As rising prices make staying on budget an even greater challenge, personal finance help is literally at your fingertips. For smartphone and mobile device users, the mobile finance industry has introduced a number of apps that make it easy to create a budget and track spending. “For those who don’t keep close financial records, seeing a spending breakdown on one of these tools can be a big shock,” says Diane Pearson, an adviser with Legend Financial Advisors, in Pittsburgh, Pennsylvania. While a few major banks have apps for their customers that integrate with their financial accounts, some of the more helpful apps are provided by online personal finance companies.

The apps, generally designed for the iPad, iPhone and Android smartphones, help consumers stay on budget with user-friendly personal finance management tools. For example, CashMap for the iPad is a personal budgeting app that enables consumers to manage their average daily balance, lower their borrowing costs, make better use of their positive cash flow, pay off debt, accelerate a loan payoff, refinance their mortgage, maximize their savings, and see their financial picture in upcoming years. “This application is a game changer for consumers who are serious about regaining control over their financial destinies in the best and most challenging of times. Instead of viewing budgeting as a boring, tedious task that rains on your parade, you’ll discover a new motivation, hope and discipline to say ‘no’ today in favor of a better tomorrow that is now in clear view,” says Dennis Williams, CashMap app founder and inventor.

Personal finance apps range from help with personal spending habits to tracking bank and investment accounts to credit card management. For example, the Pageonce Money & Bills app features a one screen calendar view of all your finances, sends reminders about your accounts and provides real-time alerts from your financial institutions. For those who are more comfortable using envelope budgeting (setting aside money in envelopes designated for household spending areas, such as mortgage, groceries, utilities, etc.), the Myelopes app for iPhone, iPod Touch and iPad manages your personal finances and spending in a similar manner so you live within your income. A comparable family budgeting app for Android devices is Easy Envelope Budget Aid, where you can record transactions at point of sale and check how well you’re staying on budget for the week or month.

On a more basic level, the Mint app for Android devices enables consumers to track bank accounts and personal spending habits. Also for Android, consumers can track and manage debt, and establish a payment plan using the IOU or Debt Snowball apps. Another Droid app geared towards budgeting is Ultimate Budgets, which helps users analyze the areas where they are spending the most money. In the area of personal investments, the sophisticated MarketDash app for iPad offers real-time market data and interactive charts so consumers can manage their investment portfolios and stock watch lists. “We see momentum building as smartphone and tablet adoption and popularity continues to grow,” says Guy Goldstein, CEO of Pageonce, the California based daily finance service for mobile devices.

Popularity: 2% [?]

The IRS recently unveiled its list of “Dirty Dozen” tax scams, with a warning to taxpayers not to fall prey to the claims of dishonest financial advisors, unscrupulous tax preparers, or other scammers.  Here are some of the more common tax scams from the IRS’ list.

Tax Scam 1: Hiding Income Offshore

Many dishonest promoters may try to convince you to hide your money in offshore banks or brokerage accounts, through offshore banks, or trusts, in order to avoid paying taxes on it.  Unfortunately, that’s illegal, and if you’re caught, you’ll be on the hook.  If you’re being pitched one of these deals, be wary.  And if you have used one of these schemes in the past, the IRS has a voluntary disclosure initiative that allows you to come clean through August 31, 2011.

Tax Scam 2: Go Phishing

Smart scammers can design official-looking emails designed to get you to reveal personal information, such as a Social Security number or credit card number.  Beware any email that purports to come from the IRS.  The IRS will not send you an email seeking this sort of information.  If they plan to audit you, they will send you a letter or show up in person.  So, beware an email that purports to come from the agency.

Tax Scam 3: Bad Preparers

While most tax preparers are honest, some unscrupulous preparers may skim a portion of your refund, charge inflated fees, or promise a huge refund.  No preparer should promise a big refund, or try to pressure you to take deductions or credits you didn’t earn.  The IRS has recently stepped up its enforcement of paid preparers, but you still need to do your homework to ensure you’ve hired an honest one.

Tax Scam 4: False Refunds

Scammers will frequently file fake information returns, then try to claim a refund based on the bogus information.  Sometimes scammers will fabricate a Form 4852 (replacement W-2) or Form 1099 as a way to reduce tax liability or claim an undeserved refund.  If someone tries to get you to go along with such a scheme, don’t let it happen.  If you’re caught, you could be on the hook for a $5,000 penalty.  Similarly, a scam artist might try to use your information to file a false return and claim a refund.  This happens often with family or friends of taxpayers, so if someone asks to use your information in order to file a false return, don’t give in to temptation.

Tax Scam 5: Bogus Charitable Deductions

Be careful when claiming noncash contributions to a charity – there are strict rules for claiming the value of noncash contributions, and the IRS specifically looks for donations reported at an inflated value.

Tax Scam 6: Bad IRAs

Beware any financial advisor who suggests that you transfer appreciated assets into an IRA, or proposes any other scheme to get around the IRA contribution limits that apply to you.

Tax Scam 7: Hidden Corporations

The IRS is also working with states to find corporations that have been formed specifically to hide income and prevent the owners of the corporation from reporting it, or allow them to report fictitious deductions.  If a financial advisor is suggesting that you establish “shell” companies to shield income, take a second look.

While you may not think of some of these as true tax scams, the IRS looks at them that way, and really, that’s all that matters.

Popularity: 1% [?]

For the second month in a row, employment figures in the U.S. rose, while the jobless rate dropped to 8.8 percent, the lowest since March 2009. The latest statistics from the U.S. Department of Labor show the private sector added 240,000 jobs in February and 230,000 in March. In addition, nonfarm payrolls jumped 216,000 in March, the largest increase since last May. “All the evidence is pointing to a strengthening labor market,” notes Bill Cheney, chief economist at John Hancock Financial Services in Boston, Massachusetts. During the recession, 7.5 million jobs were lost.

Most of the hiring over the last two months came in the private services sector, which added 199,000 jobs, followed by goods-producing industries with 31,000 new jobs. However, employment growth in manufacturing and construction stalled. Going forward, job creation is expected to improve, as CEOs of large companies reported in a March survey that they expect to add employees in the coming months.

The news has the Federal Reserve considering the withdrawal of some of its economic stimulus policies. However, the Fed is likely to proceed with caution, especially in terms of increasing interest rates to ward off inflation, as leading economists point out that a monthly job growth of 250,000 to 300,000 is necessary to impact the 13.5 million Americans who are currently unemployed. “There still remains significant slack in the labor market,” says Millan Mulraine, senior macro strategist at TD Securities in New York. “Given the high levels of unemployment and the fact that the duration of unemployment is still unacceptably high, the Fed will remain on the sidelines at least for the next year before they start contemplating tightening monetary policy explicitly.”

Despite the good news in job growth, the economy remains weak on numerous fronts: First, wages continue to remain flat and have fallen behind the rate of inflation for the past 12 months. That means people have less to spend during a time when gas and food prices are rising steadily. Second, local governments are adding to the unemployed ranks by cutting jobs to meet budget shortfalls. Third, the number of people who stopped looking for jobs remains steady. These people are not included in unemployment statistics. According to Labor Department statistics, 64.2 percent of adults either have a job, are underemployed in a part-time job while looking for full-time work, or are looking for employment, the lowest rate since 1984.

For President Obama, it is questionable whether the uptick in job growth will help his approval ratings as he seeks a second term. “It’s good for Obama that unemployment is falling,” says Terry Madonna, a political scientist at Franklin & Marshall College in Pennsylvania. “But ultimately, what voters care about is whether this recovery is helping them. Can the kids go to college? Can I pay the mortgage? Can I take a vacation?” During his weekly address, Obama called the increase in job growth “a good sign,” but warned that budget cuts and continued investment need to continue to get the economy back on stable footing. Republicans, however, jumped on the failure of the Obama administration to control government spending as a hindrance to faster job growth. “Washington’s inability to get spending under control is creating uncertainty for our job creators,” U.S. House of Representatives Speaker John Boehner (R-Ohio) emphasized. “It’s discouraging investment in small businesses, and eroding confidence in our economy. To put it simply, the spending binge in Washington is holding our country back and keeping our economy from creating jobs.”

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If you’ve got a desk or filing cabinet that’s jammed full of paper, you may want to clean it out but fear you’ll throw away something important.  Here’s a quick guide to what you should keep and for how long.

Tax Documents

The thought of an IRS audit strikes fear in just about everyone.  But that doesn’t mean you have to keep every scrap of paper forever.  The IRS has only three years to come after you for more taxes, or 6 years if you under-reported your income by 25% or more.  So, keeping the backup documentation for your tax return  – receipts, Forms W-2, Forms 1099, etc. – for six or seven years is long enough.  As for the return itself, keep it – it shows that you filed, and it’s something of a chapter of your personal history.

An important note about tax records, however – for assets that you may sell one day for a taxable gain or loss, you’ll need to be able to prove the purchase price.  This includes stocks and other investments, retirement accounts, and your home.  So, save any document that shows the initial purchase of these items.

Copies of Bills

There’s not much need to keep your monthly bills, like power or phone bills, once the next month’s bill has come in showing that you’ve paid for the prior month and that there’s no balance due.  The only exception would be a bill that proves a deduction on your tax return, which you should keep with the rest of your tax return backup.

Bank and Credit Card Statements

Check your statements as soon as they come in for mistakes or fraudulent charges (and really, you should be going online to check your accounts more often, but that’s another post).  If it all looks good, you can throw them away after a few months.  Most banks and card issuers allow you to access old statements online at no charge, but the length of time they remain available varies widely, so find out what your bank’s retention period is.  For statements that go further back, the bank can get them, but might charge you.

Documents to Keep Long-Term

In addition to the proof of purchase for assets mentioned earlier, you should keep loan agreements, such as your mortgage, until the loan is paid off.  The same goes for insurance policies, in case questions arise regarding coverage.  Wills and trust documents should be kept permanently.

Should You Go Digital?

Most companies are campaigning hard to get their customers to go to electronic billing, saving them the cost of paper and postage.  You might switch to a digital filing system of your own, too.  While this will help you tame the paper monster, there are some caveats to keep in mind.

First, make sure your documents are safe.  An encrypted flash drive is a good choice because you can keep it in your possession and it’s password-protected (just don’t forget the password!).  Less sound choices:  saving files in your email inbox (it can be hacked), or to your computer’s hard drive (it can crash).

Second, make sure your technology stays up-to-date.  As things change, you may have to move your documents to a different storage medium.  You should also check from time to time that you can access the data you’ve saved.

Conclusion

There’s no need to let fear turn you into a financial pack rat.  Throw away what you don’t need, and consider electronic storage to put an end to the clutter forever.

Popularity: 2% [?]

Mortgage brokers are threatening massive layoffs of loan officers if a new federal rule takes effect April 1 that prohibits them from earning a larger commission on mortgage loans with high interest rates. The regulation is part of the Truth in Lending Act and Home Ownership and Equity Protection Act aimed at protecting consumers from unfair or abusive mortgage lending practices. The rule in question pertains to loan originator compensation practices. The regulation, released by the Board of Governors of the Federal Reserve System, would end the practice of loan originators encouraging consumers to “consummate a loan not in their interest based on the fact that the loan originator will receive greater compensation for such loan.”

Mortgage brokers say the regulation will be detrimental to the way they make money and likely force many small brokers out of business. Currently, mortgage brokers earn higher commissions through a yield spread premium. Consumer advocates, calling the practice a “kickback from the lender,” say it’s high time such a rule is being enacted. “They made more money when they were able to stick you with a loan that was worse than what you otherwise would have qualified for,” says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, D.C.

But mortgage brokers counter that yield spread premiums are part of the retail banking process. Brokers receive wholesale pricing for home loans from banks and add in additional fees to cover their expenses while still remaining competitive with rates offered by other banks. Robert Petrelli, who owns Mount Vernon Mortgage Corp. in Weymouth, Massachusetts, says yield spread premiums are simply one way that mortgage brokers make money. Petrelli likened the process to that used by retailers who buy at wholesale and set a retail price above the wholesale cost to cover overhead and other business expenses. “Yield spread isn’t a kickback,” he emphasized, adding that banks outsource their mortgage business to brokers to save on overhead costs.

Mortgage brokers also point out that the new regulation would make it difficult for them to compete with big banks. Under the rule, brokers would be tied to a certain profit margin, while banks would have flexibility in the mortgage rate they charge customers. “We are hearing from mortgage brokers across the country that say they’re going to let all their loan officers go and become one-man shops,” says Mike Anderson, chairman of the government affairs committee for the National Association of Mortgage Brokers. The organization has filed a federal lawsuit against the Federal Reserve System requesting an injunction that postpones enactment of the new rule.

Regardless of how the new law changes the mortgage brokering landscape, mortgage finance experts say consumers should still do their homework and compare mortgage rates at several financial institutions, including mortgage brokers. “It really helps to get multiple offers or bids and compare them against one another and to try to bid them against one another,” advises Guy Cecala, publisher of Inside Mortgage Finance, which covers the residential mortgage business. Rheingold agrees, adding that the new law would make it easier for consumers to comparison shop by creating “a place where consumers have a better chance of not being cheated in the marketplace when they’re buying a mortgage.”

Popularity: 1% [?]

Think you’re broke? You may have money in places where you least expect it.

Have you skipped filing a tax return because you didn’t owe anything? You may be passing up a sizable refund. The Internal Revenue Service recently announced that $1.1 billion in previously unclaimed tax refunds are waiting for nearly 1.1 million people who did not file a Federal income tax return for 2007. Half of these potential refunds could be $640 or more, says the IRS.

Free Tax Money

Even if you think you didn’t earn enough money to merit filing a return, there may be credits that could snag you a refund. For example, you may be entitled to the Earned Income Tax Credit which is available for individuals and families with income below certain thresholds. You may also be eligible for a $400 credit ($800 if you’re married filing jointly) under the Making Work Pay Credit. These credits are refundable to the taxpayer, which means that you don’t have to have taxable income to offset them – if the credits exceed your tax liability, the balance is paid to you.

Also, if you had a job that withheld Federal taxes, file a return; if you don’t owe any taxes, all of that withholding comes back to you.

Don’t worry about being late if you are due a refund – the IRS won’t penalize you. However, if you have a tax liability from prior years, or if you owe unpaid child support, a refund could be applied to those unpaid debts, and you would not receive any cash.

Unclaimed Property

In addition to owed money from the IRS, you may have unclaimed property from any state where you have lived or worked. This might be a deposit that never got refunded; pay that you didn’t collect; or a check mailed to you that you never cashed, either because you moved or just never got around to cashing it. The State of Florida’s official website says it has $1 billion in unclaimed property; California has over $5 billion; and New York has an eye-popping $10 billion.

To find unclaimed property in your name, do an internet search for states in which you have lived and worked, looking for the official state agency that handles unclaimed property. These agencies will have a website with a search engine that allows you to enter your name and personal information, then file a claim for the property if it is, in fact, yours.

Watch Out for Sneaky Tax Companies

You may have received a letter or email from a company who promises to retrieve this unclaimed property for you. While this is legal, there is no reason for you to pay that company a cut of your unclaimed property if you can claim it yourself at no charge. Also, avoid any company that promises to tell you how to find unclaimed property in exchange for a fee – they’ll just direct you to the official state website.

Given the billions of unclaimed property out there, there’s a good chance that some of it is yours. It’s not hard to claim this money, so if you think you have something coming, go and get it!

Popularity: 2% [?]

Arriving in your local area later this year is Economia: Money Matters, an 8,000-square foot traveling museum filled with interactive multimedia displays designed to take visitors on a personal finance journey. The financial literacy traveling museum is the brainchild of Gail Vida Hamburg, CEO and founder of Rainworks Omnimedia LLC, a Chicago, Illinois-based producer of multimedia science and natural history traveling museum exhibitions. “My company is introducing to the financial literacy canon an innovative medium of educating Americans about personal finance – an interactive, immersive, multimedia traveling museum exhibition,” said Hamburg. “Science, industry and natural history museums are where Americans go for informal learning and to understand new and unfamiliar phenomena.”

Hamburg said she got the idea for a traveling museum about money after seeing results from a recent financial literacy study. The research, led by Dr. Annamaria Lusardi, a noted expert on financial literacy at George Washington University, finds that nearly half of the households that participated in the study did not have the know-how to come up with $2,000 in 30 days for a financial emergency. This despite the hundreds of personal finance books, magazines, radio and television shows, and financial literacy programs available to consumers. “The fact that even solidly middle class people, nearly a quarter of the households surveyed with incomes of $100,000 to $150,000, could not come up with that amount is quite profound,” says Hamburg.

Economia: Money Matters traveling museum is designed to educate people on the principles and complexities of economics, money management and personal finances. The intent of the museum experience is to empower visitors to make prudent financial decisions and motivate them to establish a financial security plan for their future. Rainworks Omnimedia is collaborating with financial literacy and personal finance experts to develop the content for the museum. Interactive displays will simplify the intimidating areas of personal finances, among them college planning, retirement, compounding, spending and how the stock market works. In explaining the exhibits in the traveling museum, Hamburg said “visitors will learn about personal finance by journeying through Maslow’s Hierarchy of Needs with financial self-actualization as the goal. We will also weave deep metaphors that drive all human behavior into the design of the exhibition, including balance, control, and transformation.”

The six interactive, multimedia installations and display stations in the traveling museum include a Money On The Brain digital display on real time money fears; Cognition & Spending interactive display on the brain’s behavior when spending; Money Micro & Macro multimedia display on money’s impact on a personal, national and global level; Money In Motion film showing the journey of a dollar bill; Saving Rules for Life exhibit on saving vehicles and the power of compounding; and How the Stock Market Works multimedia exhibit explaining the stock market. There are also stations showing how to read credit reports, FICO scores, credit card statements, college loans, and mortgage and leasing contracts, spending rules to apply on whether you can afford a purchase, and money management habits of financially literate people. The traveling personal finance museum will be touring the North American museum circuit beginning in Fall 2011, with its debut in California.

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Your tax return.  You’ve been avoiding it for months now, and you know you need to file it soon, but you just can’t face the dread of lots of rules and numbers and lines and crazy forms.

While the tax laws don’t ever seem to get simpler, you can take away some of the pain of tax prep if you get your files in order first.  Find these documents and get them all together, to prevent hours of hunting and stressing out.

Income – W2 vs 1099

By now, you’ve got a form W-2 for the job (or jobs) you had in 2010.  But you may have several Forms 1099.  Form 1099 comes in lots of flavors.  If you did some contracted work you might have a 1099-MISC.  Forms 1099-DIV and 1099-INT will recap your interest earnings for the year, whereas 1099-R will run down your distributions from pension accounts and the like.  And these are just a few.  Get all of these together.

Expenses – Itemized and Other Deductions

If you plan to itemize, get the documents that will support those deductions.  Here are some of the more likely suspects:

• Home Ownership Deduction – you should have received a Form 1098 for your mortgage interest, taxes, and any points you paid on your mortgage.  If you paid any property taxes yourself, you’ll need your property tax bill.
• Medical Expenses Deductions – any payments to doctors, dentists, hospitals, or clinics for medical care, as well as payments for prescription drugs.
• Charitable Deductions – this includes payments by cash or check to any legitimate charity (sorry, your broke buddy doesn’t count).  You can also claim a deduction for noncash contributions if you have a receipt from the charity and you can legitimately substantiate the fair market value of what you donated.  the items were in good condition.  Also, if you drove your own vehicle to perform charitable services, you can deduct 14 cents per mile.
• Investment-Related Expense Deductions – payments to professionals for investment advice, subscriptions to financial publications, and fees for software or online services used to manage your investments are all deductible.
• Tax-preparation Fees Deductions – payments to a tax preparer or the cost of tax-preparation software are deductible.
• Employee Business Expenses Deduction – If you used your own money to make purchases related to your job or business, or if you drove your own vehicle as part of your job (not counting commuting to and from work), this is deductible.

In addition to expenses paid by cash or check, don’t forget credit card charges – even if you’re carrying a balance on your plastic, you can deduct expenses in the year they were charged.

Tax Accountants Can Help…So Can the Internet

Tax laws are complicated enough, and if you’re dreading tax time, you probably don’t want to spend hours doing research to find more deductions to take.  At a minimum, an Internet search will yield numerous tax preparation checklists that can direct you to deductions you may not have known about.  Even better are the commercial tax-preparation software packages that will direct you to potential tax deductions based on your answers to questions.

If your return is very complicated – you did a sizeable amount of contracted work, own a rental property, or have lots of complex investments, for example – consider hiring a professional.  The prep fee might be well worth the time and stress you avoid doing it yourself.

No matter how you choose to do your taxes, however, organizing your records will make everything easier.  Get everything together for 2010…and while you’re at it, start a file for 2011.

Popularity: 1% [?]

Remember the political catch phrase, “It’s the economy, stupid,” used by Bill Clinton during his victorious 1992 presidential campaign against President George H.W. Bush? Well, if results from a recent poll are any indication, expect Republicans to dust off the successful slogan and use it freely during the 2012 elections to take control of the White House and U.S. Congress.

A new Gallup poll finds the economy the top concern of Americans. Poll numbers show that 70 percent of Americans worry about the economy “a great deal” and 22 percent are “fairly concerned.” Concerns over the economy cross party lines, with Democrats, Republicans and Independents ranking it the number one concern. The federal deficit and unemployment follow as the second and third concerns, respectively.

The survey results mimic those of a CNBC All-American Economic Survey poll that shows Americans growing pessimistic about the future of the U.S. economy. The newly released survey finds that 37 percent of Americans expect the economy to get worse over the next 12 months, a 15-point jump from last December’s poll results. Factors that have Americans most concerned about the economy are rising fuel costs, increasing food costs, and wages not keeping pace with rising prices.

Robert Rubin, who served as President Clinton’s treasury secretary, noted in a recent public forum that President Obama’s economy continues to face “serious headwinds” that are preventing future economic growth. The culprits, he said, are “our long-term fiscal trajectory, state and local government deficits, skyrocketing oil prices and high unemployment.

Mississippi Gov. Haley Barbour, a likely presidential candidate, wasted no time in telling Republicans to focus on the economy in 2012 local and national elections. During the state GOP convention this month in Sacramento, California, Barbour told delegates, “every policy of the Obama administration makes it harder for the economy to grow and harder to create jobs.” Barbour said whomever is chosen as the party’s presidential nominee must stay focused solely on economic issues that concern voters.

Dr. Maryann Feldman, a prominent researcher on economic development based at the University of North Carolina at Chapel Hill, points out that tax cuts alone will not solve the country’s economic troubles. Rather, she recommends partnerships encompassing government, industry and higher education aimed at promoting solid economic solutions. “Simply more tax cuts are not going to be very helpful and they’re not helpful to small businesses because they are struggling to make a profit,” she said. “And so, they need more investment and more capacity-building than things like tax cuts.”

Many other industry leaders have their own thoughts on stimulating the economy. Dan Juneau, president of the Louisiana Association of Business and Industry, says the country should focus on energy since many states have plenty of oil and natural gas in shale formations and offshore coastal areas. “Left to our own devices, I believe our economy could really, really, really take off,” he said. Others see economic growth in high-speed rail, pharmaceutical, technology and manufacturing.

Popularity: 1% [?]

The economy has been brutal, and you may have built up debts you can’t pay.  Or, your identity may have been stolen, and now ambitious debt collectors are looking to you to pay for someone else’s bad behavior.  Media reports suggest that debt collectors have become overzealous, and are using unprecedented tactics to get you to pay up.  But here is some advice if the collectors start calling you.

Collectors Must Play by the Rules

The Fair Debt Collection Practices Act has strict rules about how bill collectors must handle themselves. Debt collectors must call only between 8AM and 9PM.  If they call you at work, you can tell them your boss prohibits you to talk to them at work and they must stop.  They can call an employer to request contact information, but they may not discuss your alleged debt.  They also may not call family, friends, or associates to discuss your debt, or to pressure them to repay your debt on your behalf.

Debt collectors must also represent themselves honestly.  They cannot call themselves lawyers or mediators if they are not.  They must also stop calling you at home if you request in writing that the calls stop – but understand that it won’t make the actual debt go away.

What if the Debt’s Not Yours?

A debt collector may be chasing you to pay a debt that isn’t legitimately yours, because of a mistake, a similar name, or – quite commonly – because of identity theft.  Once they’ve called, they have five days to send you a letter describing the debt, the amount you owe, to whom, and how to dispute it.  Don’t ignore this notice.  Write a letter to the collector indicating that the debt is not yours.  Make sure to request “verification” of the debt.  At that point, the collector must provide documentation to prove that the debt is, in fact, one you’ve racked up, and can’t call you again until they do. If, in fact, the debt is not yours, there are steps you can take to remove collections from your credit report.

Get It In Writing

Save any correspondence you send or receive from bill collectors, especially if the letter indicates that you are, in fact, NOT responsible for a debt.  Media reports suggest that over-aggressive bill collectors will try to collect from you nonetheless.

What Can Debt Collectors NOT Do?

Even if you really do owe, there’s a limit to what debt collectors can do.  They cannot threaten you in any way.  They cannot use abusive language, curse at you, or call you names.  They cannot dredge up old debts in excess of your state’s statute of limitations.  They cannot repeatedly call to harass you.  And they cannot ignore a written notice telling them that the debt isn’t yours. That said, many of them do all of these things and more. If you can document as much as possible (hint: record the calls – if legal in your state) and you may be able to sue them. Hey, why not have shady debt collectors pay off your bills for you .

What if they Don’t Stop?

If the debt really is yours, you can try to work out a deal.  Even if it isn’t yours, it might be worth a few bucks to get the collector to go away.  But bill collectors tend to pile on fees and interest charges, and your small debt may balloon to the thousands in the hands of a collector.  If you’re being unfairly pursued, you have a few options:

Report them to the Federal Trade Commission or State Attorney

If a debt collector isn’t playing by the rules, report him to the FTC.  This may be enough to get an aggressive collector to back off.

You can also go to your state’s attorney or regulatory authority, and see if they can help with your claim.

Go to the Media

You might consider taping the calls you get from collection agencies (make sure you do it legally) and then go to the local press.  Negative media coverage can do wonders to solve “unsolvable” problems.

Sue the Heck Out of ‘Em

Many people get a bit nervous and overwhelmed when debt collectors come calling. Unfortunately, the shady individuals that populate a large chunk of that industry don’t make things any easier on normal folks. However, people have successfully sued debt collectors and there are clear penalties for debt collectors not playing by the rules. If it’s legal in your state, try to have the wherewithal to remember to record all collection-related phone calls. Then, if – or when – they break the rules, you’ll have it documented. Filing a small claims suit against them is relatively easy and you don’t need an attorney to do it.

Even if you owe money, no one has the right to harass you and make your life miserable.  Don’t tolerate companies who don’t play by the rules, rat them out publicly and by all means try to sue them if you have to.

Popularity: 2% [?]

Republican members of the U.S. Congress are questioning the participation of the newly formed Consumer Financial Protection Bureau (CFPB) in ongoing mortgage settlement talks with leading mortgage servicing companies. Although the federal consumer bureau was established by Congress to protect consumers’ rights and improve regulation of the consumer financial services industry, most Republicans opposed its creation. Now Republicans say the CFPB should not be part of the settlement talks because the agency has no permanent director as yet and no regulatory authority until it opens in July.

Sen. Richard C. Shelby (R-Ala.) has gone as far as accusing the CFPB of a “regulatory shakedown.” He cited the aggressive drive by the agency’s acting director, Elizabeth Warren, to implement strict penalties against mortgage companies as part of the mortgage settlement for improper and fraudulent lending practices. But in defending the actions of the CFPB, Warren points out that improper foreclosure practices would not have occurred if such an agency was in existence. “If there had been a cop on the beat with the authority to hold mortgage servicers accountable a half dozen years ago, if there had been a consumer agency in place, the problems in mortgage servicing would have been exposed early and fixed while they were still small, long before they became a national scandal,” she said.

Since President Obama signed the bill last July creating the CFPB, the agency has received criticism from Republicans, particularly over its expansive powers. The involvement of the CFPB in mortgage talks is the latest scuffle between Republicans and the Obama administration. But Warren isn’t backing down from the fight, emphasizing that the CFPB belongs in the mortgage talks because the issue impacts millions of Americans. “We know what can happen when laws aren’t fairly or consistently enforced because of political pressure, and it doesn’t end well for American families, for honest businesses, or for the economy,” she stressed.

In an effort to stifle the controversy before it becomes too heated and impacts mortgage settlement talks, U.S. Treasury Secretary Timothy F. Geithner issued a letter to Rep. Spencer Bachus (R-Ala.), chairman of the House Financial Services Committee, clarifying the role of the CFPB with regards to mortgage settlement negotiations. Geithner stressed that the CFPB “would not be a party to any formal settlement with mortgage servicers” because it does not have the authority to administer penalties. Although the agency will not be adding its signature to any negotiated settlement, Geithner said the CFPB is taking an active role in settlement talks because the agency will have “significant authority to set standards for the mortgage servicing industry” and will be advising federal agencies and state attorneys general “on how to design appropriate servicing standards.”

While Republicans try to push back the role of the CFPB and require congressional approval for its funding, Warren is reminding critics that the watchdog group was created to protect consumers. “Under the old system, seven different federal agencies were responsible for consumer financial protection. The tangle of seven agencies failed to create effective rules and left gaping holes in oversight. The CFPB will be directly responsible to the public for performing those core functions.”

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If you’ve recently bought a home, you may have been approached by a home warranty company offering to cover the costs of future home repairs for a small fee.  Is this worth the trouble?

The answer is:  it depends.

What is a Home Warranty?

First, let’s discuss what a home warranty is.  Simply put, it’s an insurance policy on your home, designed to compensate you if something breaks and needs fixing.  You pay an annual premium, and, if needed, a repair person comes to fix the problem, leaving you to pay only a small service call fee – usually less than $100.  Sounds great, doesn’t it?

Home Warranty Cost vs. Benefits

But what are you really getting for your trouble?  A typical home warranty will cost you $250-$600 per year.  If something expensive breaks in your home, and you have to pay only a few dollars to fix it because of your home warranty, it’s a great deal.  But it’s important to review the warranty contract to find out what types of repairs are and are not covered.  A common complaint of homeowners is that they had to fight with the warranty company to convince them a repair was necessary.  They may also have had to argue that the fix of a broken heater, air conditioner, plumbing, etc., was, in fact, covered under the warranty contract.  Like any insurance company, a home warranty company will take a strict interpretation of the contract and will try hard to avoid any claim they deem unnecessary.  Beware contracts that are loaded with contradictions and exclusions, and know that most will refuse to cover “pre-existing” conditions in older homes.

Choosing Your Repairman

Another common complaint about home warranties involves getting service when you have a problem.  When you use a home warranty company, you don’t get to choose who comes to your house to make a repair.  Instead, the warranty company contracts with local vendors, and will select the one to come take care of your problem.  Home warranty companies may delay sending a repair person, and that repair person may claim that a repair is in order, even though you think replacement of the problem appliance is a better idea.

Choosing a Home Warranty

To determine whether a home warranty is right for you, consider the likelihood that you’ll need major repairs.  If your home is newly constructed, the odds are that you’re not going to have any big-time repairs for a few years to come.  By contrast, if you’re buying an older home, the chance of costly repairs is much higher.  If your home and its major appliances are pushing the ten-year mark, significant repairs are more likely, and more costly.  But also consider the maximum cost of repairs if something goes wrong with them – in other words, how much will it cost to replace your major appliances?  If your combined home warranty premium and deductible isn’t much less than the cost of replacing an appliance with something brand new, there’s little reason to bother.

Like any insurance policy, buying a home warranty is a bit of a crap shoot, because there’s always the risk that it won’t help if you need it, or you’ll pay for coverage you won’t need at all.  Even the best home warranties won’t reduce your repair costs to zero should you need something.  Consider your true liability and place your bet.

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Expectations of retiring early and enjoying a comfortable retirement lifestyle have all but disappeared as the 2011 Retirement Confidence Survey finds that Americans have accepted working into their 70s because they won’t have enough money saved for retirement until then. Conducted annually by the nonpartisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates, Inc., the survey finds that 56 percent of Americans have less than $25,000 saved for retirement.

Tough economic times was the main factor forcing U.S. workers to put less aside for retirement or to tap savings or retirement accounts to meet everyday expenses. The survey finds that 34 percent of workers and 33 percent of retirees used money from an IRA, 401(k), savings, or investment account, or took out a loan against those accounts to pay for basic expenses. Other factors identified in the survey as redefining retirement in the U.S. include rising healthcare costs, federal, state and local government fiscal crises, high unemployment rates, lower investment returns and longer life expectancies. Consequently, the survey finds that more Americans are pessimistic about a comfortable retirement than at any time in the last two decades. “Many people are planning to work longer and retire later because they know they simply can’t afford to leave the workplace – both for the paycheck and for the benefits,” says Mathew Greenwald of Greenwald & Associates and co-author of the survey.

According to the survey, 89 percent of Americans plan to work longer than expected, with 25 percent expecting to work until age 70 or older. Furthermore, 74 percent of Americans expect to work for pay during retirement for financial reasons. The most likely reason for working later in life, the survey shows, is that most workers (70 percent) are behind schedule when it comes to planning and saving for retirement. Compounding the problem is that 49 percent of Americans determine how much they need for retirement by guessing. “There are some important things about financially preparing for retirement that people must know to do a good job, and, unfortunately, that most Americans do not know,” notes Greenwald. “Perhaps one of the most important things they should know is what their savings goal should be in order to have the retirement lifestyle they want. Most workers have not even tried to figure how much they should accumulate. When we ask people how much they need to save by the time they can retire, significant proportions provide us with figures that are far below what financial experts state is prudent.”

The silver lining in the Retirement Confidence Survey is that more workers are beginning to think about retirement and where they stand in terms of personal finances for later years. “These results could be seen as pessimistic, but I view them as realistic and positive. People are increasingly recognizing the level of savings realistically needed for a comfortable retirement,” says Jack VanDerhei, EBRI research director and co-author of the report. “We know from previous surveys that far too many people had false confidence in the past. People’s expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible.”

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Although the March 11 earthquake and tsunami in Japan will hurt the country’s already struggling economy, economists are optimistic that the impact to the global economy will be minimal. Japan’s government leaders met days after the quake to assess economic damage, with Chief Cabinet Secretary Yukio Edano declaring that, “The quake is expected to have considerable impact on a wide range of our country’s economic activities.”

While it will take several weeks before the extent of economic damage is known, the disaster has already caused the shut down of key ports and suspended production at several automakers and many other manufacturing companies, including Sony and Mitsubishi. In order to maintain financial stability in the country’s banking and financial markets, the Bank of Japan has added $183 billion into money markets and doubled its asset-purchase plan. However, leading economists are carefully analyzing two key questions: How quickly will Japan’s economy recover? What impact will the Japan disaster have on the global economy?

History offers some clues, as researchers look at how advanced countries in the past recovered from similar disasters. According to researchers, historical data indicates that countries with high levels of income, financial development and education tend to rebound quickly from disasters. “As incomes rise in a society, you can devote more resources to safety. So economies that have relatively high exposure to earthquakes or hurricanes start taking the precautions they need. Japan is among the best prepared in the world because they have high exposure and high income,” said Mark Skidmore, economics professor at Michigan State University. The country proved this back in 1995 when a 6.8 magnitude earthquake shook Kobe, Japan, home to the world’s sixth largest container port. The country’s industrial production dipped for one month, yet rose steadily in subsequent months. In that year, Japan’s economy actually grew by 1.9 percent and by 2.6 percent the following year. “Despite the scale of the disaster, it is hard to find much evidence in the macroeconomic data of the effects of the Kobe earthquake,” notes Richard Jerram, chief Asian economist at Macquarie in Singapore who monitors Japan’s economy.

Granted, Japan’s economy and public finances were stronger in the mid-1990s compared to today, but economists remain confident that Japan has the capacity to rebound. “We don’t know yet how devastating this is going to be economically, or even in terms of human casualties, but Kobe was able to rebound very quickly and I think there is the same potential here,” said Skidmore. “They have the resources. They have the social and economic and government infrastructure to effectively utilize the resources that may come in from outside as well as internally. They can focus not just insurance but also government assistance to respond effectively.”

Japan’s ability to utilize resources bodes well for reducing the impact of the disaster on the global economy. To date, J.P. Morgan economists have not changed their global growth forecast of 3.7 percent for the first half of 2011. “The shocks to date would have to magnify considerably to push global growth below this trendline,” they reported. Other economists concur that the harm to the global economy will be negligible and short-lived. “I don’t view this as having a significant impact on global growth,” said Dr. Nariman Behravesh, chief economist at IHS Global Insight. “Clearly it will add to Japan’s fiscal woes, but I think they can get through this one without serious problems.”

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One of the greatest advantages of being a homeowner is the ability to deduct your mortgage interest on your tax return using the mortgage interest tax deduction.  But just like anything else IRS-related, there are rules to follow.  Here’s a primer.

What’s a Home?

Mortgage Interest Tax Deduction

Am I Eligible for the Deduction?

Yes, if you’re the primary borrower or you cosigned for the loan.  If you just paid interest on someone else’s behalf to help them out, it’s not deductible.

How Much Can I Deduct?

Any mortgage loan secured by your home counts for the deduction, including first and second mortgages, home equity loans, and even lines of credit.  You can deduct the interest on a combined total of up to $1,000,000 of debt ($500,000 if you are married filing separately).  If you have a home equity loan secured by your residence, you can deduct the interest on up to $100,000 ($50,000 if you are married filing separately) worth of home equity debt – no matter how you used the proceeds.

What About Points?

A point is 1 percent of the loan amount, and lenders will often give you a lower interest rate if you pay some points – so, essentially, the points are prepaid interest.  Assuming that the points you paid were not service charges or for something other than interest, they are deductible – but the “how” of this deduction depends on the type of the loan.

Points paid for a mortgage used to buy or build your primary home, and secured by that home, are generally deductible in full in the year you paid them, as long as the term of the mortgage is 30 years or less.  You may also choose to prorate the points deduction over the life of the loan if you meet all of these requirements.  Points paid for a loan to buy or build a second home must also be prorated over the life of the loan.

What About Refinancing?

Interest on a refinancing is deductible, as long as your refinanced amount is no more than $100,000 over the amount of the original mortgage (the excess $100,000 is considered a home equity loan).  Points paid for refinancing a mortgage for the acquisition of your home must be prorated over the life of the loan.  If the refinancing was, at least in part, to improve your primary residence, however, the points applicable to the proceeds used for improvement are deductible in the year paid.

What About a Rental Home?

If you have a second home that you rent out, you must live in it for 14 days during the year, or more than 10% of the number of days you rented it out, in order to be considered a qualified residence.  If you don’t meet this test, your home is considered a rental property, and is not eligible for a home mortgage deduction.

How Do I Take the Mortgage Interest Tax Deduction?

Your lender will send you Form 1098, “Mortgage Interest Statement” (not to be confused with 1098-T or 1098-E) that will show the mortgage interest and points for the year.  If you paid points and they are not displayed on the form, such as points paid at closing, you can still deduct them – just make sure you have the closing statement for proof in case you’re asked.

Conclusion

Buying a home tends to be the event that finally makes itemizing your tax deductions worthwhile.  The mortgage interest tax deduction results in tax savings that can be huge and are one of the biggest tax writeoffs most Americans have. It’s definitely worth the extra work to file for the deduction.

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If you just bought a house, don’t be surprised if your lender sends you an invitation to a mortgage prepayment plan.  For a setup fee and a monthly processing fee – usually around $300 and $5, respectively– your lender sets you up on a new payment scheduled designed to pay off your mortgage faster. Should you do it?

Do It On Your Own. While getting out of debt faster is always a good idea, you don’t have to pay your lender for the right to do this.  You can add a few extra dollars to each mortgage payment, or send in an extra mortgage payment every year, and accomplish the same thing without the setup and monthly processing fee.  Check out our free debt calculator to see just how much you can save on your debts by prepaying. Just make sure that the bank is applying those extra payments correctly (you want it to go to principal, not interest), that they won’t charge you a processing fee for extra payments you make during the year, and that there isn’t a prepayment penalty on your loan.  The good news is that most fixed-rate mortgage loans don’t have prepayment penalties.  Adjustable-rate loans (ARMs), however, have them more often.  And one other caveat:  An additional principal payment on your mortgage does not reduce next month’s payment, so you will still need to stick to the payment schedule.

Does it Make Sense? You should also consider whether putting the extra money to your mortgage makes economic sense.  Even a small amount of additional principal can reduce your total interest cost by hundreds, even thousands, of dollars over the life of your mortgage.  That’s great, but could the money be better used elsewhere?

If your overall goal is to get out of debt entirely, you’re probably better off to first attack high-interest debt, such as credit cards or an auto loan.  It doesn’t make sense to put an extra $50 or $100 toward a six percent mortgage loan if you’re carrying plastic with interest rates in the double digits.  Remember also that home mortgage interest is tax-deductible, whereas credit card or auto loan interest is not.

But once you’ve paid off those credit cards, don’t max them out again.  If you’re doing that, you should be worrying less about prepaying your mortgage and more about controlling your spending habits.

If you don’t have other debt, consider putting the money in savings.  Yes, it’s true that you probably won’t – at least in the current economic environment – earn a return higher than the interest you’re paying on the mortgage.  If you don’t currently have any type of rainy day fund, however, this is a better idea than paying off the mortgage early – after all, an emergency you can’t afford might lead you back to the credit cards, and your next month’s mortgage payment will still be there waiting for you, no matter what you’ve prepaid.

So, in most cases, a mortgage prepayment plan is really just a marketing gimmick to get more money from you. The only advantage is that it will force you into the prepayment schedule, which might be good if you lack the discipline to do it yourself.  But that’s some expensive discipline.

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‘It’s not much, but it’s something’ best describes the expected economic growth for 2011. During a recent speech at a global finance conference in New Delhi, India, Terrence Checki, executive vice president at the Federal Reserve Bank of New York, said the U.S. economy is expected to grow 3.5% to 3.9% in 2011. “The economy has seen a substantial improvement over what was expected just a few short months ago,” said Checki. “That reflects strong monetary and fiscal stimulus and also progress, with the deleveraging process strengthening household and financial sector balance sheets.”

Despite his positive outlook, Checki cautioned that America’s economy still has considerable “slack” and fiscal consolidation is necessary for economic recovery to be self-sustaining. U.S. economists tend to agree, but are not as optimistic as Checki when it comes to the economy in 2011. In a recent survey, economists predict only 3% economic growth, taking into consideration the depth of the recession. Economists also noted that in 2011 there will be “ slower and less powerful than is typical improvement in labor market conditions that will cap gains in disposable personal income and personal consumption expenditures.” Not factored into the 2011 forecast is how the U.S. economy will respond to rising oil prices as a result of the uproar in Libya. Economists caution that the unrest in the Middle East could negatively impact consumer spending in the U.S.

During a semi-annual report on the state of the economy, Federal Reserve Chairman Ben Bernanke pointed out that the housing markets and job growth remain weak, hindering greater economic growth this year. But the Obama administration hopes to spur job growth by focusing on technology. During his January State of the Union address, President Obama indicated that the high-tech industry is positioned to turn the U.S. economy into the biggest in the world. Towards that goal, the president recently held a private dinner with top U.S. technology industry executives – including Apple CEO Steve Jobs, Google chairman and CEO Eric Schmidt, and Facebook CEO Mark Zuckerberg – to discuss investing in research and development to promote job growth in the technology sector. Obama also proposed a joint government and private sector partnership designed to support startup companies and small businesses. “All across America, there are innovators and entrepreneurs who are trying to start the next Intel, or just get a small business of their own off the ground,” the president said. “The truth is, we have everything we need to compete: bold entrepreneurs, bright new ideas, and world-class colleges and universities. And, most of all, we have young people just brimming with promise and ready to help us succeed. All we have to do is tap that potential.”

The White House also plans to invest in education to create a workforce highly skilled to compete in the high-tech industry. “If we want to win the global competition for new jobs and industries, we’ve got to win the global competition to educate our people,” Obama pointed out. “We’ve got to have the best-trained, best-skilled workforce in the world. That’s how we’ll ensure that the next Intel, the next Google, or the next Microsoft is created in America, and hires American workers.”

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Things are heating up in the U.S. House of Representatives as Republicans introduce legislation that would do away with mortgage modification programs aimed at helping homeowners avoid foreclosure and assisting local governments with addressing foreclosed properties. With a 33-22 vote, the House Financial Services Committee passed the bill that would end the Home Affordable Modification Program (HAMP) and the Neighborhood Stabilization Program.

While Republicans say the programs are ineffective, Democrats and White House officials argue that they are an important piece to economic recovery. During House Financial Services subcommittee hearings on the programs, David Stevens, assistant secretary at the Department of Housing and Urban Development, acknowledged that the programs aren’t working as effectively as originally planned. However, he stressed that, “Independent economists have indicated that these combined government efforts, while not sufficient on their own to enable the market to fully recover, were appropriate policy actions to help stem the vicious cycle of steadily declining house prices leading to escalating loan defaults.”

With $75 billion available in funding, the Home Affordable Modification Program is designed to lower mortgage payments of homeowners at risk of foreclosure so they can stay in their homes. Those who qualify typically realize a 40 percent reduction in their monthly mortgage payment. Despite the relief the program provides, critics, including Republicans, say it’s not reaching enough people and lenders have been more successful in providing mortgage modifications that don’t involve federal subsidies. At the end of 2010, an estimated 522,000 HAMP mortgage modifications were given. Expectations were that 4 million homeowners would be served by the HAMP program by 2012. “There are 3.3 million families who might have been reached by this program if only it had been better designed, better managed and better executed by the Treasury department,” said Neil Barofsky, special Treasury Department Inspector General charged with overseeing the Troubled Assets Relief Program (TARP) who is resigning his post at the end of this month.

Also targeted by the bill introduced by Rep. Patrick McHenry (R-N.C.), is the Neighborhood Stabilization Program. The initiative provides about $7 billion in grants to states, municipalities and nonprofit groups to buy, rehabilitate, rent or resell foreclosed and abandoned homes in an effort to create affordable housing and revitalize troubled neighborhoods hit hardest by the recession. But Rep. Gary Miller (R-Calif.) says the funds should be in the form of loans, not grants. “We’re giving $7 billion of taxpayer dollars to groups and organizations and cities and none of it comes back to the federal government. There is no requirement for repayment,” said Miller. “I think it’s a huge waste of taxpayer dollars. I don’t think there is adequate oversight of the funds, and if they sell the properties they keep the funds.”

In defending the mortgage modification programs, Rep. Luis Gutierrez (D-Ill.) pointed out that Republicans should focus on improving the programs instead of eliminating them. “Republicans are willing to give large breaks to the wealthiest in our nation yet they’re unwilling to provide the necessary aid to devastated families and distressed communities,” Gutierrez said. “Simply doing away with these critical programs that serve the American people without offering any real solutions that reform or replace these programs does nothing to alleviate our nation’s foreclosure emergency.”

Treasury Secretary Timothy Geithner warns that ending the mortgage modification programs would harm an already fragile housing market and “leave hundreds and hundreds of thousands, if not millions, of Americans without the chance to take advantage of a mortgage modification that would allow them to stay in a home they can afford.” The fate of the Republican bill remains questionable. The measure moves to the House floor, where the Republican-controlled House is expected to pass it. However, it is doubtful the bill would make it out of the Democrat-controlled Senate.

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Angry that every penny YOU make gets taxed, while your handyman, hairdresser, or plumber hides thousands of dollars every year from the tax man?

Well, now there’s a way to get even.

The IRS has beefed up its rewards program for ratting out tax cheats.  Now, you can rat out your neighbor, lawn guy, or even your boss and get up to 30% of his under-reported tax liability!

But before you get too excited, know that there are rules for this, just like everything else with the IRS.  Under the IRS’ guidelines, if the under-reported tax liability you report turns out to be $2 million or more, and the questionable taxpayer is an individual with income of $200,000 or more, you can get a payment of up to 30% of what the IRS collects.  What’s more, if the IRS collects, and you think you were stiffed on your reward, you can actually go to Tax Court. 

The program in its current incarnation came into being in 2006.  Prior to that, plenty of would-be whistleblowers complained that there was little enforcement to ensure they got the cut of tax cheating to which they were entitled. 

Clearly, the $2 million limit means that ratting out the typical hairdresser or handyman probably won’t get you very far.  Not only does the IRS want to pursue only those cases that are truly worth their time, they don’t want to bother getting into disputes between family members or between disgruntled employees and small-time employers.

But the tax man is also interested in closing the so-called tax gap – that is, the amount of taxes that people should be paying, but aren’t.  In 2009, the IRS estimated this gap at about $300 billion. 

There’s no limit on the amount a whistleblower can get from the government if the shortfall in the taxpayer’s liability is large enough.  It also doesn’t matter if the taxpayer simply made an honest mistake, or under-reported his tax liability on purpose.  If the IRS collects, so do you.

There is a less lucrative program where you can report errant taxpayers with income of less than $200,000, and an under-reported liability of less than $2 million.  However, you can’t sue in Tax Court if you don’t collect.

Of course, there’s a whole process involved in collecting under this program.  First, you’ll have to fill out a Form 211, “Application for Award for Original Information.”  That “original” information in the form’s title suggests that if the violator is already in the IRS’ crosshairs, you probably won’t collect unless you have some totally new and valuable piece of information to supply.

Form 211 also requires you to give up your name and SSN – no anonymous awards.  You’ll also have to provide details of the alleged tax violation, and give detailed information of how you came across the information.  So, overhearing a cocktail party conversation likely won’t be enough – you’ll need to have hard evidence that the taxpayer is a tax cheat.

Also, be prepared to wait, and to spend lots of awkward Christmases with the taxpayer you’re ratting out.  On average, collecting under a whistleblower claim can take some seven years. 

Considering the amount you pay in taxes is probably much higher than it would be if everyone else were honest, the IRS’ whistleblower program can be one way to relieve the stress of knowing someone else is getting away with paying less than you.  If you’ve got solid documentation of clear wrongdoing, why not report it – and get a refund of some of those unnecessarily high taxes you’ve been paying?

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If you’re thinking about buying a new home or refinancing a mortgage, now is the time to take action. Considering what’s in store for the mortgage market in the very near future, procrastination could be costly. “The price of mortgage money is going to go up, and the availability of mortgage money may also be impinged,” warns Keith Gumbinger, vice president of HSH Associates, the nation’s largest publisher of mortgage and consumer loan information. Currently, mortgage rates are at an all-time low of 5 percent for a 30-year fixed loan, but there are other reasons for considering buying a home now, rather than later.

Several factors that occur throughout this year are expected to drive costs higher for new mortgage loans. For starters, March 1 and April 1 mark the start of new and increased fees for Freddie Mac and Fannie Mae, respectively. Even more new costs may come with Federal Reserve rules that go into effect April 18. Although the rules pertain to lenders, brokers warn that the regulations would lead to increased mortgage costs for consumers. Then in July, the Consumer Financial Protection Bureau begins its examination of how lenders disclose interest rates and closing costs to borrowers. Any costs arising from changes in current practices will likely be passed on to home buyers.

On top of all this are the Obama administration’s mortgage reform goals. Borrowers can expect more restrictions on down payments, FHA loans and loan limits. In certain parts of the country, these changes could make owning a home more difficult for consumers who rely on FHA loans. “Clearly the credit box has gotten incredibly tight. We are seeing lenders who have increased and are very stringent in their underwriting standards,” said John Courson, president and chief executive officer of the Mortgage Bankers Association, the mortgage industry’s main trade group.

Also part of the mortgage reform strategy are federal and state investigations into unscrupulous mortgage and foreclosure practices. A number of big banks, among them Bank of America, Citigroup and Wells Fargo, have already alerted their investors that significant financial penalties are expected. In a statement, Bank of America said the inquiries “could result in material fines, penalties, equitable remedies (including requiring default servicing or other process changes), or other enforcement actions, and result in significant legal costs.” The uncertainties attached to mortgage reform could translate into higher interest rates for consumers.

Industry experts say all these factors will inevitably lead to mortgage prices varying much more than usual. Plus, as the economy improves, mortgage rates are expected to edge up accordingly. As a result, consumers will need to be more aggressive in finding the best mortgage rates. “As the economy finds firmer footing, so will mortgage rates. After being pressed to 56-plus-year lows in 2010 by various crises, deflation concerns and government manipulation, we may see a bit of the other side of the coin in 2011,” said Gumbinger of HSH. So for those considering a new home or refinancing, the next few months offer better mortgage options than what’s in store for the future.

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