government

12 Gov't Social Media Accounts You Should Follow

Carrie Kirby — Tue, 17 Apr 2018 08:30:09 +0000

In the Trump era, Twitter has become the de facto way that the White House communicates with the American public. But @realDonaldTrump isn't the only government social media account out there. By keeping an eye on various authorities on Twitter, Instagram, and Facebook, you can stay on top of just about everything: how to save energy, when you can get a deal on park entrance, how early you should get to the airport, and whether you need to board up your windows due to an oncoming storm.

1. National Weather Service

@NWS on Twitter, @nws on Instagram, @NWS on Facebook

What it's good for: Severe weather alerts nationwide, making it valuable to travelers. If you're expecting a hurricane, a blizzard, or a flood, follow one of the local accounts the NWS maintains so you know whether you need to evacuate.

2. Centers for Disease Control and Prevention

@CDC on Twitter, @cdcgov on Instagram, @CDC on Facebook

What it's good for: Handy health info such as how to differentiate a cold from the flu, or where to get a yellow fever vaccination. You'll also get warnings about food recalls due to bacterial contamination.

Add @cdcemergency to your follows, too. This is where the CDC puts its warnings about public health emergencies such as epidemics and natural disasters.

3. Department of Interior

@interior on Twitter, @usinterior on Instagram, @usinterior on Facebook

What it's good for: Stunning vistas and wildlife pics from our public lands. You'll also get a heads up when admission to National Parks is free. These accounts will also alert the public if there's a wildfire in a park or if a government shutdown is closing parks.

4. The Consumer Financial Protection Bureau

@CFPB on Twitter, @CFPB on Facebook

What it's good for: Education on how to recognize financial scams, your rights when collectors call, and any changes in tax laws. Also, you'll probably hear about a major financial data breach here first. (See also: 6 Ways Social Media Can Save You Money)

5. Transportation Security Administration

@TSA on Twitter, @tsa on Instagram, @TSA on Facebook

What it's good for: Your travel questions get answered here, such as, "Can my husband carry on his dead bug specimen?" Turns out, the answer is yes! You'll also find changes in ID requirements and carry-on rules. Watch for warnings about delays at specific airports as TSA rolls out new security screenings.

6. U.S. Consumer Product Safety Commission

@USCPSC on Twitter, @uscpsc on Instagram, @USCPSC on Facebook

What it's good for: Product recalls, and safety warnings you might not have thought of, like the importance of locking up the liquid nicotine used in e-cigarettes, especially if you have children or pets that could get into it. If it turns out a product you're using can be deadly, you'll want to know right away. You'll also be exposed to hilarious safety-related memes.

7. Federal Emergency Management Agency

@fema on Twitter, @fema on Instagram, @FEMA on Facebook

What it's good for: Giving you a heads up when weather conditions may lead to disaster, such as a recent warning to Southern Californians that heavy rain coming in might lead to debris flows in burn areas. In case of tornado, hurricane, wildfire, earthquake, tsunami, or any other emergency, tune in here for evacuation instructions, local phone numbers for help, and other potentially lifesaving information.

8. National Aeronautics and Space Administration

@NASA on Twitter, @nasa on Instagram

What it's good for: Cool videos from the International Space Station, Q&As with astronauts, contests, and job listings. Follow these accounts and you'll be the first to hear about any massive asteroids heading toward Earth or alien attacks.

9. Department of Energy

@ENERGY on Twitter, @energy on Instagram, @energygov on Facebook

What it's good for: Energy saving tips. You'll also find instructions on how to prepare for and avoid power outages during storms. Nuclear power plant emergency or massive blackout? You'll hear that here first, too.

10. U.S. Geological Survey earthquake alerts

@USGSted on Twitter

What it's good for: Popular in seismically unstable regions such as the San Francisco Bay Area, this feed will share the most recent quakes all over the world, so you can verify whether the shaking you just felt was a truck going by or an earthquake. If The Big One hits you, you're unlikely to be able to pull up Twitter, but if The Big One hits the area where a loved one lives, you can monitor this feed for details.

11. U.S. Department of State

@StateDept on Twitter, @statedept on Instagram, @usdos on Facebook

What it's good for: A recent post advised citizens to apply for a passport before an impending price increase. You can also find official statements — often on video — to help you stay on top of developments on the world geopolitical scene. If our tensions with Russia and North Korea lead to World War III, this would be the ideal news source.

12. Your local government agencies

Probably the most useful government social media accounts are not national. You'll want to subscribe to your local police department, transportation authority (I recently checked California's to find out the conditions at Donner Pass on my way to a ski trip), and school district. Some cities have Twitter accounts you can use to notify authorities of things that need attention, like potholes and criminal activity.

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This article is from Carrie Kirby of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future

Tim Lemke — Wed, 29 Nov 2017 09:00:07 +0000

Starting next year, investors will be allowed to contribute more money into their 401(k)s. In 2018, the limit on annual contributions to a 401(k) plan will rise from $18,000 to $18,500.

That additional $500 may not seem like a lot, but you should try and hit the new maximum if you can. Maxing out your 401(k) is often the best way to accumulate a healthy sum for retirement, and there are great tax benefits as well.

If you're on the fence about whether you need to direct another $500 into your 401(k), consider these arguments.

1. It could net you tens of thousands of dollars

It's not easy to contribute $18,500 annually into a retirement account. But if you can do it, that extra $500 each year can really pay off. Let's say you're 30 years old and plan to retire at age 65. Assuming a conservative 7 percent return, that extra $500 annually could mean an additional $74,000 overall. If you start contributing that extra $500 starting at age 25, and keep doing it for 40 years, the difference is $106,000 over time — more than an entire year's worth of living expenses for many people.

2. It's more money for you and less to taxes

If you have $500 in income available, that's money that the IRS will get a share of, unless you place it in a 401(k) plan or traditional IRA. Any money you contribute to these retirement accounts is deducted from your taxable income. If you are in a high tax bracket, that $500 could actually just represent about $300 in your paycheck. If Uncle Sam would take that much anyway, why not invest the whole amount instead?

3. You can find $42 a month

If you are at the maximum contribution now, you can find a way to hit the new ceiling. Eat out less. Ditch the morning coffee. Quit that gym you never go to. If you break down $500 over the course of a year, it comes out to less than $42 a month — or barely $10 a week. That's the cost of a mediocre lunch out. Even the smallest amount of belt-tightening can help you hit this goal, and it's probably not money you'll notice. But you'll notice it later at retirement time.

4. You may have already maxed out your IRA

If you've been placing money in an individual retirement account (IRA), you may be aware that contribution limits are lower than 401(k) plans. People under age 50 are permitted to contribute only $5,500 each year to an IRA, and it's not uncommon for people to hit that maximum. If your IRA is maxed out, having permission to place an additional $500 in a 401(k) is a huge bonus.

5. The limit might be decreased in the future

We should be thankful that in 2018, the 401(k) contribution limit is rising. That's because some members of Congress have suggested that the limit could be drastically reduced in the future as part of tax reform. Thankfully, it seems like discussion of such changes has been tabled, but there's no guarantee the idea won't be resurrected in the future. In the meantime, it's a good idea to contribute as much as you can.

6. Where else are you going to put your money?

If you have $500 a year to spare, the stock market may be the smartest place to put it. Interest rates are still very low, so placing it into the bank would only result in a few bucks each year. And very few other investments offer the same kinds of consistent returns as stocks. Unless you plan to use the money to purchase a home or start a business, you likely won't do much better on a consistent basis than — or get the same tax advantages of — investing in stocks in a 401(k).

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This article is from Tim Lemke of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Ways the Government Helps Disaster Victims Recover

Christa Avampato — Fri, 22 Sep 2017 09:00:06 +0000

Hurricane season has captured big chunks of recent news cycles, with massive storms Irma and Harvey devastating areas in Florida and Texas. The IRS and other U.S. government agencies are working to help people get back on their feet after these terrible natural disasters. Here's what they're doing.

1. Allowing loans and hardship withdrawals from retirement funds

Usually, the IRS levels penalties against early withdrawals from 401(k) and 403(b) retirement accounts. But it recently announced that in the case of Irma and Harvey, victims can take loans and hardship withdrawals against their retirement funds without penalties. All of the specifics for this IRS initiative can be found on the IRS disaster relief page.

2. Offering tax relief

The IRS provides tax relief to those who are impacted by disasters. This relief takes the form of tax filing and payment extensions, as well as the ability to claim losses on tax returns that may lower the amount of tax owed. Once an area is a federally declared disaster area, the IRS automatically marks all taxpayers in that area as eligible for relief. The details about these tax relief programs are also on the IRS's webpage for disaster relief.

3. Helping victims find shelter

If you need to find short-term shelter after a disaster, the government has services to help you. You can search for open shelters in your area by texting SHELTER and your ZIP code to 4FEMA (43362). For example: SHELTER 12345. You can also visit FEMA's page on Interim Housing if you've been displaced by a disaster and you need to find a longer-term rental home.

4. Granting government relief funds

DisasterAssistance.gov makes it possible to find local resources and apply for assistance. There are also relief funds and programs available for small businesses and those who are self-employed.

5. Hiring temporary recovery workers after a disaster

Both FEMA and the Small Business Administration (SBA) are currently hiring temporary workers in affected areas to speed the recovery efforts. FEMA's website details the opportunities it has available and SBA has set up a special website where you can apply for hurricane response jobs.

6. Cracking down on price gouging

After a natural disaster, it isn't unusual to find crucial necessities like gas and bottled water sold at ridiculously inflated prices — including reports of water for $99 a case and gas for $10 a gallon following Hurricane Harvey. This is known as price gouging, and it is illegal. People who have spotted or been victimized by this practice are encouraged to report it to their state attorney general.

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This article is from Christa Avampato of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

5 Sobering Facts About Social Security You Shouldn't Panic Over

Emily Guy Birken — Thu, 04 May 2017 08:00:08 +0000

Most people tend not to think about Social Security until they are in a position to collect benefits. Unfortunately, letting Social Security be something you worry about "later" can cause costly problems — both for you as a beneficiary, and for the program as a whole.

Here are five sobering facts about Social Security that you should know now so that you will be prepared for potential issues in the future. (See also: 6 Smart Ways to Boost Your Social Security Payout Before Retirement)

1. The Social Security Trust Fund may be entirely depleted by 2034

Social Security is set up as a direct transfer of funds from current workers to current beneficiaries. However, when the taxes coming in to pay for Social Security exceed the expenses for the program, the surplus is placed in the Social Security Trust Fund, where it earns interest. As of 2010, Social Security expenses have exceeded the tax revenue, and the Social Security Administration has had to dip into the Trust Fund in order to pay out all promised benefits. As of 2013, the Trust Fund began losing value, and it is projected to be entirely depleted by the year 2034.

When the Trust Fund runs out of money, the projected tax revenue will cover only 79 percent of promised benefits. This means anyone who is entitled to a $1,500 monthly benefit will only receive $1,185.

Why you shouldn't panic

While the coming depletion of the Social Security Trust Fund is troubling, the problem is neither new nor imminent. It's also important to note that the United States is the only country in the world that attempts to predict the 75-year longevity of its social insurance funds, which means we are in a position to do something about the anticipated shortfall. Over the next couple of decades, it is likely that our government will make relatively small changes to the Social Security program in order to make up the 21 percent anticipated shortfall that will occur once the Trust Fund has run dry.

However, it is smart for current workers to recognize that Social Security should not be heavily relied upon for a financially secure retirement.

2. The average Social Security retirement benefit is $1,360 per month

As of January, 2017, the average benefit for a retired beneficiary is $1,360 per month, which doesn't go very far if that is your only source of income. In addition, beneficiaries who are signed up for Medicare Part B (which is the Medicare medical insurance) will see $134 deducted from their Social Security benefit check for the Part B premium.

While very few retirees live solely on their Social Security benefits, these benefits do constitute at least half the income of 71 percent of single seniors and 48 percent of couples. And for a whopping 43 percent of singles and 21 percent of married couples, Social Security benefits represent 90 percent or more of total income.

Why you shouldn't panic

What you need to remember is that you have a great deal of control over how much of your budget your Social Security benefit will represent. If you diligently save for retirement, then receiving an "average" benefit of $1,360 will provide a nice financial cushion on top of your retirement portfolio. While $1,360 is tough to live on by itself, having it available on top of your necessary expenditures would be a wonderful supplement.

3. Cuts to Social Security benefits may be coming

President Trump promised during his campaign that there would be no cuts to current payments for Social Security or Medicare beneficiaries. However, although the White House has made it clear that current beneficiaries' payments are safe, it will not rule out the possibility of making cuts that will affect future beneficiaries. Some of the changes that have been proposed include:

Raise the full retirement age for workers who reach age 62 in 2023, gradually increasing it from the current age of 66 to age 69.
Change the formula for calculating benefits for retirees becoming newly eligible in 2023 in phases over 10 years. The changes would slightly increase benefits for below-average earners and slightly decrease benefits for above-average earners.
Beginning December 2018, change the calculation of the cost-of-living adjustment (COLA) to a chained consumer price index (CPI) calculation, which will reduce the amount of money beneficiaries receive in their annual COLA. The current formula for determining the COLA uses something called the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The CPI-W is a useful index for tracking the inflation of all goods, but it does not take into account the fact that many consumers make substitutions when prices go up. (For instance, if the price of beef rises, many consumers will buy chicken or pork instead.) A chained CPI calculation takes these sorts of substitutions into account, so its inflation rate is calculated at approximately 0.3 percentage points lower than the CPI-W rate.
Eliminate the earnings test beginning in January 2019. This test reduces benefits for beneficiaries who are younger than Social Security's full retirement age (currently age 66), are currently receiving Social Security benefit payments, and have income from wages or self-employment that exceed $16,920 per year in 2017.
Eliminate federal income taxation of Social Security retirement benefits as of 2054 and later, phased in from 2045 to 2053.

Why you shouldn't panic

Although making cuts to future beneficiaries' payments is hardly something to cheer about, we do need to recognize that it is much more important to protect the benefits of current beneficiaries. Since current beneficiaries generally cannot go back to work or cut expenses, they are much more vulnerable to cuts in payments than current workers are. In fact, the proposed switch to a chained CPI calculation for COLA may be burdensome to current beneficiaries, since it has been proposed for December 2018, thereby affecting those who have already retired.

What current workers need to do is plan for their Social Security to be an addition to their retirement savings. Then, if these changes and cuts do come to pass, you will not be worried about losing important income.

4. High earners don't pay as much into Social Security

Social Security is paid for through a payroll tax of 6.2 percent for workers and 6.2 percent for their employers, making the total tax contribution 12.4 percent of gross income. However, workers and their employers do not pay Social Security taxes on earnings above $127,200.

While $127,200 is a pretty significant chunk of change, it does mean that very high earners get a break once they are earning that amount. The reasoning behind this earnings cap is to maintain the connection between contributions paid in and benefits received. Since Social Security benefits are paid progressively, lower-income beneficiaries receive a higher percentage of their pre-retirement income in benefits than do high-income beneficiaries. The more money that high-income earners pay into Social Security, the less of a return they see on their contributions.

The progressive nature of Social Security benefits is the reason why it is unlikely that there will ever be a complete elimination of this earnings cap, even though the program could certainly use the funds that such a cap elimination would represent. However, even if we were to increase the earnings cap to $229,500 — which would return taxation to the same level it was in the early 1980s — we could make a major dent in the coming benefits shortfall.

Why you shouldn't panic

Although raising taxes is never popular, there is some indication that our government is working to bring the earnings cap closer to early 1980s levels. In 2016, the earnings cap was set at $118,500, which was the same as the 2015 earnings cap. Raising it to $127,200 represents a 7 percent increase.

5. 10,000 baby boomers are retiring every day

Social Security works pretty well when the ratio of workers to retirees is balanced. Unfortunately, the extra-big generation known as the baby boomers is putting the program out of whack. The 76 million members of that generation began reaching age 62 (the earliest you may take Social Security benefits) as of 2008, and they are just going to keep retiring — at a rate of 10,000 per day.

This huge retirement boom could potentially put an enormous burden on our Social Security program, especially considering the increased life expectancy of this generation as compared to their parents and grandparents.

Why you shouldn't panic

While it's true that approximately 10,000 baby boomers are going to be retiring every day until 2034 (when the last of the boomers will reach age 70, which is the latest you would want to start taking Social Security benefits), there is more to this story than just their retirement.

First, it's important to remember that we've known the boomers would be retiring en masse for quite some time. Policymakers began to plan as early as 1983, when Congress raised the full retirement age.

Second, the boomers are the workers who built up the Social Security Trust Fund, so they will be beneficiaries of the money they themselves contributed through taxes.

Finally, as of 2015, millennials had overtaken the boomers as the largest living generation in the U.S. With such a large group of young workers in the workforce, we should be able to handle the financial cost of 10,000 boomers retiring each day.

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

7 Ways Your Devices Are Spying on You

Brittany Lyte — Tue, 18 Apr 2017 08:30:11 +0000

Microwave ovens aren't spying on us (yet), but plenty of other products seem to be. From smart TVs to tech toys for kids, there are a slew of common household items collecting data about our location, habits, and preferences — and some are more sinister than others. Here are some of the ways your possessions could be tracking your every move. (See also: Your Credit Card May Be Sharing Your Private Info)

1. Your TV might be bugged by the U.S. government

According to the latest dirt from WikiLeaks, the CIA has developed a covert hacking program that can transform your smart TV into a bug. Once your TV is hacked by the program, it has the ability to enter into a "fake-off mode" in which the TV appears to be off but is actually on and operating as a recording device. The program, known as "Weeping Angel," uses the TV's speakers and camera to record what it hears and sees. Then it transmits these private living room conversations to the CIA server.

2. Your child's doll could be bait for a cyberattack

Cayla is a sweet-faced American-made doll with big, blue eyes and Bluetooth technology. Not only is Cayla adorable, she's also interactive. Everything Cayla hears gets transmitted to a voice recognition company that helps the doll to hold human-like conversations, much like the iPhone's Siri. Unfortunately, this technology also makes the doll a prime target for hackers. In Germany, where hidden microphones and cameras are illegal, the doll has been pulled from store shelves and government officials have ordered doll owners to confiscate the toy. In Norway, a consumer group has released a warning about the doll's vulnerabilities. Consumer complaints about Cayla have been filed in the U.S., though the doll remains on shelves in America and in several European countries.

3. Your shoes could help retailers figure out your age or social status

The British retail analysis firm Hoxton Analytics is pointing its facial recognition software to the ground. Instead of faces, the firm's technology records shoppers' feet as they walk in and out of participating retail outlets. The data is then analyzed to reveal a surprising amount of information, including specifics about a shopper's gender, age, and social class. It's all based on the shoes a person is wearing. According to Hoxton executives, the retail analysis technology can determine a person's gender based on his or her footwear with 80 percent accuracy. The company asserts that the marketing technology is much less invasive than scanning shoppers' faces, but its use has raised concerns among consumer advocate groups.

4. Your cell phone could be surveilling your every move

Cell site simulators, or stingrays, are commonly used by law enforcement agencies to geolocate the cell phone calls or text messages of criminal suspects and other persons of interest. The New York Police Department, for example, has used the stingray technology more than 1,000 times since 2008 to determine a person's location by monitoring their calls and texts. It's not only New Yorkers who are susceptible to this sort of secret surveillance. Stingrays are used by local police agencies across the nation, as well as the FBI and CIA. (See also: 18 Surprising Ways Your Identity Can Be Stolen)

5. A hacker could infiltrate your baby monitor

If you use a baby monitor to keep a watchful eye over your child at night, know that a hacker could infiltrate the device in order to spy on your child. In a recent horror story, a stranger hacked a baby monitor in Washington state and used the device to communicate with a three-year-old child, as well as to track the movements of people in the room. The toddler's parents reportedly entered their child's room one night and heard a voice on the baby monitor saying, "Wake up little boy, daddy's looking for you." The child had reportedly told his parents that he did not like the monitor because of the voice that spoke to him on it during the night. But it wasn't until the parents heard the voice for themselves that they understood what their child meant.

6. Your refrigerator could make you vulnerable to an email hack

Samsung's latest voice-controlled refrigerator can play music, stream movies, and sync your Google calendar onto a display screen. Sounds cool, right? But beware: Earlier models of the smart fridge have allowed hackers to break into its owner's email accounts. That's because previous security shortcomings have allowed hackers to access the refrigerator technology in order to steal users' Gmail login credentials. Here's the silver lining: Samsung's latest model hasn't had any reported hacking fiascos — not yet, anyway.

7. Your webcam could be recording you

If your webcam isn't password protected — or if the password is easy to hack — you could be under surveillance. Hackers around the globe are known to gain access to the webcams of strangers in order to peek into the private lives of their owners. There's even a creepy search engine that matches voyeuristic hackers with unsecured webcams, making it that much easier for devious internet users to violate the privacy of strangers.

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This article is from Brittany Lyte of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

What to Do If You Have a Tax Lien On Your House

Mikey Rox — Mon, 17 Apr 2017 08:30:08 +0000

The government doesn't play around with taxpayers who skip out on what they owe. When you ignore your federal, state, or property tax bills — and you don't make any attempts to pay the balance — the government can place a tax lien on your house.

A tax lien is a legal claim on property for failure to pay taxes owed. It gives the tax authority (also known as the lienholder) first rights to your property over other creditors.

A lien differs from a levy in that the government doesn't seize your house or other property. Keep in mind that a lien can become a levy at some point if you never pay your taxes or never make arrangements to satisfy the debt. The tax authority decides when to impose a levy. You'll receive written notice of the levy at least 30 days before it takes place.

A lien is a serious matter because it can negatively affect your credit. Unpaid tax liens can remain on credit reports indefinitely, whereas paid tax liens can remain for up to seven years from the date filed.

Of course, the best way to handle a tax lien is to avoid one in the first place. But if the damage is done, here's how to put this ugly mark behind you.

1. Dispute a filing error

It's not uncommon for mistakes to appear on credit reports. In fact, according to recent data from the Consumer Finance Protection Bureau, 76 percent of the 185,700 credit-reporting complaints they've received since 2011 are related to errors — including state or federal tax liens that mistakenly appeared on credit reports.

If you check your credit report and find a lien reported in error, don't ignore this mistake. This can lower your credit score. Contact the IRS or your state tax office to file a dispute. If a review of your account proves that you don't owe the debt, the government withdraws the tax lien (as if it never happened). A withdrawal also removes the lien from your credit report.

Thankfully, the number of tax liens reported in error should be dropping. In response to criticisms by the CFPB, the top consumer reporting agencies — Experian, Equifax, and TransUnion — issued a new provision. As of July 1, 2017, tax lien and civil judgment data will only be included on credit reports if they contain three pieces of information: the person's name, address, and Social Security number or date of birth. This information must be current according to court records as of the last 90 days.

The association representing the credit bureaus expects half of the consumers with tax liens on their credit reports will see them removed.

2. Pay your tax bill in full

Parting with your hard-earned money isn't easy, but paying your tax bill in full is one of the fastest ways to get the government off your back and move on with your life.

Typically, the government releases tax liens within 30 days of full payment of an outstanding debt (including penalties and interest). A release removes the lien from the property.

Unfortunately, paid tax liens can still remain on your credit report for up to seven years. However, under the IRS's Fresh Start Program, after paying your balance in full, you can submit a request to have a federal tax lien withdrawn from your credit report before the seven-year mark. Some states also give taxpayers the option of requesting an early withdrawal of a state tax lien from their credit report once they've paid their debt in full.

3. Set up an installment plan

If you can't pay what you owe in full, set up an installment plan with the government. This lets you pay off your tax debt over time. The tax authority releases the lien once you've set up a payment plan.

In the case of federal debt, the IRS allows individual taxpayers to set up monthly direct debit payments on debt amounts up to $50,000 for up to six years. Go to IRS.gov and apply for installment payments through the online payment system. If you owe more than $50,000, or require longer repayment terms, request installment payments by completing and mailing Collection Information Statement Form 433-A or Form 433-F.

Taxpayers who owe less than $25,000 and who've made at least three consecutive direct debit installment payments also can request to have the lien withdrawn from their credit report. However, defaulting on an installment agreement can trigger a new tax lien.

Some states also allow installment plans to repay a tax debt, though the criteria for these plans varies by state.

4. Sell the property

If you don't have money to pay an outstanding tax debt in full, and you can't afford an installment plan, another option is selling the property and satisfying the debt with proceeds from the sale. However, this method only works if the sale price is high enough to pay off the lien and any existing mortgages on the property. If the sale won't generate enough proceeds to pay off attached liens, you can't sell the property. If you're able to sell the home, the company handling your escrow account forwards payment to the lienholder after closing.

Keep in mind that you'll need to contact the lienholder before closing to request a lien release. In the case of federal taxes, this involves requesting a Certificate of Discharge from the IRS. If the request is approved, this document releases (or removes) the lien from the asset being sold (though it stays in place in every other way), and allows the property to transfer to the new owner lien-free.

5. Refinance the property

Then again, maybe you don't want to sell your home. There's also the option of refinancing and borrowing cash from your home equity to satisfy a state or federal tax lien on the property. Since refinancing replaces an existing mortgage with a new loan, mortgage lenders will not approve your loan application unless they have first lien position on the title. This puts the lender in priority position to benefit from liquidation if the property goes into default. For this to happen, you'll have to request a lien subordination from the IRS or your state tax office before applying for the loan.

Subordination doesn't eliminate a tax lien — rather, the lien becomes secondary to a lender's lien on the property. And with the lender's security interest first, you're more likely to acquire a new mortgage.

Be aware that your ability to refinance depends on how the tax lien impacted your credit. A tax lien will reduce your credit score, and to refinance, you'll have to meet a lender's income and credit score requirements. You need a minimum credit score of 620 for a conventional loan and a minimum credit score between 500 and 580 for an FHA loan.

This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Easy Way to Do Your Taxes (Without Paying Someone Else)

Damian Davila — Wed, 22 Feb 2017 10:00:20 +0000

Like clockwork, Tax Day comes every year. In 2017, it falls on Tuesday, April 18 (Wednesday, April 19 for residents of Maine and Massachusetts). If just the mention of taxes makes you nervous, or even stressed, you're not alone. Since 2007, the American Psychological Association (APA) has been tracking the top causes of stress for Americans and has found that money, including tax preparation, is consistently at the very top of the APA's list.

While it may feel tempting to relieve this stress by paying somebody else to file your return, or buying expensive tax prep software, there is a long list of options to have your taxes prepared for free. Let's review what organizations offer free tax preparation services and what you can do to make the whole task… less taxing.

1. Free File Software From the IRS

Individuals who earned less than $64,000 in 2016 — 70% of Americans, according to the IRS — can file their federal taxes for free with Free File Software from the IRS, a partnership of the IRS with eight software providers, including TaxSlayer, H&R Block, and ezTaxReturn.com.

In addition to free federal tax filing, most Free File Software partners offer free state tax filing for residents of states with income tax requirements. Some providers may charge a fee for filing state tax returns.

2. IRS Tax Volunteers

Looking to help the community by preparing taxes free of charge, many Americans receive training by the IRS and then volunteer at approved locations in their communities. IRS-certified tax volunteers participate in two main programs.

Volunteer Income Tax Assistance (VITA)

Individuals who make $54,000 or less, have disabilities, or have limited English proficiency have access to free basic income tax return preparation with IRS-certified volunteers through VITA. Qualifying taxpayers have their returns filed electronically.

Tax Counseling for the Elderly (TCE)

IRS-certified volunteers for the TCE program focus on taxpayers who are 60 years of age and older, and specialize in questions about pensions and retirement unique to seniors.

Located at neighborhood centers, libraries, schools, shopping malls, and other convenient locations throughout the country, VITA and TCE sites can be found online through the VITA/TCE Locator Tool or by calling 1-800-906-9887. Since many TCE sites are operated by the AARP's Foundation Tax Aide program between January and April, you can also use the AARP Site Locator Tool or call 1-888-227-7669.

3. Free Tax Services at Universities and Colleges

Around the country, many student-run service organizations offer free tax assistance for low- to moderate-income individuals. Generally, these organizations offer free e-file for federal and state tax returns under the supervision of the IRS and CPA certified accounting faculty. Here are some examples:

VITA site from the Accounting Department at Dixie State University in Utah;
VITA site from York College in New York;
VITA site from St. Mary's University in Texas;
VITA site from the University of the West in California;
VITA site from the University of Minnesota Duluth; and
VITA site from the Levin College of Law at the University of Florida.

The majority of student-run organizations offering free tax assistance are also IRS-certified VITA sites. Keep in mind that free tax preparation programs at universities and colleges can only provide tax preparation to individuals making $54,000 or less. Student volunteers will most likely turn away small business owners and self-employed individuals because volunteers are limited to returns with certain types of income, including Wages and Salaries (Form W-2), Interest Income (Form 1099-INT), Dividends Received (Form 1099-DIV), Unemployment Compensation (Form 1099-G), IRA Distributions (Form 1099-R), Pension Income (Form 1099-R, Form RRB-1099), and Social Security Benefits (Form SSA-1099).

Student-run tax prep organizations can generally help nonresidents on a student visa (F, J, M, or Q), or a teacher or trainee visa (J or Q), but may turn away those with dual citizenship because these types of individuals require much more complex tax prep.

4. Free Offers From Tax Preparation Companies

Commercial tax preparers and software providers also offer free software access to taxpayers filing certain types of returns. Here are two samples from well-known companies:

H&R Block: Free tax prep for forms 1040EZ, 1040, 1040 with Schedule A, and some state tax forms.
TurboTax Federal Free Edition: Free prep of forms 1040EZ and 1040A and some state tax forms.

Since no humans are involved when using free tax prep software, you're responsible for figuring out the answer to your questions and responding to audits from the IRS. Also, getting help from a company rep over the phone or via online chat may cost you additional fees.

There are many offers available from online and brick-and-mortar providers. Since most of these free tax prep offers involve e-filing, it's a best practice to verify that they're authorized e-file providers by the IRS. Screen offers near you using the IRS e-file Provider Locator.

5. Free Tax Help From State Governments and Non-Profits

In an effort to help individuals and families with low-to-moderate income levels, many state governments provide free income tax preparation and electronic preparation through the Earned Income Tax Credit (EITC). Here are some examples:

The Illinois Department of Human Services offers free tax help to individuals and families making up to $30,000 and $55,000 respectively per year.
The Honolulu Community Action Program is offering free tax preparation to Hawaii residents with $55,000 and under in annual income and with a relatively simple return.

Contact your state government for a list of public and private organizations offering free tax preparation services.

Getting Ready for Free Tax Preparation

As you can imagine, any organization offering free tax preparation gets an avalanche of requests from taxpayers. Let's review some strategies to minimize the chances of being turned away or having to spend more time than necessary.

1. Know the Limitations of the Volunteers or Software

Free help is generally limited to more basic returns. For instance, if you're a small-business owner with questions on your Schedule C about how to take a tax deduction for your commercial refrigerator purchase, you're better off hiring a certified tax professional who can handle such complex tax scenarios. (See also: 4 Times You Should Splurge and Hire a Pro)

Verify that you're eligible for free tax prep under the guidelines of the organization that you're trying to visit. If you have a tax form that you've never seen before, check with the organization whether or not the volunteers can handle it. Many of the organizations on this list post on their websites the forms that they can process.

2. Schedule an Appointment (If Applicable)

Many organizations offering in-person tax consultation and preparation require you to book an appointment in advance. Whenever this is possible, book one so you can have a guaranteed time slot.

3. Show Up Early and Don't Procrastinate

If you can't make an appointment, do your best to show up early. If an organization has a schedule of 2 p.m. to 7:30 p.m., you'll probably have a better chance of being helped by showing up at 3 p.m. than at 7:20 p.m. Since most of the tax prep options on this list are only open between January and April, try to visit way before Tax Day when volunteers are less likely to be busy.

4. Prepare for Appointment

Make sure you have all the documents you'll need listed below before you attend your appointment. If you do not have all necessary documents, you may be asked to make another appointment, if available.

Bring:

At least one form of government-issued ID;
Your Social Security card to verify your Social Security Number, as well as the Social Security cards for any children you're claiming as dependents;
All W-2 forms;
All eligible 1099 forms, such as 1099-MISC, 1099-INT, SSA-1099, and 1099-DIV;
Affordable Care Act Documents, such as 1095-A, 1095-B, and 1095-C;
Form 1098, if you own real estate;
Form 1098-T, Tuition Statement, if you're a college student;
A copy of your last year's return (not always mandatory, but it helps volunteers a lot);
Documentation proving marriage status when filing jointly (check for more potential requirements because a spouse may or not need to be present, depending on your unique tax situation);
A voided check showing the routing and account numbers for the account that you want to use for direct deposit of your refund, if applicable;
Receipts and supporting documents of any deductions that you plan to take; and
Any additional forms that apply to your tax situation.

This is a general list, but you may need additional documents or forms. Contact the tax preparation organization in advance or read the fine print of the software that you're planning to use to cross your T's and dot your I's. Best of luck in this tax season, you got this!

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This article is from Damian Davila of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Stop Falling for These 6 Social Security Myths

Emily Guy Birken — Mon, 07 Nov 2016 10:30:29 +0000

Over 166 million taxpayers pay into Social Security, which pays benefits to over 65 million Americans. As with any program as large and sprawling as Social Security, myths about how it works can run rampant — and since the facts tend to require more than a sound bite to explain, those myths become entrenched in our collective consciousness as fact.

But not only are these Social Security myths untrue, believing them can cause you to make poor decisions about your Social Security benefits. Here are six of the most common and harmful myths about Social Security, debunked:

1. The Government Is Raiding the Social Security Trust Fund

You will often hear people complain about how untrustworthy our government is, and offer the fact that Congress "raids" the Social Security Trust Fund as proof. While it is true that the Trust Fund is where excess Social Security taxes are placed for future beneficiaries, and it is also true that the government uses money in this account to pay for government programs, it is simply not true that the fund is being "raided."

Here's what's going on. Money placed in the Social Security Trust Fund may sound like it is being put in a vault somewhere for the safekeeping of future beneficiaries. But that's not how money works. Not only would that be a security risk, but the money in such a vault would lose value to inflation. In order to maintain and increase the value of the trust fund, the money must be invested in government programs.

Think of it this way: Any time you invest money commercially — whether by putting it in an interest-bearing bank account or by buying stocks or bonds — you are probably aware that the institution is immediately spending the money you have invested. The private institution spends your investment with the understanding that it will earn profits and be able to pay you back, with interest.

The government is no different. It spends money invested in the Social Security Trust Fund on infrastructure, military spending, government salaries, welfare, and the like, knowing that those investments will earn interest. But unlike a private institution, this kind of government spending is backed by the full faith and credit of the U.S. government.

The government's spending of money from the Social Security Trust Fund is just as valid a use of invested money as is the lending and spending that a bank or corporation does with investors' money.

2. Social Security Is Going Bankrupt

This myth is based on a kernel of truth — specifically, Social Security benefit payments exceed payroll tax revenues and have done so since 2010. In order to maintain promised benefits, Social Security has had to dip into the Social Security Trust Fund. As of 2013, the Trust Fund began losing value, and it will become entirely depleted by 2037.

This is the point at which most analysis stops, and that is why you will often hear the myth that Social Security is circling the drain. But it is impossible for Social Security to go bankrupt, because it was always designed as an immediate transfer of funds from current workers to current beneficiaries. (When there were more workers than beneficiaries, excess taxes were placed in the Trust Fund. This was the case until 2009). The program does not count on a specific pool of money, but on the tax revenue of current workers.

That being said, once the Trust Fund is depleted, tax revenue is only expected to pay for approximately 79% of promised benefits. This is the shortfall you will hear experts referring to when discussing the future of Social Security. But it does not spell the end of the program. It is just a shortfall that we need to find a way to make up.

Social Security was created specifically so it could be changed and tweaked to meet the changing needs of Americans — changing needs like this anticipated shortfall. We might have little faith in Washington right now, but it is specifically the job of our government to make changes to Social Security to deal with this coming shortfall. Eventually, they'll get around to it.

3. It's the Baby Boomers' Fault We're in This Mess

There are plenty of articles out there that place the blame for Social Security's financial woes squarely at the feet of the baby boomer generation — the largest-ever generation of Americans, born between 1946 and 1964. There are 76 million baby boomers, and having that many people retire over a couple of decades places an enormous burden on Social Security. Since our system is based upon an immediate transfer from current workers to current retirees, having the boomers retire all at once puts too many retirees into the equation.

But the boomers' retirement is hardly a surprise. They've been around for six or seven decades now, and we have seen this mass boomer retirement phase coming for many years. According to Virginia P. Reno and Joni Lavery in the Social Security brief Can We Afford Social Security When Baby Boomers Retire?, "Policymakers began to plan as early as 1983, when Congress lowered the cost of Social Security benefits for boomers and later generations by raising the age at which unreduced retirement benefits will be paid."

Believe it or not, our government has been trying for quite some time to prepare for this moment. Part of the reason we had such a surplus in the Social Security Trust Fund was because of our preparation for the mass retirement of the boomer generation. We are far better prepared for the boomers than many doomsayers might have you believe.

4. Waiting for Benefits Means You Risk Not Getting Your Fair Share

It is possible to take Social Security benefits as early as age 62, although your benefits will be permanently reduced by up to 25% to 30 percent by taking them early. Wait until your full retirement age (66 for individuals born between 1943 and 1954, rising to age 67 for anyone born in 1960 or later), and you will receive your full benefits. If you can wait until age 70, you will receive delayed retirement credit equal to approximately 8% per year between your full retirement age and 70.

If you calculate the break-even analysis on your Social Security benefits, it often looks like you're better off by taking early benefits. Early, reduced benefits offer you more lifetime benefits for nearly 15 years into the break-even analysis.

The problem with this thinking is that the only way for you to "win" these calculations is to die young. It would actually be far worse for you to take early benefits and then live a long life on a reduced income. It is much smarter to delay your benefits as long as possible to provide yourself with the largest benefit you can get.

5. Immigrants Are Taking Social Security Benefits They Didn't Pay For

This myth is an election year favorite, and it conflates Social Security benefits with Supplemental Security Income (SSI) benefits. Social Security benefits are only available to beneficiaries who either paid into the system themselves, or who are the dependents of those who paid into the system. If you have not paid any Social Security payroll taxes (or you haven't been the dependent of someone who has), you are not getting Social Security benefits. Period.

SSI, on the other hand, is a welfare program designed to provide aid to the elderly and disabled, and SSI benefits are paid through general governmental revenues. Immigrants are eligible to collect SSI benefits, but only if they show the same level of extreme need as any other SSI beneficiary.

6. Privatizing Social Security Would Make the System Fairer

The possibility of privatizing Social Security is a common suggestion for fixing many of the problems inherent in such a large government program. These suggestions often promise that privatization will be cheaper for the government, more lucrative for beneficiaries, and fairer for everyone since you will get out what you put in.

Unfortunately, none of those three promises would be true. Social Security is a very efficiently run program, with administrative expenses totaling less than 1% of the program's budget. But creating and maintaining individual investment accounts would be incredibly expensive, since it would incur broker commission fees and/or mutual fund management fees, which would either come from the program budget or individual investors.

In addition, it is unlikely that the majority of beneficiaries would be able to improve upon their Social Security "return on investment" through investment accounts, since humans are notoriously irrational investors. Social Security benefits are guaranteed, while investment returns are not.

Finally, attempting to create pay-for-what-you-get fairness in a social insurance program like Social Security is a non-starter. The intention of Social Security is to provide guaranteed income to the elderly, the disabled, and their families, by spreading the cost of that income over all of society. Strict fairness in such a system would leave our most vulnerable citizens in abject poverty or worse. It's also important to note that the transition costs of privatizing Social Security have been estimated at nearly $5 trillion over the first two decades. Those costs would need to be paid by current workers, who would potentially be paying into their privatized accounts and still be paying taxes that go toward current beneficiaries — which would feel incredibly unfair.

This article is from Emily Guy Birken of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

You're Probably Owed Almost $200: Here's Where to Claim It

Andrea Cannon — Tue, 05 Apr 2016 09:00:14 +0000

Do you want free money? We thought so. After all, who couldn't use a little extra dough — especially when it's free and unexpected? Fortunately, there may be lost money in your name, just waiting to be claimed.

What Are Unclaimed Funds?

Unclaimed funds are held by the government and may be owed to you. This commonly happens when money goes missing due to lost contact or a period of inactivity from one to five years. If you moved without sending a forwarding address to certain financial institutions, for example, then there may be money waiting for you.

There is currently about $41.7 billion in unclaimed property and a total of $58 billion in unclaimed cash and benefits. This results in about $186 owed to every American, on average. So, there is a very good chance that money is hidden somewhere with your name on it. Some payouts are as high as $300,000, while the average unclaimed benefit is $892 — so it is definitely worth a quick search.

Common sources of unclaimed funds include:

Money from the IRS: This can be from an unclaimed or undelivered tax refund check.
Old bank accounts and safe deposit boxes: If you have a number of bank accounts or keep small amounts of money spread out over various places, you may have forgotten about money in one of those accounts.
Life insurance policies.
Unclaimed back wages.
Stocks, bonds, dividends, and CDs.
Escrow accounts.

Check Your State's Site

Each state has its own unclaimed money page, which can help you determine if there are unclaimed funds in your name. To get started, simply type in your first and last name. A list of everyone with unclaimed money (with your name) will appear and all you need to do is search for your address among the names displayed.

Where to Search

If you believe you are owed money for a specific reason (such as unpaid wages), then the government can help you find it. They offer information on where to look for that specific source of income, and can help you avoid unclaimed money scams.

For instance, they can connect you with the United States Department of Labor, where you can find owed wages by searching for your employer's name.

You can also search directly for:

The government does not have one central website where you can find unclaimed money. Fortunately, the National Association of Unclaimed Property Administrators (NAUPA) offers a state-by-state search for unclaimed property. Here, you can search each state that you've lived in on one site. They can also connect you with all the sources for unclaimed property.

Sites like MissingMoney.com (which is exclusively endorsed by NAUPA) can search all participating states to quickly find any unclaimed property or money. This way, you don't have to visit each state's site separately. This can be especially helpful if you have lived in various states. However, not every state is represented on the site.

Get the Most From the Search

When you are searching for free money in your name, make sure to look at all the states you've lived in. Make sure to also check under both your married and maiden name, as well as under any nicknames you commonly use.

What Does It Cost?

It is fast, easy, and completely free to search for lost money in your name. After all, it is your money, and it's just waiting for you to find it.

What If You Find Free Money?

If you discover lost money, it is also completely free to claim it. You simply contact your state to reclaim the money. Once you complete a simple claim inquiry, the state will contact you with further details. You will likely need to file a claim electronically or through the mail to claim the proceeds. The entire process generally takes about three to four months.

Recovering Funds for Deceased Family Members

If you discover lost money in the name of a deceased relative, the rightful heir can claim it. After all, the money belonged to your relative, not the government, so their heirs now have a right to it. In fact, about one out of every 600 people are the beneficiaries of unclaimed life insurance policies. Your state will require certain legal documents for verification, which may include a will or death certificate.

Scams and Locator Companies

Unfortunately, there are a number of unclaimed money scams from people who want to steal your personal information. There are also a number of locator companies who will charge a fee to help you find unclaimed property in your name, or in the name of a family member. Your best defense against these potential fraudsters is to do the search yourself. Even if you have moved around a lot, the free online search should only take a matter of minutes.

Have you claimed lost money? How much did you get?

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This article is from Andrea Cannon of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Unclaimed Assets: Is the Government Holding Your Money?

Michael Kling — Fri, 08 Mar 2013 11:24:30 +0000

State governments are holding an estimated $41.7 billion in unclaimed property, also called abandoned property. The funds could be from abandoned bank accounts, refunds, security deposits, insurance funds, customer over payments, or uncashed paychecks. The list goes on: stocks, bonds, contents of safe deposit boxes, pensions, tax refunds.

The good news is that the Internet makes to easy to discover if some of that property is yours, and then to reclaim it. (See also: How to Buy All That Stuff the Police Seize)

The Law on Lost Loot

If an account has no activity and the company holding it has no contact with the owner for a year or more, the funds must be turned over to the state, which holds the money and tries to find the rightful owner, according to the National Association of Unclaimed Property Administrators (NAUPA). Claims can usually be made into perpetuity, even by heirs.

Because companies are required by law to send funds from lost accounts to the state of the owners' last known address, you could have unclaimed property in every state where you've lived.

State laws vary. For instance, in some states unused gift cards are deemed abandoned. Some states auction off abandoned property — which could be anything from liquor to sardine cans — and try to return the proceeds to the owners.

In fiscal year 2011, states returned a total of $2.25 billion to rightful owners, according to NAUPA. The average claim was $892. Amounts are often pocket change, but can occasionally run into the millions of dollars. In one such case an anonymous Connecticut resident claimed $32.8 million in proceeds from a stock sale.

Claiming Your Missing Property

How to find if you have unclaimed property?

NAUPA's website has links to state unclaimed property programs. You can also search the database at MissingMoney.com. That site, which is endorsed by NAUPA, lets you search many state databases at once. Both sites are free.

State programs aren't the only ones returning unclaimed property.

Claiming Lost Tax Refunds

Every year the IRS is unable to find people due tax refunds because they move, change their names, or have errors on their returns. For returns filed in 2011 for the 2010 tax year, unclaimed tax refunds to almost 100,000 tax payers amounted to over $150 million.

Taxpayers can use the "Where's My Refund?" tool on IRS' website to locate missing refunds. They can also use the department's phone tool by calling 1-800-829-1954.

To avoid lost returns in the first place, the IRS says taxpayers should file electronic returns and use direct deposit, which are faster and more efficient.

Claiming Lost Pension and Insurance Benefits

The Pension Benefit Guaranty Corp, a federal government agency, has over $300 million in unclaimed pension benefits for 38,000 people. You might be entitled to a benefit if you are a beneficiary of a deceased participant.

To find if you are, use the agency's online search tool.

If you think you have unclaimed life insurance benefits, you should check the insurance company's website for an online database.

Claiming Lost Bonds

For U.S. savings bonds, visit treasuryhunt.gov. Each year, 25,000 payments are returned to the government as undeliverable, the Treasury Department reports. Billions of dollars in savings bonds have stopped earning interest, but haven’t been cashed.

Using Paid Searchers

Some businesses, using states' freedom of information acts, will search for your unclaimed property for a fee. Although most businesses work within the law, watch out for scams. Before signing a contract, contact your state unclaimed property office for more information.

There's no need to pay a fee when you can use free databases or contact your state's unclaimed property office directly.

To avoid letting an account become abandoned in the first place follow these tips:

Contact the institution holding the account once a year, especially if you move or change your martial status. Most financial institutions don't forward mail for security reasons.
Keep accurate financial records, including bank account numbers, insurance policies, and information on rent and utility deposits.
Cash checks right away.
Respond promptly to requests for confirmation of account balances.
If you have a safe deposit box, record its number, bank name and address, and give the extra key to someone you trust.
Prepare and file a will that details all of your assets.

Have you ever been reunited with your lost or forgotten money or property? Did you discover any using the tools linked above?

This article is from Michael Kling of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Ask the Readers: Would You Donate to the Government?

Ashley Jacobs — Tue, 23 Aug 2011 10:36:20 +0000

Editor's Note: Congratulations to Christie, John Mc, and Elizabeth S. for winning this week's contest!

The United States is currently over $14 trillion dollars in debt. After the recent debt-ceiling crisis, almost everyone became painfully aware of how in trouble the United States is financially. But is the severity of the situation enough to cause Americans to pull together to try to alleviate the debt issue by donating to the Bureau of Public Debt?

Would you donate to the government? Do you think that people should donate to help the United States reduce it's debt? Why or why not?

Tell us if you would donate to the government and we'll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We're doing three giveaways — one for random comments, one for random Facebook "Likes", and another one for random tweets.

Mandatory Entry:

Post your answer in the comments below

For extra entries (1 per action):

Go to our Facebook page, "Like" us, and leave a comment telling us you did, or
Tweet your answer. You have to be a follower of our @wisebread account. Include both "@wisebread" and "#WBAsk" in your tweet so we'll see it and count it. Leave a link to your tweet (click the timestamp for the individual URL) in a separate comment.

If you're inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.

Giveaway Rules:

Contest ends Monday, August 29th at 11:59 pm Pacific. Winners will be announced after August 29th on the original post. Winners will also be contacted via email.
You can enter all three drawings — once by leaving a comment, once by liking our Facebook update, and once by tweeting.
This promotion is in no way sponsored, endorsed or administered, or associated with Facebook.
You must be 18 and US resident to enter. Void where prohibited.

Note: Due to recent changes in Facebook's promotions guidelines, we have restructured the entry format of our giveaways.

Good Luck!

Tell us if you would donate to the government and we'll enter you in a drawing to win a $20 Amazon Gift Card!

This article is from Ashley Jacobs of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The Debt Ceiling Crisis in Everyday English

Sarah Winfrey — Fri, 29 Jul 2011 22:46:06 +0000

If you’re like most Americans, you’ve heard more than you ever wanted to hear about the debt ceiling crisis. However, hearing is different from understanding, and this is a complex problem that can be difficult to grasp. In this case, it's been even harder to get an accurate explanation about what is going on in language that’s easy to understand. After all, if you’re not an economist or a financier, it’s easy to wonder what the big deal is, anyway.

This week, I had the chance to talk to FOX Business Network reporter Shibani Joshi to see if she could shed some light on this situation and what it means for everyday Americans. She’s been following the story closely for weeks now and was eager to help Wise Bread readers gain a deeper understanding of the debt crisis. (See also: Debt Ceiling Contingency Plans)

What Is the Debt Crisis All About?

Basically, the country is running out of money. As of next Tuesday, August 2nd, the country will no longer be able to borrow more money because it will already have borrowed the maximum amount allowed under current laws. While this may not have a huge effect immediately (since the country does have other sources of income), if not resolved it means that, eventually, the U.S. will not be able to pay its bills. This includes payments owed on the money we’ve already borrowed, as well as veteran’s benefits, Social Security, Medicare and Medicaid, and more.

The government’s problem is similar to the problems that, on a smaller level, caused the recession. Joshi puts it this way, “In the same way we saw Americans living outside of their means by taking out too much credit to buy bigger homes than they could afford and maxing out their credit cards, the U.S. government uses too much credit. This is a magnified example of what happened to millions of Americans in the last decade.”

Is it a Big Deal?

According to Joshi, this is a significant problem. “If the U.S. can’t pay its bills,” she says, “it defaults on its loans and then the entire world will be impacted.” Many countries look to the United States as a financial leader, even during a recession. If we cannot meet our financial responsibilities, this will trickle down to effect people worldwide.

Not raising the debt ceiling will not only effect people around the world financially, but in other ways, too. “We are the most stable nation in the world, and the beacon that the world looks to for security,” Joshi says. If we are proven to be less secure than we appear, that will effect how other countries interact with us and could, eventually, lead to shifts in power around the globe.

Should You Panic?

Not yet. The August 2nd deadline isn’t hard and fast, except that we cannot borrow more money after that date. However, “we still have cash coming into the government, and the government will be able to pay its bills for a short time after August 2nd,” Joshi explains. This means that there is more time and space for lawmakers to agree on a plan than is being touted in many news sources.

In addition, Joshi stresses that “this is sometimes just how the system works. An outcome will be reached. It may not be fun or pretty, but it is how our system works.” She believes that, while lawmakers may hold out until the very last minute, they are not willing to sacrifice the well-being of the country they serve and the rest of the world for a few partisan ideals.

If We Don’t Raise the Debt Ceiling, How Does It Affect Average Americans?

The most significant place that average Americans will see an effect from this crisis is in the value of their investments. The Dow has fallen nearly 500 points during the last week because of the disagreements in Washington on this issue. “That is your money,” Joshi explains, “in retirement funds, college funds, and more.” It’s expected that interest rates will also rise, which means that mortgage, auto loan, and credit card rates will go up, too. The prices of certain commodities, like oil and gold, are also expected to rise. “This could affect your grocery bills and the price at the pump,” Joshi says, which hits every American where it counts.

Beyond that, Americans who rely on money from the government may be put in very difficult situations. If the country cannot provide that depended-upon income, these individuals and families could face serious financial difficulty.

However, it’s also important to note that we don’t know exactly what will happen. We’ve never defaulted on loans before, nor have we had a lowered credit rating. So for the moment, all of this is speculation.

What Can Every American Do in Regards to this Crisis?

1. Don’t panic. Give the government a bit more time to figure things out.

2. Get educated. Before you decide what you think about this issue, learn more about it. The information in this article is a bare-bones explanation. If you want to know more, continue researching until you feel like you understand what’s going on. Then, and only then, decide how you think it should be resolved.

3. Take action. When you know how you’d like to see the situation handled, contact your federal representatives to let them know. You can call, email, write, or Tweet your opinions. Talk to friends and family members, too. After all, many Americans still don’t understand the issue very well.

4. Be open to compromise. Issues as complex as these almost always require conversation and concessions on all sides before they’re resolved. Instead of insisting that your solution is correct, dialogue with others and try to come to a mutual understanding, just like we all want our representatives to do right now.

5. Be open to change. This country needs to operate on a balanced budget that doesn’t involve burgeoning debt, and that means that things cannot continue the way they are. “We have major issues to deal with that go beyond the debt ceiling,” Joshi says, “including a huge spending problem, entitlements that are dysfunctional, and a tax code that could use a house cleaning.” Making things better means change, and it will be easier if we all see it coming.

Shibani Joshi joined FOX Business Network (FBN) in September 2007 as a reporter. To her role, Joshi brings experience in investment banking, strategy and business development. Joshi began her career as an investment banking analyst at Morgan Stanley, where she worked on merger, acquisition, and corporate finance deals in the real estate sector.

Joshi holds an MBA degree from Harvard Business School. She also earned a bachelor’s degree in finance and accounting at the University of Oklahoma. Joshi is a native of Oklahoma City and her parents are originally from Pune, India. FOX Business Network will be airing a special report on the debt crisis on Monday, August 1 at 5AM/ET, where you can hear more of her thoughts and explanations on the current issues.

This article is from Sarah Winfrey of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Indirect Ways Taxes to the Rich May Hurt You

David Ning — Tue, 19 Oct 2010 13:00:09 +0000

With Congress taking their time with the discussion of extending the Bush tax cuts, everyone seems to have stated their opinion on whether high income earners should have their taxes raised. Naturally, as only 3% of all taxpayers qualify for the highest tax bracket, most middle class people are in favor of letting the tax cuts expire only for the highest earners.

On the surface, it doesn't concern them, so everything is A-OK. But does high taxes for high income earners really not matter to the middle class? Here are a few possible ways higher taxes could affect anyone.

High taxes could affect your boss' salary, and how do you think she feels about this? No matter how much anyone makes, higher taxes mean a reduced paycheck. Do you think she will be happier or less satisfied? If she is unhappy, do you think the work place will be a better environment?

Of course, not all bosses will ever let his/her emotions affect the work place, but you know these people are out there!

High taxes definitely affect business owners, and that could mean less perks for employees to offset that dreaded tax bill. For small business owners who make celebration plans like where to go for the Christmas party based on mood, employees are definitely taking a hit.

Don't care about perks? What about your salary? The decision of salary increases often come directly from the top. If business owners are feeling the pinch, she is naturally less likely to feel generous to everyone else. If she is unhappy, you might not get a raise no matter how many times you ask.

High taxes could affect essential services. Everyone's assumption that the rich can afford to pay higher taxes is absolutely right, but they can also afford to work much less than they do now. Go too far with tax rates, and the motivation to work longer hours fade. This potentially means fewer doctors performing surgery, and fewer entrepreneurs coming up with brilliant ideas that improve our way of life, which lead to lower quality of life for everyone.

The economy could suffer. Studies have shown that the top 3% of income earners make up 25% of discretionary spending. If they have less to spend, the United States economy, being a consumer economy, will suffer. Less demand for goods, less money for all businesses, and many more lost jobs.

High-tax states will suffer too. This might sound irrational (and it very well could be), but a few people I know are thinking about moving to another state with a lower tax rate. After all, addresses matter when it comes to our finances. They can afford to pay higher taxes, but because the subject is on the forefront of their minds, any solution to counteract the effects are on the table. And it doesn't stop at the state lines either. Some are even thinking of moving overseas to countries where tax rates are more generous.

Your children could ultimately suffer. As our government goes further into debt and needs more revenue to sustain its "lifestyle," the only way to get money is taking it from businesses and individuals through taxes.

Eventually, businesses and individuals alike will realize that it might be better to move abroad. On a small scale, this has already been happening in the past decade. If this becomes more of a widespread trend, then America could lose its competitiveness and everyone living in it will suffer.

This article is from David Ning of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Low Interest Rates Do Not Make Homes Affordable

David Ning — Wed, 04 Aug 2010 17:00:31 +0000

Does the sales price of your home matter if the mortgage rate is low enough?

If you ever thought about buying a home, the recent all-time low mortgage rates must be enticing. And this is exactly how the government wants everybody to feel, by the way. In an effort to keep homes affordable (as they claim), the federal reserve is driving down interest rates to record lows. But is what they are doing helping? Let's take a look.

Just a short couple of years ago, interest rates were at 6 percent. For a $300,000 mortgage, the payment would have been $1798.65 a month. With the interest rate at 4.5 percent, the monthly payment drops to $1520.06. So far so good, because it costs us less to own our home.

But wait a minute.

Most people don't just refinance and lower their payment. These days, with rates at 4.5 percent, roughly the same monthly payment ($1798.73, to be exact) could get you a $355,000 mortgage. So what do people do? Instead of buying a $350,000 home with their down payment and loan approval letter, they shop for a $400,000 home. And who can blame them? An extra $50,000 almost always gets them a nicer place. Sometimes, it would actually allow them to pay more for a house than they otherwise would.

For example, they might have been able to get the house for $350,000 if they tell the seller that the offer is all they are approved for, but if a buyer can muster up $400,000, he might end up offering $360,000. Same house, higher transaction price. Having a lower interest rate also allows more people to qualify for a home. This is a good thing for someone who couldn't afford the payment before, but it drives prices higher because of more demand, ultimately lowering affordability for everybody.

In other words, lowering interest rates gets more people thinking about buying a home and drives up demand. Most of the time, that's a noble and worthwhile goal, since home ownership is still a dream of many. But as you've witnessed in the last decade, allowing more people to own homes mindlessly is just reckless. What we really need to do is make homes affordable so financially responsible people can actually afford the payments, which is only achievable through lower home prices.

I'm a homeowner too, so the selfish side of me is thinking that high-priced homes are good. But for the economy to grow and our country to be a place people want to be in the future, nice homes need to be affordable without government intervention. Unaffordable home prices will never get us there. Please allow homes to be affordable again for the hard-working American.

Related articles from MoneyNing:

How to Recast Your Mortgage
First Time Home Buyer Tips and Guide

This article is from David Ning of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

The U.S. Government Wants You in Debt

Investor Junkie — Thu, 28 Jan 2010 14:00:02 +0000

I’m going to out on a limb and make the bold statement: the United States government wants you in debt, rather than you saving money. Politics aside, I am going to discuss why I believe this statement to be true. If you accept my premise, I will then discuss ways you can use it to your advantage.

Current Examples

Government taxes serve more than the purpose to fund federal obligations. Taxes (either increases or decreases) have been a method in which a government can modify personal behavior. If the government wants people to stop smoking, it creates a “sin” tax to make it more costly to smoke. When a government offers tax incentives for acquiring debt, they are basically stating they want you to purchase things with debt. The government then rewards you when you comply. Why else would the government have implemented these policies to stimulate the economy?

Federal Reserve policies have forced the average one-year CD interest rates to currently below 1.5% APR. In addition, the FDIC recently ruled banks that are not “well capitalized” will not be allowed to sell fixed investment products for more than 75 basis points (or 0.75%) above the national average. This effectively punishes savers and fixed income retirees, while rewarding people who have debt with lower loan rates.
Offering the Cash-for-Clunkers program rewarded people to buy new cars (mostly likely with an auto loan), while trading in existing working cars (more than likely these cars were debt free).
A tax credit of $8,000 to buy a home, originally just for first time homebuyers, now is for anyone. Congress liked the plan so much, they have extended it into 2010. How many people bought a house with cash only?
Why is it people who did not take on too much debt are indirectly punished, while others who over extended themselves are excused of their loans? Can you say moral hazard?

It’s been said many times over 70% of the U.S. economy is consumer based. If the consumer disappears what happens to the economy? This might be the core reason why the United States policy might be trying to continue spending any way possible.

Older Examples

You might be thinking, “Investor Junkie, you must be a Republican, since you are mentioning policies of the current administration.” You'd be wrong. Examples have existed for many years regardless of which party controls government — some as long as the Federal Reserve has been in existence.

George W. Bush stated after 9/11 that we must go out and keep spending.
The Federal Reserve’s economic policy has always favored inflation, while deflation is considered “evil.” Deflation by itself is assumed to be bad, but that’s not always the case. Deflation helps savers as the value of your money saved increases. Deflation when you have massive leverage (as our government and many people on a personal level do) makes debt cost more. This causes the government to be in a bad situation; so the goal of the Federal Reserve is to re-inflate what was deflated. I personally believe the Federal Reserve is doing this at no cost spared, and will cause future ramifications.
Since the Federal Reserve has been created in 1913 the dollar has lost 95% of its value. Don’t believe me? Visit The Inflation Calculator, and plug in one dollar, enter 1913 as the start year, and 2008 as the end year. What cost $0.05 in 1913 now costs $1.00. Because of inflation the value of your money, if you don’t do anything with it, decreases. Would you rather save it, or immediately buy something with it? Better yet, if you buy with debt that debt will be worth less in the future. Inflation causes you to make this decision.
Your home’s mortgage interest is tax deductible. Netherlands, Sweden, and Switzerland are the only other countries to offer a tax deduction, effectively saying you should not only buy a home, but also buy a home with debt.
Businesses can take on loans to purchase equipment and it’s considered capital improvements. When purchasing via a loan, you can take a tax deduction from the interest.
Freddie Mac, Fannie Mae, and banks were mandated by the federal government to make subprime loans.
Inflation, on average for the past 97 years, has been around 3.43%. This means any debt that’s held for one year is worth 3.43% less than it was the previous year.
The government taxes interest earned from most savings and investments.

Yet again you might be thinking, “But Investor Junkie, the U.S. government offers tax deductions for retirement accounts.” Yes this is very true! There are examples of tax deductions for savings, but it usually only delays taxes, and does not eliminate them. Currently Roth IRAs are an exception to this rule.

Let’s not forget about estate taxes. If you have saved over the years and have a sizeable nest egg, a good portion of that nest egg could die with you. By default, your heirs are taxed considerably on your inherited savings after a specific dollar amount. Taxes are delayed, but usually never eliminated.

Use the U.S. government policy to your advantage!

From the many examples I have shown, the United States government wants you to acquire debt. I’m not sure this is a done on purpose or by accident. Don’t fret — not all is bad. If you understand what’s occurring, you can seize the opportunity.

How to take advantage of this situation:

Acquire fixed rate debt on assets that increase in value with inflation. A perfect example is to own a home and real estate investments. Use Bankrate.com web site to calculate your real interest rate after taxes. Mortgage rates are at historic lows and probably will be higher in the future.
Where the government does offer incentives to save, use them. This can include any of the following investments: 401K, 403b, IRA, Roth IRA, 529.
If you believe we are going to have higher inflation in the next 10-30 years than the previous 30 years, you are best to purchase hard assets. Commodities and real estate do very well in high inflation environments.
Plan methods to minimize or delay your taxes every step of the way, including at death.
For the more adventurous type, owning a business is another method to acquire debts that are tax deductible and earn income in the process.

In the end, it’s been said the only sure things in life are death and taxes. Having debt is also almost another sure thing, and best to use government policies to your advantage.

What are your thoughts on the topic? Do you think the government wants you in debt? Do you believe it’s on purpose or by accident?

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Guest Post Blurb:

This is a guest post by Investor Junkie, who likes likes to discuss what it's like being an entrepreneur and investing. He's about making money work for you by talking about passive and active investments. Read more articles by Investor Junkie:

This article is from Investor Junkie of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: