Sunday, March 31, 2013

Think Before Paying Taxes With A Credit Card

United Financial Counselors

A Not For Profit Organization

www.UnitedCounselors.org

As long as the government gets paid in full, it’s not picky about the method. Paper, plastic, even cash if you visit a local office. (Don’t mail cash.) It doesn’t matter to Uncle Sam.


It does matter to you, though. Using a credit card means the usual concern of paying it off quickly or paying high interest rates. But because the IRS uses third-party processing companies, you’re also going to pay an extra 1.88 to 2.35 percent. On a payment of $1,000, that means an extra $19 to $24. If you can afford to pay in full, is the credit card’s convenience worth that extra money?

Most debit cards, on the other hand, get charged a flat fee between $3 and $4. (Even if you owe so little that the percentage option is to your advantage, the minimum fees will guarantee you pay that much anyway.) Be careful with MasterCard debit, though: two of the five vendors charge a percentage fee on those just like credit cards.

If you’re going to pay by credit card, keep in mind your credit utilization ratio – if your monthly statements show you’re using more than about 30 percent of your available credit, your credit score’s going to get dinged until you bring that down. You also want to make sure the payment is treated as a purchase and not a cash advance, which can trigger fees and a higher APR rate.

9 Great Tax Tips


United Financial Counselors
Local: 786-288-5320 or Toll Free: 877-509-3160
 
 
If it’s time for you to get started, here’s some last-minute advice that might help.

1. Contribute to an IRA

One of the few ways you can still lower your 2012 tax bill is contributing to a tax-deductible IRA. You have until April 15 to do it. Contributing has big benefits – a tax deduction, tax-deferred compounding, and the main benefit: survival when you’re retired. The IRS says the max you can contribute for 2012 is $5,000 ($6,000 if you’re 50 or older).

2. Get organized

I once spent three days on the floor of my living room, sorting through a box of crumpled Home Depot receipts because I didn’t organize before I started my taxes. Don’t make my mistake. Get what you need before you sit down, like:
  • W-2′s from your employer
  • 1099-MISC if you’re self-employed
  • 1099-SSA for Social Security benefits
  • 1099-INT and 1099-DIV forms
  • 1099-G for state unemployment comp or state tax refunds
  • 1098-T for paid college tuition
  • Summary of paid real estate taxes
  • Summary of paid health care costs
  • Summary of child care expenses
  • Receipts to back up potential deductions

3. Decide if you’ll get help

Before you spend hours struggling with tax forms, decide if you want to DIY or get help. If you made $51,000 or less last year, you can get free tax help from the IRS VITA program. If you’re 60 or older, you might find free help through the Tax Counseling for the Elderly program. If you don’t qualify for either, you can pick up cheap or free software by checking out vendors on the IRS Free File website.

4. Slow and steady wins the race

Some people thrive on deadlines. Others feel rushed and end up overlooking deductions or making mistakes. If you’re more the rushed type, slow down. Mistakes on taxes can be costly: Enter the wrong info and you could end up paying more than you should, or not getting back all you could. When you’re done, double-check your return before you file.

5. Don’t rush past deductions

Don’t feel tempted to take the standard deduction to save time. Hunt down itemized deductions and see if they’d save versus the standard. Here are the basic standard deduction figures for 2012 from TurboTax:
  • Standard deduction for single taxpayers – $5,950
  • Standard deduction for married taxpayers filing a joint return – $11,900
  • Standard deduction for head of household taxpayers – $8,700
Here are some common deductible expenses you might use to beat the standard deduction:
  • Charitable donations
  • Home mortgage interest and real estate taxes
  • Higher education expenses
  • State and local income taxes
  • Medical expenses (but only what exceeds 7.5 percent of your adjusted gross income)
  • State sales taxes
  • Job-hunting expenses
  • Points paid to refinance a mortgage
6. Go digital
However you choose to do your taxes, be sure to eFile and request direct deposit. If you request direct deposit, the IRS says you’ll get your refund in less than 21 days and you can track the status online. And if you have to pay, you can also pay electronically.
Everyone can file their tax return electronically free through Free File.

7. Prepare for the worst

If you didn’t cheat or make a big mistake, odds are you won’t get audited. But play it safe and make sure you have everything you need if you do get the dreaded IRS letter. Start a file for your 2012 tax return and store anything you might need:
  • Copies of your filed form
  • Statements backing up the deductions you took
  • Copies of receipts

8. Get an extension

If you don’t owe – you’re getting a refund – you don’t have to file an extension, or file by April 15. There’s no deadline when Uncle Sam owes you.
But if you do owe, and can’t get your taxes done by April 15, no sweat. Just file an extension. That will buy you another six months, so your return won’t be due until Oct. 15.
Important: Extensions extend your time to file, not pay. If you’re going to owe, estimate your taxes and send in a check with your extension by April 15.
And if you owe and can’t pay? Send in your form or extension anyway. You’ll be penalized: The failure-to-pay penalty is 0.5 percent of what you owe for every month it’s not paid, with no time limit. So if you owe $5,000, your penalty will be $25 per month. Not fun, but not the end of the world.
The failure-to-file penalty is 10 times worse. The penalty for not filing is 5 percent per month of what you owe, up to 25 percent total. So if you owe $5,000, not filing is going to cost you $250 per month. After five months, you’ll owe the max of $1,250.

Since filling out and filing an extension form only takes a few minutes (you can even file it free electronically with TurboTax’s free extension filer), you’ve got to be either rich, crazy, or both not to.

National Mortgage Setltement Key Provisions!

United Financial Counselors

A Non-Profit Consumer Advocacy Group
Toll Free: 877-509-3160 or Local: 786-288-5320

About the Settlement

In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers:
This bipartisan settlement will provide as much as $25 billion in:
  • Relief to distressed borrowers in the states who signed on to the settlement; and
  • Direct payments to signing states and the federal government.
It’s the largest consumer financial protection settlement in US history.
The agreement settles state and federal investigations finding that the country’s five largest mortgage servicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct. Both of these practices violate the law.
The settlement provides benefits to borrowers in the signing states whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.


KEY PROVISIONS OF THE SETTLEMENT

Immediate aid to homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide.
State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.

 


Immediate aid to borrowers who are current, but whose mortgages currently exceed their home’s value. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.

 

Payments to borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process. $1.5 billion will be distributed nationwide to eligible borrowers . The National Mortgage Settlement Administrator will mail Notice Letters and Claim Forms in late September through early October 2012 to approximately 2 million borrowers who lost their home due to foreclosure between January 1, 2008 and December 31 2011 and whose loans were serviced by one of the five mortgage servicers that are parties to the settlement. These materials will explain to you how to get your payment if you are eligible. If you have further questions after reading this material, you can contact the National Mortgage Settlement Administrator at 1-866-430-8358.

Immediate payments to signing states to help fund consumer protection and state foreclosure protection efforts.

First ever nationwide reforms to servicing standards; something that no other federal or state agency has been able to achieve. These servicing standards require single point of contact, adequate staffing levels and training, better communication with borrowers, and appropriate standards for executing documents in foreclosure cases, ending improper fees, and ending dual-track foreclosures for many loans.

State AG oversight of national banks for the first time. Something no court could award.
  • National banks will be required to regularly report compliance with the settlement to an independent, outside monitor that reports to state Attorneys General.
  • Servicers will have to pay heavy penalties for non-compliance with the settlement, including missed deadlines.



BANKS ARE STILL ACCOUNTABLE FOR OTHER CLAIMS NOT COVERED BY THIS SETTLEMENT
This agreement holds the banks accountable for their wrongdoing on robo-signing and mortgage servicing. This settlement does not seek to hold them responsible for all their wrongs over the years and the agreement and its release preserve legal options for others to pursue.
Specifically, this settlement does not:

  • Release any criminal liability or grant any criminal immunity.
  • Release any private claims by individuals or any class action claims.
  • Release claims related to the securitization of mortgage backed securities that were at the heart of the financial crisis.
  • Release claims against Mortgage Electronic Registration Systems or MERSCORP.
  • Release any claims by a state that chooses not to sign the settlement.
  • End state attorneys general investigations of Wall Street related to financial fraud or the financial crisis.
The agreement settles only some aspects of the banks conduct related to the financial crisis (foreclosure practices, loan servicing, and origination of loans) in return for the second largest state attorneys general recovery in history and direct relief to distressed borrowers while they can still use it.
State cases against the rating agencies and bid-rigging in the municipal bond market, for example, continue. Claims and investigations against MERS and how Wall Street packaged mortgages into securities also continue.

On January 27 U.S. Attorney General Eric Holder along with Housing and Urban Development (HUD) Secretary Shaun Donovan, Securities and Exchange Commission (SEC) Director of Enforcement Robert Khuzami and New York Attorney General Eric Schneiderman announced the formation of the Residential Mortgage-Backed Securities Working Group. The working group will investigate those responsible for misconduct contributing to the financial crisis through the pooling and sale of residential mortgage-backed securities.

Mortgage Companies with the Most Consumer Complaints



United Financial Counselors

A Not for Profit Financial & Housing Counseling Organization
The Consumer Resource Blog

Bank of America and J.P. Morgan Chase did not respond to a request for comment.
Within the entire database, which contains more than 90,000 complaints, mortgages made up about 55% of complaints.

Bank of America is the most-complained-about company when it comes to mortgages, garnering more than 15,000 complaints on issues such as loan modifications and servicing since late 2011, according to information released this week from a federal database of consumer complaints.
Other top complained-about companies are

Wells Fargo, with about 8,000 mortgage-related complaints, and J.P. Morgan Chase, with about 5,000 mortgage complaints, according to the Consumer Financial Protection Bureau’s database that covers mortgages, and other products such as credit cards and student loans.

“When we get complaints directly from our customers or through the CFPB or other sources, we thoroughly investigate them and if we’ve made a mistake, we work to do what’s right for our customer,” wrote Tom Goyda, a Wells Fargo spokesman, in an email.

Looking broadly at all mortgage complaints in the database, the top category was “problems when you are unable to pay,” which made up almost six-tenths of complaints. The “making payments” category constituted about one-quarter of complaints. There were also complaints about loan applications and agreements, among other issues.

Of all mortgage complaints, more than 5% closed with monetary relief, according to the CFPB. About 58% of complaints were closed with an explanation. Another 21% were closed without relief, and 10% were closed with non-monetary relief.

Looking at just at the most-complained-about companies, Bank of America , JPMorgan Chase and Wells Fargo  were among the five mortgage servicers that settled last year with state attorneys-general across the country, as well as the federal government, for servicing violations.

Given their market dominance, one could expect these servicers would also get a lot of complaints. As of the fourth quarter, Wells Fargo had about 19% of the market share for servicing 1-4 family residential mortgages, while Bank of America and affiliates had 13.5%, and Chase had 11.2%, according to Inside Mortgage Finance, a publication following industry trends.