The times are a changin', and so are the tax laws my friends. So today I thought I'd post up a few interesting changes that caught my eye from a newsletter (pdf) forwarded over to me. This tax love comes straight from CPA Lisa Scarazzo, and goes out to all her clients each year.

I wanted to post it all up, but 5+ pages might have bored ya so we stick with a few ;) But mad thanks to Lisa for allowing us to post this up! You can find her & all her awesome accountant skills over at LAScpa.com. Here's what we got:

Ponzi Scheme Losses
A new law is allowing taxpayers to take a theft loss in 2009 for investment fraud. If the taxpayer invested their own cash and the loss is generated from a criminal fraud or embezzlement similar to the Madoff scheme, the loss will be deducted from ordinary income. The loss is deductible in the year it is discovered and not limited to the $3,000 capital loss per year rules.

Converting a Traditional IRA to a Roth IRA
In 2010 anyone can convert money they've already invested in a traditional IRA into a Roth IRA. There will be no adjusted gross income limit for the 2010 year. That is a change from current law where the IRA conversion is not allowed if your adjusted gross income is $100,000 or greater when you convert to a Roth. You will owe tax on whatever amount you have converted from the traditional IRA to the Roth IRA. After paying the tax on the conversion today, you will never pay any tax in retirement or when it is withdrawn. The good news is that if you convert in 2010, the tax bill can be spread over two years. (J - we'll be converting about $900 of the Mrs. traditional over to a Roth this year - woohoo!)

New and Enhanced Home Buyer's Credit
This credit has changed for 2009 into two different credits: 1) Existing Home Owners that have lived in and owned their home for at least 5 out of the last 8 years, and 2) First Time Home Buyers. Both of these credits have income limitations so please check with our office for further details to see if you qualify.

• Existing Home Owners now have the opportunity to purchase a new home if they have owned their current home for at least 5 out of the last 8 years and receive a credit up to $6,500 or 10% of the purchase price of the home. The total purchase price of the home can not exceed $800,000. The new principal residence must be purchased after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).
• The First Time Home Buyer Credit is available on the purchase of a principal residence for individuals who have not had an ownership interest in a home during the 3-year period ending on the date of the purchase of the new home. This does not apply to home equity loans not used to buy, build or improve the primary residence. The credit is increased to a maximum of $8,000 or 10% of the purchase price for homes purchased between January 1, 2009 and April 30, 2010 and the credit does not have to be paid back to the IRS in the future (this differs from the 2008 $7,500 credit).

Foreclosures & Bankruptcy
In general, if a taxpayer is forgiven or absolved of their debt (credit cards or mortgages), the debt becomes taxable income. The Mortgage Forgiveness Debt Relief Act will exclude debt forgiveness from taxable income if the taxpayer's debt was a mortgage from their principal residence and the debt was used to buy, build, or improve their residence (home equity debt does not qualify). This is for years 2007, 2008, and 2009.

*ALERT* IRS Email Scam
An email is circulating that makes a statement similar to this: "A refund will be issued to you from the IRS if you follow these instructions." This is a scam - the IRS does not send emails to individuals. The IRS only sends correspondence via the U.S. Postal Service. Never open an email that claims to come from the IRS.

Financial Steps to Solvency
Many individuals are looking for ways to financial recovery. Here are my recommendations: (J - links go to my posts, not Lisa's....although would be interesting to see her go into more detail ;) )

1. Cut Spending.
2. Track Expenses & Budget.
3. Increase income (if possible) by taking a second job.
4. Pay off high interest loans & negotiate lower interest rates on loans & credit cards.
5. Pay bills timely and make contact with creditors to set up a payment plan for overdue bills.

I know this isn't the most exciting stuff, but it's all good things to keep in mind! And thought I'd shoot over before everyone's already filed away ;) Thanks again Lisa! For more info and tax tips, check out her full newsletter here: Annual Individual Tax Newsletter 2009 (pdf). *Please always remember to do your OWN research and consult a professional before taking action*

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Get ready for a handful of TurboTax giveaways tomorrow!!

Labels: bankruptcy, foreclosure, roth ira, taxes

That's now 2 foreclosures in 2 months :( And, just like the other one, i can literally see the place right outside our living room window! Perhaps they both partied together??? Arghhh....

But you know what? I'm done ranting about it all, i've said my peace last time and it didn't get us anywhere (although it did make for a good blog post!).

Yup, this time i'm gonna be Mr. Positive and help create a happier atmosphere up in here :) You know, in the spirit of Christmas and all. So let's get started!

1. The Foreclosuree's can now start fresh.
This may be pushing it, but it's true! Imagine all that stress and frustration they must be feeling? Sure your life is in shambles and you have to start all over again (esp if you filed Bankruptcy, which i'm assuming would happen), but you just got rid of your #1 liability!

2. Someone's gonna get a helluva good deal!
Word on the street says the place is going for $225k!!! Considering we bought our townhouse for $360k, and our neighbor's for $350k, that's a 35% discount! Our places aren't *exactly* the same, but who really cares at this point...if you're a shopper, you'd be crazy NOT to pick up the cheaper one.

3. It'll probably be the last foreclosure on our street.
I say this only because the "core" residents here - about 75% - have owned their places since construction ended in the 80's. So most of them have probably already paid them off, or are close. The two pulling the foreclosure cards have been newbies so dar, and there's only a handful of us around. You can never tell exactly what's gonna happen, but this is all about staying positive ;)

4. We didn't lose any good friends.
That's a good thing right? It's not like i'm THAT close to any of our neighbors anyways, but it would def. suck if any of those living side-by-side of us left :( We've been getting pretty close to one of them, and would hate to see anything horrible happen over there.

5. It forces us to stay on top of our game!
This is probably the most important of the positive outcomes - making us pay even CLOSER attention to our finances so we're not next! I'd like to think we're already doing this, but a little *extra* attention never hurt. Plus, imagine if God forbid we DID have to foreclose after all this $hit i spilled last month?! I guess at that point it would be the least of our worries, but the whole idea is still scary...

How'd i do? I gotta admit it was pretty hard at first to come up with, but once i put myself in OTHER people's shoes the positives started flowing in :) I only hope that it does us all some good, i can only take so much bad news at a time. HAPPY XMAS EVE-EVE!

Labels: foreclosure, home ownership

NOT. GOOD. AT ALL. Especially since i was hearing this while watching my 'Skins drop their lead and lose it against our rival Cowboys last night!

Talk about a double whammy. One being more important than the other, ofcourse, but equally upsetting ;)

I didn't know this neighbor, but she sure threw some awesome parties! It was like Cinco de Mayo there every other weekend - at least when peering through our window in jealousy. We were never invited, but now we share their pain....damn economy.

I'm not sure of her entire situation exactly, but from what our GOOD neighbors say (the ones who invited us to watch this so-called football "game" last night) it seemed as if their interest rates reset and they could no longer afford their corner-unit with a glam frontview of our LAKE!!! arghh....so they then tried to "short sell" it, only to find out their lender won't except it!!!

Short Sale: A short sale occurs when a property is sold and the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed.

So while this neighbor HAD an offer on the table to buy the property at a MUCH lower value (i think it was around $300k for a place that sold for $370 two years ago) she just said "F it" and it is now in foreclosure. ARghhhhhhhhhhhh.....

So now, the minute it sells for buttloads less, all of our places will drop in value!!! I don't know the logistics of it all, but basically if her stupid corner townhouse with the f'ing fantastic view sells for, let's say, $200k (God forbid), and our not-*as*-nice places used to be valued at $350k-$370k, then the next buyers coming into town could value our places around $250-$300k or something equally horrendous. I really don't know how it all works out in reality, just in theory ;) What i DO know is that it hurts us either way...and it really pisses me off.

Again, i don't know her specific situation, but it just sucks when you are a good little citizen and pay your dues on time and diligently, yet you lose thousands because of someone else's mistakes! Why again did we have to buy a house so randomly at the peak of the market? oh yeah - to follow the American dream! F to the F to the F, F, F.

Labels: crazy economy, foreclosure, home ownership, rant

If i became a celebrity, i'd be an outcast. There's no way i could muster up enough balls to take on a multi-million dollar mansion out in The Hills...

Even IF my man Beckham lived next door! Or even Britney Spears for that matter - and that's saying something ;)

Of course, money is crazy and it can steer the best of us down the wrong path at times. Just take a deeper look at the whole Ed McMahon debacle. The poor guy can't even pay his mortgage :( I swear, if you ever see or hear me getting like this, STOP ME in my tracks and call me out, okay? Good, good.

I know the whole Ed thing is old and played out (the news, not the guy...meanies) but I find the whole thing incredibly interesting. I guess cuz it just goes to show that no matter how rich you are, or think you are, you are SCREWED w/out good money management!

Here's a clip from Ed's interview w/ Larry King:

"King: And the payments, you can't make -- what's the problem?

Ed McMahon: Well, if you spend more money than you make, you know what happens. And it can happen. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen. You want everything to be perfect, but that combination of the economy, I have a little injury, I have a situation. And it all came together."

His wife also joins the convo and adds that they probably should have paid more attention to managing it all earlier, and that "Because you're a celebrity, people think you have a lot more than you have." Hmm...yeah okay i can see that. But, and i'm kinda being harsh here, if you KNOW you're not great at watching your financials, find someone who is! Or even hire a professional money manager. Doing any of that would save you a great deal of money in the long run, not to mention your sanity.

Of course, this is all easier for me to say since a) i'm not in their situation, and b) i'm not dealing with millions and millions of dollars ;) Whatever happens with their situation though (the foreclosure process had already started as of June '08), I do hope that it all gets worked out. No one deserves to go through all that pain and suffering, no matter what the situation.

I'd also like to give them MAD credit for stepping up to the public platform and spilling all their details to the world!

It's hard to measure how helpful that could be to others, but i can tell you that it def. made ME stop and think twice about stuff. It's easy to get complacent and think you're on the right track all the time, but it's hard to know 100% until you're actually tested in battle. Or perhaps that's when you know you're okay - When you basically never get INTO battle?

Whatever the case, I'd like to think that when i become a celebrity (aww yeahhh) I'll have all my ish together and be ready to start saving that money! Now i just gotta figure out how to go about being one :)

Labels: celebrity finance, debt, foreclosure, money management

"You Have Options. We Can Help."

WOWWW, something in the mail that's actually NOT spam! haha... And not only that, but something that can potentially help people KEEP THEIR HOMES!

I applaud you Maryland, that is very impressive.

A state stepping up to help out those stuck in all this sub-prime mortgage mess ... you don't see that every day ;)

The flyer is sponsored by Maryland Hope (a division of The Maryland Department of Housing and Community Development) and shows their call to action on the front "Act NOW! Before It's Too Late!", along w/ their toll-free Hotline and website. Then, on the back, it shows some of the services they offer:

• Free nonprofit counseling in your community
• Financial resources that can save your home from foreclosure.
• Help with non-responsive loan servicers.
• Mortgage fraud investigation

Not bad, right? And even if you DO end up chucking it, *hopefully* it will at least get you to stop and think about it. Whether you need the help, or not, though, I commend Maryland for giving it a shot. I personally had nooooooooooooo idea something like this existed, and had i been in trouble? Oh you better believe i'd be all over that website ;)

For more information on Maryland Hope, call their Hotline @ 1-877-462-7555 or visit their website: http://www.mdhope.org/

Labels: foreclosure, home ownership, mail bag