Thoughts, Ideas, and Concepts by Sandra Parks

Posts tagged ‘Credit’

NEW CREDIT CARD RULES IN EFFECT 2-22-2010

Unexpected rate hikes. Over-limit fees. Double-cycle billing. Those are just a few of the credit-card practices that have trapped millions of consumers into a life of constant worry over mounting debt. In less than a week, these practices will be history.

Unexpected rate hikes. Over-limit fees. Double-cycle billing. Those are just a few of the credit-card practices that have trapped millions of consumers into a life of constant worry over mounting debt. In less than a week, these practices will be history.

Exceptions, Caveats, Loopholes:

• Rate hikes are allowed if you’re more than 60 days late with a payment.
• Some banks have already found a way around the rate-hike issue, by increasing card users’ regular interest rates to as high as 29.9% and then refunding a part of that rate for each month that the customer pays on time.
• Double-cycle billing, although prohibited, can technically still exist for credit cards that don’t have grace periods.
• Issuers have been calling consumers asking them to opt in for over-limit fees in exchange for lowering that fee, says Chi Chi Wu, a staff attorney with the National Consumer Law Center, a consumer advocacy group. What they’re not saying is that if people don’t opt in, the transaction will be denied and they will not be charged over-limit fees in the first place, Wu says.

Billing Statements, Payments and Disclosures

• Billing statements must be sent 21 days before the due date.
• Your due date should be the same date each month.
• Payments are considered on time when received by 5 p.m. on the due date or the next business day after a holiday or weekend.
• Payments above the minimum must be applied to the highest-rate balance first.
• Each monthly statement must include information on how long it would take you to pay off your balance if you make minimum payments only and the total you’ll pay, including interest and principal; and how much you need to pay each month in order to pay off your balance in 36 months and the total you’ll pay, including interest and principal.
• Statements must also include a warning that by making only minimum payments you will pay more interest and it will take you longer to pay off your debt, as well as a toll-free number to call if you want to be referred to a credit-counseling service.

Exceptions, caveats, loopholes:

If you make a purchase under a “deferred-interest” plan (such as “No interest for six months,” for example), the company may let you choose to apply extra amounts to the deferred-interest balance. Otherwise, for two billing cycles before the end of the promotional period, your entire payment must be applied to that balance. Carrying a “deferred-interest” balance is a risky proposition altogether, says Wu: Unless the balance is paid in full over the specified period, the company will charge all interest retroactively once the promotional rate expires. “We think deferred-interest plans should have been banned,” Wu says.

College Students and Young Adults

• No credit cards for college students unless co-signed by a parent or they can demonstrate “ability to pay.”
• No credit-limit increases if you are under 21 and have a co-signer without that co-signer’s permission.
• No credit-card marketing and freebies on college campuses.

Exceptions, Caveats, Loopholes:

• Issuers will likely start appealing to parents to co-sign their children’s credit cards. And the Federal Reserve has specified that issuers have the option of keeping the parent on the hook even after the young person turns 21, Wu says. “If that younger person keeps the credit card for 20 years, the co-signer is liable that whole time.”
• Issuers are not allowed to give out freebies for signing up for a credit card on or near a campus — which still allows them to set up shop near popular off-campus venues and offer freebies to everyone, whether or not they apply.

Should you file your taxes???

You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive.

Check the Individuals section of IRS.gov or consult the instructions for Form 1040, 1040A, or 1040EZ for specific details that may affect your need to file a tax return with the IRS this year.

Even if you don’t have to file, here are eight reasons why you may want to file:

  1. Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.
  2. Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
  3. Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
  4. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
  5. Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
  6. Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
  7. First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
  8. Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.

For more information about filing requirements and your eligibility to receive tax credits, SAP Taxes at 972.569.7938

Good Information, email the author for questions.

Personal BrandingBusiness sucks.
Layoffs abound.
Job stability is wavering.

Will you panic or prosper?

If you want to accomplish the latter, remember this three-word philosophy: Anonymity is bankruptcy.

That’s why we’re going to explore three tactics for elevating your visibility:

  1. Exert your distinctiveness.
  2. Prepare to be vulnerable.
  3. Be smart, not a smarty-pants.

When executed consistently, these practices will capture the attention of potential employers, thus contributing to a greater awareness of the value you bring to the company.

1. Exert your distinctiveness.

As an executive, the net worth of your human capital is a function of your expertise. So, the three questions you need to ask yourself are:

  • What are you known for knowing?
  • Who is already attracted to you and sees you as a resource?
  • What have you done, specifically – in the last 24 hours – to amplify that expertise within your company?

Once you’ve identified and evaluated your true expertise and inventoried your negotiable personal assets, the next challenge is to assert that distinctiveness in every possible personal-branding touchpoint: questions you ask, answers you give, e-mails you write, meetings you attend and conversations you hold.

The cool part is, asserting your distinctiveness elevates your visibility. Elevating your visibility attracts more responsibility. More responsibly increases the net worth of your human capital. And an increased net worth of human capital compels potential employers and solidifies your job security.

Remember: If your presence makes a difference, your absence will make a different. You want people to start asking where you are when you’re not around. You want to become so invaluable that you become noticeable in your absence. Executives like that get hired and rarely get laid off. What are you known for? What are you known as? And what hard-to-copy capabilities do you possess that position you distinctively, effectively and continuously?

2. Prepare to be vulnerable.

Vulnerability is attractive. Vulnerability is approachable. Vulnerability is strength. Even President Obama – during his first month in office – recently owned up to the media for his poor appointee choice.

“I’ve got to own up to my mistake,” Obama told NBC News. “I’m frustrated with myself, with our team. … I’m here on television saying I screwed up.”

Look, we’re all a bit nervous. And we’re all a bit vulnerable. The danger is when we’re not willing to disclose that vulnerability by practicing radical honesty. So here is my suggestion: Dare to be dumb.

In my workshops and seminars, I challenge people to increase their usage of the phrase “I don’t know.” It cuts down on the pressure to know everything. Plus, pretending like you do know when you don’t cracks your foundation, your integrity.

It’s a falsehood in your personality, and during interviews employers can smell it. Being vulnerable, however, means being secure enough to be who you are, even if who you are is wrong. What’s more, in a sea of gargantuan professional egos, your vulnerability will stand out as a refreshing change. Are you willing to admit your ignorance? Are you someone others can feel dumb in front of?

Remember: When you maintain this attitude of approachability, your employees and your potential employers will respond to (and have more respect for) you. How are you branding your honesty? Are you willing to take the lead with your integrity and become someone others can be vulnerable in front of?

3. Be smart, not a smarty-pants.

Yes, human capital is a function of knowledge. At the same time, there’s a fine line between being smart, and being a smarty-pants.

Here’s the difference: Smart people attract others; smarty-pants people alienate others. Smart people are trusted with greater responsibility; smarty-pants people are avoided.

Next time you attend a department meeting, consider this three-step, unforgettable strategy:

  • Bite your tongue. Don’t say anything until the last five minutes of the meeting. That way you can collect you thoughts, clarify your position and speak confidently. By looking around, listening and learning first, your comment will contain its maximum amount of brilliance.
  • Come out of nowhere. When the meeting leader says, “Does anybody have any questions?” or “Any final thoughts before we finish?” you raise your hand and say: “I had an observation …” All the people in the room will turn their heads, rotate their chairs and look in the direction of the one person who hasn’t said anything all morning – you.
  • Articulate your idea. This is the best part. See, if you only say one thing, it becomes more profound because scarcity creates a perception of value. What’s more, the longer you wait to say something, the more everybody else will want to know what you’re thinking. Ultimately, your calmness, patience and quietude will draw them in. In the words of our mistake-friendly president, “Power grows through prudent use.”

Remember: Let go of the need to prove how smart you are by always adding some super-intelligent comment or asking some super-tricky question. You can still be smart – and be perceived as being smart – without looking like a know-it-all jerk. Are you sharing your knowledge or showcasing it? Are trying to elevate your visibility or be the center of attention?

Look, times are tough – tougher than they’ve been in a long time. But you’re tougher. And I’m confident you’re going to make it out alive!

Challenge: Pick a few of the strategies from this list that work best for you. Customize your visibility plan according to your unique skills and passions. And remember those three crucial words … Anonymity is bankruptcy.

Let me ask ya this: How are you elevating your visibility?

Let me suggest this: For the list called, “30 Ways to become the Most Interesting Person You Know,” send an e-mail to me, and I’ll send you the complimentary list!

Scott Ginsberg, a k a, “The Nametag Guy” is the author of eight books and an international professional speaker. He’s been recognized by The Wall Street Journal and 20/20 as “The Authority on Approachability.” And, as the producer of NametagTV, he teaches professionals how to GET noticed, GET remembered and GET business. To rent his brain, email scott@hellomynameis scott.com.
 

WOW!!!! Aren’t you just sick of this mess?

Disclosed for the 1st time, ‘damage points’ taken off for late payments

 

Borrowers already knew that late payments hurt their credit scores, but for the first time, they now know the extent of that damage.

 

 

 

Did you max out your credit card? Expect a credit score drop of 10 45 points. Declare bankruptcy? Your score will plummet by up to 240 points, and your odds of getting credit will nosedive with it. to  

The “damage points” data, unveiled recently by FICO, are part of the most revealing glimpse into the firm’s once-secret — and still mysterious — credit scoring model. The new information discloses how many points borrowers’ scores will drop when they make the most-common mistakes.

 

‘Help People Understand’ Scores

 

“I hope this information will help people to better understand FICO scores and the value for them of avoiding credit missteps. It illustrates key points such as the higher your score, the farther it can fall if you stumble,” says FICO spokesman Craig Watts. “Getting and maintaining a good score isn’t complicated. We all just need to pay our bills on time, keep credit card balances low and take on new debt sparingly. ”

 

 

fico1.jpg

 

The greater transparency about FICO scores is important because American consumers’ ability to get credit rises and falls with the number. FICO, the company that pioneered credit scoring, assigns consumers a three-digit number from 300 to 850, depending on how well they handle credit. Other companies also offer scores, but FICO’s version is the most widely used by lenders in determining whether a consumer can borrow, and at what rate.

 

FICO’s credit score has been around for decades, but only within the past decade have consumers gradually gained access to theirs. Though the raw numbers can be purchased, how they’re figured remains a FICO secret, as closely guarded as the formula for Coca-Cola. Until Thursday, FICO revealed only broad categories of factors influencing the score, but not the number of points at stake for consumers who fail to pay as agreed. The “damage points” information, revealed in a report by personal finance writer Liz Pulliam Weston, will be made available through its myFICO.com Web site starting this weekend.

 

FICO’s information shows that bankruptcy does the most serious damage to a credit score (up to 240 points), followed by foreclosure (up to 160 points) while maxing out a credit card has the least numerical impact (as few as 10 points).

 

Those with good or excellent credit — so-called prime borrowers — put more points at risk with each mistake. For example, someone with an average credit score of 680 who pays a bill 30 days late will see a drop of 60 to 80 points. But for someone with an excellent credit score — 780 — that same delinquency can send a FICO score tumbling by 90 to 100 points.

 

The Cost in Dollars

 

In order to show just how badly a drop in your FICO score can hurt your wallet, we spoke with members of the home mortgage, auto and credit card lending industries. We presented hypothetical scenarios of a consumer who decided to apply for a $200,000, 30-year mortgage; a $20,000, five-year auto loan and a credit card. While all the industry insiders stressed that a FICO score isn’t the only factor in determining who gets credit and at what cost (other factors they cited include the borrower’s debt-to-income ratio and whether they have already established a relationship with the lender), they were able to provide an idea of what a borrower who had the following credit scores could expect.

 

For a Consumer Who Started With a FICO Score of 780:

 

 

  • Following a 30-day late payment, the consumer’s car loan rate would jump nearly 3 percent, costing the borrower $26 more each month.
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  • Following a debt settlement, the consumer would pay as much as $109 more each month on a home mortgage.
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For a Consumer Who Started With a FICO Score of 680:

 

 

  • Following a 30-day late payment, the consumer would pay $41 more each month for a car loan.
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  • Following a 30-day late payment, the consumer would pay as much as $95 more each month on a home mortgage.
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  • Following a debt settlement, the consumer would no longer qualify for a credit card.
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Some Surprised By the Details

 

Consumer advocates say it’s important for borrowers to know what can damage their FICO scores. “If they know it in advance, they won’t go out and step in a pile of doo-doo. They won’t go out and do some of these things,” says Linda Sherry, director of national priorities with advocacy group Consumer Action. Even experts found some surprises in today’s news. “FICO imposes bigger hits than I would have thought for being maxed out or 30-days late just once, reinforcing my view that it is a cruder, blunter instrument than they like to claim. Nevertheless, it is a powerful, widely used crude blunt instrument,” says Ed Mierzwinski, consumer program director for the U.S. PIRG consumer advocacy group.

 

Of course, knowing the impact on a FICO score and actually avoiding these mistakes are two separate things: Amid rising unemployment and other daily financial struggles, paying bills and staying on-track financially becomes a much bigger challenge for many borrowers.

 

“Some of these things are out of their control,” Sherry says of consumers.

 

Additionally, as Weston points out, consumers with identical FICO scores can have different credit histories. That means the same slip-up — such as maxing out a credit card — could have different impacts on consumers who have the same FICO score. In the examples they provided, FICO assumed each borrower had several active major credit cards, a mortgage, car loan and student loans.

 

Sherry acknowledges the benefit of putting a number to a financial blunder. “I don’t think we necessarily knew the numbers that a bankruptcy could apply to a credit score,” Sherry says.

 

Helping You Make Better Decisions

 

While knowing the numbers may not keep you filing for bankruptcy if given no other choice, the information may help you make the best decision when faced with a bad situation.

 

FICO scores — and the access to credit they provide — are a valuable asset to consumers and supply a safety net when incomes are stretched. It’s an asset that needs to be protected, Sherry says, even if job loss or catastrophic illness makes bill paying problematic.

 

“In that period of time, paying down debt is the last thing on your mind. Paying the minimum payment may also be the last thing on your mind, but you’ll be doing yourself a big favor if you do,” Sherry says.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax credit is coming back to bite millions

WASHINGTON – More than 15 million taxpayers may owe the government $250 or more because of how the IRS last spring set up President Barack Obama’s tax break that was designed to help consumers spend the U.S. economy out of recession.

Individuals with more than one job and married couples in which both spouses work may have to repay the government $400, either through a smaller tax refund or a larger tax bill, according to a report released Monday by the Treasury Department’s inspector general for tax administration. Social Security recipients who also earn taxable wages may have to repay $250.

The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was Obama’s signature tax break in the massive stimulus package enacted in February. The credit has increased weekly paychecks for 95 percent of working families, giving them cash to help boost consumer spending during the worst economic recession in decades.

Workers concerned about whether they are withholding enough taxes can use a calculator on the IRS Web site to find the appropriate amount that should be withheld.

Taxpayers can adjust their withholding by filing a new W-4 form with their employer. But with only a month and a half remaining in the 2009 tax year, it’s getting late to make adjustments.

Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new tax withholding tables issued by the Internal Revenue Service.

The withholding tables, however, do not take into account several common categories of taxpayers. And that could force some people to repay what the government gave them.

For example, a worker with two jobs gets a $400 boost in pay at each job, for a total of $800. That worker, however, only is eligible for a maximum credit of $400, so the remaining $400 will have to be paid back at tax time — either through a smaller refund or a payment to the IRS.

The IRS recognized there could be a similar problem for married couples if both spouses work, so it adjusted the withholding tables. The fix, however, was imperfect.

A married couple is eligible for an $800 credit. However, if both spouses work and make more than $13,000, the new withholding tables give them each a $600 boost — for a total of $1,200.

There were 33 million married couples in 2008 in which both spouses worked. That’s 55 percent of all married couples, according to the Census Bureau.

Also, a single student with a part-time job gets a $400 boost in pay. However, if students are claimed as dependents on their parents’ tax returns, they don’t qualify for the credit and would have to repay it when they file their returns.

Some retirees face even bigger headaches.

More than 50 million Social Security recipients received $250 payments in the spring as part of the economic stimulus package. Those lump sum payments were intended to provide a boost for people who didn’t qualify for the tax credit.

However, the payments were sent to many retirees who also received the tax credit. Those retirees will have the $250 payment deducted from their tax credit — but not until they file their tax returns next year, long after the money may have been spent.

“More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes,” said J. Russell George, the Treasury inspector general for tax administration.

Sen. Chuck Grassley of Iowa, the senior Republican on the Senate Finance Committee, called problems with the tax credit “another unfortunate example of what can happen when Congress and the White House rush through legislation like the stimulus without thinking through the consequences.”

The tax credit is also available for 2010. George said the problems will continue if workers don’t adjust their withholding for next year.

For many, the new tax tables will simply mean smaller-than-expected tax refunds. The average tax refund this year was about $2,800. A little more than three-fourths of the 143 million taxpayers filing a return last spring received refunds, according to the IRS.

The IRS was aware of the issues when the withholding tables were released last spring and waged a public awareness campaign to get people to check their tax withholding, said Michael Mundaca, acting assistant treasury secretary.

“It’s just technically how withholding works,” Mundaca said. “It’s an approximation and therefore for some people there will be overwithholding and for some people there will be underwithholding.”

Separately, the IRS estimated that about 65,000 taxpayers could face penalties for not withholding enough taxes in 2009 because of the Making Work Pay tax credit. However, those taxpayers will be eligible to have the penalty waived, IRS spokeswoman Michelle Eldridge said.

The credit pays workers 6.2 percent of their earned income, up to a maximum of $400 for individuals and $800 for married couples who file jointly. Individuals making more than $95,000 and couples making more than $190,000 are ineligible.

Sandra Parks 972.569.7938 http://saptaxes.net

CHILD TAX CREDIT

The child tax credit allows taxpayers to claim a tax credit of up to $1,000 per qualifying child under the age of 17. This reduces their tax liability, potentially to $0. In order to claim the credit, the taxpayer and child must meet numerous requirements.

When a taxpayer’s child tax credit is more than their tax liability, they may be eligible to claim an additional child tax credit as well as the child tax credit. The additional child tax credit is also a tax credit of up to $1,000 per qualifying child. This further reduces their tax liability and can result in a refund. Taxpayers must meet additional requirements to claim this credit.

  1. The child tax credit is a nonrefundable tax credit.
  • A. True
  • B. False
  1. Shane is a 17 year old US citizen who lives with his mother and is supported by her. Shane qualifies for the child tax credit.
  • A. True
  • B. False
  1. Brad has two children who qualify for the child tax credit. Brad’s modified adjusted gross income is $54,000 and his tax liability is $3000.
    Brad is eligible to take the full credit of $1,000 per child.
  • A. True
  • B. False
  1. Deb and Doug have one child who qualifies for the child tax credit. Their income is $66,000 and their tax liability is $5,000.
    Deb and Doug are eligible for the additional child tax credit.
  • A. True
  • B. False

For more information please visit http://saptaxes.net or contact me at 972.569.7938

Thanks!

Extensions

Good Morning everyone,

Today is the last day to file your 2008 Income tax returns.  If you need any assistance please contact me at 972.569.7938 or saprpm@yahoo.com

The Oct. 15 deadline is fast approaching for millions of taxpayers who requested a six-month extension to file their 2008 tax returns.

It’s also the deadline for special voluntary disclosures by taxpayers with assets in previously undisclosed offshore financial accounts.

In most cases, Oct. 15, 2009, is the last day taxpayers may timely file their 2008 federal tax returns. The IRS expects to receive as many as 10 million tax returns from taxpayers who used Form 4868 to request a six-month extension to file their returns. Some taxpayers, for example, may have requested a filing extension to claim the first-time homebuyer credit for a home purchase that closed after the April 15 deadline.

Some taxpayers can wait until after Oct. 15 to file. This includes those serving in Iraq, Afghanistan or other combat zone localities and people affected by recent natural disasters.

First-Time Homebuyer Credit

First-time homebuyers who purchased a home in 2009 may be able to receive a credit of up to $8,000 for home purchases that closed since the beginning of the year. First-time homebuyers who purchased a home in 2008 may be able to receive a credit of up to $7,500. The 2008 credit must be repaid over 15 years.

The credit is claimed on Form 5405. See the First-Time Homebuyer Credit page on this web site for more details.

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