So a friend emailed me last week about how to get copies of her credit report. It’s been a while since I’ve blogged about this (and a while since I’ve gotten my own reports from the three credit reporting agencies) so I thought I’d mention it again. Just something to take care of before Labor Day as everybody gears up for the fall.
· You can do it online at www.annualcreditreport.com/cra/index.jsp . This site is run by the Federal Trade Commission (FTC)
· You can call: 1-877-322-8228
· You can get a request form at the web site above and mail it to: Annual Credit Report Request Service, P. O. Box 105281, Atlanta, GA 30348-5281
Don’t wait for an unpleasant surprise. Know what on your credit report and stay in control of your finances. Until next time, here’s to good planning!
I just saw a report from Fairmark Press about a policy that’s been instituted by Google, THE online search engine. Now, they aren’t the first company to do this, but they’re certainly the most well-known. Thousands of companies offer the same health benefits to their gay and lesbian couples that they provide for their heterosexual married employees. But the non-het folks get taxed on the value of the partner/spouse’s premium. It’s called imputed income. Google recently announced that it’ll cover the added cost of the imputed income…not in the employee’s paycheck, but rather in a separate check. Google honchos view the added tax as being discriminatory. Since health insurance generally gets more expensive as one ages, gay Baby Boomers nearing retirement are shelling out a pretty penny for the additional tax…something their heterosexual co-workers don’t have to bother with.
Google is doing this to continue attracting the best talent. And it does make it a tad more expensive for them to hire lesbian and gay workers. That’s a luxury a smaller company may not be able to afford. It would be much more efficient to eliminate the Defense of Marriage Act and change the tax code to get rid of imputed income. But, until that happens, Google’s doing the right thing. It’s progress. Until next time, here’s to good planning!
There’s been a lot written in the last nine months about converting Traditional IRAs to a Roth in 2010. Some folks are converting because the income limit has been eliminated. Roth IRAs are attractive for many people because the assets in the Roth can be withdrawn tax-free. And, those converting in 2010 can take two years to pay the income taxes that will be owed. But it may not be a good idea for you to convert some or all of a Traditional IRA to a Roth. Here’s why:
* Retirement’s just around the corner. If you’ve got more time before retiring (say, at least 15 – 20 years) then it’s more likely your account will grow enough to make up for the income taxes you’ll have to pay upon conversion. If you’re 58 or older, it may not make sense
* The tax bill would choke a horse. This is how we used to phrase it back in Missouri. If you don’t have the cash (in non-retirement accounts) to pay the tax bill, even if you spread the taxes over the next two years, then I’d think twice about converting. If you use retirement funds to pay the taxes, then you’ll have to pay more taxes on the money you used to pay the taxes. It’s an evil web
* A different tax bracket in retirement. At this point, none of us knows if our tax bracket will be lower or higher once we’re retired. The rule of thumb used to be: “I’m won’t be working…just getting Social Security and drawing from my IRA, so I’ll be in a lower bracket.” But that may not be the case. Given the huge deficits that our country has had, now, for almost ten years, income taxes may be higher in retirement. It’s certainly not out of the realm of possibility
* Converting may bump you into a higher bracket now. Bummer. But, seriously…you convert your $100,000 Traditional IRA to a Roth, you’re looking at a pretty big tax bite
You can always convert a portion of your Traditional IRA. Just some food for thought. Until next time, here’s to good planning!
I had to read this twice when I first saw this reported online. Because California is a community property state, the Internal Revenue Service says gay and lesbian couples must be treated the same as heterosexual couples when it comes to federal income taxes. This is the first time the feds have recognized gay couples as one unit for income tax purposes. Community property rules require married couples to treat all income as joint property. If heterosexual couples file their tax returns separately, the Supreme court has already ruled that incomes must be combined and then divided equally for reporting purposes. The Defense of Marriage Act doesn’t recognize gay marriages, so these couples will still be filing “separately” to the IRS. But it’s the fact that these couples are registered as domestic partners with the state that prompts the community property rules to kick in.
Roughly 58,000 couples who have registered as domestic partners must now change how they report their income. For many of these couples, this may result in a lower tax bill…or should I say they’ll be paying federal income taxes in line with their heterosexual friends. That will be the case especially if one spouse earns considerably more than the other. It will bring the higher wage earner down to a lower tax bracket. That’s a good thing.
Nevada and Washington state are also community property states so gay and lesbian couples registered as domestic partners there may be similarly affected. It’s hard to keep up with all the changes out there. Until next time, here’s to good planning!
It’ll be a packed house on Thursday in a federal courtroom in Boston. On the docket is the constitutionality of the Defense of Marriage Act, that draconian law that defines marriage as between one man and one woman. Gay couples believe DOMA disciminates against them by denying more than 1,100 benefits of marriage that have always been afforded to married heterosexual couples.
This will be the first time opponents of DOMA will be able to present their case against the law in court. I think it’s fitting the first courtroom arguments are here in Massachusetts, where gay marriage first became legal. Gay & Lesbian Advocates and Defenders sued on behalf of three widowers and seven married gay couples here in the Bay State. It was a lawsuit by GLAD that delivered marriage equality in 2004.
Even though the Obama Administration says it agrees DOMA should be overturned, government attorneys say it’s still law and they want the suit thrown out (huh?). GLAD attorneys want the court to throw out DOMA by ruling in their favor without a trial. Stay tuned. Until next time, here’s to good planning!
If you stuck your head in my office, you’d think I’m a proponent of keeping everything. Not true. I just like to read the magazines and go through all the mail. Although, I do want to report good progress in the sorting department this past weekend. Anyway, you probably have lots of pay stubs, tax returns, old bank statements and the like, too. I’m often asked by folks what should be kept and what needs to be shredded? Here’s some thoughts as many of us put our 2009 income tax in the rear view mirror:
- Definitely keep your old tax returns. I’d also recommend you keep the documentation that goes with each return for three years. You never know when you might have to prove something to the IRS
- Getting a confetti or cross-cut paper shredder will make your records un-tape-able
- Keep your “thank you’s” from charities for three years
- Keep your year-end investment statements for three years, although I always think it’s a good idea to keep your very first statement from an investment until after you sell it. That way you’ll be able to find your original cost (basis) very easily
- Keep records that pertain to your home until, well, you aren’t living there anymore. So, that would be what you paid, what you’ve spent on improvements. Even though the first $250,000 of a home sale is exempt from capital gains, you’ll want to make sure you add every legitimate improvement. Improvements get added to your basis, so you may end up paying less tax
- Keep records that show what you contributed to retirement accounts and what you took out of said accounts. Keep any Form 8606 if you made any nondeductible contributions to a Traditional IRA
- If you bank online, you might get yourself closer to going paperless, although I think it’s a good idea to keep bank statements for at least 3 years
- Shred your ATM receipts, your bank deposit and withdrawal slips
- Shred your credit card receipts. Just make sure your receipts match up with the amounts on your monthly statement
I hope this helps. Do some shredding this weekend. Until next time, here’s to good planning!
Do you pay attention to the expenses for your investments? If you’ve been reading my missives for a while, then you know I’ve been known to rant about fees and expenses. They do matter because they do add up.
The U.S. Supreme Court issued a ruling recently on a case about mutual fund expenses. This may put pressure on fund managers to justify the expenses they charge, particularly if there’s one fund for retail investors (folks like you and me) and an identical one for institutional investors (like pensions and 401(k)’s). Traditionally, the expenses have been lower for the institutional accounts. The reasoning was that the institutional fund would be dealing with fewer “customers” and have economies of scale, so the fund’s expenses would be lower (so the expenses would be lower for the pension funds, etc.). Well, some retail investors in Oakmark Mutual Funds didn’t think they should be paying higher fees to the fund’s investment advisor, Harris Associates, so they sued. Many mutual funds have an outside investment advisor do the heavy lifting of deciding which companies to invest in, when to buy, when to sell….
The Supreme Court’s ruling, I suspect, will be tough for the mutual funds: going forward, if an investment advisor like Harris Associates manages money for mutual funds A, B and C, Harris will have to explain to each fund how it calculates its fees that it charges the other funds. Seems to me all that will add to the cost. But, hey, what do I know? The high court was unanimous. Until next time, here’s to good planning!
I’ve got some more ideas to get you thinking about getting your financial house in order (or tweaking it if you’ve done some stuff). If you missed my first installment, scroll down and see Tuesday’s posting. So, what about:
* Keep your important documents where you can access them. While I keep my tax preparation records for seven years, I do keep every income tax return I’ve ever filed in my life (yes….there are a lot of them). In case there’s a question about my Social Security contributions, I’ll have the answer. My life, disability and long term care insurance policies are all in the portable safe. The will is there, too. It’ll be the first thing I grab if there’s a fire
* Reduce your debt. The credit bureau Experian says the average American carried about $17,000 in debt, other than a mortgage. Much of it is from credit cards. List your credit cards with the highest interest rate on top and make a consistent effort to pay extra toward the balance. This kind of debt can choke you, especially if you have an emergency or lose your job
* Check your credit score. You should be entitled to one free credit report a year from each of the major credit bureaus (at least that’s the law in Massachusetts). Take advantage of this and make sure there’s nothing there that doesn’t belong to you. It happens all the time
* Make sure you understand where your investments are and how they’re invested. Talk with the representative that established the plan with your employer. Or call your own financial advisor. The economy has been in rough shape for more than a couple of years now. It’s all connected to investing. It’s your money, so make sure you know if it’s working for you
Resolve to change your financial habits for the better…..and follow through on it. Good luck. Until next time, here’s to good planning!
The start of a new year is always a good time to review your financial, business and life priorities. I always recommend writing down goals, both long term and through the end of the year. Here are a few suggestions:
* Be more consistent in your budgeting, saving and investing. There’s something every month you can do without to tighten your budget. And saving regularly into an emergency fund or for retirement will only result in good
* Did you increase your monthly contributions to your employer’s retirement plan, like a 401(k)? Are you saving to a Roth IRA? The maximum contributions to a 401(k), 403(b) or Thrift Savings Plan is $16,500 in 2010. If you’re over 50, you can put in an additional $5,500. The maximum for Traditional and Roth IRA’s is $5,000 ($6,000 for the over-50 crowd)
* Don’t forget that you can make your 2009 contribution to your IRA until April 15, 2010
* Double check your beneficiaries on your life insurance, retirement plans and other assets. If you got married, divorced or had some other major life event, you want to make sure your assets go where you want them to go
These are just a few ideas. I’ll post some more later this week. Have a great one and until next time, here’s to good planning!
Men and women definitely have different experiences and perceptions about money and finances. I’d like to pass along some ways that women can change their lives by changing these habits. This comes from the Women’s Institute for Financial Education, www.WIFE.org:
1) Dependence on Others – forget about the white knight riding in to sweep you away
2) Putting Things Off – Don’t procrastinate and get stuck. If you take small steps you’ll build confidence about your ability to manage your finances
3) Allowing Fear to Take Over – The market dives of 2008 and 2009 are the best example: people buying high and selling low. Have a long-term investment plan and stick to it. In the end, you’ll be better off
4) Not Having Goals or Direction – How can you get anywhere if you don’t have your roadmap? List your goals with steps to achieve them
5) Not Investing in Your Career – If you put your career on hold to raise a family, you may be hurting your chances for a secure retirement. You’ve got to have those 40 quarters of employment to qualify for Social Security. Keep in touch with former bosses and take classes to keep current
6) Not Being Ready When Your Marriage Ends – Whether it’s divorce or death, all marriage end. Have a frank discussion with your spouse/partner about finances. Both of you need to be able to survive and thrive no matter what happens
7) Not Getting Good Professional Advice – Everybody’s got an opinion about what to do. It’s pretty daunting and easy to get confused. Talk with a lawyer, financial professional, and tax person to make sure you’re doing everything you can to plan for your future
Start 2010 off right! Take charge. Until next time, here’s to good planning!
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