Ilyce Glink's Blog

Welcome to Ilyce Glink's blog! Here you'll find Ilyce's latest insights on personal finance advice, real estate advice and consumer issues. Come back often for timely and interesting posts on a wide variety of topics.

IRS Changes Deductions for Tax Year 2009

Earlier this month the U.S. Internal Revenue Service announced tax changes effective for tax year 2009 (so for tax returns filed in early 2010).

Personally, I think some of these would have been nice to use for this tax year, but perhaps one should be grateful for the breaks one gets.

Here they are:

- The value of each personal and dependency exemption, available to most taxpayers, is $3,650, up $150 from 2008.

- The new standard deduction is $11,400 for married couples filing a joint return (up $500), $5,700 for singles and married individuals filing separately (up $250) and $8,350 for heads of household (up $350). Nearly two out of three taxpayers take the standard deduction, rather than itemizing deductions, such as mortgage interest, charitable contributions and state and local taxes.

- Tax-bracket thresholds increase for each filing status. For a married couple filing a joint return, for example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $67,900, up from $65,100 in 2008.

- The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $5,028, up from $4,824. The income limit for the credit for joint return filers with two or more children is $43,415, up from $41,646.

- The annual gift exclusion rises to $13,000, up from $12,000 in 2008.

Labels: IRS, Tax, tax deduction

posted by Melanie G. Rogers at 12:21 PM 1 comments

What to Do If Your Employer Hasn't Paid You

Nancy called in to ask what she should do. Her employer is behind on wages and then moved her to commission-only but hasn't paid that either. She finally decided to leave and wants to know if she can collect unemployment.

I suggested she contact the Department of Labor (www.dol.gov), which takes a dim view of companies that don't pay employees.

Here's a response from another listener who is a little further down this path:

Dated: 8/10/2008I am further along in the employer did not pay me porblem. just mentioned on your show.

GA dol says if they dont have money your are sol.

i did bar assotion recommendation. lawyer biled me more than it was worth.

on employer not paying taxes to gov. lawyer said gov will do notihing dont bother them they are too busy

sued company in fulton county superior court for back wages and other torts.

company looks at this like it is just more time that they DO NOT HAVE TO PAY. WHEW.

GETTING JUDGEMENT means they still dont have to pay.

company wins.
employee looses.


I suggested Nancy chat with a labor attorney. She may also owe taxes on the wages she did receive if her employer didn't pay those. Does anyone else have any suggestions for her?

Labels: employer, Tax

posted by Ilyce Glink at 12:19 PM 0 comments

Today on the Ilyce Glink Show August 10, 2008

There's a lot to talk about on Today's Show.

CDs Are Looking Like A Better Deal Interest rates are starting to rise, which means that CDs are looking like a better place to park your cash. Wachovia is offering 4.25 percent on a 1-year CD and Countrywide is offering 5 percent on a 5-year CD. You don't want to lock up your cash for too long, so take advantage of a 6-month or 1-year CD only. You may want to consider "laddering" CDs so that they roll over and mature at different times.

New Tax Rule Changes to the 24-Month Exclusion for Home Sellers. This is a big change folks, and we'll spend some time on it today. Here's how the rule was: You could sell your home every 24 months, provided you lived in it as a primary residence, and then you could keep up to $500,000 (if you're married, $250,000 if you're single) in profits tax free when you sell. The rule is now changing. If you sell your primary residence and move to a vacation home you've owned, you'll need to live there for five years as your primary residence, or you won't be able to take the full exclusion. The change refers to "nonqualified use," and it refers to any period of time (after 2008) when the property isn't used by you, your spouse or former spouse as a primcipal residence. It is effective for sales beginning January 1, 2009.

How Does Georgia Compare for Closing Costs? The new BankRate Survey is out and Georgia is 43rd on the list with an average closing cost of $2,900 on a $200,000 house.

Overdraft Fees Rising At The Nation's Ten Largest Banks. You don't want to overdraw your account if you're at one of the following banks: Bank of America, Chase, CitiBank, Fifth Third Bank, National City Bank, PNC, SunTrust, U.S. Bank, Wachovia, and WAMU. According to the Consumer Federation of America, consumers are paying at least $17.5 billion in fees each year.

Freddie Mac Doubles Financial Incentives to Servicers Who Help Borrowers Avoid Foreclosure. Fannie Mae and Freddie Mac have been paying loan service companies for years to help them help homeowners avoid foreclosure. Now, Freddie Mac is stepping up the payments to give an added incentive to servicers to keep people out of foreclosure. How much are they getting? Starting August 1, 2008, compensation for repayment plans will rise to $500, while doing a loan modification will earn a servicer $800. For short sales, where Freddie Mac agrees to accept less than the full amount owed on a borrower's loan, the compensation rises to $2,200(because short sales take so much time to work out).

It's going to be a great show. We're on from 11a to 1pm at www.wsbradio.com. I hope you can join us.

Labels: CDs, closing costs, Ilyce Glink, Mortgage, Tax, WSB

posted by Ilyce Glink at 8:11 AM 0 comments

Want Your Stimulus Check? File Your 2007 Taxes

Labels: Social Security, stimulus money, Tax, tax preparer, Veterans Affairs

posted by Melanie G. Rogers at 3:34 PM 0 comments

Ilyce's Radio Show Now Available

Listen to Ilyce's June 22 show at ThinkGlink.com: http://www.thinkglink.com/radio.asp

or you can download the Podcast. Check it out!

Ilyce fields a call about cost basis for determining taxes on a home sale. The family sold the home that was jointly owned by multiple family members.

Labels: Ilyce Glink, Radio, stock market, Tax

posted by Melanie G. Rogers at 3:22 PM 0 comments

Con artists after your IRS rebate check

Labels: IRS, Scams, Tax

posted by Ilyce Glink at 2:41 PM 0 comments

More on the Tax Deadline Extension for GA Tornado Victims

This is specifically for tornado victims in Georgia:

We checked with Chet Burgess, a tax expert who was on Ilyce's show on Sunday, and he said the May 19 extension applies to everything except for a few unusual exceptions.

So the listener who commented on the blog asking whether the extension applies to quarterly tax payments is correct, it does. It also applies to Roth IRA payments and HSAs.

And you do not have to prove you were a victim, just that you live in one of the affected counties: Bartow, Burke, DeKalb, Floyd, Fulton, Jefferson and Polk.

Thanks to Chet for great advice! You can find him at http://brookwoodtax.com/.

Melanie

Labels: 2008, Tax, tax extension, tornados, WSB

posted by Ilyce Glink at 12:34 PM 1 comments

File your taxes on time, even if you can't afford to pay

Labels: IRS, loans, Tax

posted by Ilyce Glink at 3:37 PM 0 comments

Affected by the March 14, 2008 tornadoes? You have more time to file your taxes.

Georgia will Follow Federal Storm Relief Rules

The Georgia Department of Revenue has announced that they will follow the Federal tax relief guidelines for the recently declared disaster areas. Following is the announcement:

FOR IMMEDIATE RELEASE
March 28, 2008
DOR Offers Relief to Severe Storm and Tornado Victims

ATLANTA – Businesses or individuals in seven Georgia counties struck by the recent severe storms and tornadoes that began on March 14 and have been declared a presidential disaster area are eligible for tax extensions and assistance from the Georgia Department of Revenue, Commissioner Bart L. Graham announced today. Counties in the disaster area are Bartow, Burke, DeKalb, Floyd, Fulton, Jefferson and Polk.

"We will do all we can to assist the affected businesses and individuals as they work their way through this situation," said Commissioner Graham.

Affected businesses or individuals in the presidential disaster area will be given until May 19 to submit their returns or make tax payments, including estimated tax payments that have a due date falling on or after March 14, 2008, or on or before May 19, 2008. These dates correspond with the dates set by the Internal Revenue Service. Affected taxpayers should write 'March 2008 Tornado' across the top of any forms submitted to the Department.

Taxpayers who are assessed a penalty and believe they did not receive due consideration regarding the storms' impact, need assistance, or have questions should contact DOR's main office in Atlanta at (404) 417-2400.

Labels: Tax, WSB

posted by Ilyce Glink at 11:32 AM 1 comments

Would you buy a foreclosed house if you could get a $15,000 tax credit?

Labels: Congress, Foreclosure, Home Buyers, Tax

posted by Ilyce Glink at 7:22 PM 0 comments

IRS Wants to Ensure Armed Forces Get Stimulus Payment

Labels: IRS, military, Rebates, Tax

posted by Ilyce Glink at 3:13 PM 0 comments

IRS Announces Biggest Tax Scams

The United States Internal Revenue Service (IRS) announced the 12 biggest tax scams for 2008. They are:

1. Phishing
2. Scams related to the economic stimulus package
3. Frivolous arguments
4. Fuel tax credit scams
5. Hiding income offshore
6. Abusive retirement plans
7. Zero wages
8. False claims for refund and requests for abatement
9. Return preparer fraud
10. Disguised corporate ownership
11. Misuse of trusts
12. Abuse of charitable organizations and deductions

Remember the IRS will not call you asking for personal information. And if it sounds too good to be true it probably is.

For more information please visit Ilyce's forum, headings Tax and Scams.

Melanie

Labels: IRS, Phishing, Retirement Money, Tax

posted by Ilyce Glink at 11:11 AM 0 comments

Don't Forget These Tax Deductions

Here's a list of deductions that people may overlook when filing their taxes.

1. Out-of-pocket expenses relating to charitable activities, including the standard mileage deduction
2. Medical transportation, including standard mileage deduction and lodging expenses incurred for medical reasons while away from home
3. Legal fees incurred in connection with obtaining or collecting alimony
4. Gambling losses to the extent of gambling gains
5. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies
6. Contraceptives, if bought with a prescription
7. Commissions and closing costs on sale of property
8. Seller-paid points on the purchase of a home
9. Education expenses to the extent required by law or your employer or needed to maintain or improve your skills
10. Mortgage pre-payment penalties and late fees

Source: J.K. Lasser

Labels: IRS, Tax, tax deduction

posted by Ilyce Glink at 1:38 PM 0 comments

How to Pick the Right Tax Preparer

More than half of the 120 million U.S. taxpayers hired a tax preparer last year, according to the Chicago Better Business Bureau. And not all of them were happy with the results.

About 19 percent of consumers complained about billing and another 19.5 percent complained that their tax preparer was unresponsive. Seven percent complained that the company was rude and 6 percent said they did not get their refund.

The most egregious? More than 6 percent had tax preparers who never filed their taxes at all!

You're responsible when there's a mistake - not your tax preparer - so pay attention.

What can you do? Be really careful in who you hire to do your taxes. And follow these tips from the BBB:

-Ask around. Get referrals from friends and family on who they use, and check the BBB Reliability Report on tax preparation services free-of-charge at http://www.bbb.org/.

-Look for credentials. Ideally, tax preparers should either be a certified public accountant, a tax attorney, or an enrolled agent. All three can represent taxpayers before the IRS in all matters, including an audit. Note that enrolled agents have extra training. Also, find out if the preparer is affiliated with a professional organization that holds its members to a code of ethics.

-Don't fall for the promise of a big refund. Be wary of any tax preparation service that promises larger refunds than the competition, and avoid any tax preparers who base their fee on a percentage of the amount of the refund. (And don't get a refund anticipation loan - waiting 10 days to get an electronic refund is worth it to save fees and hefty interest.)

-Think about accessibility. Many tax preparation services only set up shop for the months leading up to April 15. In case the IRS finds errors, or in case of an audit, consumers need to be able to contact their tax preparer throughout the year.

-Read the contract and know what you're paying for. Consumers must read tax preparation service contracts closely to ensure they understand issues such as how much the service costs, how the cost will be affected if preparation is more complicated and time consuming than expected, and whether the tax preparer will represent the consumer in case of an audit.

Some other helpful Web sites are:
National Association of Enrolled Agents - go to the section for taxpayers http://www.naea.org/MemberPortal/
American Institute of Certified Public Accountants - consumer information section - http://www.aicpa.org/Consumer+Information/Find+a+CPA/

Melanie G. Rogers

ThinkGlink.com

Labels: BBB, CPA, enrolled agents, IRS, Tax, tax preparer

posted by Ilyce Glink at 9:08 AM 0 comments

How Do I Get My Rebate?

President Bush just signed the stimulus package that authorizes the U.S. Internal Revenue Service to send every taxpayer $600 to $1200 (couples).

To get a rebate all you have to do is file your 2007 taxes. There are no special forms required. Here's more info from the IRS:

The IRS will use information on the 2007 tax return filed by the taxpayer to determine eligibility and calculate the amount of the stimulus payments.

The IRS will begin sending taxpayers their payments in early May after the current tax season concludes. Payments to more than 130 million taxpayers will continue over several weeks during the spring and summer. A payment schedule for taxpayers will be announced in the near future.

Stimulus payments will be direct deposited for taxpayers selecting that option when filing their 2007 tax returns. Taxpayers who have already filed with direct deposit won't need to do anything else to receive the stimulus payment. For taxpayers who haven't filed their 2007 returns yet, the IRS reminds them that direct deposit is the fastest way to get both regular refunds and stimulus payments.

Most taxpayers just need to file a 2007 tax return as usual. No other action, extra form or call is necessary. This Web site will be the best information source for all updates and taxpayer questions.

In most cases, the payment will equal the amount of tax liability on the tax return, with a maximum amount of $600 for individuals ($1,200 for taxpayers who file a joint return).

The law also allows for payments for select taxpayers who have no tax liability, such as low-income workers or those who receive Social Security benefits or veterans' disability compensation, pension or survivors' benefits received from the Department of Veterans Affairs in 2007. These taxpayers will be eligible to receive a payment of $300 ($600 on a joint return) if they had at least $3,000 of qualifying income.

Qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans' benefits and earned income, such as income from wages, salaries, tips and self-employment. While these people may not be normally required to file a tax return because they do not meet the filing requirement, the IRS emphasizes they must file a 2007 return in order to receive a payment.

Recipients of Social Security, certain Railroad Retirement and certain veterans' benefits should report their 2007 benefits on Line 14a of Form 1040A or Line 20a of Form 1040. Taxpayers who already have filed but failed to report these benefits can file an amended return by using Form 1040X. The IRS is working with the Social Security Administration and Department of Veterans Affairs to ensure that recipients are aware of this issue.

"Some people receiving Social Security and veterans' benefits may not realize they will need to file a tax return to get the stimulus payment," Stiff said. "To reach these people, the IRS and Treasury will work closely with the Department of Veterans Affairs, the Social Security Administration and key beneficiary groups on outreach efforts."

Eligible taxpayers who qualify for a payment will receive an additional $300 for each child who qualifies for the child tax credit.

Payments to higher income taxpayers will be reduced by 5 percent of the amount of adjusted gross income above $75,000 for individuals and $150,000 for those filing jointly.

Taxpayers must have valid Social Security Numbers to qualify for the stimulus payment. If married filing jointly, both taxpayers must have a valid Social Security Number. And, children must have valid Social Security Numbers to be eligible as qualifying children.

Taxpayers who file their tax returns using an Individual Taxpayer Identification Number issued by the IRS or any number issued by the IRS are ineligible. Also ineligible are individuals who can be claimed as dependents on someone else's return, or taxpayers who file Form 1040-NR, 1040-PR or 1040-SS.

To accommodate taxpayers who file tax returns later in the year, the IRS will continue sending payments until December 31, 2008. The IRS also cautions taxpayers that if they file their 2007 tax return and then move their residence that they should file a change of address card with the U.S. Postal Service.

The IRS will mail two informational notices to taxpayers advising them of the stimulus payments. However, taxpayers should be alert for tax rebate scams such as telephone calls or e-mails claiming to be from the IRS and asking for sensitive financial information. The IRS will not call or e-mail taxpayers about these payments nor will it ask for financial information. Scam e-mails and information about scam calls should be forwarded to phishing@irs.gov.

Labels: IRS, President Bush, rebate, Tax

posted by Ilyce Glink at 3:47 PM 1 comments

IRS Issues Guidance on Mortgage Debt Forgiveness

Labels: Foreclosure, Mortgage, Tax

posted by Ilyce Glink at 10:48 AM 0 comments

Handle With Care: Tax Refund Loans

Labels: BBB, loans, Tax, tax preparer

posted by Ilyce Glink at 9:27 AM 1 comments

IRS Warns of New Scams

Labels: banking, credit cards, Scams, Social Security Numbers, Tax

posted by Ilyce Glink at 3:38 PM 0 comments

Not Paying Taxes on Principle Does Not Fly

The U.S. Internal Revenue Service continues to gear up for tax season. Today they released the top four reasons that people give for not paying their taxes:

* Misinterpretation of the 9th Amendment to the U.S. Constitution regarding objections to military spending.

• *Erroneous claims that taxes are owed only by persons with a fiduciary relationship to the United States or the IRS.

*A nonexistent "Mariner's Tax Deduction" (or the like) related to invalid deductions for meals.

*Certain instances of misuse or excessive use of the section 6421 fuels credit.

In 2006 the IRS increased the penalty to $5000 from $500 for tax returns which cite one of these reasons.

For more information check out this Web site: http://www.irs.gov/taxpros/article/0,,id=159853,00.html

While one can make a lot of jokes about tax season, it's not funny if you have to pay a big penalty.

Melanie G. Rogers

ThinkGlink.com

Labels: energy, IRS, Tax

posted by Ilyce Glink at 3:30 PM 1 comments

How to File Taxes For Free Online

Labels: IRS, Tax, tax preparer

posted by Ilyce Glink at 2:10 PM 0 comments

Congress Raises AMT Exemption

As Ilyce mentioned on the Clark Howard Show, Congress passed the annual fix to the alternative minimum tax.

Congress raised the AMT exemption to $66,250 for tax year 2007.

The AMT, originally created to keep the ultra rich from averting tax liability, has been affecting the middle and upper-middle class Americans in recent years.

National Public Radio offers a nice AMT synopsis on its web site:
http://www.npr.org/templates/story/story.php?storyId=17452645

You can check out other AMT articles as well:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aMm3cS9FNw0U&refer=home

http://money.cnn.com/2007/12/19/pf/taxes/amt_vote_walkup/?postversion=2007121916

Melanie G. Rogers
ThinkGlink.com

Labels: AMT, Congress, middle class, Tax

posted by Ilyce Glink at 1:23 PM 0 comments

Congress Votes to Extend Mortgage Insurance Tax Deduction

Ilyce is hosting the Clark Howard Show today on WSB Radio. Here's some more information about the mortgage insurance tax deduction mentioned on air.

American homeowners earning $100,000 or less who pay government or private mortgage insurance premiums may continue to take tax deductions. Homeowners who earn more than $109,000 may take a partial deduction. Congress yesterday extended the deduction through 2010. The average consumer may save as much as $350 according to the Mortgage Insurance Companies of America (MICA), a trade association representing private mortgage insurers.

Labels: Home, House, insurance, Mortgage, pmi, Tax, tax deduction

posted by Ilyce Glink at 12:53 PM 0 comments

Debating Whether to Have an Accountant Do Your Taxes?

Labels: accountant, IRS, Tax, tax preparer

posted by Ilyce Glink at 10:55 AM 0 comments

IRS Increases Business Mileage Reimbursement Rate

Labels: Business, Cars, IRS, Tax

posted by Ilyce Glink at 1:30 PM 0 comments

Mortgage Debt Tax Reduction Bill Will Help Few Americans

Last Friday, the House passed a bill which will reduce the amount of tax due on mortgage debt forgiven during foreclosure or while in bankruptcy. Currently, taxpayers must pay tax on this amount as it is considered income. It's really "phantom income:" income that's taxable but not spendable.
The bill, H.R. 3648, is currently a permanent measure but the White House wants to limit it to three years, according to the Washington Post.
What does this mean to the average taxpayer? Not much. According to RealtyTrac, almost 500,000 foreclosures were filed in the first quarter of 2007. Even if the same number filed each quarter this year, we're looking at 2 million foreclosures out of 75 million households, per the U.S. Census.
Still, families that filed for bankruptcy in 2007 or went through foreclosure will be grateful for the tax break.

Melanie G. Rogers, ThinkGlink.com Staff Writer

Labels: Bankruptcy, Foreclosure, Tax

posted by Ilyce Glink at 1:07 PM 0 comments

IRS Announces New Web Page for Those Facing Foreclosure

The IRS announced today that it has posted a special web section at its website for homeownerse who lose their homes to foreclosure.

What many people don't find out until it is too late is that selling your home for less than the amount you owe on the mortgage can cause you to pay a whole lot more tax next April 15th.

Here's how it works: The IRS treats a "short sale" as phantom income. So, if you owe $100,000 on your mortgage but sell your home for $80,000, that missing $20,000 ($100,000-$80,000) is treated as income by the IRS. So, you would then owe income tax on the missing $20,000 as if you had earned it in your job.

When President Bush talked about offering some tax relief to the millions of homeowners facing foreclosure, it was unclear what was going to be done. According to the IRS, new special relief provisions can reduce or eliminate the tax bite for financially strapped homeowners who lose their property.

According to the IRS news brief, "the new section of IRS.gov includes a variety of information, including a worksheet designed to help borrowers determine whether any of the foreclosure-related relief provisions apply to them. For those taxpayers who find they owe additional tax, it also includes a form they can use to request a payment agreement with the IRS. In some cases, eligible taxpayers may qualify to settle their tax debt for less than the full amount due using an offer-in-compromise.

"The IRS urges struggling homeowners to consider their options carefully before giving up their homes through foreclosure.

"Under the tax law, if the debt wiped out through foreclosure exceeds the value of the property, the difference is normally taxable income. But a special rule allows insolvent borrowers to offset that income to the extent their liabilities exceed their assets.

"The IRS cautions that under the law, relief may be limited or unavailable in some situations where, for example, part or all of a home was ever used for business or rented out.

"Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. By law, this form must show the amount of debt forgiven and the fair market value of property given up through foreclosure. Though the winning bid at a foreclosure auction is normally a property's fair market value, it may not necessarily reflect its true value in some cases.

"The IRS urges borrowers to check the Form 1099-C carefully. They should notify the lender immediately if any of the information shown on their form is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home (Box 7).

"The IRS also reminds lenders of their obligation to provide accurate information on the Form 1099-C. By law, the lender must send a copy of this form to the IRS. IRS follow-up contacts with taxpayers involved in foreclosure are based largely on the information reported on this form, and whether it conflicts with information provided by the taxpayer on their federal income tax return.

"The IRS normally initiates these follow-up contacts by sending the borrower a notice. The tax agency urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency."

Check out this link for more information: Questions and Answers on Home Foreclosure and Debt Cancellation.

You may also be interested in the following IRS Publications:

Publication 523, Selling Your Home
Publication 544, Sales and Other Dispositions of Assets
Publication 908, Bankruptcy Tax Guide
Form 1040, U.S. Individual Income Tax Return
Form 1040, Schedule D, Capital Gains and Losses
Form 1099-C, Cancellation of Debt
Form 9465, Installment Agreement Request

Labels: Mortgage, Real Estate, Tax

posted by Ilyce Glink at 1:20 PM 0 comments

Today on the Ilyce Glink show

We're celebrating earth day a little early today. My guest on the show will be Sergio Palleroni, a sustainable design expert, architect, and professor at the University of Texas. Join us for some interesting information on the state of Green Design in the U.S., as well as an update on New Orleans, where Sergio has been spending quite a bit of time lately.

And, since tax day is only two days away, we'll be talking about taxes. But watch out if you're in Montana, Oklahoma, and Utah -- your state taxes are due tomorrow, Monday April 16th. There were emergency petitions in Arizona and Indiana to move the state tax due date from Monday to Tuesday. Find out more at the New York State Society of CPA's State Filing Deadlines Website.

Labels: Green, Tax, WSB

posted by Ilyce Glink at 8:39 AM 1 comments

From the Ilyce Glink show yesterday

Sorry I didn't get this up on time, Folks. Crazy day, what with Tax Day around the corner for coporations.

Trusted ID, a company that sells services to consumers to help stem the tide of identity theft, has started a database of compromised Social Security numbers. Here's the place where you can test out whether your social security number has been compromised: www.stolenIDsearch.com.

Read the stor