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Reckoning Your Rebate

Under the economic stimulus plan passed in February, more than 130 million households will qualify for a rebate of up to $600 for singles and up to $1,200 for married couples (with extra cash back for those with kids under 17). But how much will your rebate be? Do you even qualify?

Check the Internal Revenue Service's new economic stimulus calculator at www.irs.gov/app/espc to find out. As with all things tax, the answer may not be so simple, especially if you've got a nice white-collar income. That's because, using a formula, payments are phased out above $75,000 in adjusted gross income for singles and $150,000 for married couples filing jointly. So a couple with two children and adjusted gross income of $80,000 will get $1,800 ($600 per adult and $300 per child), according to the IRS, while a couple with two kids and AGI of $160,000 gets $1,300. For a married couple filing jointly, the rebate phases out entirely at a combined income of $174,000.

If you usually take an extension, remember: While rebates will start going out in May, extenders won't get theirs until after they've sent in their returns.

Fools Rush in on Earnings Reports

With earnings season set to begin, stocks will be moving, and investors will be paying close attention. Perhaps too much so. A study shows that small investors who try to jump in and out of stocks to game earnings announcements may be shooting themselves in the foot.

The study examined 293,630 earning releases over a 35-year period, dividing them up by percentile, based on 12-month returns. The top 1% of stocks with earnings released when the market was closed ran up the five days prior to the release and fell 3% in the five days following. Behind the move: Small investors rushing to buy and pushing prices up. When the announcement came, they stopped buying and got clobbered as the stock fell. Then, the stock resumed its upward march.

Brett Trueman, a professor of accounting at UCLA's Anderson School of Management and one of the study's authors, recommends short-term investors buy five days before a release and sell at the close of the last trading day before earnings come out. The daring can short the close the day before earnings and buy back five days later. Long-term investors, meanwhile, shouldn't worry a lot about a break in momentum. "Don't necessarily interpret it as bad news," he says. "After a few weeks they start rising again."

Fat Times for Some Muni Funds

Investors are looking far and wide for safe places to stash cash where they can get a yield that at least keeps up with inflation. For residents of high-tax states like California, Ohio, New York, or New Jersey, sticking close to home pays. Among single-state municipal money-market funds, yields are near 4% on a tax-adjusted basis for those in the highest tax bracket. The typical money fund delivers just 2.26%.

You can thank troubles facing muni bond insurers for the extra juice, as dicey subprime mortgage bets led to investor jitters. But, says Dan Wiener of the Independent Adviser for Vanguard Investors newsletter, "The risks aren't as substantial as they've been made out to be." Vanguard's low-cost funds offer some of the best yields.

Another way to make the most of your idle money: If your cash is being swept into a money fund at your brokerage firm, make sure it's going into the best option. "Many firms sweep cash into low-yielding bank products, so ask if a tax-exempt state fund is an option," says Peter Crane, of the Money Fund Intelligence newsletter. "The aftertax yield is going to beat the bank rate in most cases."


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