herself. I bet she’d miss my sparkling personality but after a while she’d probably be OK with it.

Second, our dog Tobey is the fiercest beagle in all the land. He’d do fine finding his own rawhide cow ears and kibble. Just the other day we left some food on the table and he managed to to jury-rig a Rube Goldberg-contraption just to get at it.

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There are two parts to any investment – cash flow and equity appreciation. Cash flow refers to how much money the investment generates and equity appreciation is how much the investment itself grows in value. When you look at real estate, cash flow refers to any rents you can earn and equity appreciation refers to any increase, or decrease, in the property’s value.

In the last few years, real estate has taken a huge hit because prices simply grew too quickly, financially incapable people were given loans they couldn’t afford, and the myth that “buying a home is the best investment ever” was finally revealed to be the result of incredible anecdotes and not a statistical look at historical home values.

I’ve never liked the idea of real estate as purely an investment for a variety of reasons.

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