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Small businesses benefit from new tax breaks

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SACRAMENTO, Calif. ( 1/31/11)--Small business owners may be eligible for several new tax breaks designed to help take the sting out of filing, thanks to four pieces of legislation passed in 2010 (Central Valley Business Times Jan. 24). New legislation--which created or expanded deductions and credits for small businesses as well as for self-employed individuals--includes the Patient Protection and Affordable Care Act of 2010; the Health Care and Education Reconciliation Act of 2010; the Small Business Jobs Act of 2010; and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. When preparing 2010 tax returns, look for credits and deductions mainly in the areas of capital investment and health insurance costs. Here’s an overview:
* Equipment deduction. Now, businesses can choose to treat the cost of certain property as an expense and deduct it in the year it’s placed in service, rather than having to depreciate it over several years using Internal Revenue Service (IRS) depreciation tables (Consumer Reports Money Adviser February). The maximum first-year deduction for 2010 was increased to $500,000 from $250,000, and the cap jumped to $2 million from $800,000. Although taxpayers lose the benefit of first-year dollar-for-dollar deductions above the cap, an extension of Section 179 of the tax code provides for a 50% “bonus depreciation” in 2010 to get cash into the hands of small businesses quickly. Bonus depreciation covers new equipment only, and you can depreciate items even if you operated in the red for the year (CNNMoney.com Jan. 17). * Health-care premium tax credits. Companies with 10 or fewer employees earning annual salaries averaging $25,000 or less in 2010 are eligible for the maximum credit of 35% of the premiums paid. The credit is phased out for companies with more than 25 employees with average annual salaries exceeding $50,000. To see if you qualify, complete the IRS “3 Simple Steps” worksheet. * Self-employed insurance deduction. Self-employed taxpayers who pay their own health insurance costs now can reduce their net earnings from self-employment by those health insurance costs (irs.gov January). Previously, you could deduct your insurance costs from business profits, but not from self-employment taxes. * Vehicle depreciation. For passenger autos you use in your business and first placed in service in 2010, your total depreciation deduction increases to $11,060. For a truck or van first placed in service in 2010, the maximum deduction increases to $11,160. However, if you didn’t take any bonus depreciation for those vehicles, your maximum deduction is $3,060 for a passenger automobile and $3,160 for a truck or van. * Alternative minimum tax break. General business credits of eligible small businesses in 2010 are not subject to the alternative minimum tax. According to the IRS, general business credits now can offset both regular income tax and alternative minimum tax. The provision applies to any general business credits determined in the first taxable year beginning after Dec. 31, 2009, as well as to any carryback of credits. For a list of general business credits, see IRS Form 3800.
For more information, read “Prep Your Home-Based Business for Success” in Home & Family Finance Resource Center.

iMSN Moneyi columnists money commandments on HandFF Radio

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WASHINGTON (1/28/11)--Sunday’s H&FF Radio program provides money-management strategies, including advice from personal finance columnist Liz Weston. The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “The 10 Commandments of Money: Survive and Thrive in the New Economy.” Liz Weston, personal finance columnist, MSN Money, outlines financial rules to follow in the new economic climate, such as balancing your budget, paying down toxic debt, and maximizing your financial flexibility. * “Health Care Survival Guide: Cost-Saving Options for the Suddenly Unemployed and Anyone Else Who Wants to Save Money.” Martin Rosen, executive vice president and co-founder, Health Advocate Inc., Plymouth Meeting, Pa., discusses ways to save money on health-care expenses regardless of insurance coverage, income, health, or employment status. * “If I’m So Smart, Where Did All My Money Go?” Doug Warshauer, founder, Kessler Warshauer Ventures, Chicago, explains how families can better manage money through budgeting and financial planning.
Home & Family Finance is a resource center for personal finance information at the Credit Union National Association (CUNA). The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites. For more information, read “Anticipate End of Cobra to Maintain Health Insurance” and use the “Budget Blueprint” calculator in the Home & Family Finance Resource Center.

Home appraisal advice eases home buying

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CHICAGO (1/26/11)--If you’re buying a house, it’s important to understand the role of a mortgage appraisal. Lenders use appraisals to make sure the collateral will support the loan they’re intending to make. Understanding this is just one piece of advice for consumers from the website of Appraisal Institute, based in Chicago (Jan. 12). The institute encourages consumers to:
* Make sure the lender hires a qualified appraiser--As the buyer, you want an appraiser with field experience in your market, and the knowledge and experience to handle the appraisal properly. Ask your lender for the appraiser’s qualifications and, specifically, if the appraiser is certified by a professional appraisal organization such as the American Society of Appraisers. * Go along during the inspection--You can accompany an appraiser during the appraisal inspection and offer information you consider important. Tell your lender you’d like to do this and confirm the appointment. Pay attention to whether an adequate inspection is performed and decide if the appraiser spent enough time at the property to note important features, improvements, or problems. * Get a copy of the report--Though the lender orders the appraisal to help assess collateral risk, you have a right to obtain a copy as well. Federal law requires that lenders provide delivery of the appraisal to consumers upon request within 30 days, whether credit is granted, denied, or the application is withdrawn. * Examine the report--Though a qualified appraiser is the best person to review an appraisal, you can review the appraisal as well. One common error is miscalculation of gross living area. Pay attention to whether adjacent homes add or detract from the value of the property, the property is equal to or lower in price than surrounding homes, specific rooms such as a bathroom or kitchen need remodeling, and the number of bedrooms and baths in the home are comparable to similar houses in the same price range. * Order a second appraisal--If problems arise from the first appraisal, obtain a second one. * File necessary complaints--Federal law requires lenders to report legitimate complaints with appropriate regulatory authorities. To contact the appropriate appraisal board, visit asc.gov.
To find out more about the appraisal process, and how it differs from a home inspection, read “Appraisers Home In on Value” in the Home & Family Finance Resource Center. And, visit your credit union for all your home loan needs.

Find a qualified tax preparer

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NEW YORK (1/24/11)--If the thought of preparing your own taxes makes your head spin, you’re in good company. The National Taxpayer Advocate office, within the Internal Revenue Service (IRS), reports that 60% of taxpayers pay someone else to prepare their returns (WalletPop.com Jan. 14). Enlisting the services of a tax preparer can be convenient, but research before deciding which one to trust with your taxes. WalletPop.com offers these suggestions for finding a reliable, qualified tax preparer:
* Go online. Do a search for tax preparers in your area. Check each one’s website for information about the preparer’s qualifications. Also look for signs that the preparer stays informed about the latest tax issues, perhaps by writing a tax blog or contributing to media stories about taxes. * Look for complaints. Check with licensing agencies or professional organizations to find out if complaints have been filed against a preparer. If a preparer has a number of complaints on record, you may want to steer clear. * Ask about compliance. The IRS requires all paid tax preparers to have a Preparer Tax Identification Number (PTIN). Some states also require additional licensing. Ask potential tax preparers if they meet these requirements. * Consider the cost. You probably can expect to pay between $200 and $500 for a federal return. But fees can vary depending on your location and the complexity of your return. If a preparer’s fees differ greatly from others in the area, don’t be afraid to ask why. * Expect good service. Does the preparer return your phone calls, answer your questions, and advise you about which documents you should bring to your appointment? If not, look for someone you feel more comfortable working with. * Check availability. Find out when the preparer’s office is open and how you can get in touch during the off-season, in case there’s a problem with your return. * Get recommendations. Ask family or friends if they can refer you to a preparer. But don’t settle for a name alone--ask additional questions about what the preparer does or doesn’t do well.
To learn more, read “Online Tool Makes Tracking Deductions a Snap” and watch the “Getting Tax Records Organized” video in the Home & Family Finance Resource Center.

HandFF Radio Resources to save on airfare prevent foreclosure

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WASHINGTON (1/21/11)--Sunday’s H&FF Radio program helps you find deals on flights, steer clear of foreclosure, understand financial habits, and avoid investment mistakes. The show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* “Reconnect With Your Travel Agent for Best Airfare.” Mark Murphy, president/CEO, Performance Media, Moorestown, N.J., discusses how using a travel agent can help you save time and money when booking a flight. * “WaysHome: Consumer Foreclosure Prevention Education Interactive Video.” Margaret Simeone, vice president of marketing, Fannie Mae, Washington, D.C., shares information about a new online video that teaches homeowners about mortgages and foreclosure prevention. * “Discover Your Financial Genealogy.” Susan Tiffany, certified credit union financial counselor and director of consumer periodicals, Credit Union National Association (CUNA), Madison, Wis., explains how conducting oral interviews with elder family members may reveal why you have a particular relationship with money. * “Where You Should Save and Invest.” Eleanor Blayney, certified financial planner and owner, Direction$ LLC, McLean, Va., reveals savings and investment mistakes people make and suggests where to put your money based on today’s financial climate.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites. For more information, read “In a Down Market, It Pays to Know the Financial Risks” and use the “Do I Want a Fixed or Adjustable Rate Mortgage?” calculator in the Home & Family Finance Resource Center.

Blowin in the windfall

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MADISON, Wis. (1/19/11)--This month’s $380 million lottery drawing brought worldwide attention to the holders of the two winning tickets. Each time a big lottery jackpot hits the news, you can be forgiven for thinking “That could be me!” and dreaming of a spending spree. More likely you’ll get a less newsworthy windfall--found cash, a year-end bonus, a modest inheritance. But even moderate windfalls can lead to costly mistakes if you’re not careful. To ensure that you don’t blow any windfalls that come your way, the Credit Union National Association's Center for Personal Finance recommends that you start by getting help from qualified advisers. Follow these tips:
* Pay the Internal Revenue Service first.” Consult an expert--accountant, tax attorney, or other tax adviser--to determine your tax liability, if any. (Your state or local bar association might offer referrals to tax attorneys.) Winnings from gambling are taxable, of course. Insurance settlements and inheritances might not be. If you do owe the government something, immediately set that amount aside before you spend any of the rest. * Look at the whole picture. Almost as common as news stories about lottery winners are the follow-up articles about sudden millionaires who foolishly let it all slip away. Make no rash decisions. Instead turn to a Certified Financial Planner (CFP) for comprehensive windfall advice. A CFP designation means the planner has passed a rigorous exam and has stayed up to date with continuing education. Let the CFP help you consider all your needs, goals, and options and make the most of your good fortune. * Give wisely. Windfalls can put recipients in a charitable mood. Get legal advice before giving money to friends and relatives to head off potential tax issues and hard feelings. Check out charitable organizations through evaluators such as Charity Navigator and Give Well to make sure your donations will be put to good use. And reward yourself, too. It’s OK to splurge a little. Just be sure you don’t jeopardize your long-term goals when you do. * Keep an even keel. Windfalls can be stressful, especially if they’re associated with a death in the family or because of a public event. Excitement, publicity, and the inevitable demands of opportunists and investment swindlers can be bad for your physical and mental health. Before you feel overwhelmed, talk to a trusted personal or family therapist about coping skills.
For more help dealing with a windfall, read “Make the Most of Unexpected Good Fortune” in the Home & Family Finance Resource Center.

Your home Prepare for a tough sell in 2011

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MADISON, Wis. (1/12/11)--If you’re planning to sell your house in 2011, it’s going to be a tough market. That’s the consensus of a number of analysts predicting that home prices will continue to fall, interest rates will rise in the second half of the year, and the number of sellers will continue to outnumber the number of buyers (seekingalpha.com Jan. 4). The mortgage market has been so dismal Moody’s Analytics suggested last year that in many markets in the U.S. it made more sense to rent than to buy. The cost to rent has gone up a modest 3% the past year and should continue to be moderate. Some observers, however, say the market may improve by mid-2011 and certainly by the end of 2011. Moody’s chief economist Mark Zandi told CNNMoney.com (Jan. 4) that owning a home again will be more advantageous than renting. His reasoning: Home prices will fall more, making ownership more affordable and the oversupply of homes for sale will keep already depressed home prices low. And while mortgage rates will rise in the second half of 2011, they will remain low by historical standards. While forecasts for the housing market are varied, motivated sellers can succeed with these steps:
* First, get your house ready to sell. Often referred to as staging, and the subject of many television shows, this simply means taking an objective look at the sales appeal of your home. Does it need painting, new carpet, or minor fix ups? Get rid of things that make it your home--photos, for example. Make it as neutral and as uncluttered as possible. Sell to buyers’ needs, not yours. Be honest with yourself about its curb appeal. * Second, decide whether you’ll go it alone (FSBO or for sale by owner) or enlist a broker. FSBO means more work on your part, but potentially more money in your pocket. And you’ll likely have to fend off numerous calls from brokers hoping to get your listing. Listing with a broker offers greater marketing potential, but you’ll be paying commissions to the selling agent and usually a buying agent. * Third, decide whether you’re willing to offer incentives. Even if you go it alone you might want to consider a commission to the successful buyer’s agent. Agents are likely to nit pick your house to death if they show it without one. Consider including paying for a home warranty for the first year or two. They typically cover all appliances and the heating and cooling systems, for around $500 or so annually. Or offer to pay a portion of the buyer’s closing costs; you can deduct it as a sales cost. * Finally, be patient. Just try to find someone who can give you an accurate picture of how long it will take to sell a home these days. It all depends on local market conditions.
For more ideas, read “You Can Sell Your House--Even in a Down Market,” in Home & Family Finance Resource Center.

Three ways to leverage your payroll tax raise

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NEW YORK (1/10/11)--If you have a job and pay into Social Security, you’ll get a temporary “raise” in 2011. That’s because a 2% decrease in your payroll taxes is part of the Tax Hike Prevention Act Congress signed into law at the end of 2010 (msnbc.com Jan 3). You won’t see this money in a lump sum. Instead, each paycheck will be a tad more because you can expect to pay a little less in taxes. How much? You can get an idea by visiting Kiplinger.com and typing “tax cut calculator” in the search engine. No matter what size your “raise,” if you don’t plan how you’ll use that money it will slip away. Here are three ways to get power out of that extra cash:
* Invest in yourself. If you don’t have any credit-card debt, put the entire 2% in a pre-tax retirement account or Roth IRA, start laddering certificates of deposit/share certificates (CDs), open a high-yield savings account, or invest in a mutual fund. If you have credit-card debt, use the extra cash to pay it down. * Invest in your living situation. Establish an appliance-replacement fund and think “energy-efficient,” pay more on your mortgage every month, or put the money aside every paycheck for auto maintenance. * Invest in quality of life. Start a fund for gift giving so you can celebrate important occasions and give to charity without worry, add a line to your budget for family entertainment so you’re ready when the big show comes to town, stash the money to pay the rising costs of health care, or join a fitness club and invest in your personal health and well-being.
Two of these ideas have bonuses in that you’ll get a percentage back if you invest in a pre-tax retirement account or a health savings account. Others save you money by reducing costs: If you pay down credit card debt, pay more on your mortgage, or upgrade an appliance, you’ll wind up paying less in interest or the cost of energy. If you invest in a Roth IRA, besides bringing you more money when you retire, your contributions most likely will be cheaper in today’s tax climate than they will be in the future. For more tax help, view the video “Getting Tax Records Organized” in the Home & Family Finance Resource Center.

HandFF Radio presents investing financial checkup tips

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WASHINGTON (1/7/11)--Sunday's H&FF Radio program exposes investment tips that don’t work and discusses survey results showing Americans are more frugal these days, why and when to get a financial checkup, and what the latest in ATM technology means for you. The show, rebroadcast from an earlier airing and which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:
* "Investment Tips That Simply Don’t Work." Michael Reese, president and founding principal, Centennial Wealth Advisory, Traverse City, Mich., provides insights about how to avoid losses. * "Americans More Frugal These Days." Janet Bodnar, editor, Kiplinger’s Personal Finance magazine, Washington, D.C., reviews the surprising and sobering results from a survey on family finances. * "Get a Financial Checkup." Susan Tiffany, certified credit union financial counselor and director, consumer periodicals, Credit Union National Association (CUNA), Madison, Wis., covers how to recognize the signs that you could stand a professional checkup--even if you aren’t in dire financial straits. * "The Latest in ATM Technology." Kathy Herziger-Snider, vice president product development, CO-OP Financial Services, Rancho Cucamonga, Calif., describes how advances in ATM technology affect you.
Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, maker of award-winning cheddar; and the Defense Credit Union Council and member credit unions, serving those who serve the country worldwide. Home & Family Finance airs Sundays at 3 p.m. ET on the Radio America Network. The show also is carried on American Forces Radio Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network. CUNA and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites. For more information, read “In a Down Market, It Pays to Know the Financial Risks,” and view the “Investing: Dollar Cost Averaging” video in the Home & Family Finance Resource Center.

Find the right fitness equipment

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SOUTH BEND, Ind. (1/5/11)--Is your New Year’s Resolution to get fit, but your personal economy is shaky? You can lose weight, gain muscle mass, pump up your endorphins, increase flexibility--name your goal--without spending precious time and scarce money at a gym. Learn how to shop for quality new or used fitness equipment--from the simplest to the most complicated--and move your workout into your home (GenXFinance.com Dec. 27). New equipment is ideal--it comes with a warranty and is an investment. But if your budget says “no,” or you aren’t sure what you need, it makes sense to purchase used equipment. Websites can help you figure out what you need and want, get you started on your own exercise program, and even review brand names and models. Then, when you are ready to purchase equipment, you can make an informed decision. Use key words and phrases to search these sites for ratings, comparisons, reviews, or helpful tips:
* ConsumerSearch.com reports what experts and users say about a product, without being influenced by advertising or other commercial considerations. * About.com gets its information from real people with passion and expertise in their fields who agree to observe a conflict-of-interest policy. * E-How.com combines expert with practical knowledge to help you research, share, and discuss solutions and tips for just about anything you want to do.
Examples of key words or phrases: exercise video, treadmill, resistance band, strength training, toning, elliptical machine, fit on a budget, and so forth. You’ll find choices for information about the topic you enter, plus leads to new areas of exercise you perhaps hadn’t considered. Before you buy fitness equipment:
* Think about activities you already enjoy. This is important when venturing into something new to increase the likelihood you’ll actually use the equipment you buy. For example, if you hate bike riding, don’t buy a stationary bike. Start with exercise videos that you rent or borrow from the library and a good pair of shoes to find out what you like. * Determine your budget. Exercise gear doesn’t have to be expensive, but you want good quality. Visit About.com and search “exercise on a budget” for alternatives to spending a lot of money for gym membership or on home equipment. * How much room do you have? Before you buy anything bigger than resistance bands, think about where you’ll put it. Measure your space to avoid future problems. * Beware of fitness fraud. This includes quick fixes and impossible claims. Example: An ab machine will target your abdominal muscles, but it won’t reduce fat over your tummy.
For a broad review of healthy ideas, listen to “10 Ways to Save on Health Care” on the Home & Family Finance Resource Center.

Understand provisions of 2010 Tax Relief Act

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ALEXANDRIA, Va. (1/3/11)--In December, Congress passed and President Barach Obama signed the 2010 Tax Relief Act. The bill brings significant tax-law changes for many Americans. The National Society of Accountants (Dec. 20) breaks down some of the most important changes, including:
* Increased Alternative Minimum Tax exemption amounts. The act increases 2010 exemption amounts to $47,450 for individuals, $72,450 for married couples filing jointly and surviving spouses, and $36,225 for married couples filing separately. * No change in tax rates. Individual tax rates will be held at the 2010 level for the next two years. * Extended capital-gains tax rate. For 2010, qualified capital gains and dividends are taxed at a maximum rate of 15%. The act extends that rate through Dec. 31, 2012. * Extended itemized deduction limitation. The “Pease” limitation--which reduces the total amount of a higher-income individual’s otherwise allowable deductions--was suspended for 2010. It was scheduled to return at a projected level of income starting at $169,550. However, the act has extended the suspension through Dec. 31, 2012. * Suspension of personal exemption phaseout (PEP) extended. The PEP reduced the total amount of exemptions for taxpayers with adjusted gross incomes exceeding the applicable threshold--$169,550 for singles and $254,350 for joint filers in 2011. The PEP was suspended for 2010, and the act extends that suspension through Dec. 31, 2012. * Extended marriage penalty relief. The relief provision increased the basic standard deduction for married couples filing joint returns to twice the amount for a single taxpayer. The act extends marriage penalty relief through Dec. 31, 2012.
For more information about preparing for tax season, read “Your Tax Bracket Tells Just Part of the Story” and watch the “Getting Tax Records Organized” video in the Home & Family Finance Resource Center.