Me Myself N My Mortgage Theories

We’re all aware of the fact that the Social Security benefits are protected from assignment, levy and garnishment. However, there are 5 cases wherein you cannot protect the benefits.

1. Unpaid federal taxes: If you’ve not paid the federal taxes in time, as per Section 6334(c) of the IRS Code, your benefits can be levied for collecting the taxes.

2. Income tax for current year: Beneficiaries can have a percentage of their benefits withheld and paid to the IRS in order to fulfill their income tax liability for the current year.

3. Payment of non-tax debt: As per the debt Collection Act of 1996, your benefits can be withheld and paid to a federal agency to which you owe the non-tax debt.

4. Child Support/alimony: The Social security benefits can be garnished to provide child support or alimony obligations.

5. Overdue tax debt: The IRS has the right to collect overdue federal tax debt of beneficiaries by levying up to 15% of each monthly payment until the debt is repaid. This is in accordance with the Tax Payer Relief Act of 1997.

Technorati Tags: protect social security, exceptions to social security protection, garnish social security

President Bush has approved an Economic Stimulus package worth $160-170 billion with the aim to save the economy from an upcoming recession.

What does the Economic Stimulus package include?

The package includes tax rebates for all taxpayers including children too. Taxpayers who file individually will be getting tax rebate checks worth $600 whereas those filing jointly will receive double the amount.

In order to avail this rebate, individual taxpayers should be earning less than $75000 in adjusted gross income. But for married couple, the limit is $150,000. Besides taxpayers, every child will receive $300 in tax credit. The package also includes tax benefits for equipments purchased by businesses and payments to seniors and disabled veterans.

Can it help avoid recession?

It is expected that the Economic stimulus will put $120 billion into the hands of Americans so that they are able to spend it thereby boosting the economy.

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Investment Postcards from Cape Town is Dr Prieur du Plessis’s international investment blog. It consists of a wide range of topics dealing with the macro outlook for stock markets, bonds, currencies and commodities (including gold). This is a great site that is a storehouse of information. The posts are illustrated with graphs that make the whole presentation extremely comprehensible. Features also include index tickers, stock market polls, a translator and video clips.

Du Plessis is chairman of the Plexus group of companies that he founded in 1995, and with his 25 years’ experience in the investment industry is a renowned investment professional. He has had more than 1 000 articles published and also published a book “Financial Basics: Investment” in 2002.

The site has a delightful humor section with entertaining photographs and hilarious sketches reflecting issues across the world.

Hi all,

Hope you’ve had a great Christmas!

Well, some of you may be enjoying your vacations and planning for some fun and excitement in the New Year eve. But here’s something that you shouldn’t avoid – how to save your hard earned money from going to the IRS, I mean how to increase your tax savings.

It may be a bit tough for you to actually sit down and start calculating the figures ..but this is something that can help you save thousands of dollars that you’ve earned through hard work. So, while you run the figures, take a look at the deductions/credits you can avail being a taxpayer.

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If you are the one looking for a happy and stress-free retirement life with no monetary problems or health hazards, then there are 12 financial solutions that you may watch out for.

1. Social Security Income:

This is a benefit which the Federal government offers to those who have paid taxes into Social Security. But to avail this benefit, you need to apply for a Social Security card and get a Social security Number even. Just browse through the Rules of getting Social Security.

2. Medicaid and Medicare:

These are health care programs offered to people so that they can pay for their health-care costs. The eligibility criteria for both the programs are slightly different. However, Medicaid caters to long-term care while Medicare offers assistance mostly for short-term care.

3. Reverse Mortgages:

This is an excellent tool for seniors wherein you don’t pay for the loan but the loan pays you. And, you can use it to serve a variety of purposes – be it paying off your debts, making a big purchase or consolidating your medical bills and the like. Know more…

Interested to get an overview on other financial solutions? Just have a look here.

Technorati Tags: senior financial solutions, reverse mortgage, stress-free retirement

Its tax time guys and by now most of you must have approached insurance companies so that you can deduct the premiums from the taxes.

Let me share with you my knowledge on tax deductible insurance premiums.

Private health insurance and dental plan premiums are deductible as a part of the itemized deduction for medical expenses. But you can only avail this deduction if you itemize and if the cost of the insurance policy is restricted to 7.5% of your income.

However, those who are self-employed can deduct health insurance premiums as an adjustment to their income without having to itemize. Until and unless the tax payer is not involved into some kind of group plan, 100% premiums are deductible.

If you use a car for business purposes, you can deduct your auto insurance. The deduction for business use of the car should be reported in Form 2106 if you are an employee. But if you are self-employed, then you need to report the deduction in Schedule C.

There is another type of insurance available in the market - homeowners’ insurance policy. Premiums on such a policy cannot be deducted on your primary residence. But you cannot deduct such premiums for your rental property. Those who work from home can also deduct a certain part of their insurance as a part of the home office deduction.

You can look forward to your liability insurance and professional insurance policies for tax deduction benefits. If you are an employee, you need to report these expenses as itemized deductions whereas you need to use Schedule C if you are a self-employed tax payer.

Technorati tags:tax deductible insurance, itemized deduction, auto insurance, homeowners insurance

There are goes a common saying - “There are both sides of the same coin”. Similarly, there are positive and negative aspects of every financial move. While keeping a mortgage after retirement may seem to a good option for some, others feel it’s best to get rid of it and enjoy a tension-free life.

Here are some probable reasons as to why you should pay off your loan.

Get debt-free: This is an obvious reason behind paying off your mortgage. At least you can start getting peace of mind when you get out of the debt.

Changes in lifestyle: You may wish to change your lifestyle or retire early and this may not be possible with such a financial obligation.

Options in Retirement: When you pay off the mortgage, you are relieved from the financial obligation and can save the freed-up amount for retirement needs. By clearing the debt, you can build up equity and hence qualify for reverse mortgage after retirement.

Avoid investment risks: If you prefer to avoid risks with your finance, you may avoid going into investments and instead invest your spare cash into the mortgage to pay it off early.

Technorati tags:mortgage, mortgage payoff

Several changes have been introduced into the new pension law under the Pension Protection Act (signed into law on the 17^th of August, 2006).

Some of the provisions include:

• Higher contributions for defined contribution plans like 401k or 403b and also for the traditional and Roth IRA.
• Direct conversion from previous employer’s 401K plan into Roth IRA.
• Continuing with the Saver’s Credit.

Know more on the Pension Plan Changes

Technorati tags: 401K, Roth IRA, Pension law, Pension Protection Act

Generating tax-deferred income is a significant part of an effective tax planning strategy. The income earned on the principal compounds tax deferred until money is withdrawn. However, at the time of withdrawal, you are required to pay taxes.

The government provides individuals with various means of earning tax deferred income. Popular options include retirement plans like the 401K, 403b, IRAs and other qualified plans. Besides the retirement plans, there are fixed and variable annuities, life insurance contracts, and other related options.

However, it is to be kept in mind that most tax deferred investments require you to pay penalty if you withdraw cash prior to being 59 and ½ years old. The penalty is around 10% of the total contribution made to earn tax deferred income.

However, tax-deferred investments help to minimize your current tax liability and increase your net worth by offering you a variety of choices such as equity portfolio, fixed income portfolio or a combination of both.

As the year 2006 is about to end, you still have some time to make plans for your year-end tax savings. While you plan your savings, have a look at the options that can help you out.

1. Sell your principal residence before the New Year’s Day. This will give you the chance to get the maximum tax break. If you owned and occupied your house for at least 2 years out of the last 5 years prior to its sale, you will get tax exemption on $250,000 out of your capital gains taxes. For qualified married couples who file joint tax return, the exemption limit goes up to $50,000. This tax break provided by the Internal Revenue Service is available for only once in every 2 years.

2. Buy a house as your principal residence before the year ends. With fixed rate mortgages being offered at around 6%, you can start shopping for a home loan at your preferable terms and conditions. If you pay a home acquisition fee of 1%-2% of the loan amount, it becomes tax deductible as itemized interest. But you need to record the home purchase by the 29^th of December, which is the last business day for 2006. Besides this, you can deduct mortgage interest paid in 2006 on your 2006 income tax returns.

3. You can refinance any existing mortgage for which you have paid a loan fee which is being amortized over the life of the loan. This will help you get rid of a variable rate mortgage. You can also get tax-free cash out of your home equity. In the year when the loan will be fully repaid with undeducted loan fees, these fees will become tax-deductible as itemized interest.

4. You can make your first monthly mortgage payment for 2007 in 2006 itself. Try to pay the first installment for 2007 well before 29^th of December. If you can send the payments to the lender in time so that he can include it in your IRS 1098 interest deduction statement, you will be getting a higher itemized deduction for 2006.