My Personal Finance Blog

Congress recently passed the Economic Stimulus Act of 2008. It’s designed to inject $152 billion into the U.S economy. What does this mean to you?

You could be one of the 130 million taxpayers who will receive a rebate check this year.

If you own a business, your business can take advantage of two tax breaks: Increased Section 179 Amounts and Bonus Depreciation. For more information relating this this topic, please see my recent article: “How the New Tax Law Can Help Your Business: Two Tax Breaks for Businesses.

If you own or invest in real estate, you may find some relief with your “jumbo” loans.

ARE YOU GETTING A REBATE CHECK?

There are two groups eligible to receive rebates. You can only be in one group so if you qualify for both, be sure to pick the group that results in the higher rebate amount.

Group 1: Those who paid taxes in 2007.

Group 2: Seniors, disabled veterans and widows of veterans.

Those specifically excluded from the rebate pool include nonresident aliens, estates, trusts and dependents (dependents only have to qualify as a dependent and need not be claimed as a dependent in order to be ineligible).

WHAT IS THE MAXIMUM POSSIBLE AMOUNT OF YOUR REBATE IF YOU ARE IN GROUP 1?

Keep in mind that these are the maximum possible rebate amounts and may not necessary be the amount you ultimately receive due to limits and phase-outs.

If you paid taxes in 2007, the maximum amount of your rebate is:

$600 for individual filers

$1,200 for joint filers

Plus, add an additional $300 per qualifying child to your maximum possible rebate amount. There is no limit on the number of qualifying children!

Example: If you are a joint filer with two qualifying children, your maximum rebate amount is $1,800 ($1,200 basic rebate + $600 for two qualifying children).

WHO IS A QUALIFYING CHILD?

If you’re familiar with the child tax credit definition, that same definition applies here. There are several requirements:

- A qualifying child must not have attained the age of 17 as of the close of the calendar year.

- The qualifying child must be the taxpayer’s qualifying child for purposes of the dependency exemption.

- The qualifying child must be a son, daughter, stepson, stepdaughter, or descendant of such child, or a brother, sister, stepbrother, stepsister or a descendant of such relative.

Don’t forget, your maximum possible rebate amount may be reduced due to limits and phase-outs. Read on to find out if your rebate amount is impacted.

WILL YOUR REBATE BE LESS THAN THE MAXIMUM POSSIBLE AMOUNT?

If you’re in Group 1, your rebate amount may be less than the maximum possible amount due to limits and phase-outs.

First, the amount of your rebate is limited to your 2007 tax liability. This means if your maximum possible amount is $600 and your 2007 tax liability is $575, then $575 is the maximum rebate your can receive.

Second, the rebate amount phases-out based on income levels.

The rebates start to phase-out when:

- A single person’s 2007 adjusted gross income is greater than $75,000

- A married filing joint couple’s 2007 adjusted gross income is greater than $150,000

If you’re over these limits, then your rebate amount is reduced by 5% of the amount exceeding the adjusted gross income threshold.

WHAT DOES THIS PHASE-OUT REALLY MEAN?

Here is a formula you can use to determine your rebate amount:

Step 1: Determine your Maximum Possible Rebate amount

Step 2: Determine your 2007 adjusted gross income (AGI) (You can find this on your 2007 tax return).

Step 3: Is your 2007 AGI greater than $75,000? ($150,000 if joint filer)

If you answered no, you’re done! You’lll receive the maximum possible rebate amount. If you answered yes, continue to Step 4

Step 4: Calculate your “Excess AGI.” Your 2007 AGI – $75,000 ($150,000 if joint filer) = Excess AGI

Step 5: Calculate your “Rebate Reduction.” Excess AGI x 5% = Rebate Reduction

Step 6: Is your Rebate Reduction amount greater than your Maximum Possible Rebate amount (from Step 1)?

If you answered yes, then your rebate amount is $0. If you answered no, then your rebate amount is:

Maximum Possible Rebate – Rebate Reduction = Your Rebate Amount.

Here are a few examples.

Example 1:

A married couple with no qualifying children and 2007 AGI of $175,000:

Step 1: Maximum possible rebate amount is $1,200

Step 2: AGI is $175,000

Step 3: AGI is greater than $150,000 so continue to Step 4.

Step 4: Excess AGI is $25,000 ($175,000 – $150,000)

Step 5: Rebate Reduction is $1,250 ($25,000 Excess AGI x 5%)

Step 6: Rebate Reduction amount ($1,250 from Step 5) is greater than Maximum Possible Rebate amount ($1,200 from Step 1) so the rebate amount is $0.

Example 2:

A married couple with 1 qualifying child and 2007 AGI of $175,000:

Step 1: Maximum possible rebate amount is $1,500 ($1,200 basic rebate amount + $300 for 1 child)

Step 2: AGI is $175,000

Step 3: AGI is greater than $150,000 so continue to Step 4.

Step 4: Excess AGI is $25,000 ($175,000 – $150,000)

Step 5: Rebate Reduction is $1,250 ($25,000 Excess AGI x 5%)

Step 6: Rebate Reduction amount ($1,250 from Step 5) is NOT greater than Maximum Possible Rebate amount ($1,500 from Step 1) so the rebate amount is $250. ($1,500 – $1,250).

WHAT’S THE MAXIMUM AMOUNT OF YOUR REBATE IF YOU ARE IN GROUP 2?

For seniors, disabled veterans and widows of veterans, the maximum amount of the rebate is $300 for individual filers and $600 for married couples filing jointly.

To qualify for the rebate in Group 2, the individual must have either:

At least $3,000 of any combination of earned income, Social Security benefits and certain veterans’ benefits (including survivors of disabled veterans), or

Net income tax liability of at least $1 and gross income greater than the sum of the applicable basic standard deduction amount and one (two if a joint return) personal exemption ($8,950 for singles, $17,900 for joint filers).

Unlike Group 1, Group 2 doesn’t have any phase out or additional limits. As long as the taxpayer meets one of the two requirements above, the maximum rebate will be issued.

HOW CAN YOU CLAIM YOUR REBATE?

If you file a 2007 income tax return (that’s the tax return due April 15, 2008), the IRS will calculate the rebate amount for you and will send it by mail or direct deposit without your having to take any further action.

If you don’t file a 2007 tax return but still qualify for a rebate because of your earned income level, combat pay, or receipt of Social Security benefits, the IRS has promised to announce how you will get on the rebate list.

WHAT IF YOU EXTEND YOUR 2007 TAX RETURN?

Because the rebates are based on your 2007 return, if you file your return after April 15, 2008, your rebate will be delayed. For example, individuals on extension this year who do not file their 2007 return until the extended October 15, 2008 deadline will not receive their checks until year-end. No checks will be sent after December 31, 2008.

Read about the benefits of extending your tax return.

After 2008, those who missed out on the rebate or received only a partial rebate get a second shot at qualifying with 2008 data when they file their 2008 return in 2009. This group includes those who did not receive a full $600/$1,200 check either because their 2007 income was either too low or too high, or they did not receive a full $300 child credit because their income was too high or a child was born or adopted in 2008. They get another chance to claim the difference based on their 2008 tax return filed in 2009. If a taxpayer would have received a smaller rebate check if based on 2008 return information rather than his or her 2007 return, however, the taxpayer is not required to give back the difference.

WHEN WILL YOU RECEIVE YOUR REBATE?

Congress has directed the IRS to issue rebate checks “as rapidly as possible.” No specific date has been released yet, but it’s likely that the process will start in May. The government is also likely to utilize direct deposit as much as possible rather than issuing paper checks. Overall, the government will have to issue or deposit more than 130 million checks, so the rebate process will take some time. When we learn how the government intends to issue the checks, we’ll let you know. Also, if you owe any federal debts or unpaid child support, the government will apply your rebate to that debt.

Tom Wheelwright is not only the founder and CEO of Provision, but he is the creative force behind Provision Wealth Strategists. In addition to his management responsibilities, Tom likes to coach clients on wealth, business, and tax strategies. Along with his frequent seminars on such strategies, Tom is an adjunct professor in the Masters of Tax program at Arizona State University. For more information, please visit http://www.provisionwealth.com

In most cases the senior is looking places to find money to off set the major loses they have felt from the banking and investment crisis. The one place that is still a safe haven in many areas is the home, even with declining values. The main reason is that most seniors purchased their homes when values were mush lower before the great appreciation era. If a seniors still has a mortgage on their home and many do have a current mortgage on their home and have to make payments every month. If a senior has a first mortgage lets say just for $100,000 at a 6% rate they are putting out over $600.00 per month or $7,200 per year. This amount if they did not have to make the payment would be added to their income that they would be able to use to live.

In many cases seniors over the years when the economy was booming many took at 30 year loans and or adjustable rate mortgage and are now faced with higher payments and they are trying to stay afloat.

If a senior is faced with this problem they should really consider a Reverse Mortgage for many reasons not to mention relief from payments. In many cases not only would they be free from mortgage payments, but they would receive additional funds to use as they see fit. Under the Reverse Mortgage program they senior controls how and what they spend the money on once they have closed.

Some things never change when doing a Reverse Mortgage and that is they still must pay the taxes and insurance on their home. If a senior is use to having an escrow of taxes and insurance they maybe able to set aside the monies with the company and have them pay it yearly for them.

One thing that all seniors should be looking at is the availability to access the money that they need from their home that they paid for over the course of their lives. In the years that you will need it the most and not have to worry about paying it back in their lifetime.

Many seniors are now thinking that if they take out a Reverse Mortgage and the bank or Mortgage Company goes out of business they will be out of luck. This is not true it is protected by the FHA mortgage insurance, that if they do go out of business then Federal Government takes over and pays them the money. The Reverse Mortgage is the safest mortgage in the entire mortgage industry. Unlike a typical mortgage where a lender has many options to force your paying of the loan, the Reverse Mortgage has the full protection of the US Government that guarantees that the senior will never have to leave their home for as long as they live. This of course is providing they pay their taxes and Insurance and continue to live in the home as their primary residence.

Now in 2009 a new program is emerging within the Reverse Mortgage and this a great option for many seniors who have one reason or another sold their home or have to move to a newer location. The Reverse Mortgage purchase program is now available to seniors over the age of 62. The program is design to allow seniors to purchase a home without any mortgage payments for life. Now just to make it very clear this does not mean that a senior can purchase with no money down. This is not the same mortgage that got this country in to the financial situation that we are in where people would by a home with zero down or less in some cases.

A senior who is looking to purchase a home will have to have money to purchase a home; it is all based on the age of the person and the appraised value of the home. Let’s say that a person age 62 wants to purchase a home that is appraised at $200,000, they would need approximately 40% down payment on the home. They would in most cases be able to finance all or part of the closing cost within the Reverse Mortgage. But let’s look at it in another way! Remember the older you are the less you will need down!

If that same person wanted to purchase a home using a conventional mortgage, they would need at least 20% down and would have to qualify with at least a 720 credit score and have the income to qualify for the mortgage payment.

So let’s look at the difference!

Conventional Reverse Mortgage

$200,000 Purchase price ………………………$200,000

$40,000 down payment ……………………….$80,000

$160,000 mortgage …………………………….$120,000

$858.00 per month payment……………………Zero per month

Now this is what it looks like on paper for a conventional mortgage verses the Reverse Mortgage the big difference is that a senior for a Reverse Mortgage purchase they will not have to qualify for the loan they already are if they are 62 or older. Also under the conventional mortgage if a senior fails to make a payment on their mortgage they will be foreclosed on just like anyone else.

For the senior who has a mortgage currently and is worried if they are going to be able to make payments on the mortgage Think Reverse Mortgage! No Income or Credit qualifying; if think this isn’t a big deal call your mortgage banker and see what it takes to get a mortgage today.

Also this is very important issue your conventional mortgage is not guaranteed that you will stay in your home for the rest of your life!

Here is what you have to do to get a Reverse Mortgage for your home!

Speak to a Reverse Mortgage Specialist who can educate you on all aspects of the program.

You will be required to have a FHA Approved counseling session and receive your certificate to hand to the mortgage company.

A Fully executed loan application must be signed and submitted.

The FHA appraisal must be completed for value and condition of property.

The title search must be completed and cleared of any and all liens and judgments

All insurances must be changed all endorsements

Closing is scheduled once all final conditions have been cleared.

Closing takes place either in the home or at a title office.

The client must wait three business days for the cancelation period which includes Saturdays.

Money is disbursed and all existing liens are paid off and any additional funds available are sent to the person who closed on the loan.

So if you are thinking of how you are going to make it through these hard times, waiting to see if the market will ever turn around you are loosing money in your home.

Remember this as the stock market, and real estate even stay where it is now you may never see the return of that money.

I am a Reverse Mortgage Specialist I have spent over 20 years as a Real Estate broker and the last 10 years in the mortgage industry, and 5 of them providing Reverse Mortgages. My years as a professional, I have always felt that helping our seniors is helping the back bone of this country. Our seniors are the ones who made this country great and in the time of their lives that is so suppose to be their golden years it is in many cases painted black. I have dedicated my life to helping them achieve some sort of financial independence and help to enjoy the fruits of their labors. You can visit our site and receive all the education http://www.bestmortgageplans.com

Are you one of the millions of Americans who fear that company cutbacks may cause you to lose your job? With the national unemployment rate at the highest in 26 years, touching 8.1% in March of 2009, it is expected that millions of more Americans will lose their jobs this year before the economy gets better.

Though you may not be able to predict the stability of your job, what can you do now to protect your income and mortgage if a layoff occurs for you?

Contribute to Savings

Many individuals and families with good jobs and a mortgage do not have an emergency savings account set in place. What a tragedy that can be if a sudden loss of regular income occurs! To protect yourself and your family from a financial crisis, you should have a savings account set up with at least three, and ideally six, months of living expenses. That means you should look at your monthly budget and determine what basic costs you will incur, such as your house payment, groceries, car payment, etc.

If you have a little savings or no savings at all, start now. Open a savings account at your bank that you contribute money into each month. The more you can cut back now and put into savings, the better you will feel if you are suddenly laid off from work.

Buy Mortgage Insurance

Mortgage insurance is available that can help you pay your mortgage while you are unemployed. However, don’t confuse mortgage insurance with Private Mortgage Insurance (PMI). PMI is a type of insurance you may be required to pay for each month with your regular mortgage payment. PMI protects your lender and pays them the balance of your loan in the event you default. This is for the sole benefit of your lender and doesn’t help you prevent foreclosure.

Find an insurance agent that sells mortgage insurance. The type of policy you need is one that will take over all or a portion of your mortgage payment should you become disabled or find yourself unemployed due to layoffs. Premiums may be high, but the alternative could be a more expensive foreclosure if you are out of a job.

Find a Layoff Insurance Program

Many financial groups in many states offer “layoff insurance.” This type of income loss protection can help you pay your mortgage if you become financially unable to meet your mortgage obligation. However, you will usually be required to pay premiums for at least six to 12 months before you can file a claim. There may be other restrictions as well, such as a cap limit on the amount that the group will pay each month (i.e. meeting the principal and interest payment only and no tax escrow), and a limit on how long they will make your payment.

Groups that offer this benefit are not insurance companies, and thus, are not regulated by state insurance commissions in terms of financial reserves. Beware of groups who offer this type of benefit but are financially unable to pay claims.

This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

Helpful mortgage information at Online-Home-Mortgage.net P. Payne works for OHM Mortgage and Foreclosure Information Site providing answers to all those questions people need to know.

A rising number of homeowners are defaulting on their mortgages and facing foreclosure or loss mitigation as the economy continues to decline. Homeowners who are unable to make their monthly mortgage payment for whatever reason have options that will allow them to stay in their homes. Even though many situations like these end in foreclosure and a ruined credit score, it doesn’t necessarily have to turn out that way.

A loan workout is when you negotiate with your lender any kind of plan that will benefit both you and the bank when you are delinquent or in default. This is a general term used in the industry to cover the different options you may have such as a loan modification, repayment plan, short sale, and forbearance, just to name a few. Some of these loan workout plans will work for some homeowners and not for others. The important thing is that you contact your bank and talk with them about your situation.

Mortgage Modification, also call Loan Modification can help homeowners stay in their home and continue to make their monthly payments. A loan modification is a change in the terms of the loan which will allow it to be reinstated with lower payments and possibly lower interest so that the borrower can afford to keep their home. If you find yourself in a situation where you can no longer afford your mortgage, it may seem like there is no hope to saving your home, but MOST people do qualify for a loan modification.

A mortgage modification, which is a lot like a refinance loan, is when homeowners refinance their current mortgage to get a better interest rate to lower their monthly payment. No matter what the reasons might be, if you are about to default on your home loan it is important to consider loan modification to save your home.

Loan modification is not the same as debt consolidation or refinancing a mortgage before you begin to fall behind. A mortgage modification is a long term solution sought after a homeowner is no longer able to make their monthly mortgage payments. Rising interest rates, job loss, or other events preventing a homeowner from making their payments on time is when a loan modification is used to keep them in their home.

Loan modification may change the loan’s term length, interest rate, and/or other factors to keep mortgage payment affordable for the borrower. There may also be expenses and fees can be included in a new loan modification and paid off in affordable monthly payments. Besides being allowed to stay in their home, a loan modification also saves the homeowner’s credit from the negative affects of a foreclosure.

If you are looking for loss mitigation or a loan modification to save your home there are many resources for you to choose from. With the solutions of loan modification and loss mitigation available, as well as other routes, foreclosure should always be the last resort.

For more information, please visit Legal Loan Bailout.

Dustin Rohde is an article contributor to Legal Loan Bailout. Legal Loan Bailout connects you with lenders that can help you avoid foreclosure using home loan modification. Depending on your specific situation, we will negotiate a loan modification that will help you keep your home.