Is there anything a taxpayer can do to avoid the Alternative Minimum Tax?

It’s estimated that nearly 4,000,000 American consumers will get stuck paying the Alternative Minimum Tax this year, more commonly known as the “dreaded AMT”. According to the Tax Policy Center, that means approximately $6,600 in extra tax costs on average.

Unfortunately, there are still many taxpayers who don’t even realize that there’s a two tax system in the United States and that, depending on several factors, they will have to pay whichever of those two tax amounts is higher.

The good news is that a certain portion of your income is exempt from the AMT.  Married couples, for example, receive around $80,800 for the full exemption and, for single taxpayers, it’s approximately $51,900. Unfortunately the “AMT exemption” will, as your income gets higher, be phased out, meaning that single people and married couples earn between $200,000 and $500,000 are the ones that will more than likely be facing the tax this year.

What “triggers” put you at a higher risk of facing the AMT?

Many of the deductions that you might qualify for on your “regular” federal income tax return are allowed with the AMT, including personal exemptions, standard deductions and also deductions for state and local income taxes.

For example,  when you live in a state where state and local taxes are high and you normally would take a big deduction on your regular taxes, or when you end up having many miscellaneous deductions or have several children (which usually means a number of personal exemptions), these deductions are instead adjusted downward or, in some cases, eliminated entirely when it comes to calculating the AMT.

Unfortunately, if you normally take these deductions, the AMT liability may be triggered by them. There are other “triggers” as well including exercising, but not selling, your stock options, reporting on your taxes that you have a large investment expense and also claiming accelerated depreciation on something. You could also put yourself at risk for the AMT liability if you use a home equity loan or line of credit for anything other than actually improving your home.

What can be done to avoid the AMT?

Frankly, you need to be careful when bunching your itemized deductions if you’re a borderline candidate for the AMT because they might end up losing their value. Shifting some deductions to a year when you won’t be subject to the AMT is what most tax expert advise, if possible.

Unfortunately, many upper middle-class taxpayers may not be able to do much if they are firmly in the “AMT zone” except prepare to pay higher taxes.

Who needs an Emergency Fund? If these things happen, you do.

If you’ve been an adult for any length of time you know that life is full of surprises, some good and some, well, not so good. Some of the “not so good” surprises include major car repairs, unforeseen illnesses and getting laid off from the job, all of which can catch you completely off-guard and leave you financially strapped.

When that happens, one of the best things that you can possibly have to help you is an Emergency Fund of cash set up to fix those repairs, pay those bills or see you through until you get your next job.

The so-called “experts” in finance will tell you that having an emergency fund of 3 months’ worth of money is a good idea, but frankly having 6 months or even 12 months’ worth of cash put aside “just in case” is much better. That means if you make $2000 a month after taxes, you need at least $6000 in your emergency fund to cover you for three months, $12,000 to cover you for six months or $24,000 to cover you for a full year. Is that a lot of money for many people? Yes. Will it save your behind if you have a financial emergency? Undoubtedly!

So what kind of emergencies are we talking about here? Let’s take a look, shall we.

First there is the loss of your job. Whether you’ve been laid off, fired or need to leave for personal reasons, your emergency fund will provide a much-needed “safety net” to help get you through until you get started working again.

Then there’s the dreaded medical emergency. The fact is, even if you already have health insurance it doesn’t cover all of the costs of care, especially if an ambulance ride is necessary or things like major surgery and physical therapy are needed. Also, don’t forget about your pets needing emergency medical help, something that can be just as costly, and just as big as a financial shocker.

If you suddenly have to move because you’re being kicked out of your apartment, your boss needs you in another state or for some other unforeseen reason, having an emergency fund will help to pay for moving expenses which, frankly, can be quite high. Not only that but if you need temporary housing, new furniture or need to put your things in storage for a few weeks or even months, having your emergency fund to pay for those extra costs will be a godsend.

Don’t even get us started about unexpected car repairs,  which always seem to come at the very worst time. An engine blows, a  timing belt goes or something else that costs hundreds, or even thousands of dollars, and insurance doesn’t pay for those things now, does it? Even worse, if you’re stuck having to purchase a new car entirely, having that emergency fund will at least take some of the sting out of your situation.

Speaking of repairs, let’s say that your refrigerator suddenly conks out, your washing machine goes on the fritz or a wind storm blows off half your roof. Sure, you might have homeowners insurance but if your deductible is really high you’re going to be left paying a lot of those repairs out-of-pocket. If you do, you’ll be glad to have the emergency fund handy to help out.

Then of course there is the last one on our list, unexpected travel. If your dear grandmother passes and she lives in California but you live in New York, going to her funeral is going to cost a pretty penny. The same thing can be said for any emergency travel that you need to make and, if your emergency fund is well-stocked, at least you’ll have the extra cash to cover the expenses.

The bottom line, dear readers, is simply this; having an emergency fund is basically “saving for a rainy day”. Since you really never know when it’s going to rain, or when a sudden financial expense is going to pop up, having that emergency fund handy and full of easy to access cash may very well be the only lifesaver you’ve got.

So do yourselves a favor and, even if it’s only 50 or $60 a week, start putting money aside into the emergency fund today. The fact is, you never know what tomorrow’s going to bring.

 

A case of Mistaken Identity? What to do if Debt Collectors start Calling for something you Don’t Owe

It’s happening more and more across the country; consumers receiving phone calls from collection agencies about bills that they don’t actually owe. In fact, the problem has grown so excessive that it’s now the #2 complaint that the Consumer Financial Protection Bureau is receiving. If you’re keen on understanding why it’s happening, and what to do about it if you find yourself getting these types of calls, read below and find out. Enjoy.

Simply put, people who don’t pay their bills expect to hear from a debt collector but what they don’t expect is to get calls or letters from a collection agency for debts that aren’t theirs. The question that this growing number of consumers have is what to do about it if it does happen, and the first thing that they should do is contact the Consumer Financial Protection Bureau or CFPB. In 2013 they started accepting complaints from consumers who were getting calls or collection notices that were unwarranted and, in the first six months, they got over 11,000 of them.

The most common complaint was mistaken identity, or collection agencies trying to collect on a debt from a person who didn’t actually owe the debt. The US PIRG, another consumer advocacy group, analyzed all of the complaints and found that the collection problems were already a major source of them, second only to complaints about mortgages during the same period of time.

Some of the other complaints from consumers about the collectors included;

What exactly are your rights?

Although it’s hard to have sympathy for them, the fact is that that collectors have a very tough job. Very few people actually want to talk to them so many of their calls and letters go unanswered or completely ignored. This of course makes it extremely difficult for them to verify information. Also, many consumers feel that if they simply ignore their calls and letters and don’t respond, collection agencies will go away.

The first thing that you should do if you’re getting calls from an unknown collection agency is to simply inform the caller that you won’t do anything until a “validation notice” is sent to you, something that’s required by federal law. They are required to send you that validation notice by the Fair That Collection Practices Act, and to do it within 5 days of their first contact with any consumer. The notice must include the name of the creditor to whom you supposedly owe money as well as information on how to proceed if you believe that the debt is not owed by you.

“You should do that in writing as soon as possible, preferably within 30 days of your first contact with the debt collector,” explained Christopher Koegel, an assistant director at the Federal Trade Commission. “Once they get that letter, the collector is not supposed to continue collection attempts until it can verify that you are the right person.”

One of the reasons you need to address this type of problem as quickly as possible is that many debt collectors will have this debt, whether it’s yours or not, and add it to your credit report, something that could lower your credit score. That’s why getting your free credit report every year from annualcreditreport.com is so important, so that you can find any incorrect information, dispute it in writing and get it taken off of your report.

By law if you inform a debt collecting agency that you want them to stop calling they must, but it’s best to do this in writing. If you actually do owe the debt it won’t make it go away, and the debt collecting agency could decide to take you to court, but the harassing phone calls to stop.

My Kinda Hoops Contest and Giveaway

What do credit cards, home mortgages, auto insurance, and life insurance all have in common? In each case you want the best possible rate, plain and simple! I can appreciate any company that allows me to save in each of those areas, as those payments equate to a majority of my monthly bills. This is precisely why I think Lowest Rate is a great site to bargain shop for the best rates on your loans today. Couple low interest rates with an awesome college basketball tournament giveaway, and I’m sold.

The way to your customers hearts is by giving back to them, and doing so in a fun and creative way. Their My Kinda Hoops contest is simple and easy. Just pick the team that you think is going to win, and every round they win you will have a certain number of entries submitted into the drawing. So make sure you sign in and submit right away because the first one alone will make you eligible for 20 entries into the drawing! If your pick should lose early on, don’t fret, you will have the opportunity to make one additional selection as your tourney winner. If you pick now and your team goes all the way, you will get a maximum of 54 entries into the drawing. This will give you a great chance to win an iPad mini, Samsung 8, or even $500 in cold hard cash.

After the championship games ends the drawing will commence and the winner will be announced on April 11th at 12pm EST. If I were a betting man, and I am, the smart money says University of Michigan goes all the way! To read all of the entry rules and sign-up information for Canadian residents, please go to the contest landing page to get the fun started.

3 Steps to Set up a Budget

We’ve talked about this many times in the past and, simply put, the big difference between financially secure people and those who are not usually boils down to one specific thing; a budget. People who create and, of course, use a budget are usually more secure financially, have less debt and have higher credit scores then people who don’t.

If you still don’t have a budget and really don’t have a clue as to how you should start, the tips below will get you there and allow you to begin taking better control of your finances right now, today. Enjoy.

Your 1st  step is to look at the exact amount of money you spent per month over the last three or four months. If you primarily use a credit or debit card for the majority of your purposes, finding out this number is as simple as logging into your bank’s dashboard to see your transaction history. If you’re the kind of person that uses cash for most of your transactions and purchases however, it will be a little bit more involved as you’ll need to look at how much money came in, and how much money you had left at the end of the last two or three months, in order to determine how much you spent.

If that’s not possible, then at the beginning of the next month you should get a paper notebook or app and start keeping track of everything, and every purchase, that you make. (Yes, it might be slightly tedious but it’s vital to your financial future.)

What you’re looking for is where exactly your money has been going.  This is the information you need to figure out if you’ve been spending too much on certain things like entertainment, eating out, clothes and other “non- essential” items. Knowing exactly what you’ve spent is a vital part of putting together your first budget but, frankly, the next step is more important.

That 2nd step is making a plan to address your overspending.

Let’s say, for the sake of example, that you make $2400 after taxes every month. Now let’s say that you spend;

  • $1100 on housing
  • Florida dollars on groceries
  • $300 on entertainment
  • $100 on your phone
  • $750 on other expenses

Guess what bucko, you’re spending $2650 a month or $250 more than you actually make! Looking at those numbers is easy to see that there’s a problem, but the question that’s more important is how to address it, change it and fix it.

Since a budget is basically a spending plan what you’ll need to do is write down how much you’re willing to spend on each of those categories the following month and, more importantly, decide where to eliminate or at least cut back on spending. Will you eat out less, spend less on entertainment or change your phone plan?  What about clothing and $7.00 lattes at Starbucks?

Whatever you need to do to whittle that spending down to $2400 (or less if possible), you’ll need to do it if you want to get your spending and your finances under control and stay in control.

Your 3rd  step is to simply track your spending. Once you’ve categorized your spending (and you can make as many categories as you like) you need a system to track it. That’s about as simple as it gets these days with the plethora of spreadsheet programs or online budgeting apps available. Frankly, without one of these you’ll never be able to stick your budget so do yourself a favor and pick one up ASAP.

Actually, you might find out that keeping a budget is actually a bit of fun, especially when you see how much money you’re actually managing to save.

Every day, or at least once a week, check your spreadsheet and make sure that you’re not over your budget on any one particular category. Did you spend $80 today on groceries? Make sure you noted on your spreadsheet and see how much you have left for the rest of the month. Once you get the hang of it you’ll actually become quite skilled at making your money last longer, something that will inevitably help you to start putting away into a retirement account, paying down your debt or funding an emergency account.

Should you consider refinancing a student loan?

One of the biggest debts that the average American has is their student loans from college. Recently there’s been a lot of talk about “refinancing” a student loan and today  we’ll take a look at a number of different factors that you should know about before making a decision on whether to do this or not. Enjoy.

The first question is simply this; should someone refinance their private student loan into a loan with a lower rate? Most private student loans feature variable interest rates that have been based on a specific borrower’s credit history. When that person first takes out their private student loan, he or she probably has a limited credit profile and will be treated as a higher credit risk by most lenders. What this means is that, for most student loan borrowers, a private student loan comes with interest rates that are quite high.

That being said, there are a number of borrowers who, after graduation, and obtained a job and gotten excellent credit. These people may be able to qualify for a refinance of their existing private student loan and turn it into a new private loan at a much lower rate.

For many borrowers however the situation is, unfortunately, not available. Not only that but there are few financial institutions that actually offer this type of financial product. If you do happen to find one there are a number of things to consider.

First, look closely at the APR. While the monthly payment on your new student loan might well be lower, the interest rate could actually be higher due to the fact that your new long-term may be spread out over a longer period of years. If you are an active-duty service member, you might wish to consider that if you refinance its possible you’ll lose the rate benefits on your pre-service obligations.

You also need to closely consider the tax consequences as your new loan may not be considered a student loan and might not qualify for the interest tax deductions that student loan’s qualify for. If claiming this deduction is something you do every year you definitely will want to take a look at whether or not you’ll be able to continue doing the same.

As far as federal student loans are concerned, refinancing them as private student loans with a lower rate depends on a number of factors. The fact is, Congress has not lowered the rate on federal student loans in quite some time, including the most common loan the Unsubsidized Stafford Loan. If you’re a borrower with excellent credit you may be able to qualify to refinance your federal student loan with a newer one at a lower rate.

There are a number of risks however. First you need to look closely at whether you’ll be switching from a fixed loan to a variable rate loan. Since most federal loans have fixed rates you won’t have to worry about your monthly payment increasing if interest rates rise but, if you’ve switched to a variable rate loan and interest rates rise, your loan amount could rise with them.

Lastly you want to be sure to understand what you’re giving up with your federal student loan before you make the choice to change it into a new private student loan, mostly forgiveness options. On the other hand, if you have sufficient emergency savings, a strong credit history, a secure job and likely won’t need any forgiveness options, refinancing to a new private student loan may well be worth considering.

Indeed, it could help you take advantage of today’s historically low interest rates as well as the improved credit profile that you (hopefully) have today. It’s definitely a useful way to lower your monthly college loan payments as well as build your savings and retirement fund, but you need to closely consider all of the risks before signing on any dotted line.

Distinction between payday loan providers and loan sharks

Many people fail to distinguish between real loan sharks and providers of payday loans and other personal loan facilities and this is very unfair to the many legitimate providers of emergency cash like Wonga. This article will highlight a case study of what happens if you seek credit from unauthorized, loan sharks. Read on to find out how to spot the hallmarks of an unauthorized credit organization or a loan shark as they are also known.

 

What a real loan shark looks like

The case study concerns the arrest and conviction of three men, Ian Parsons, Christopher Weaver and Mark Weaver. These men ran an illegal loan shark facility form their home in Manchester, and in September 2014 they were sent to prison for 32 months. The loan sharks preyed on vulnerable young women, and charged them 100% interest on loans, so for example a loan of £100 would have to be paid back at £20 a week for 10 weeks. Charges were also added to the initial loan sum if there were late payments. The loan sharks menaced and threatened their victims with intimidating texts, and arranged all the “loans’ through informal means such as Blackberry Messenger or text message. Specific threats sent via text to the victims included the following “He’ll come and grab you and snap your jaw” and “I will end you”. Luckily, personal loans offered through reputable online companies like Wonga and more traditional banking establishments and building societies like Barclays or the Halifax are well developed brands that are trustworthy and would not risk the damage to their Brand identity by resorting to such underhand techniques as a means of recovering debt. The loan shark operation was eventually dismantled by the UK Illegal Money Lending Team, a dedicated team with The Metropolitan Police. The loan sharks were arrested, prosecuted and sent to prison.

 

A need for legitimate credit facilities?

Cases like this both highlight the need for legitimate sources of credit for things like personal loans, and the key differences between loan sharks and legitimate providers of credit facilities like Wonga. Provision of legitimate sources of credit means that vulnerable people do not have to turn to criminal loan sharks who use threats of physical violence to intimidate their victims to repay money they cannot afford.

 

Regulation

Legitimate credit providers are authorized and regulated and any illegal intimidation is strictly prohibited. These credit providers have to abide by strict regulations in how they lend money, how they assess people’s financial circumstances and any debt recovery actions pursued must be proportionate and legal. These rules exist so that people can enjoy the benefits of, and indeed the rewards of getting access to credit facilities in emergencies. Given these differences, it is hard to fathom why people fail to distinguish between legitimate credit providers and payday loan companies who are meeting market demands in a way that is fair to people and fully legal under the laws of the UK. A legitimate credit provider will always give you written documentation to evidence your loan, and will never threaten you with violence, so why don’t people give legitimate credit providers a break and recognize they are different from loan sharks?

Houston drivers – How to make an effective job search?

Any driver who lives in Houston wants to have a well-paid job. That is why a lot of drivers even while being employed do not leave a possibility to look for a new job or the second one. Living in Houston and getting the driver’s profession implies a big perspective, because Houston regional job market offers a range of vacancies that cover different areas for practicing and working.

 

When a driver tries to make some productive searches of a job they address different sources, such as newspapers, street advertisements or sending resumes to different trucking companies. To make finding online trucking jobs simple it is suggested to write the appropriate driver’s resume. Certainly, not only resume plays a vital role for finding a job, but many other factors and requirements including. However, the resume written correctly promises to be not only reviewed, but responded. With the right written resume you may become a candidate for different driver’s vacancies. Among available positions the job market in Houston proposes are: truck drivers, drivers for medical delivery, transfer driver, drivers for different kinds of transportation, taxi driver, city driver and many others.

 

So, before making your decision what position you want to hold, let’s look at the obvious things you should point out in your CV. The first thing is your qualification and experience. Your CV will perfectly work if you write three-four sentences about your previous and present experience, how many years you had a driver employment, whether you master professional driver abilities or not and so on.  Then the resume is suggested to contain your real skills. Try to write the full list of your skills. Describing your professional experience try to make it in a way for your future employer to decide there is no better variant than you. One of the main points is your education. Perhaps you know how important the point about education is for finding a job of driver.

 

Unemployed drivers who are seeking for jobs often forget about underlining of their education, but employers in Houston pays their special attention to that point. The better education and professional experience the more chances to receive the job position you want.

 

Drivers in Houston often desire to start their taxi career, as taxi drivers have flexible hours for work and good salary percent. While searching for the vacancies of drivers in Houston, try to do your best to show your driving skills. Generally drivers are professionals who are required almost in any company. There is no any company, firm or other working establishment in Houston that may exist without drivers. So your task is not to be lazy and continue your searching, as whole Houston driver job market is displayed on such sites as Jobtonic.com with which help various kinds of job for drivers with different salary proposition and employer’s requirements may be found without leaving your home and with time sparing.

 

Over 40? Never too Late to Save for Retirement

From a retirement planning perspective, the decade between your 40th and 50th birthday is a time when, if you haven’t started saving for retirement, you definitely should.  Of course anyone who started putting money away before then is going to be better positioned financially than you are to meet their long-term retirement goals, but the good news is that there’s still plenty of time to shore up your savings even if you’ve been hitting the “snooze button” on your retirement plans for the last 20-odd years.

Gregory Olsen, a certified financial planner with Lenox advisors, says that “for a lot of people, they celebrate their 40th birthday in earnest”. He also says that, luckily, most 40-somethings have the maturity and insight to be able to better project their future income needs and accurately predict what they’re going to need in order to keep up their lifestyle once they retire.

That actual numerical figure will differ for everyone, and depends on exactly when you plan to retire, what you are life expectancy is and whether you envision a “low-budget” retirement or have plans to take trips to Europe and eat dinner at the golf club every night.

On the Social Security Administration’s website you can find a Life Expectancy Calculator that will offer you general guidelines on how long you’ll possibly live, but the results you get from that calculator will need to be adjusted to reflect not only your present health but also any health risks or concerns that might be familial.

Once you start to actually estimate your expenses in retirement, you’ll need to remember to factor in the basics like food, housing, transportation and of course healthcare. While your home may be paid off by the time you retire, healthcare costs and other expenses won’t be, and may actually become higher the older you get.

Determining how much you’ll get from guaranteed sources of income, including Social Security, pensions and, for a few lucky people, trust funds, is your next step. Using the Social Security administration’s website you can determine what your future benefits are going to be quite easily, but the others may need more work.

Once you’ve determined the difference between what you’ll likely spend and what you have in guaranteed income, you’ll have a number that you can use to determine how much your savings will need to be in order to maintain your current standard of living. Most financial planners will tell you that you should save at least 15% of your income every year as well as maxing out any tax-deferred retirement savings plans that you have like IRAs, 401(k)s and Roth IRAs as well.

One of the best ways to improve your financial prospects and be able to live longer on your retirement savings is to stay as healthy as possible, including eating well and exercising regularly. If you smoke you should quit and if you’re overweight you should definitely consider dieting, as one of the biggest retirement expenses is the cost of healthcare.

Finally, starting to save right now is vitally important as you got a lot of catching up to do. It will be impossible for enough away to retire comfortably, but you’re definitely going to need to put a lot of thought and work into it and stash as much money away as possible.

Companies that Mix Religion with Business.

It’s well-known that talking about religion or politics among friends and family members can make for awkward conversation. For businesses, it can not only be awkward but also financially deadly.

Not long ago the CEO of fast food chain Chick-fil-A made his opinions known about the fact that he believes marriage should be between a man and a woman. The backlash that his comments sparked, from the media, gay and lesbian couples across the country and even Boston’s mayor, was massive.

On the other hand, when former Arkansas governor (and FOX commentator) Mike Huckabee organized a “Chick-fil-A appreciation Day”, the restaurant saw record shattering sales. When it comes to religion and business, it’s quite literally a double-edged sword (or at least a double-edged kitchen knife).

If you’re looking to invest in companies that have a religious bent, some of the companies on the short list below might surprise you. It’s not just Chick-fil-A that like to serve doctrine with their chicken sandwiches (they even close all of the stores on Sunday).

For example, clothing store Forever 21 prints a message or passage from the New Testament on the bottom of all of its bags for customers to enjoy when they make a purchase. If you’ve ever purchased a trendy skirt or skimpy top from the company you may have noticed a reference to “John 3:16” on the bottom of your bag, one of the most obvious and most well-known religious references. The Chang family, owners of the chain, are born-again Christians.

Tyson Foods, famous for their chicken, actually employs over 1200 office chaplains at locations around the country to provide, as they call it, “compassionate pastoral care” to their employees. John Tyson, founder of the company, has often spoken openly about his Christian beliefs and the fact that he believes his company should “be a faith friendly company”.

If you’ve ever eaten and In-N-Out Burger you may have noticed that their cups, containers and wrappers all have Bible passages printed on them. While they may have a secretive “special menu”, it’s no secret that this chain wants to deliver a religious message to their customers. Interestingly, the company doesn’t address or make reference to their religious passages on their company website

Then there’s Alaska Airlines who, along with their in-flight breakfast, also pass out inspirational notecards to all fliers with passages from the Old Testament. In fact, this is a company tradition that’s been going on for several decades.

All of these companies are traded on the stock market and so, if you wish to purchase stocks for your portfolio that lean towards religion or faith, you’d do well to start with them.

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