Starting in 2011, President Obama plans to reduce the charitable giving tax deduction from 100% to 28% of your charitable contribution for families who earn over $250,000 in adjusted gross income. Right now, if you give $100 to your local charity, you can deduct $100 from your adjusted gross income, which determines how much tax you owe on your annual federal taxes. Obama has coined families making more than $250,000 per year as “wealthy”, so he is imposing a reduction in this tax deduction to 28 percent. For families that this applies to, they will only be able to deduct $28 per $100 they give to charity on their taxes.

PROS

• This will help discourage wealthy people from avoiding taxes by setting up bogus charities to give to and receive a large tax deduction.
• It will increase tax revenue for the government

CONS

• It could discourage wealthy people from giving generously to charities and other non-profit organizations.
• It’s really a tax increase without calling it a tax increase.
• Charities and non-profits could see a reduction in revenue, thus causing them to scale down their operations and goals.

I have always been a strong advocate for giving generously to others, whether it’s your money or your time. One of my core beliefs about being financially responsible and accumulating wealth is to set yourself up to be a generous giver. I don’t like the fact that charities and religious organizations could suffer from this and the fact that wealthy people are being penalized for giving. I understand that there many wealthy people that manipulate in order to pay less taxes, but it seems to me that a watchdog agency for charitable contributions would be more beneficial than a reduction of the tax deduction.

What’s your take?

Related Posts:

• How To Check A Charity For Legitimacy
• The Low Down on Warren Buffet Giving Away A Ton of His Money
• Highlights of President-Elect Barack Obama’s Tax Plan
• Refocusing my motivation to become wealthy
• My Reaction to the Economic Topics Discussed In Last Night’s Presidential Debate

What Do You Think About Obama’s Plan To Reduce Charitable Giving Tax Deductions? is a post from: Money Crashers

I think the housing market is the key to jumpstarting our economy again. Everyone is focusing on the financial services and auto industry, but I think the real estate industry is the key to an economic recovery. I don’t like the idea of bailing out people, not because I don’t have a heart, but because buying a home is a risk. Failure is not always such a bad thing. Anyway, we are going to bail them out, and we’ll see how Americans respond to this gift.

Who will ths plan help?

For the most part, it will help those who have already defaulted on their loans. Lenders will have the ability to restructure the loan by reducing the interest rate and possibly the principal amount. They will try to reduce your loan payment to 31% of your household income. Obama says that this plan will weed out helping those who could never afford owning a home in the first place, because they will not restructure a loan that offers no plausible way to make the payment affordable based on the borrower’s income.

The mortgage must have originated before Jan. 1, 2009, and the unpaid principal can amount to no more than $729,750 for a single family home (more for a home with two-to-four units). Borrowers with other debt, such as car loans and credit cards, exceeding 55% of their incomes, may still qualify for a modification, but they’ll be required to accept debt counseling in a HUD-certified program.

Obama also claims there will be relief for some people that are unable to refinance their home, because they are upside down on their mortgage. I think this will be the minority of people that get relief from this package, because they will allow a refinance up to 105% of the value of the home. I know that many people are about 10% to 15% upside down on their homes, so I am not sure how many people this will help.

Who is not eligible?

If your house value has dropped more than 5%, you are out of luck.

How Do You Get Help?

Start calling your lender. Explain to them that you want help restructuring your mortgage and go from there. If they give you a hard time, refer to Obama’s plan and explain that you qualify for help.

Is there a catch to all of this?

Kind of. The restructured loan payment amount will only last for about 5 years, and then the loan will revert back to the original loan terms after that.

The reduced payment would stay the same for five years and then gradually revert back to the conforming loan rates in place at the time of the modification, increasing by no more than 1% a year.

I hope this works, because if more people start making their payments and confidence is restored in the housing market, we will see the financial services industry and the real estate industry make a rebound over the next 12 to 18 months. Related Posts:

• Savings Tip: Eliminate Your Private Mortgage Insurance
• Mortgage Lenders Are Willing to Make A Deal With You To Avoid Foreclosure
• Seven Ways to Save Your House From Foreclosure
• The Wonderful World of Mortgages
• First-Time Homeowners, Consider Buying in 2008

Will Obama’s Housing Rescue Plan Work? is a post from: Money Crashers

Click here for the Wall Street Journal’s Breakdown of the Stimulus Bill

This bill is the largest piece of government intervention in American history, and the problem is that it’s not focusing on what caused the economic downturn in the first place. Our economy slowed down from a housing bubble that burst, which exposed the mortgage and credit corruption that ran rampant through financial institutions on Wall Street. Jobs are being lost because companies with horrible products and services can’t handle the economic downturn any longer and their executive management would rather pay themselves than pay their shareholders and customers.

So, be a good citizen, check out the breakdown and see if you think the government did a good job at spending your money.
Related Posts:

• Show Your Patriotism Tomorrow
• Breakdown of Spending for Proposed 2009 Stimulus Bill
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• Common Question Asked About The Economic Stimulus Check

The Final Breakdown For The 2009 Economic Stimulus Bill is a post from: Money Crashers

“With a price tag of more than $1 trillion when you factor in interest, it costs every family almost $10,000 in added debt. This is an act of generational theft that our children and grandchildren will be paying for far into the future.”

This was a completely partisan quote by a Republican that did not agree with the economic recovery bill that just passed in the House of Representatives, but if you divide the cost of this bill by the amount of taxpaying Americans in the United States, his numbers are roughly correct about the debt that is being passed onto us. I know, the title to this post was a little silly, but not really when you sit down and think about it.

For those of us working very hard to eliminate our personal debt, the government has just handed each of us an extra $10,000 in debt to add on to the total we already have in our own personal debt. Sure, we won’t get monthly loan coupons in the mail from China, the U.S. Treasury, or whoever we borrow this money from, but we will pay this money back in the form of tax increases and/or increasing our spending to stimulate the economy. In a perfect world, this package will generate enough income tax from job creations, but if it doesn’t generate enough money to repay the money we are spending for this plan, the only way for the local, state, and federal government to recover the money is to increase income, capital gains, property, and sales taxes.

Maybe I will put an extra $10,000 in my debt snowball with an asterisk next to it. Great, now my debt snowball is going to look like baseball’s statistic for the homerun leader.
Related Posts:

• The House Passes Obama’s Massive Economic Stimulus Recovery Plan
• A Calculator To Estimate Your Refund From The Proposed Economic Stimulus Plan
• Obama Tries To Scare Us Into Another Stimulus Plan
• Congress To Vote Again On Economic Bail Out Plan
• The Final Breakdown For The 2009 Economic Stimulus Bill

The Stimulus Package Passed: Should You Factor In An Extra $10,000 to Your Debt Snowball? is a post from: Money Crashers

Here is the full story from the AP wire, via Fox News. (this is an AP story, not a Fox News story)

$13 More Per Week in Everyone’s Paycheck . . .

It looks like these tax cuts are not going to be tax credits like last year’s checks which were advances on a tax credit created for 2008. They will merely restructure the tax brackets, which on average, will put another $13 a week in your pocket. Doesn’t sound too exciting, does it? Will this change your world and help you pay your bills more? Please comment below.

The $15,000 home buying tax credit was axed . . .

This would have really stimulated the real estate rebound. It would have encouraged banks to start lending money again, and it would have put more mortgage brokers, processors, real estate agents, home inspectors, appraisers, and title agents back to work. Instead, they increased the existing $7,500 first-time home buyer tax “credit” that was really a zero percent interest loan, to a REAL $8,000 tax credit that does not have to be paid back. They extended the date until August to qualify for the credit. This is still a nice deal, but it’s not a credit, it’s a 0% interest loan from the government.

About $46 Billion went toward major infrastructure projects . . .

All this talk about pumping money into infrastructure jobs, and it gets is about 7 or 8% of the total spending bill? If 1/3 are tax cuts, and 2/3 are spending, then what else are we spending money on? This is the huge problem with this bill. Obama is stating that it will create millions of new jobs because of the investment in infrastructure projects, but only $46 billion is going towards major infrastructure projects.

More money is being spent on health care than infrastructure. . .

There will be a 60% subsidy for COBRA health care to people on unemployment benefits, and about $86 billion will be divvied up among the states to subsidy their Medicaid programs over the next 2 years.

The only people getting a check will be SSI recipients, veterans on pensions, and people on welfare. . .

A $250 dollar check will be issued to the people described above. Again, how this will rock their world, I am not sure, but it’s in there.

I’m definitely disappointed in this entire package and how it all played out. Hardly any thoguht was put into it. It only took 24 hours for the Senate and the House to agree on a revised plan. And do you know the reason why it only took 24 hours? Because there was no bipartisan representation. It was all Democrats in there deliberating in the conference after the Senate passed their version. So much for bipartisanship, huh?

How do you feel about it? Are you disappointed or happy about it? How will it affect you? Do you think it will affectively stimulate the economy? Do you think the economy will get worse if it doesn’t work? Related Posts:

• Breakdown of Spending for Proposed 2009 Stimulus Bill
• The House Passes Obama’s Massive Economic Stimulus Recovery Plan
• Tips for Those Starting Their First Real Job
• The Proposed $15,000 Tax Credit For Home Buyers in 2009
• 30 year fixed mortgage rates rise to 6.61% average

Update On the Final Version Of The 2009 Economic Stimulus Plan is a post from: Money Crashers

Last July, a bill was signed into law that included a $7,500 tax “credit” for first-time home buyers. Here are the differences between the credit that is active now and the one that has been proposed.

The current $7,500 tax credit:

1. It’s not really a credit. It’s like a 0% interest loan from the government. You can claim the $7,500 credit this year, but you’ll have to pay it back over a 15 year period or quicker if you choose.
2. It’s only for first-time home buyers or if you haven’t owned a principal residence within the past 3 years.

The Proposed $15,000 tax credit:

1. It would be a TRUE tax credit that you don’t have to pay back! You can even claim the credit on this year’s taxes if it passes into law this week. This means that you’d get $15k less any taxes owed back in the form of cold hard cash to put towards a down payment or improvements on your new home.
2. It would count for ALL home buyers, not just first-time home buyers. Congress will require that it’s a primary residence so investors can’t take advantage of the credit.

This would be an unbelievable credit if it passes, and I think we will see a huge spike in home sales if this amendment makes it to the final bill when it passes. The process is somewhat complicated like anything Congress does. The Senate and House will have to collaborate to create a final bill that incorporates any and all amendments, and then Obama will sign it into law. So, there’s a possibility that it could still be chopped out of the bill. I will keep you updated when I hear anything.

Related Posts:

• A Calculator To Estimate Your Refund From The Proposed Economic Stimulus Plan
• It’s A Great Time For Young People To Buy A House
• Update On the Final Version Of The 2009 Economic Stimulus Plan
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• The House Passes Obama’s Massive Economic Stimulus Recovery Plan

The Proposed $15,000 Tax Credit For Home Buyers in 2009 is a post from: Money Crashers

Why I Agree With What Obama Did

If financial institutions, automakers, and other private corporations want to beg for government bailout money because it’s the easy way out of their problems, then the President has every right to impose regulations and limitations on them. What are these executives going to say? They were the ones that were too lazy to figure out a way to save their companies, so they looked to the government. The government was glad to help, because they knew that it would expand their power over the financial sectors. Obama is merely flexing his muscles now that the country owns a piece of the financial sector.

Why I Disagree With What Obama Did

This is one step closer to nationalizing banks. Again, this isn’t “Obama’s fault”, and I don’t fault him for what he did, because it’s the executive’s faults for asking for the money in the first place. No company is too big to fail. Companies will come and go, and the ones that make mistakes will sometimes fail. The ones that do not provide good customer service and a good product will not survive. These financial institutions should have merged together and bought each other out. That would have been the sensible thing to do. They could have come together, re-organized, re-structured, and split back up when they got their crap together. Instead, they looked to Uncle Sam, and now Uncle Sam is saying “Waaaiiiiiitttttt a minute”, you’re not getting that money with no stipulations.

What’s your take on this? Is this one step closer to nationalizing banks? Do you think executives deserve the pay they receive? Does Obama have the right to limit their compensation? I think he does, but it scares me that he does have that right. Related Posts:

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Should Obama Limited CEO Compensation? is a post from: Money Crashers

How can I still get the last stimulus plan’s money?

The stimulus refund checks that were sent out last summer were an advance on a 2008 tax credit specifically put into legislation by the Bush administratiion at the beginning of 2008. In an effort to get the money out as quickly as possible, the IRS sent out the money early in 2008 based on qualifications from your 2007 tax returns. If you made less than $3,000 or more than $87,000 in adjusted gross income in 2007, you may not have received the full amount of the refund money or any at all. If your AGI is between those numbers for 2008, then you should claim the 2008 stimulus refund tax credit on this year’s tax return.

Should I claim the refund money as earned income on my 2008 tax return?

No, it is not considered earned income. It was merely an advance on a tax credit for this year’s tax returns. There was a rumor flying around last summer that you would be required to pay back the money in your 2008 tax return if you received a check, but that’s not true. You simply can’t claim the credit for 2008’s return if you received the mone in advance.

For more information, click here Related Posts:

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Don’t Miss Out On the 2008 Stimulus Plan Tax Credit is a post from: Money Crashers

This bill is chalked full of spending that has nothing to do with stimulating the economy. Philosophically, I disagree with spending and building infrastructure to stimulate an economy. I think cutting taxes stimulates an economy better, because it puts more money into the hands of businesses and individuals. When businesses have more money, they have more room to expand and create jobs.

Next, the bill will go to the Senate, and they will banter back and forth for a little while about it. Democrats have enough votes to get this thing passed without any Republicans voting for it, so all of the hoopla and debate is trivial. I really hope this works for the sake of the country, but my gut tells me that it won’t work based on common sense. It’s not different than someone with a financial crisis and $100,000 in debt decides to borrow 1 million dollars to get out of the mess. Would you do that? Then, why is our government doing it?

What’s your take? Related Posts:

• Breakdown of Spending for Proposed 2009 Stimulus Bill
• The Final Breakdown For The 2009 Economic Stimulus Bill
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• Financial Question #11: Bush Signs Economic Stimulus Plan Into Law

The House Passes Obama’s Massive Economic Stimulus Recovery Plan is a post from: Money Crashers

When you listen to him, it’s obvious that he’s trying to gain support from the American people by scaring us into believing that we need to spend more money to fix a problem. As a money crasher reader, do not take after the government when it comes to your personal finances. If you are going through financial problems, do not try to spend your way out of it. The smart thing to do is cut spending, save money, and do anything and everything you can to increase your monthly income.

This spending plan and so-called stimulus plan will put us into so much debt that we will be paying it back for decades. It will increase the size of the government and slowly take away our freedoms and liberties. My position on on this is not anti-Democrat. Republicans were spending like crazy for the past 8 years that they were in control, and I hated what they were doing as well. It’s sick, and the government needs to be stopped. We’re the only ones that can stop them from spending our hard-earned money. Call your local Congressman or Congresswoman to express your disgust in the proposed spending plan. Related Posts:

• The House Passes Obama’s Massive Economic Stimulus Recovery Plan
• Information About A Possible 2009 Economic Stimulus Plan
• The Stimulus Package Passed: Should You Factor In An Extra $10,000 to Your Debt Snowball?
• Common Question Asked About The Economic Stimulus Check
• The Month of May Was Favorable to Discount Retailers

Obama Tries To Scare Us Into Another Stimulus Plan is a post from: Money Crashers