Avoid rollover and refinancing penalties

NEW YORK (CNNMoney.com) -- Do we have to claim our government rebate checks as income on our 2008 tax return? - Dusti, Idaho

Well, Uncle Sam won't tax your rebate check. But your state might, says John Roth of tax information service, CCH.

While it's unclear right now how many states will make you claim the rebate check, it wouldn't be surprising if you do have to include it in your state taxes, according to Roth.

"States will want as much money as they can gather," he says. To find out, you'll want to ask your accountant or go to your state revenue department as you get closer to next year's tax season. This issue may not even be looked at until this Summer or Fall.

What is the difference between a bull and a bear market? - Pon

A bull market refers to a group of securities in which prices are rising or are expected to rise. On the other hand, a bear market is a falling stock market.

Generally bear markets are called when indexes drop 20% from their highs, says Doug Flynn of Flynn Zito Capital Management.

According to some reports, the use of "bull" and "bear" are used to describe the way the animals attack their opponents. A bull thrusts its horns up into the air while a bear swipes its paws down.

I left my job at the end of '07 to go back to school, but I have to do something with my 401(k) by the end of the year. What should I do? - Liza, North Carolina

The easy answer is to roll over your 401(k) into an individual IRA with a bank or mutual fund company. But you may also consider rolling the money into a Roth IRA if and only if you can pay income taxes on that now, says Flynn.

Since you won't be making much income as a student, you'll be in a lower tax bracket, says Frank Boucher of the Garrett Planning Network. If you pay income taxes on that amount now, you'll be able to take that money out tax-free with a Roth when your income is higher.

Whatever you do, make sure the money doesn't hit your hands first, says Boucher. Otherwise you'll be hit with taxes and penalties.

My husband and I just purchased a home last June. We want to refinance, but we don't know if there is a certain length of time we need to wait. What's the best thing for us to do? - Crystal, Michigan

It's not so much a matter of time as it is a matter of how much equity you have in your home. If you only put down 5%, you'll have a hard time refinancing, says Bob Moulton of Americana Mortgage.

As a general rule of thumb, you'll need about 10% to 20% of equity in your home in order to refinance. Look at how much money you put into your down payment and how much principal you've paid off so far.

You'll want to make sure you don't have any prepayment penalties in your mortgage note. This is a penalty you'll have to pay in case you pay off your mortgage early. Some penalties can be 3% of the original loan. So if you have a $200,000 loan, your penalty will be $6,000.

Prepayment penalties may expire after 2 or 3 years, or a year after your rate resets if you have an adjustable rate mortgage.

If you decide that refinancing is worth your time, shop around. These days it's getting a lot harder to qualify for a refinance. But if you have credit at or near 720, you should be fine.

And, just keep in mind, just because the Fed cuts rates, it doesn't mean the interest rate on a 30-year mortgage will go down. That's because mortgages are tied to what the market does, not what the Fed does.