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Getting Ahead
2nd Quarter 2010

In this issue:

New Credit Card Rules

Tax Season - April 15th is Closer Than You Think

Recessionomics 101: How to Make Extra Money

New Credit Card Rules

The new credit card rules have changes that are very favorable if you act on them.

  1. Your next credit card statement will clearly disclose how long you'll be in debt when you only make minimum payments. A reporter for The Financial Times of London crunched some numbers and found that the typical American with an average balance and interest rate making only minimum payments won't be out of debt until 2058! And that's never charging another penny to that card again.

  2. If you have multiple interest rates on your account, anything you pay over the minimum balance will be applied to the highest rate first. But beware...if you only pay the minimum, the money will still be applied to the lowest balance first.

  3. Banks must give you a 45 day notice before raising the interest rate on future purchases. Use this as a chance to "leapfrog," that is to get a new card elsewhere. Notify your issuer that you're rejecting their new terms. You won't be able to make any new charges, but you'll get to pay off your balance under the old agreement.

  4. Your interest rate on existing balances can't be raised until you're in default for 60 days.

  5. Any annual fees must be capped at 25 percent of your card's limit.

  6. Teaser rates on new cards opened going forward must be honored for one year.

  7. Two-cycle billing will no longer be allowed. This was a sneaky way that banks would charge massive interest if one month you paid in full and the next month you didn't.

  8. Adults under age 21 will need parental consent to get a new credit card. The sole exception is for legally emancipated minors.

  9. Billing statements must be mailed to you no later than 21 days before the due date.

  10. The new daily cutoff for a lender to receive payments via the mail is 5 p.m.

  11. It will be illegal for a bank to let a transaction run when they know you'll go over your limit -- unless you explicitly give them written permission to do so.

  12. Sellers of debit gift cards must clearly disclose the fees that are passed on to the user. Such cards will now have a 5-year lifespan.

Article courtesy of

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Tax Season - April 15th Is Closer Than You Think

Even though April 15 may seem far away, consider getting started now on your taxes. In addition to the usual complexities, millions of Americans will discover new twists and potholes on the road to preparing their returns this year. Congress has created new and expanded deductions, credits and other breaks that could benefit many people if they leave enough time to master the fine print.

Here are a few major changes and other tricky issues to watch out for, as well as advice from tax professionals:

Charitable Giving: A new law allows many people to give money this year to charities offering relief to victims of the Haitian earthquake and deduct their contributions on their tax returns for 2009. This means "an immediate tax benefit" for many generous donors, says Internal Revenue Service Commissioner Doug Shulman.

But there are important restrictions. The IRS says the new law only applies to cash contributions made to these charities after January 11, 2010 and before March 1, 2010. Also, the gifts "must be made specifically" for relief of victims in areas affected by the Haitian earthquake.

You can't deduct donations if you claim the standard deduction but you have a choice of deducting this year's gifts on either your 2009 or 2010 return. Thus, if you are claiming the standard deduction for 2009 but expect to itemize on your 2010 return, wait to claim these Haiti-related donations.

Keep records such as a canceled check or a receipt that shows the name of the charity and the date with the amount of the contribution. What if you made a donation by text message? A telephone bill will be fine as long as it shows the name of the organization you donated to and the date and amount of the gift, the IRS says.

Standard Deduction:
For 2009, the basic standard deduction is $11,400 for married couples filing jointly, up from $10,900 for 2008. For most singles, the 2009 deduction is $5,700, up from $5,450, according to CCH, a provider of tax, accounting and other business information. There are higher amounts for the blind and people who are age 65 or older.

Many people who pick the basic standard deduction may be eligible to increase it to reflect state and local real-estate taxes paid last year (up to $500, or $1,000 if married filing jointly). They may also be able to increase it to reflect a net disaster loss, and state or local sales or excise taxes on the purchase of a new motor vehicle. See the IRS's new Schedule L.

Car Purchases: Many taxpayers are eligible to deduct some or all of the state or local sales or excise taxes paid on the purchase of new cars, light trucks, motor homes or motorcycles during 2009 but there are limits. For example, this deduction is limited to the tax paid on up to $49,500 of the purchase price of each qualifying new vehicle. Also, the new vehicles must have been purchased after February 16, 2009 and before January 1, 2010. Leases don't count.

Home Purchases: Lawmakers have extended and expanded a tax credit of as much as $8,000 for some home buyers. It's known as the "first-time homebuyer credit," but many other buyers are now eligible as well. There are several versions of the credit depending on the purchase date of the home; it may benefit many people who bought last year as well as some who purchase a home this year. For purchases made this year, you must buy or enter into a binding contract to buy a principal residence on or before April 30 and close on the home by June 30. And for 2010 purchases, you can claim the credit on either your 2009 or 2010 return, the IRS says. The rules are highly complex, so check the IRS Web site,, (and pay attention to new documentation requirements), buy tax-preparation software or hire a tax expert.

Warning: The IRS is doing "increased compliance checks" following reports that ineligible people were claiming this credit.

Capital-Loss Carryovers: Many investors lost large amounts of money in the financial markets during 2008 and have hefty tax-loss carryovers that can be used on their returns for 2009. Don't forget to check to see if you have any loss carryovers.

The basic rules remain the same: Capital losses can be used to soak up capital gains on a dollar-for-dollar basis. If losses exceed gains, you can deduct up to $3,000 a year ($1,500 if married and filing separately) from your wages and other ordinary income. Additional losses are carried over into future years.

Mileage: The IRS's standard mileage rate for business use of a car, van, pickup or panel truck during 2009 is 55 cents a mile. It's 24 cents a mile for using your vehicle for medical reasons or as part of a deductible move. And it's 14 cents a mile for using your vehicle to provide services to charitable organizations.

For more information, including breaks for college costs and tax credits for qualifying energy-saving home improvements, go to the IRS Web site and search for Publication 17, "Your Federal Income Tax (For Individuals)." Look for the section "What's New for 2009." Also, type "Fact Sheets 2010" in the search box.

Article courtesy of Tom Herman.

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Recessionomics 101: How to Make Extra Money

Job loss, tighter credit and a renewed appreciation for savings is persuading more people to cut expenses. But you can cut only so far. Two full years of recession have not left many unexamined family expenses. Meanwhile, prices -- from gasoline to utilities to food -- haven't fallen. And incomes, if you still have one, aren't exactly shooting through the roof. It's time to make some money.

Fortunately, there are many ways to earn extra cash even when full-time jobs and extra shifts aren't an option. They include taking in boarders, starting a small business and getting paid for your opinion. Some of this work provides only a free meal and $10 fee, but others, such as tutoring or selling Grandma's diamond broach, could be quite lucrative.

The key, according to Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling, is to "find your skill or what you think would be fun to do." She says, for example, someone with computer skills may want to teach a class, install computers or create Web sites.

"Think about what are people willing to pay for," says Cunningham. "Who do you know and how can you leverage existing relationships." For example, does your dentist need someone to clean the office or does your accountant need someone to cater the Christmas party?

1. Sell It: One of the fastest and easiest ways to get extra cash is to sell unwanted and unused stuff. It's never been easier to make hundreds or even thousands of dollars.

Auction houses are a popular place to sell potentially valuable items. Don't overlook some of the more mundane items, such as books and sports equipment. Many bookstores provide cash or store credits for "gently" used books. Similarly, stores provide cash and store credits for gently used sports equipment.

2. Rent It: Your home, probably your biggest asset, is a potential source of extra cash. A growing number of people are renting out a room or grabbing a roommate for extra income. It's less difficult for residents in "destination" locations near colleges, resorts or cities to rent a room or even the house for a few weeks, months or long term.

Some homeowners prefer using a real estate agent, others like finding renters themselves, online or through friends. Either way, it's crucial to vet the potential tenant and spell out expectations.

Another option that's a longtime favorite of students and young adults is earning extra cash for house and pet sitting.

3. Say It: Many businesses are willing to reward individuals for taking opinion polls, testing products or being a secret shopper. The compensation varies, and it's crucial to avoid scams. Work only with reputable companies and avoid anything that requires a membership fee. One place to start is

People won't make much but they might have fun working in a focus group or evaluating products or services as a mystery shopper. Once again, watch out for scams. Don't pay any fees or respond to unsolicited emails. A good place to start is or, the Web site for the Mystery Shopping Providers Association.

4. Do It: One of the best ways to earn extra cash is by creating a business using existing skills and interests. An artist may teach a class, a photographer may do weddings and a sports enthusiast may referee or caddy.

Article courtesy of Jilian Mincer.

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