Last year Congress passed a bill allowing an $8,000 tax credit for first time homebuyers as an incentive to increase spending in the housing market. To be eligible for the credit you must not have owned a home for at least three years prior to the purchase and the purchase must be made for a primary residence; rental properties and vacations homes did not qualify. The credit was good for 10% of the value of the home up to $8,000, meaning that as long as the house you purchase was worth more than $80,000 you will qualify for the entire credit. The original bill, which expired on November 20, 2009, was extended late last year to run through April 30th of this year with a few notable changes.
Unlike the credit available in 2009, the new $8,000 credit does not have to be repaid as long as you live in the home for at least three years. If you sell before those three years are up you will pay the $8,000 back as extra tax on your return the year that you move. Also, the credit for 2010 does not apply to houses worth more than $800,000. There was no value cap on the old credit. One last change to keep in mind; the new law has increased the income limits from $75,000 for an individual and $150,000 for married couples to $125,000 for individuals and $225,000 for married couples.
In addition to the first time homebuyer’s credit extension, the new bill also includes a provision for long-time homeowners. If you’ve owned a home for at least five out of the last eight years then you may qualify for a 10% credit on the purchase of a new home up to $6,500. The same dates and income limits apply to the long-time homeowner’s credit as to the first time homebuyer credit.
Source
http://www.kiplinger.com/printstory.php?pid=18896
Monday, February 1, 2010
Feds Step Up Insurance Industry Oversight
In the wake of the economic free-fall we have experienced over the last two years the government has stepped up its efforts to regulate economic activity in as many sectors as possible. The insurance industry is no exception. While the battle for healthcare reform is front and center in the public’s view now, Congress has another change coming for the insurance industry that is not making headlines. Congress has plans to create a new federal office within the Treasury Department tasked with extensive insurance industry oversight.
While many industry executives and state regulators are complaining that increased regulation will lead to more complication and administration time for carriers and encroachment on state regulatory laws, the office may bring some benefits for the industry as well. The office will give insurers its own representative in global trade talks, which is important for an industry that is increasingly expanding overseas. The office may also prove to consolidate some industry data which may prove useful for insurers.
These possibilities not-withstanding the new office, as the new federal torch-bearer for insurance regulation, is bound to be the center of contention when Democrats begin their push for federal insurer charters next year. Insurance regulation has long been the territory of the states and most state regulation bodies are unhappy with the idea of the federal government encroaching on their right to regulate insurers within their borders. State regulators argue that recent predicaments like the one AIG found itself in back in 2008 are perfect examples of why regulation should be left up to the state. Michael T. McRaith, director of the Illinois Department of Insurance, pointed out that AIG paid all of its policyholders even during its lowest point.
Source
http://www.kiplinger.com/printstory.php?pid=18958
While many industry executives and state regulators are complaining that increased regulation will lead to more complication and administration time for carriers and encroachment on state regulatory laws, the office may bring some benefits for the industry as well. The office will give insurers its own representative in global trade talks, which is important for an industry that is increasingly expanding overseas. The office may also prove to consolidate some industry data which may prove useful for insurers.
These possibilities not-withstanding the new office, as the new federal torch-bearer for insurance regulation, is bound to be the center of contention when Democrats begin their push for federal insurer charters next year. Insurance regulation has long been the territory of the states and most state regulation bodies are unhappy with the idea of the federal government encroaching on their right to regulate insurers within their borders. State regulators argue that recent predicaments like the one AIG found itself in back in 2008 are perfect examples of why regulation should be left up to the state. Michael T. McRaith, director of the Illinois Department of Insurance, pointed out that AIG paid all of its policyholders even during its lowest point.
Source
http://www.kiplinger.com/printstory.php?pid=18958
Reduce Your Tax Burden Today
Tax season is upon us and it seems that every year Uncle Sam takes more and more of your hard-earned money. This year, throw a little extra cash in your retirement account and reduce your taxable income as much as possible. Regardless of what type of retirement account you have, this year you are allowed to contribute up to $16,500 of your salary tax-deferred. If you are 50 years old or older you can add an additional $5500 in catch-up contributions this year, raising your yearly total to $22,000. That’s up from $15,500 last year ($21,000 if your over 50), but limits will not increase in 2010 so make sure you take advantage of the boost during this tax year.
If you are self-employed you can shelter even more of your income. As long as you have no employees (other than your spouse) you can open a solo 401k and contribute up to $16,500 ($22,00 if you are over 50) plus your business can kick in up to 20% of your total net income until the total reaches $49,000. If you don’t have the cash to spare right now, you’ll have until you file your ’09 tax return to max out your contribution.
Source
http://www.kiplinger.com/printstory.php?pid=18927
If you are self-employed you can shelter even more of your income. As long as you have no employees (other than your spouse) you can open a solo 401k and contribute up to $16,500 ($22,00 if you are over 50) plus your business can kick in up to 20% of your total net income until the total reaches $49,000. If you don’t have the cash to spare right now, you’ll have until you file your ’09 tax return to max out your contribution.
Source
http://www.kiplinger.com/printstory.php?pid=18927
Don't Be Fooled By Cut Rate Policies
These days we would all like to find a way to save a little money on our health insurance but before you sign-up for a cut rate insurance policy, consider these factors. If you focus on premium savings alone, you may actually end up paying more out of your pocket each years rather than less. When researching plan designs you must take into consideration maximum out-of-pocket limits and co-pay amounts. Saving a few hundred dollars a year makes sense when the benefits still line up, but unfortunately this is rarely the case.
Taking things into consideration like out-of-pocket limits, co-pay amounts, coverage limits, coverage exclusions, and limitations requires some homework but it can pay dividends in the long run. Many carriers create policies with the intention of bringing premiums down by cutting coverage where it’s not likely to be noticed. Many shoppers simply compare premiums, deductibles, co-pays and miss the underlying factors that can run your health tab up each year. Here are a few things to look for when you’re shopping plans.
Check the coverage limits. Is there a lifetime limit on the policy? Sometimes cut rate policies will have extremely low lifetime coverage limits like $50,000 or $100,000. This may seem like a lot of coverage until you realize that fairly common treatments, like a hospital visit due to a heart attack, can cost well over $50,000. With a cut rate policy you have just exhausted your entire lifetime benefit and will probably incur additional out-of-pocket expenses. A full coverage plan may cost you more in monthly premium but their lifetime coverage limits of $1 million dollars or more could save you thousands down the road. Another thing to look over closely is per-illness limits. Some policies will have a higher lifetime limit but may place limits on each individual claim. Again, these can cost you on a large claim.
Another area some carriers skimp on in plan design to lower the premium is prescription drug coverage. Most top plans cover generic, brand-name, and specialty drugs with co-pays but it is becoming increasingly common to see cut rate plans cover prescriptions with co-insurance rather than co-pays. If you take monthly prescriptions this could end up costing you big in the long run. Also keep in mind that some plans have a prescription drug deductible that has to be met before your co-pays come into play and they can be as high as $500 a year.
Before you sign on with any plan, cut rate or not, call your physician and make sure that he accepts the plan you are considering and ask the agent or call the carrier and find out whether or not your doctor is in network or out of network. If you physician is not in the plan’s network you could end up spending thousand of extra dollars each year. Most plans have much higher deductibles and out-of-pocket maximums for out of network visits and many cut rate plans have a very limited physician network.
While cut-rate plans may seem like a good deal, and some in-fact are good deals, make sure that you do all of your homework before you sign on with any insurance plan regardless of the premium price. Looking over these critical benefits can save you thousands in the long run.
Source
http://www.kiplinger.com/printstory.php?pid=16262
Taking things into consideration like out-of-pocket limits, co-pay amounts, coverage limits, coverage exclusions, and limitations requires some homework but it can pay dividends in the long run. Many carriers create policies with the intention of bringing premiums down by cutting coverage where it’s not likely to be noticed. Many shoppers simply compare premiums, deductibles, co-pays and miss the underlying factors that can run your health tab up each year. Here are a few things to look for when you’re shopping plans.
Check the coverage limits. Is there a lifetime limit on the policy? Sometimes cut rate policies will have extremely low lifetime coverage limits like $50,000 or $100,000. This may seem like a lot of coverage until you realize that fairly common treatments, like a hospital visit due to a heart attack, can cost well over $50,000. With a cut rate policy you have just exhausted your entire lifetime benefit and will probably incur additional out-of-pocket expenses. A full coverage plan may cost you more in monthly premium but their lifetime coverage limits of $1 million dollars or more could save you thousands down the road. Another thing to look over closely is per-illness limits. Some policies will have a higher lifetime limit but may place limits on each individual claim. Again, these can cost you on a large claim.
Another area some carriers skimp on in plan design to lower the premium is prescription drug coverage. Most top plans cover generic, brand-name, and specialty drugs with co-pays but it is becoming increasingly common to see cut rate plans cover prescriptions with co-insurance rather than co-pays. If you take monthly prescriptions this could end up costing you big in the long run. Also keep in mind that some plans have a prescription drug deductible that has to be met before your co-pays come into play and they can be as high as $500 a year.
Before you sign on with any plan, cut rate or not, call your physician and make sure that he accepts the plan you are considering and ask the agent or call the carrier and find out whether or not your doctor is in network or out of network. If you physician is not in the plan’s network you could end up spending thousand of extra dollars each year. Most plans have much higher deductibles and out-of-pocket maximums for out of network visits and many cut rate plans have a very limited physician network.
While cut-rate plans may seem like a good deal, and some in-fact are good deals, make sure that you do all of your homework before you sign on with any insurance plan regardless of the premium price. Looking over these critical benefits can save you thousands in the long run.
Source
http://www.kiplinger.com/printstory.php?pid=16262
2010 Small Business Outlook
No matter which way you look at it, 2009 was a dismal year in most business sectors. While the administration has made promises of “green shoots” and painted a fairly rosy picture of the economy in 2010, many economists are questioning their predictions. The last few months have brought an increase in the unemployment rate despite the good news earlier in the fall. So here is a look at what local small businesses should expect for 2010.
Many economists believe that with all of the pending legislation, most significantly healthcare reform and carbon cap and trade, business owners are trying to keep the budgets trim until they find out what is coming in the next year. Many business owners are afraid to begin hiring again because the economy is standing on shaky legs and coming legislation has the potential to knock it off its feet. It’s also critical to understand that any increased demand from slight economic growth can be handled by increasing the work week or switching part time employees to full time. It may not be necessary for small businesses to begin hiring again for quite some time. It is certainly possible that the unemployment rate could remain in the double digits all the way through 2010. While high unemployment is a telling indicator on the national economy, it may not be the biggest concern for local business owners.
The main concern for most small businesses in our area revolves around the tight credit situation many businesses and their customers find themselves in. Despite massive taxpayer funded packages aimed at increasing the amount of credit available from for homeowners and businesses most have found it nearly impossible to wrangle a loan in the last year. Hopefully that will change in the next few months but with the foreclosure rate increasing and a disproportionate amount of commercial loans coming due in the next few years you can bet that banks will be reluctant to dole out much cash. Safe prospect is a relative term for loan officers these days. What used to be a quick and easy transaction for a business owner in good standing with a good credit rating has turned into a laborious task for all involved. Unfortunately conditions in this sector are unlikely to improve until creditors are feeling confident in the direction of the economy. You can bet that many of them will still be waiting it out next year.
With credit tight and unemployment remaining high it may seem a dismal picture, but there are a few indicators that may give some hope. Both consumer and corporate confidence is on the rise and holiday spending saw a small bump this year. That may mean that Americans are beginning to loosen their purse strings, which is good news regardless of the other indicators. A good chunk of the American economy depends on the amount of faith American consumers and businesses have in the future.
Source
http://www.kiplinger.com/printstory.php?pid=18940
Many economists believe that with all of the pending legislation, most significantly healthcare reform and carbon cap and trade, business owners are trying to keep the budgets trim until they find out what is coming in the next year. Many business owners are afraid to begin hiring again because the economy is standing on shaky legs and coming legislation has the potential to knock it off its feet. It’s also critical to understand that any increased demand from slight economic growth can be handled by increasing the work week or switching part time employees to full time. It may not be necessary for small businesses to begin hiring again for quite some time. It is certainly possible that the unemployment rate could remain in the double digits all the way through 2010. While high unemployment is a telling indicator on the national economy, it may not be the biggest concern for local business owners.
The main concern for most small businesses in our area revolves around the tight credit situation many businesses and their customers find themselves in. Despite massive taxpayer funded packages aimed at increasing the amount of credit available from for homeowners and businesses most have found it nearly impossible to wrangle a loan in the last year. Hopefully that will change in the next few months but with the foreclosure rate increasing and a disproportionate amount of commercial loans coming due in the next few years you can bet that banks will be reluctant to dole out much cash. Safe prospect is a relative term for loan officers these days. What used to be a quick and easy transaction for a business owner in good standing with a good credit rating has turned into a laborious task for all involved. Unfortunately conditions in this sector are unlikely to improve until creditors are feeling confident in the direction of the economy. You can bet that many of them will still be waiting it out next year.
With credit tight and unemployment remaining high it may seem a dismal picture, but there are a few indicators that may give some hope. Both consumer and corporate confidence is on the rise and holiday spending saw a small bump this year. That may mean that Americans are beginning to loosen their purse strings, which is good news regardless of the other indicators. A good chunk of the American economy depends on the amount of faith American consumers and businesses have in the future.
Source
http://www.kiplinger.com/printstory.php?pid=18940
Healthcare Legislation Update
Following the stunning republican victory in the recent Massachusetts special election healthcare reform legislation has been dead in the water for days. Without their critical 60th vote in the Senate, democrats are having a hard time figuring out just how they will pass their bill. They have a few options available to them. First, the House can simply pass the bill that has already come out of the Senate. This method is the most direct, but based on the noise coming out of the democratic caucus in the House there are not enough votes to pass the Senate bill in its current form. The other option would be to break up the bill and pass the items individually using the fast-track reconciliation rules in the Senate which only require 51 votes to pass.
Despite the fact that Democrats have a clear path towards passage, they still have a long road in front of them. Many Democrat representatives and senators from swing districts see the writing on the wall. They know that pursuing the party leadership’s agenda could quite possibly cost them their seat in the 2010 election cycle. The party holds the key to surviving the election cycle for members in safer districts, but for Democrats that find themselves facing ever-more hostile crowds at home, their choice lies between the party and re-election. It is hard to imagine that very many of them will choose party loyalty over their seat. While it may seem a noble cause, if history is any indicator most politicians, regardless of ideology, will choose their seat over principle if forced to pick.
The most likely outcome will be a watered-down version of the current bill. Democrat leadership will be forced to but out some of the more audacious programs to get conservative democrats on board. If they try and pass the current bill through fast-track reconciliation they risk alienating nearly every American voter. Polls show overwhelmingly that American voters do not like it when politicians use loopholes to pass unpopular legislation. The next few weeks will hold the answer, but the longer they take to pass the bill, the less likely it will pass. The closer we get to November the less motivated anyone in congress will be to pass any sort of legislation.
Source
http://www.politico.com/pelosi-floats-two-track-health-reform.htm
Despite the fact that Democrats have a clear path towards passage, they still have a long road in front of them. Many Democrat representatives and senators from swing districts see the writing on the wall. They know that pursuing the party leadership’s agenda could quite possibly cost them their seat in the 2010 election cycle. The party holds the key to surviving the election cycle for members in safer districts, but for Democrats that find themselves facing ever-more hostile crowds at home, their choice lies between the party and re-election. It is hard to imagine that very many of them will choose party loyalty over their seat. While it may seem a noble cause, if history is any indicator most politicians, regardless of ideology, will choose their seat over principle if forced to pick.
The most likely outcome will be a watered-down version of the current bill. Democrat leadership will be forced to but out some of the more audacious programs to get conservative democrats on board. If they try and pass the current bill through fast-track reconciliation they risk alienating nearly every American voter. Polls show overwhelmingly that American voters do not like it when politicians use loopholes to pass unpopular legislation. The next few weeks will hold the answer, but the longer they take to pass the bill, the less likely it will pass. The closer we get to November the less motivated anyone in congress will be to pass any sort of legislation.
Source
http://www.politico.com/pelosi-floats-two-track-health-reform.htm
Thursday, October 29, 2009
Now Is a Good Time to Go Back to School
Counterintuitive though it may be a downturn in the economy generally signals an upturn in higher education. Otherwise qualified individuals who have lost their jobs over the past year have been looking to higher education as a way to occupy their time productively and give them an edge when searching for a new job. In fact, many two and four year institutions are expanding their class offerings to fit the schedule of part-time students looking to boost their resume. Higher education is, indeed, the answer for many Americans who have had their hours reduced or eliminated. Of course, renewed education can be an expensive endeavor, but the digital age has given us a few tools to make higher education more affordable.
Many universities are now taking advantage of online technology to allow users to access lectures and course materials online for free. For instance, many schools are taking advantage of a program called iTunesU. iTunesU allows universities to post audio and video clips of their lectures in the iTunes store where users can download them to their iPod for free. This is a good option for individuals who do not posses the time or the resources to actually attend classes at a university. This also allows you to tailor your learning to your specific career field. This method does not, however, give you any credit that would be visible on a resume; it is simply a way of bringing your education up-to-date in your field.
Some two-year colleges and universities are offering course materials online for free as well. Visiting departmental websites for universities such as UNC Chapel Hill will yield a surprising amount of course work for some classes. You can use study guides and lecture notes to educate yourself on new techniques and theories in your field. Unfortunately this also does not provide a tangible benefit for your resume. Do not be fooled though, increased knowledge in your field will be evident to employers during an interview.
Perhaps the most effective way to redefine your career skills during a downturn is to attend a two-year institution. There are over 1900 community colleges in the United States and many of them are making special efforts to accommodate laid-off employees and part-time employees from local industries. For instance, some community colleges are offering classes that begin as early as 6 a.m. and as late as midnight to accommodate working individuals or individuals with families.
For more information on programs available here in our area you can check out Cape Fear Community College (http://cfcc.edu) or the University of North Carolina Wilmington (http://uncw.edu).
Source
http://money.cnn.com/2009/10/29/pf/online_classes.moneymag/?postversion=2009102904
http://www.nytimes.com/2009/10/28/education/28community.html?_r=1&pagewanted=p
Many universities are now taking advantage of online technology to allow users to access lectures and course materials online for free. For instance, many schools are taking advantage of a program called iTunesU. iTunesU allows universities to post audio and video clips of their lectures in the iTunes store where users can download them to their iPod for free. This is a good option for individuals who do not posses the time or the resources to actually attend classes at a university. This also allows you to tailor your learning to your specific career field. This method does not, however, give you any credit that would be visible on a resume; it is simply a way of bringing your education up-to-date in your field.
Some two-year colleges and universities are offering course materials online for free as well. Visiting departmental websites for universities such as UNC Chapel Hill will yield a surprising amount of course work for some classes. You can use study guides and lecture notes to educate yourself on new techniques and theories in your field. Unfortunately this also does not provide a tangible benefit for your resume. Do not be fooled though, increased knowledge in your field will be evident to employers during an interview.
Perhaps the most effective way to redefine your career skills during a downturn is to attend a two-year institution. There are over 1900 community colleges in the United States and many of them are making special efforts to accommodate laid-off employees and part-time employees from local industries. For instance, some community colleges are offering classes that begin as early as 6 a.m. and as late as midnight to accommodate working individuals or individuals with families.
For more information on programs available here in our area you can check out Cape Fear Community College (http://cfcc.edu) or the University of North Carolina Wilmington (http://uncw.edu).
Source
http://money.cnn.com/2009/10/29/pf/online_classes.moneymag/?postversion=2009102904
http://www.nytimes.com/2009/10/28/education/28community.html?_r=1&pagewanted=p
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