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Money-saving tax tips for filers

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NEW YORK (2/28/11)--Before filing your tax return this year, become familiar with important changes since tax year 2009. Then take advantage of every credit, deduction, and free resource available (The New York Times Feb. 18). Last year, millions of taxpayers didn’t understand that they needed to complete Schedule M to claim the Making Work Pay tax credit. Luckily, the Internal Revenue Service (IRS) gave eligible filers the credit anyway, but don’t count on that going forward. First stop: IRS Publication 17, which has a link for “What’s New for 2010.” And there are plenty of other resources to guide you through the tax-filing process, including websites, tax software, and free local assistance. Here are some suggestions:
* Find all tax deductions. A deduction reduces the amount of your taxable income. Common examples include mortgage interest you paid, charitable contributions, and medical and dental expenses that exceed 7.5% of your adjusted gross income. For more information about tax deductions for the 2010 tax year, visit irs.gov or efile.com/tax-deduction. * Don’t overlook a single tax credit. A credit is better than a deduction because it cuts your actual tax bill. Common examples include the child tax credit, dependent care tax credit, savers credit, and first-time homebuyer tax credit. For a list of family, work, and home-related tax credits, visit efile.com/tax-credit/federal-tax-credits. * Let go of some tax breaks. Tax breaks that disappeared for tax year 2010 include the exclusion from income of up to $2,400 in unemployment compensation, which means that all 2010 unemployment payments are taxable; and a deduction for state or local sales or excise taxes on new vehicle purchases (unless you bought the vehicle in 2009 after Feb. 16, but you paid the tax in 2010). And the first-time homebuyer’s credit is available only if you signed a contract before May 1 and closed before Oct. 1, 2010 (New York Times Feb. 18). * E-file if possible. Visit irs.gov for options. Or you can e-file with commercial tax software or through a paid tax preparer. Shop around, and take into account the filing costs for both federal and state returns. * E-file with Free-file if you’re eligible. If your income is less than $58,000, visit irs.gov for information about 20 tax software companies that make their products available for free; some also support state tax returns for free. If you make more than $58,000 and are comfortable preparing your own tax return, consider Free File Fillable Forms at irs.gov/freefile. * Use direct deposit. This is the fastest, safest way to receive your tax refund. * Get free help from VITA. The Volunteer Income Tax Assistance program offers free tax help to low- to moderate-income taxpayers, generally with incomes $49,000 and below. Certified volunteers are at VITA sites throughout the community—neighborhood centers, senior centers, libraries, schools, malls, and many credit unions. Most offer free e-filing. Call 800-906-9887 for the nearest VITA site. * Visit Taxpayer Assistance Centers (TACs). If you don’t think your tax issue can be handled online or by phone, TACs provide face-to-face assistance through April 9. Visit irs.gov/localcontacts to find the TAC closest to you. * Use Taxpayer Advocate Service (TAS) as a last resort. The TAS helps taxpayers resolve problems with the IRS. It’s free and confidential after you’ve tried to resolve the problem through regular IRS channels. Call 877-777-4778.
Finally, plan ahead. The average refund last year was $3,003. Rather than giving an interest-free loan to Uncle Sam, file a new Form W-4 with your employer and have less money withheld from your salary, putting more money in your pocket throughout the year. For more information, read “Don't pass up retirement tax credit” and “Find a qualified tax preparer” in Home & Family Finance Resource Center.

Tax tips mortgage help on HandFF Radio

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WASHINGTON (2/25/11)--Sunday’s H&FF Radio program covers tax advice for the self-employed and solutions to mortgage problems. 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:
* “Tax Savings for the Self-Employed.” Ray Lucia, certified financial planner and radio host of “The Ray Lucia Show,” San Diego, highlights tax issues for the self-employed, including saving for taxes and filing taxes quarterly. * “A View From the Trenches: Mortgages and the U.S. Housing Market.” Patrick Peavley, executive vice president, and Jackie Graham, mortgage loan specialist, McLean Mortgage Corp., McLean, Va., discuss the future of the housing market and home ownership. * “Mortgage Lending and Foreclosure Prevention.” Julia Gordon, senior policy counsel, The Center for Responsible Lending, Durham, N.C., shares strategies and resources for consumers struggling with their mortgages.
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 “What to Do When Your ARM is Due” and watch the “Refinancing Your Mortgage” video in the Home & Family Finance Resource Center.

Brady Bunch families face financial challenges

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McLEAN, Va. (2/23/11)--Blended families are the new normal. Divorce, remarriage, and living outside conventional marriage have changed families and created an expanded network of step relatives. With more than half of all marriages ending in divorce and more than 40% of all Americans having at least one step relative, it’s imperative to talk about money and how you’ll handle it before entering into a new marriage (USAToday.com Feb. 6). To keep your relationship sane and decrease money problems:
* Find common ground--Talk about money before blending families. Decide if you’ll have separate or joint accounts, or both, as well as who’ll be responsible for each child’s expenses. What contributions can you count on from ex-spouses; what financial commitments have you made to ex-spouses? * Discuss money issues with family members--Your children might have to change habits or get used to new rules pertaining to money, but including the kids in discussions about finances early on will lessen future problems. * Plan ahead--If you’re remarried and you and your new spouse each bring children to the new marriage, discuss how you’ll pay for your children’s college education. Will you both chip in for each child or will you be responsible for paying for only your own children? Will your former spouse, and perhaps the child’s grandparents, play a role? * Check insurance policies and wills--Read policies carefully to be certain that all family members are covered the way each parent wishes. It’s just as important to check your wills to make sure the wording includes all children, both natural and adopted. * Consider estate planning--Meet with an attorney and make sure all kids from past marriages are considered. This includes looking at college educations, inheritances, and even custody issues. Determine who will be responsible for your children if you die.
To learn more about creating financial harmony in stepfamilies, read “Financial Candor Makes Second Marriages Sweeter” in the Home & Family Finance Resource Center.

Take your job search off the beaten path

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WASHINGTON (2/22/11--With the national unemployment rate at 9% in January, it’s still hard to find a job. And it could remain tough for a while: The White House predicts that the unemployment rate should drop to a more normal level of 5.9%, but not until 2015 (The Wall Street Journal Online Feb. 14). If you’re not having luck with traditional job-hunting strategies, it might be time to approach your search from a new direction. Try one of these alternatives, reported by USNews.com, to showcase your skills and ramp up your networking potential:
* Speak up. Are you an expert in some topic, career-related or otherwise? You probably can find a local organization that would like to hear you speak. Try your local Kiwanis Club, Chamber of Commerce, or professional organization. You’ll not only highlight your knowledge and skills, but you’ll also make new contacts. * Use LinkedIn Events. You may already have a LinkedIn profile, but the social network’s Events application can be particularly useful. Add the application to your profile to find professional events in your network, such as speaking engagements, conferences, and other programs. * Check out Quora.com. This up-and-coming social-media website allows users to ask and answer questions on a variety of topics. Getting involved on the site could help you make new contacts and find answers to career questions. Answering questions on the site also allows you to establish yourself as an expert in your field and attract attention from others in your industry. * Start a website or blog. Post your portfolio and resume, provide links to relevant social-media profiles, or blog about issues in your field. When potential employers search for you online, they’ll find positive results. Maintaining a site or blog also shows off your tech-savvy--a trait that employers like to see. * Join a group. Find an activity or group that appeals to your personal interests. Taking a break from the job search to do something you enjoy, such as a sport or hobby, keeps you motivated and refreshed. And you never know--a new contact from your softball team or book club might even know about the perfect job for you.
For more information, listen to “Keep Your Head When Facing Job Loss” and “Where the Jobs Are Now” in the Home & Family Finance Resource Center.

HandFF Radio celebrates America Saves Week

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WASHINGTON (2/18/11)--Sunday’s H&FF Radio program recognizes America Saves Week, which begins Sunday, by offering savings strategies for consumers. 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:
* “America Saves Week.” George Barany, director of financial education, Consumer Federation of America, and national organizer, America Saves, explains why America Saves is important and discusses the organization’s strategic initiatives, including wealth-building through homeownership and at work. * “Military Saves.” Charles Lowery, acting director, Military Saves, outlines goals of the program and shares financial strategies for military families facing deployment. * “Emergency Savings: Rebuilding This Must-Have.” Kim McGrigg, community manager, Money Management International, provides steps to follow to rebuild your emergency savings fund. * “Tax Time Savings Bond Campaign.” Joanna Smith-Ramani, director of strategy, D2D (Doorways to Dreams) Fund, explains how you can purchase a savings bond for two other people when you file your federal income tax return.
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, watch the “Use Direct Deposit and Automatic Transfers” video and use the “What’s It Worth to Cut Back My Spending?” calculator in the Home & Family Finance Resource Center.

Boomers continue to reshape retirement

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NEW YORK (2/16/11)--If you’re one of the 78 million baby boomers reaching retirement age in the next 17 years, you won’t be surprised to find that your generation is changing the retirement landscape (SmartMoney Feb. 4). Three developments in retirement living deserve investigation. Senior co-housing. If you like people and want to be part of community decision making, but also love your privacy, check out senior co-housing. The defining characteristic of co-housing is participation. As a resident, you will participate in the neighborhood design of the community, which gives you the ability to own your own home and share common space. You’ll also participate in management, community meals, and decision making. You’ll share services such as landscaping and maybe even nursing. You’ll pay monthly dues, and meet with your community regularly to decide how to spend the dues money. One bonus: If you don’t require 24/7 on-site health care, these kinds of housing developments are usually less expensive than continuing care facilities. University-based retirement communities (UBRCs). Beaches and golf courses aren’t the only attractions that beckon retirees. An increasing number of retirement communities feature a university as the draw. UBRCs are usually located within a mile of a university. A UBRC forms a close tie with the participating university and offers health care at every level. The main attraction is access to college classes and events. Retirees also benefit from student interns who come into the retirement community. Access to this kind of lifelong health care, continuing education, and interesting ways to socialize can cost a lot, depending on location and amenities. Continuing care retirement communities (CCRCs) without walls. You don’t have to leave home to benefit from the services and amenities of a CCRC. Continuing care retirement communities “without walls” are springing up, bringing services to you and you to the services. This works well if you have a lot of money and are not sick. A more economical model involves paying a monthly fee for CCRC staff to arrange transportation and activities for you. If you want health care, the CCRC staff will coordinate access to certain services, but you pay for the care. If you need a lot of care, or have a lot of trouble moving around, this won’t work for you.

Act to lower your credit card rate

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MADISON, Wis. (2/14/11)--With the national average interest rate for credit cards reaching a record high of 14.73% (creditcards.com Feb. 2), you’ll want to make sure you’re getting the best deal possible. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 restricts issuers’ ability to raise rates, but whenever they can, you can be sure that many will. Here’s some advice from the Credit Union National Association’s Center for Personal Finance for getting the lowest rate possible on a credit card:
* Get a card from a credit union. A credit union credit card typically has a significantly lower interest rate than a bank credit card. For example, right now the national average rate for a high-limit “platinum” card is 2.34 percentage points higher at a bank than at a credit union ( Informa Research Services Inc. Feb 6). * Use your card for convenience only. The very best way to control credit card costs is to use your card for its primary advantages only--as a convenient and secure way to make daily purchases or cover emergency expenses. Then always pay off your balance as soon as possible--preferably within the grace period, when no interest charges apply. * Use a different kind of credit. Suppose you’re buying a big-ticket item, such as a computer, or paying for major car maintenance. Rather than use your expensive credit card, consider “closed-end” credit, a loan with a set number of monthly payments. A personal installment loan, even if it’s unsecured--that is, not backed by collateral--will have lower finance charges. * Tend to your credit score. The rate a credit card issuer will offer you is highly sensitive to your credit history and the score derived from it. The credit score is the lender’s estimate of the risk that you won’t repay your card balance. That’s why you’ll want to do everything you can to demonstrate that you’re creditworthy, such as by paying all your bills on time, without fail. * Use a secured card. A credit card backed by money you’ve set aside in a special account is a good way to start improving a weak credit score. Your lender will give you a better interest rate because it can always take money from your account if you don’t make your payments. But if you do, your credit record will improve and, over time, so will your score and your future cost of credit.
For more information, read “New Law Prompts Close Look at Your Credit Cards” in the Home & Family Finance Resource Center.

Experts talk couples and money on HandFF Radio

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WASHINGTON (2/11/11)--Sunday’s H&FF Radio program provides guidance to help couples navigate a range of financial issues. 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:
* “Is Your Marriage Match the Right Money Match?” Michael Sion, author, American Institute for Economic Research, Great Barrington, Mass., shares financial advice for couples from his book, “Money and Marriage: How to Choose a Financially Compatible Spouse.” * “Talkin’ Money With Your Honey--Get Financially Naked.” Manisha Thakor, founder, Women’s Financial Literacy Initiative, Santa Fe, N.M., explains how couples can approach financial discussions. * “Military Couples and Money.” Kimberly Lankford, contributing editor, Kiplinger’s Personal Finance magazine, offers strategies to help military couples prepare for deployment. * “Divorce: Separating Your Finances Can Be Harder.” John Ulzheimer, president of consumer education, SmartCredit.com, Costa Mesa, Calif., explains how divorce can affect a couple’s finances.
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 “Put Your Financial House in Order Before Tying the Knot” and “Economy Inspires Parting Couples to Get Creative” in the Home & Family Finance Resource Center.

Dont pass up retirement tax credit

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MADISON, Wis. (2/9/11)--Hard to believe, but as many as 88% of taxpayers who could benefit from it don’t even know about the Saver’s Credit. Officially named the Retirement Savings Contribution Credit, the 10-year-old saver’s credit was designed to encourage low- to middle-income workers to save for retirement. But a survey released mid-January by the Transamerica Center for Retirement Studies of 3,598 full- and part-time workers with incomes of less than $50,000 indicates that as few as 12% of those who could benefit from the credit are aware of it (TheStreet Jan. 17). One possible explanation for low awareness is that tax filers must use Internal Revenue Service (IRS) Forms 1040A, 1040, and 1040NR to claim the credit; it is not available if you file using Form 1040EZ. Thus, lower- to middle-income workers, those most likely to use 1040EZ and eligible for the credit, may miss it or remain unaware of it. An eligible worker can apply the credit to the first $2,000 of voluntary contributions to a 401(k) or similar employer-sponsored retirement plan or individual retirement account (IRA). There are credits of up to $1,000 for single filers and $2,000 for married couples. The saver's credit is available to workers aged 18 years and older who contributed to a company-sponsored retirement plan or IRA in the past year and are:
* Single or married filing separately, with adjusted gross income (AGI) of up to $27,750 in tax year 2010 or $28,250 in 2011. * Head of a household with AGI of up to $41,625 in 2010 and $42,375 in 2011. * Married and filing a joint return with AGI of up to $55,500 in 2010 or $56,500 in 2011.
You may not claim the saver’s credit if you’re a full-time student or claimed as a dependent on someone else’s return. If you use tax preparation software, look for prompts that refer to the saver’s credit, retirement savings contributions credit, or credit for qualified retirement savings contributions. If you work with a professional tax preparer, make sure he or sure is knowledgeable about the credit. And if you prepare your own forms, complete Form 8880 to determine the credit rate and amount; transfer that amount to the appropriate line on Form 1040A, 1040, or 1040NR. Remember, the credit is not available using Form 1040EZ. For more information, listen to “Save Money With Do-It-Yourself Tax Prep Online Software and Programs” and view “Getting Tax Records Organized” in Home & Family Finance Resource Center.

Contactless payments rise opportunists follow

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MADISON, Wis. (2/7/11)--Some observers believe 2011 is the year contactless mobile payments finally take off in the U.S. Parallel with that transition, the growth of credit card sales could begin to slide in the next few year, CNNMoney.com reported (Jan. 24). Pay-by-phone sales will grow from $16 billion in 2010 to $46 billion this year and $214 billion in 2015, according to the research firm Aite Group (Jan. 11). Visa, MasterCard, and megabanks are testing contactless mobile payments. And AT&T, T-Mobile, and Verizon have joined with Discover and Barclays to form a mobile application group called Isis. While mobile applications such as tap-and-go and bumping phones to exchange funds will grow steadily, especially among younger consumers, it will take a long time to change consumer habits away from using plastic cards. Meanwhile, fake mobile applications already have been written to compromise banking information stored on iPhones, Androids, and other mobile devices, Phonenews.com reported (Jan. 10) . Some applications contain malicious code that tries to compromise banking information stored on the devices to commit bank and/or credit card fraud. Jim Hanson, vice president for the Credit Union National Association’s center for personal finance, said, “It’s a cliché that new technology spawns new fraud--or at least new variations on old scams.” Consumers will have to be ever more vigilant in protecting their financial information, he said. Consumer Reports last fall observed that the organization “has not seen broad examples of consumer fraud from mobile payments, but there is a great deal of opportunity for consumer exploitation as mobile payments gain momentum.” The message for consumers: Be cautious about downloading phone apps without understanding their source. Stick with mobile tools from trusted providers, such as your credit union. And for more information, read “Keep Passwords Strong, Secret, and Safe” in Home & Family Finance Resource Center.

HandFF Radio Cellphone plans fraud prevention for seniors

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WASHINGTON (2/4/11)--Sunday’s H&FF Radio program helps older adults find the right cellphone plan, guard against fraud, and rethink retirement plans. 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:
* “Tips for Seniors Buying Cellphones.” Mac Haddow, senior fellow on public policy, Alliance for Generational Equity, Las Vegas, discusses special cellphone programs available to seniors. * “Fraud Against Senior Citizens: How to Fight Back.” Fred Claridge, director, Certified Senior Guidance Association, Las Vegas, explains what older people can do to protect themselves from scams. * “What is the Association of Mature American Citizens?” Daniel Weber, founder, AMAC, Bohemia, N.Y., describes how the AMAC works to resolve some of the issues seniors face. * “America, Welcome to the Poor House: What You Must Do to Protect Your Financial Future and the Reform We Need.” Jane White, president and founder, Retirement Solutions, Madison, N.J., provides guidelines for protecting your retirement savings in the face of a low employer savings match.
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 “‘Specialists’ Share Financial Expertise With Spouses” and use the “Cost of Borrowing From Your 401(k)” calculator in the Home & Family Finance Resource Center.

Do falling home prices signal time to buy

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NEW YORK (2/2/11)--Home prices in many of America’s largest cities continue to fall. The recently released Standard & Poor’s/Case-Shiller home price index reports average home prices slipped 1.6% in 20 U.S. cities during November. Prices in eight cities sank to their lowest levels since 2006 and 2007 (nytimes.com Jan. 25). These circumstances could mean it’s an excellent time to buy a home. Here are three things to consider before taking the plunge:
* How do you want to spend your extra money? Once you buy a house, you have to maintain it. You may need money you previously spent on life’s little luxuries to repair a leaky roof, fix a broken window, or replace light fixtures. * Would you benefit from tax breaks? Owning a home means you can deduct mortgage interest and property taxes you pay throughout the year from your taxes, but you must itemize these on your tax return. You benefit from tax breaks afforded to homeowners only if itemized deductions will be greater than the standard deduction. * Can you afford a monthly house payment? The 26/38 rule can help you identify how much house you can afford. A monthly house payment should be less than 26% of your monthly gross income and includes your mortgage, property insurance, and property taxes. Your total monthly debt obligations—including house payment, car loans, and student loans, for example—shouldn’t exceed 38% of your monthly gross income. This standard has some wiggle room; talk to your credit union home loan specialist for guidance.
For more things to think about before you buy a house, read “Find the Path to Homeownership” in the Home & Family Finance Resource Center.