Extension Educator, Consumer Economics
Extension Specialist, Consumer Economics
Extension Educator, Consumer Economics
March 28, 2010
Do I really think it's possible to make doing taxes less tedious? Well, honestly, no. But, I do think you can look for ways to reward yourself by finding money, clearing paper clutter and organizing your finances for 2010.
The next two weeks will find many people scrambling to finish calculating their taxes! I've made that 11:59 p.m. run to the post office on April 14th before -- have you? Do you need a way to motivate yourself to finish this task? Well, here are three suggestions that just might be the motivation you need!
1) Find Money. When working on your taxes, explore the many tax credits that are available. Finding a tax credit that applies to your financial situation is like finding a treasure chest of money! A tax credit that saves you $300 (for example, on the cost of an energy efficient window) is $300 less taxes you need to pay.
The American Recovery and Reinvestment Act of 2009 created new tax credits and changed eligibility levels on other tax credits. Don't assume that you don't qualify! Check out tax credits available for education, new vehicle, children, as well as others. For a convenient list of tax credits, visit the IRS website's "ARRA Information Center."
Be sure to not miss the earned income tax credit. The (EITC) helps people who work but earn modest incomes. The tax credit you can receive varies depending on your income and the number of children you have. New tax rules have increased the EITC. For example, married filing jointly households earning $48,279 or less with three or more qualifying children may be eligible for a tax credit up to $5,657. Visit the IRS website for more information. If the EITC amount is more than the taxes you owe, then you may receive a cash payment
While looking through your financial paperwork keep an eye out for costs that you don't want. For example, on my credit card summary I found some reoccurring memberships that I had forgotten about as well as a monthly fee for a service I don't recall signing up for! Cancelling these services will save me money in 2010.
2) Throw Away Paper Clutter. A rewarding aspect of preparing taxes is being able to throw away many of the papers that have accumulated over the year! Save things that:
Throw out those records that have expired, been replaced, and are no longer important to you. For example, if an annual statement from a mutual fund contains all the information that was originally sent to you quarterly, discard the quarterly statements.
Keep a copy of your income tax returns and supporting documents for at least six years. You may need even older tax records if you own a home, have a non-deductible IRA contribution, or you have business or rental property that depreciates over a number of years. For more information, check the IRS Publication 552, Recordkeeping for Individuals.
3) Organize Your Finances for 2010. Set-up a filing system that works for you. At a minimum, designate a folder called "Current Year Taxes" for papers (or electronic files) that will help you prepare your 2010 taxes. For more information about organizing your financial papers, visit University of Illinois Extension's website, "Dealing with Clutter."
Taking these steps may not make paying taxes fun, but at least it will put a positive spin on the activity. See how much money you can save and just how much you can add to your recycle bin while completing your tax forms this year.
How do you take the tedious out of taxes? Send me your suggestions by clicking on my name below; I'd love to hear your creative ideas!
March 19, 2010
By now, you have likely received your 2010 Census forms in the mail. Some of you, like myself, have probably already completed and returned the form; I had to otherwise it may have gotten misplaced and not returned at all. For those who have not returned your form yet, I hope this blog encourages you to do so as soon as possible.
What is the Census?
The Census is an official count of every household in the United States, including non-residents. The Constitution requires that a count be conducted every 10 years. This year the Census is made up of only 10 questions. It is estimated that it should take about 10 minutes to complete the form. The Census asks questions about:
Why is it Important?
The information collected from the census is used not only to determine population in the U.S., but also to determine the number of seats each state will occupy in the U.S. House of Representatives. Electoral districts and constituency boundaries are set using census data. Additionally, census data is sometimes used to advocate for causes, or assist in research.
As I began my journey to complete my family tree, I used census data to locate my relatives. Surprisingly, I was able to go back to the 1800s! Without the census data, my family tree would have stopped at my great grandparents. Think about your great grandchildren that are one day going to want to complete their family tree, but you won't be there, because you weren't counted.
How does it benefit your community?
On a more practical note, it makes sense to participate in the census because census information is used to determine the needs in your community. Census data is used to determine how more than $400 billion of federal funding is spent on:
If accurate information is not collected, your community could miss out on appropriate representation in government as well as vital services.
Is your information private?
Some of the public express concern about census information being used against them in the case of receiving government benefits, possible incrimination or potential deportation, in the case of illegal aliens. Census data cannot identify a person by name, address, social security number, etc. Identifying information collected from the census, by law, cannot be shared with the public or even government entities such as the IRS, FBI or CIA. Census bureau employees must take an oath for life to protect identifiable information.
What can you do to help?
At the end of each workshop, I try to remind everyone about the importance of completing the census. Once you have mailed your form, encourage others to complete their census forms in a timely manner. The census bureau welcomes your help in getting the word out. The census bureau has partnered with government, non-profit, corporate, and educational institutions. To sign up as a 2010 Census partner or for more information, visit 2010 Census.
March 16, 2010
Today we welcome guest blogger, Wes Sprague -- a University of Illinois student.
For retirees aged 65 and older, Medicare has been an enormous social success. It has helped to vastly reduce the level of senior poverty in America by providing most every retiree over the age of 65 with public health insurance, yet there are still many ways that it needs to be improved in order to meet the needs of post-retiree Americans that have paid into our social welfare system. As we move forward with heated health care reform in Washington, it's important to understand why these issues exist, especially in today's bi-partisan political environment, and how they will affect the health benefits of both current and future retirees.
Here is an outline of the major issues facing health care reform with regard to the special interests of retirees and what Washington needs to do in order to mend the system:
• Bridge the gap for Early Retirees.
According to the 2008 US Census, Medicare (public health insurance) covers 92.6% of people over the age of 65, making it the single largest primary health insurer of retirees (Turner, Boudreaux and Lynch). However, in 2007, more than 4 million people ages 55 – 64 (12.4% of the age cohort) were without health coverage (Jacobson, Schwartz and Neuman) suggesting that early retirees face a significant impetus to purchase health insurance between the years when employer health insurance stops and when eligibility for Medicare begins after age 65. With rising health care costs, people in this age group, especially those who are not eligible for Medicaid, want the ability to buy in to Medicare to receive preventive care when health risks are less significant and for major medical coverage.
• Fill the "Donut Hole".
During the Bush Administration, congress ruled on Medicare Part D, which created a gap of more than $3,200 in prescription drug coverage from $2,510 to $5,726 where no benefits would be paid if prescription expenses fell within that range (Hall). This created what has been dubbed the "donut hole". Approximately one in four seniors continues to pay premiums for Medicare Part D and the cost of their prescriptions (Hall). On one hand, seniors could stop paying the premium once they fall into the benefit gap; however this forfeits their right to be in the program during the next year, placing them at significant medical and financial risk (Hall). Closing the "donut hole" needs to be one of the significant talking points to Health Care Reform as it places seniors in a position to avoid prescription health treatments.
• Bring down the costs of Long-Term Care.
Serious debate about Long-Term Care has been off the table since the Pepper Commission over a decade ago, however as baby boomers age, the US will see a shift in the population distribution towards an increasing proportion of senior citizens in America (Clark, Burkhauser and Moon 318). With this shift, Long-Term Care will become increasingly more important as seniors become too disabled to handle daily activities. The cost of Long-Term Care has increased over time due to the nature of its continuous care, so the cost of Long-Term Care insurance has followed suit. This has made Long-Term Care insurance unaffordable for most middle-class Americans, placing significant pressure on state funded Medicaid programs as a source to relieve the burden that Long-Term Care raises (Clark, Burkhauser and Moon 318-340). Current legislation that should be included in the health care bill includes the CLASS Act by the late Sen. Edward Kennedy (Democrat – Massachusetts) and Rep. Frank Pallone (Democrat – New Jersey) (Easterling). Such legislation can be used to assist middle-class families with the cost of Long-Term Care
• Continue Retiree Health Benefits.
Congress has been debating whether they should reduce or eliminate the tax exclusion of employer-sponsored health insurance (ESI) in order to generate the additional tax revenue to fund expansions in health care coverage (Clemans-Cope, Zuckerman and Williams). While the current exclusion reduces revenues generated by the government, it provides a significant benefit for covered employees and retirees as Medicare often does not cover the full cost of health coverage. Decreasing the ESI exclusion will place significant pressure on employers to reduce or eliminate health care benefits in an environment where health care is already expensive. This places early retirees at significant financial risk if they lose their employer sponsored health benefits; many of whom gave up wage increases over the course of their employment in place of such promised benefits. The bottom line is this: reduction in the ESI exclusion will reduce the availability of employer sponsored health benefits for all Americans. This is not in our nation's best interest.
• Create a Public Option.
There has been a lot of debate over whether a "public plan" option would place unfair pressure on private insurance companies to lower premiums and keep their business practices under control due to the low cost structure that a government plan could potentially provide. While nearly 49 million Americans are uninsured, nearly every insurance lobbyist argues that a "public plan" option would establish a monopoly in the marketplace. However, there is no evidence to support that opinion. One study, designed by the New America Foundation to measure the impact of government insurance plans offered by states nationwide, found that among 30 state governments offering both a public and private option, the private option attracted more customers than the public one (Levey). Since a government public option will most likely target the elderly and the poor, there is a high probability that there won't be a major shift to the "public plan" option as many anti-option proponents would lead Americans to believe due to the enhanced benefits of private health insurance. However, it would have the significant benefit of keeping health insurance premiums in check for the majority of Americans who have the option to give up the additional benefits of private insurance for the low costs of the "public plan" option. This will lower the cost of health care for both early retirees who cannot afford private insurance during Medicare ineligibility and retirees who require supplemental coverage over and above the cost of Medicare.
Clark, Robert L., et al. The Economics of an Aging Society. Malden: Blackwell Publishing, 2004.
Clemans-Cope, Lisa, Stephen Zuckerman and Roberton Williams. "Changes to the Tax Exclusion of Employer-Sponsored Health Insurance Premiums: A Potential Source of Financing for Health Reform." June 2009.
Easterling, Barbera. "What Is at Stake for Retirees in Health Care Debate?" 31 July 2009. Labor Union Bog. 8 November 2009 <http://www.4ibew.com/2009/07/31/what-is-at-stake-for-retirees-in-health-care-debate/>.
Hall, Mike. Prescription Drug Donut Hole: 'Sweetheart Deal' for Big Pharma. 14 July 2009. 8 November 2009 <http://blog.aflcio.org/2009/07/14/prescription-drug-donut-hole-sweetheart-deal-for-big-pharma/>.
Jacobson, Gretchen, Karen Schwartz and Tricia Neuman. Health Insurance Coverage for Older Adults: Implications of a Medicare Buy-In. Menlo Park, CA: Henry J. Kaiser Family Foundation, 2008.
Levey, Noam N. "Health care debate: Will public option be viable?" Chicago Tribune 26 July 2009.
Turner, Joanna, Michel Boudreaux and Victoria Lynch. "A Preliminary Evaluation of Health Insurance Coverage in the 2008 American Community Survey." Survey. U.S. Census Bureau, 2008.
March 2, 2010
What do you use credit for? Buying a house? Paying for college? Keeping food on the table after months of unemployment? Well, here's something I didn't even know you could use credit for. Nope, not Starbucks. Not vending machines. It's not even real...
If you're into social media, you may be playing online games such as Farmville or Zoo World, Fishville or Mafia Wars. Have you been tempted to "invest" in some virtual goodies for your game that cost real-world money? BusinessWeek quotes Atul Bagga of research firm ThinkEquity as saying that, so far, only a very small percent of players have spent any money. But that could change as EASY CREDIT becomes available in the world of social media.
Apparently, one company thinks that the main barrier to people making these small purchases (examples in the BusinessWeek article ranged from 25 cents to $5.95) is the ease of making the purchase. So they're selling software to the companies behind these games that will allow players to buy now, pay later.
In the title of today's post, I said "virtual debt." I miss-spoke. The debt will be very real and has to be paid with real-world money.
Someday in the future, I can imagine a conversation between two young people:
Young A: "My mom said that, when she was growing up, you only used credit to pay for real stuff, like food and gasoline."
Young B: "Oh yeah? My great-grandmother told me that she remembers when people would only use credit to buy things like a house or pay to go to college. It was something about how you should only use credit to buy things that would increase in value. She even tried to convince me that there was a time when there weren't credit cards. I think she's getting senile."
Young A, shaking her head: "That's so sad. Anyway, why wouldn't I use credit to feed my lions and elephants on Virtually Extinct? It's not like I could let the species die!"
March 1, 2010