Wednesday, April 21, 2010

“Personal finance questions answered by WalletPop ... - WalletPop (blog)” plus 3 more

“Personal finance questions answered by WalletPop ... - WalletPop (blog)” plus 3 more

Personal finance questions answered by WalletPop ... - WalletPop (blog)

Posted: 21 Apr 2010 12:01 PM PDT

Filed under: Tax - Advice

Financial advisorApril 15 has come and gone, but tackling personal finance questions never ends. Our WalletPop experts remain on hand to answer your burning questions about home, taxes and inheritance.

Question: I am a first-time home buyer in this hectic market. I have heard that the first-time home buyers credit will be extended to houses closing until June 1, 2010. The original date for closure cutoff was April 30, 2010. Any truth to the June deadline extension?

--Debra


Question: My former employer checked block 13 of the W2 stating I was offered a 401(k) program, which I never gave anything to. I have my own IRA. However, when I did my taxes, I had to pay a penalty. Why is this?
--Mike

Answer from Jennifer Lane, owner of Compass Planning Associates and author of The Complete Idiot's Guide to Protecting Your 401(k) and IRA: Unfortunately, whether or not your personal IRA contribution is deductible depends on your income and the availability of a retirement plan through your employer -- whether you chose to participate in the employer's plan or not. Many people opt not to contribute to their work plan for a variety of reasons. They may dislike the investment choices, or the plan may have higher fees than comparable investments available individually. Many employers have suspended their matching contributions in response to challenging economic conditions, further reducing the incentive to participate in the company plan.

Your access to a 401(k) may make you ineligible for the deduction you wanted on your IRA, but all is not lost. You can still contribute and look forward to withdrawing the non-deductible part of the contribution tax-free in the future -- after all, you've already paid the taxes on it. Or, if you're eligible, you could instead fund a Roth IRA. A Roth won't give you a deduction now -- just like your IRA -- but all future withdrawals are tax-free. See IRS Publication 590 for details and more info.

Question: We inherited my mother's house. It was appraised at $450,000 and sold for $400,000. We paid back real estate tax of $10,000. Each one of us got $130,000. Did we have to file?
--Dick

Answer from Scott Testa, professor of business administration at Cabrini College in Philadelphia: Generally, taxpayers can exclude up to $250,000 in capital gains when selling their primary residence -- the exclusion is $500,000 if you are married and filling a joint return -- which is known as the Section 121 exclusion.

There may be transfer, stamp or property taxes to be paid when selling the house, and those taxes are listed in detail on the settlement statement prepared by the title company during escrow. However, there should be no federal income taxes. The tax code allows taxpayers to exclude up to $250,000 in capital gains ($500,0000 if married), provided the taxpayer has owned and lived in the property as their main home for two out of the past five years.

Got a personal finance question? Leave it in the comments section

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IAC, DJ Shutting Down Personal Finance JV FiLife - paidContent.org

Posted: 21 Apr 2010 10:06 AM PDT

Personal Finance Daily - Marketwatch

Posted: 21 Apr 2010 09:09 AM PDT

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By MarketWatch

Don't miss these top stories:

You can understand how salt got so popular. It offered one of the earliest ways of preserving foods so they could be stored or transported, with the added benefit that it made dull foods taste a whole lot better. Even though in the age of refrigeration we don't need salt so much as a preservative, it still makes canned and packaged foods a lot more palatable to plenty of people.

The problem is we now salt everything, and we salt it way too much for our own good. And it's not just the cheese Whoppers or the Slim Jims. Plenty of processed foods hold so much sodium that one or two servings is enough to push you past the recommended limit of 1,500 milligrams per day.

Because too much sodium can raise blood pressure and lead to heart disease and stroke, the Institute of Medicine is calling on federal regulators to force processors to lower salt levels in food. The idea is to do it gradually, so we won't notice so much, and already some food manufactures are voluntarily buying into that idea.

And while salt may be ubiquitous, and relatively cheap, these days we have ready access to a world of other spices that can do wonders for your taste buds without doing damage to your heart.

-- Steve Kerch, assistant managing editor

HEALTH CARE

Most Americans' salt intake is too high

The processed food you buy soon may get an overhaul as public-health experts look for ways to lower Americans' salt intake. On Tuesday, experts from the Institute of Medicine called on the U.S. Food and Drug Administration to regulate sodium levels in food, saying widespread salt reduction could prevent 100,000 deaths a year.
See Health Matters Blog.

If you don't lose weight your finances will

You have to admire Michelle Obama for taking on an issue that can turn off millions of Americans, who themselves are overweight. From better food labels to more money for healthier foods in schools, the First Lady is taking on the issue with a vengeance, tackling the problem from many corners. But there's another, big reason that each and every parent should get rid of excess weight and teach their kids good eating habits: our financial futures.
See Jennifer Openshaw.

Obama nominates patient advocate to head Medicare, Medicaid

President Obama this week nominated Dr. Donald Berwick, a pediatrician, patient-safety advocate and Harvard professor, to be the top administrator for the Centers for Medicare and Medicaid Services (CMS). Temporary acting administrators have been filling in since the Bush administration's last confirmed pick, Dr. Mark McClellan, left the post in late 2006. If confirmed by the U.S. Senate, Berwick would lead CMS during a transitional period that anticipates a significant expansion of Medicaid and changes to Medicare, the health-insurance program for the elderly and disabled.
See Health Matters Blog.

Cobra subsidy goes on

Despite all the commotion over the health-care legislation, some unemployed people say they're more worried about what will happen to their group health insurance under Cobra.
See Health Care.

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10 Personal Finance Tools You Should Use Now - U.S. News & World Report (blog)

Posted: 21 Apr 2010 07:50 AM PDT

A few years ago, Trevor Flannigan decided to start managing his budget using the online tool Mint.com. The 23-year-old district manager of a grocery store chain in Minneapolis suspected he could be spending less money each month, but he needed help organizing his various credit, debit, and other bank accounts. So he entered his nine accounts into the website and started tracking how much he spent.

The website now warns him when he approaches the limit of his monthly budget in different categories, such as eating out. "When I see I already spent x amount of dollars, I say, 'It looks like I'm having soup for the last week of the month,'" says Flannigan.

[See 5 Reasons Credit Card Companies Won't Survive.]

Flannigan is among the thousands of consumers who have incorporated online personal financial management tools into their lives. While they have been around for years, only recently have they started to really take off, with about 1 in 4 consumers using some kind of tool. "With the downturn causing more financial headaches for people, they've become a lot more disciplined, so they are turning to tools," says Ron Shevlin, senior analyst at the research and advisory firm Aite.

The tools are also much better than they used to be. They now allow users to automatically upload all of their financial data for quick analysis. Shevlin adds that the process has also become more fun, because some sites, such as www.wesabe.com, make it easy to compare spending habits with other users, which makes budgeting a more social process. "It shows you, 'People like you spent money this way,' so there's more of a context," says Shevlin.

A recent survey by Aite suggests that personal finance tools actually change people's behavior, too. In a survey of people who use such tools, 3 in 4 said they now have better control of their finances. Two in 5 said they are saving more money, and 1 in 5 said they are paying less in late fees.

[See Benefits of Budgeting by the Year, Not the Month.]

Dozens of tools now exist, so how can you pick the best one for you? Here's an overview of 10 of the most popular options:

1) On Mint.com, you can upload your account information and get immediate insight into where your money is going. You can then use that information to start saving more money, like Flannigan did. That ease of use makes it one of the top-rated tools.

2) Wesabe.com also allows users to track where their money is going by uploading account information and reveals how their spending habits compare with others on the site. The social networking approach has its pros and cons; Some users say they enjoy the personalized tips but others find little use for them.

3) Geezeo offers its money management tools through banks and credit unions; It stopped taking on new consumer customers in January. But if your bank or credit union uses the program, you might enjoy using Geezeo to set goals and track your spending habits.

4) Yodlee also works with financial institutions to reach customers interested in online money management, but individual consumers can sign up for the service. Users say it's easy to upload their spending data and analyze where their money is going.

5) Pennyminder is ideal for families with multiple spenders because it allows users to see other family members' spending and jointly manage a household budget.

6) You Need a Budget is aimed at people living close to their budget and trying to pay off debt. The tool encourages you to decide where every dollar earned is going on a monthly basis, then helps you make adjustments if you spend too much.

7) Buxfer's simple design is appealing, as is the fact that users can sign in using a Google or Facebook account. It also has an easy tool for people who share expenses, such as roommates.

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