Wednesday, February 27, 2008

Teach teens about income taxes

MADISON, Wis. (2/27/08)--With the looming April 15 tax deadline, it's a good time to teach working teenagers about money and taxes, says the Credit Union National Association.

Many teenagers don't understand that the total amount they earn isn't all "theirs." According to Denise Witmer, author of the book, "The Everything Parent's Guide to Raising a Successful Child: All You Need to Encourage Your Child to Excel at Home and School" and contributor to, teenagers can benefit from some key lessons about income taxes:

Be familiar with some tax forms. The teenager will fill out a W-4 form when starting a job, and deductions will appear on the pay stub. Explain these forms with the help of or suggest he talk to the employer's personnel department. At the beginning of the next year, he'll receive a W-2 form needed when filing taxes. And if he was self-employed--mowing lawns, for example--he even may need to fill out a Schedule C form.

Age is not a factor in paying taxes. If your teenager receives a paycheck, explain that the company will deduct taxes from the gross or total amount paid. If she makes more than a certain amount in a given year--$5,350 in 2007--she'll have to file an income tax return and pay taxes. If she makes less than that, she may be due a refund but can get it only if she files an income tax form.

Money from babysitting and mowing lawns is considered earned income. Your teenager must pay self-employment taxes if the amount is more than the Internal Revenue Service's limit for the year--$5,350 for 2007.

Unearned income of $850 or more must be reported. This could include investments, dividends or interest, or capital gains. If the teenager has both earned and unearned income, she needs to file a tax return if earned-plus-unearned income totals $850 or more, or if earned income plus $300 is more than $850.

Tax money helps run the country. Taxes U.S. citizens pay are vital for public schools, police and fire services, repair of national highways, military spending, aid to foreign countries, and more. Without taxes, these services may not exist.

Emphasize the importance of saving. Feb. 24 through March 2 is America Saves Week. Take advantage of teachable moments--such as when a child starts to earn money--and help the child set savings goals and make plans to reach those goals. When it comes time to buy a car or shop for a mortgage, good saving habits early on can mean the difference between financial independence and financial instability in adulthood.

For more information, read "Taxes--Just Do It" in Googolplex.

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Monday, February 25, 2008

Millions of seniors will get rebates... if they file

NEW YORK (2/25/08)--Calling all senior citizens who haven't had to file a tax return in the past: If you want an economic stimulus rebate check this year, you need to file a 2007 federal tax return ( Feb. 15).

If you're like most people, you won't have to do anything extra to get the rebate--simply file your 2007 tax return and show at least $3,000 in qualifying income. But if you had at least $3,000 in earned income--and therefore qualify for the rebate--but otherwise weren't required to file a return, now you must file if you want the rebate.

Both the Internal Revenue Service and AARP are making a special effort to reach out to about 12 million low-income seniors who may not realize they need to file a tax return to get their rebate.

Here's what you need to know:

You must file. Since the rebate is based on your 2007 income, you can't get the rebate until you file your 2007 tax return and show at least $3,000 in qualifying income ( Feb. 11). If you file by April 15, the Treasury Department estimates you can expect a rebate check sometime between May and early July. If you file an extension, you may not see the rebate check until the end of the year.

Other benefits count. If you're a Social Security recipient, veteran, and/or retired railroad worker who otherwise wouldn't need to file a tax return, now you must file to get the rebate ( February). Perhaps you had $500 in earned income, plus at least $2,500 in qualifying benefits; in this case, you're eligible for the rebate. Report those benefits on Line 20a of Form 1040 or on Line 14a of Form 1040A. The only other lines to fill out are name, address, and Social Security number.

Make it clear. Write "Stimulus Payment" at the top of any form you file.
Opt for direct deposit. It's the fastest way to get your refund and rebate payments. If you opt for high-cost refund anticipation loans (not recommended by consumer advocates) or any other loan agreement with your tax preparer, your rebate will be sent via check so it doesn't go into the tax preparer's account.

Keep 'em separate. Rebate checks will be sent separately from any 2007 tax refund amount you're expecting.

Already filed? As long as you filed and reported at least $3,000 in qualifying income, you'll receive the rebate and don't need to do anything else. If you filed but your qualifying income was less than $3,000, consider filing an amended return (Form 1040X) if you discover you really did receive enough total income to qualify for a rebate.

Need help? Don't spend $100 or even $50 on a tax preparer if you're getting a $300 or $600 rebate check. Instead, visit one of the IRS's Volunteer Income Tax Assistance program (VITA) sites, which offer free tax preparation for lower income and elderly individuals. VITA volunteers typically are located in community and senior centers, shopping malls, libraries or schools. Call 800-829-1040 or 888-227-7669 for tax counseling for elderly individuals.

Note that anyone who owes back taxes or past-due child support will have at least part of the rebate applied to those or other nontax federal liabilities.

It's estimated that 117 million low- and middle-income households, 20 million senior citizens receiving Social Security payments, and 250,000 disabled veterans will get a rebate check ( Feb. 11). In general, most individuals will receive payments of up to $600 (up to $1,200 for joint filers). Each qualifying child increases the amount by $300.

For income thresholds and more information, visit

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Friday, February 22, 2008

H&FF Radio guests discuss recession, savings, gambling

WASHINGTON (2/22/08)--Experts on this Sunday's H&FF Radio show cover a range of money topics--including recession fears, savings challenges, the $5 bill makeover, and an alarming trend in gambling.

Home & Family Finance airs Sundays at 3 p.m. EST on the Radio America Network. The one-hour program devoted to consumer finance issues is brought to you by America's credit unions and their 90 million members, and is presented by CO-OP Network.

The Credit Union National Association (CUNA) and Radio America are podcasting Home & Family Finance through iTunes, Podcast Alley, Odeo, and other popular podcast library sites, as well as on Radio America and CUNA's websites.

Sunday's show, which you also can hear later via the Internet, features Paul Berry, Washington, D.C., journalist and broadcaster, discussing these topics with special guests:

"The New $5 Bill: What Improved Security Features Mean to You and Counterfeiters," with Dawn Haley, chief, Office of External Relations, Bureau of Engraving and Printing, U.S. Department of the Treasury, Washington, D.C.;

"The U.S. Economy: Headed for a Recession?" with Steve Rick, senior economist, CUNA, Madison, Wis.;

"Internet Gambling: What It Costs You and Me," with Keith Whyte, executive director, National Council on Problem Gambling, Washington, D.C.;

"America Saves Week," with George Barany, director of financial education, Consumer Federation of America and national organizer, America Saves, Cleveland; and

Listener Q & A: Free help with your taxes; how to pay down credit card debt; adjustable-rate-mortgage options; trends for new businesses.

Home & Family Finance is a resource center for personal finance information at CUNA. The radio show is sponsored by CO-OP Network, the national credit union ATM network; Cabot Creamery Cooperative, makers of cheddar cheese; Visa; and WesCorp. For more information, read "Financial Fitness Challenge April—Make Saving a Habit" and "Calculator: Should I Pay Off Debt or Save?" in Home & Family Finance Resource Center.

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Thursday, February 21, 2008

Mica to AP: People need rainy day funds

WASHINGTON (2/21/08)--People need to save more of their income to create a rainy day fund or backup, Dan Mica, president/CEO of the Credit Union National Association, told the Associated Press yesterday. Forbes published the item Wednesday.

The article focuses on "America Saves" week, a national campaign starting next week that aims to help people save more--with this year's focus on saving automatically.

Numerous reports of people missing credit card payments and falling behind on mortgages should drive home the point that more savings is needed, Mica said in the article.

Having money automatically transferred into savings means "you never miss it," Mica said. Once that account is started, consumers can consider increasing their level of savings every time they receive a raise.

"And anytime you get some extra money, like a tax refund or a tax rebate, a certain amount should go into savings, too," Mica said.

More than 1,000 government agencies, corporations and nonprofit groups have combined efforts in the America Saves program with a goal of increasing consumers' understanding the need to save for emergencies, for a down payment on a home, to educate children or to finance retirement.

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Five rebate spending tips for tax first-timers

MADISON, Wis. (2/20/08)--It's official: President Bush approved legislation last week that will deliver tax rebates to U.S taxpayers who have filed for the 2007 tax year, and checks will be mailed in late May (Associated Press Feb. 13).

For many young adults, this will be the first time they receive any kind of check from the U.S. government. And young adults filing their first-ever tax return may be getting both a tax rebate and a tax refund.

Faced with the potential for a substantial windfall, what are some of the best ways young adults can put Uncle Sam's check to use?

Pedal power. Spring is around the corner, and the environment is a major concern. Consider purchasing a new bike, particularly if you live in an area where you can commute to school or work with your new wheels ( Jan. 28). You'll save money on gas, get exercise and reduce your carbon footprint. Don't forget your helmet.

Help others. Feeling charitable? Consider donating a portion or all of your new money to a worthy cause. Current economic woes affect charities as well as businesses and consumers ( Feb. 4). Giving to your favorite cause will help others and make you feel warm and fuzzy. A side benefit is that your charitable donation may be tax deductible, which will help if you itemize on your 2008 tax return.

Invest in yourself. Place your refund or rebate check in a savings account, share/certificate of deposit, Roth IRA or other investment vehicle. Whether it's a rainy day fund or a start on a down payment for your first home, your credit union can help.

Act locally. Purchase goods and services within your community. Hire a local painter to fix that failed weekend project in your condo, dine out at a locally owned restaurant, or head down to the local electronics store instead of a large retailer to grab that new video game you've been eyeing. This multiplies the economic impact your dollars have in stimulating the local economy, and in turn boosts the national economy ( Feb. 9).

Knock down debt. It may not be the most exciting option, but it will help you pay off credit cards, student loans, and other forms of debt, putting you in a better position to make big purchases in the future.

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Wednesday, February 13, 2008

Bundling can save you a bundle

NEW YORK (2/13/08)--Don't toss that telecommunications offer in the trash too quickly. You could save some loot by bundling services (MarketWatch Feb. 5).

Bundling means you'll receive Internet, TV (cable or satellite), and phone service from the same company--generally at a lower cost than you'd pay for individual services from different companies--and all on one bill.

To find if bundling might be for you, pay attention to these points:

Real rate. Know what you'll be paying when the promotional period ends. To get the best deal, you may have to commit to a year or two of service ( Jan. 27). Or, bundle promotions might come with extras such as additional TV channels at no cost. But when the promotion ends you could be billed for these services if you don't cancel the extras on your own.

What you're paying for extras. Your first month's bill might be quite high. In addition to monthly fees and taxes, look for start-up costs and charges for remotes or cable boxes. If you selected premium channels, you'll be billed for those as well.

Same phone number. Most companies will let you keep your old number unless you're moving or trying to maintain a nonlocal number. If there's a charge for switching numbers, ask the phone company to waive it--most will do this to hook a new customer.

Service limitations. If you make too many calls you might be charged for the extras. Or, your Internet upload and download speeds might be affected if your computing habits typically exceed the company's bandwidth limits.

Though bundling might save money for most, it's not for everyone. If you're happy with the services you're already getting, you might not want to risk sacrificing quality or service. Maybe you don't want all your eggs in one basket. Maybe you don't need all three services or you don't use some or all of the services often. And if you use a cell phone for most calls, you might not need a landline at all.

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Monday, February 11, 2008

Crooks use rebate checks to snare victims

ATLANTA (2/11/08)--Crooks are drumming up new ways to heist money from victims' financial accounts. Some of those scams use the government's new economic stimulus package's proposed rebate checks as bait (Associated Press via

Despite well-publicized warnings, victims unwittingly hand over personal information--such as account numbers or Social Security numbers. Internal Revenue Service (IRS) officials warn that a variety of scams could be around through the end of the tax season and beyond ( Jan. 30).

Be on the lookout for these phone and e-mail scams:

Give account info for direct deposit of rebate. The caller claims to be from the IRS and promises a sizable rebate in return for bank account information--which supposedly is required for the direct deposit. If you refuse, you're told you can't receive the rebate. Hang up--it's a scam.

Click on link for refund claim form. This bogus e-mail message looks legitimate, but if you respond and enter personal information, expect your accounts to run dry.

Click on link because your return is being audited. The link prompts you to complete forms with personal and account information. Hit the delete button and keep identity thieves at bay.

Check not cashed--please verify account info. The caller claims to be from the IRS and to have sent out a check. But don't comply with any request for an account number over the phone--or in an e-mail message.

Bottom line: Don't let rebate-check anticipation cloud your senses. If a tax preparer tries to convince you to take out a short-term advance loan on your stimulus rebate check, just say no.

Consumer advocates expect these loan products--which carry excessive interest rates typically aimed at people who can't afford them--to pop up as soon as rebate checks are in the mail.

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Wednesday, February 6, 2008

Scholarship money at your fingertips

CHICAGO (2/6/08)--Hoping for a scholarship to help curb the high cost of tuition? Start applying now, because many applications are due within the next two months (Sun-Times Jan. 21).

With the average size of a scholarship around $2,000, knowing where to look for scholarship money is key. About 6.9% of undergraduate college students receive private scholarships.

Several free scholarship databases, such as and, are available on the Internet. The College Board,, also has a list of scholarships.

In addition to searching the Web, talk to a high-school guidance counselor or college financial aid adviser. Other places to find scholarships:

School activities, academic clubs, or athletic organizations;
Student's employer;
Parent's employer
Parent's union;
Church or religious organization;
Local government;
Local businesses;
Local newspaper; and
Credit union.

For more information about acquiring scholarships, read "Make Up for College Savings Shortfalls" in Home & Family Finance Resource Center.

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Monday, February 4, 2008

Struggling homeowners have access to resources, help

McLEAN, Va. (2/4/08)--Last week's housing reports painted a bleak picture for homeowners already struggling as subprime rates begin to adjust upward, but there are resources available to help (USA Today Jan. 30).

More than 1% of homeowners faced foreclosure in 2007, up 79% from 2006, according to a report from RealtyTrac (Jan. 29), a real estate marketing company based in Irvine, Calif. As home prices fall, homeowners discover that the mortgage exceeds the value of the house. To make matters worse, U.S. Census data put the home vacancy rate at 2.8%, with 2.18 million homes on the market in the fourth quarter.

Refinance inquiries have spiked since the Federal Reserve lowered interest rates twice last month, ABC News reported Jan. 30. However, many borrowers are stymied by lower appraisals that prevent them from refinancing into loans with easier terms (Reuters Jan. 29).

What's a financially strapped homeowner to do? Seek help immediately:

Contact your loan servicer. Don't wait, and don't be embarrassed. Provide detailed information about your income and expenses. Foreclosure is a cumbersome, expensive process, and reputable servicers prefer to avoid it.

Check out online resources. One excellent website is, which recently added new resources for homeowners facing foreclosure, according to the Credit Union National Association's center for personal finance. Click "Home Ownership" and then "Foreclosure Resources for Consumers" for links to agencies and organizations that can help.

Call the HOPE Now hotline. Dial 888-995-HOPE for access to Department of Housing and Urban Development (HUD)-approved credit counselors. The hotline was established by Treasury and HUD officials in August 2007, at the direction of President Bush.

Be on the lookout for scams. Predators are stalking distressed homeowners, hoping to cash in on the mortgage mess. So-called rescuers may trick you into selling your home for a fraction of what it's worth, or dupe you into signing documents that transfer the title out of your name.
If you're thinking of refinancing, contact your credit union, and take advantage of online mortgage comparison calculators, such as

For more information, read "Calculator: Do I Want a Fixed or Adjustable Rate Mortgage?" in Home & Family Finance Resource Center.

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Friday, February 1, 2008

Consumer Brief

SCHAUMBURG, Ill. (1/31/08)--Record-breaking gasoline prices have resulted in substantial changes to our spending behavior, according to research from the Nielsen Company. Based on responses from nearly 26,000 U.S. consumers, the study revealed that shoppers are combining trips and errands (70% said they are doing so), eating out less (41%), and staying home more frequently (39%). These findings come on the heels of a lackluster holiday sales season, despite an increase in online shopping as a way to deal with high prices at the pump. More than one-quarter (27%) of respondents said they're shopping more frequently at supercenters and big-box stores, and 25% are clipping more coupons. It's expected that food shoppers also will make up for reduced spending power by buying less expensive grocery brands (Nielsen Jan. 14)...