What Do I Do If I Can't Pay My Taxes?

Image via WikipediaWith tax day only a few weeks away, people are scurrying to get their tax returns done. If your nervous about the whole procedure you're either afraid your not going to make the deadline or you know you owe Uncle Sam money.

If you don't pay by the deadline of April 18th, you could be in store for some tough interest and penalties. The IRS could garnish your wages or your bank account. It also has the power to place a lien on your property, which could ruin your credit rating.

Even if you don't have the money, you should file anyway because failing to file brings with it a penalty of 5% of the unpaid tax for each month the return is late, up to 25% of the amount owed, plus interest. So it's better to file because the IRS will only charge a late fee that is only one-half of 1% a month.

What if I can't file or pay the taxes? Get a short-term extension. If you know you'll have the money in 120 days or less, ask the IRS for a short-term administrative extension. You'll still be liable for the failure-to-pay penalty and interest. You can request a six-month extension by filing IRS Form 4868. Approval is automatic. Filing for an extension doesn't give you more time to pay, so you'll still owe interest and late-payment penalties for every month you're overdue. However, you'll escape the failure-to-file penalty. Include your best estimate of the amount you owe. To request an extension, call 800-829-1040.

I have the tax returns ready, but I don't have the money to pay. Pay with a credit card. The IRS accepts plastic. But unlike most retailers, the IRS won't cover the cost of processing the transaction. You'll have to pay the fee, which ranges from 2.35% to 3.93%, depending on which provider you choose. The fee will be added to your balance.

Is there a way I can make monthly payments to the IRS? The IRS offers a program that allows taxpayers to pay their tax bill in monthly installments. If you owe $10,000 or less and are in good standing with the IRS, approval is automatic. The fee to set up an installment plan is $105, but the IRS will reduce it to $52 if you agree to have payments electronically debited from your bank account. You'll also pay interest, but the rate, which is adjusted quarterly, is considerably lower than the interest on a credit card balance. To request an installment agreement, file IRS Form 9465. In general, the IRS will give you up to five years to pay off your debt. You can choose the amount of your monthly payments. And if you miss a payment, the IRS has the right to demand that you pay the entire balance.

I am so broke, I will never be able to pay my tax bill, What can I do? Under certain circumstances, the IRS will agree to accept less than you owe. The percentage of people that receive this kind of help is very low. You have to convince the government that you don't have the money and that you probably never will. The fee to apply for an offer in compromise is $150, although the IRS will waive it for low-income taxpayers. You'll also be asked to document your assets and liabilities in excruciating detail.

With matters as serious as these, it will not be a bad idea to seek professional tax help. A certified tax accountant will hold your hand through these times and give you the needed guidance.

For a more detailed explanation check out "Losing Sleep Over Owing The IRS?" over at Forbes.com

The Mystery Of Medicare

Image via WikipediaI have gone through most of life not thinking about Medicare. I didn't have to, it wasn't for me, it was for those old timers over there. Now that I have become one of those old-timers, I am getting curious. Even though I am to young for it yet, you have to be 65. It's still over the horizon for me, but with a lot of my baby-boomer brothers and sisters closer to it, I thought a little info searching was in order.

So what does it cover? Do I need it? When should I sign up? Lots of questions. So I headed over to the HQ for all things about retirement, our old friends at AARP.org. They have created Medicare Starter Kit to get you up to speed on all things Medicare.

They start out with the Top Eight Do's and Don'ts:

1. Do give yourself time to learn about Medicare: It's a system with many choices and deadlines. Being informed is the best way to avoid mistakes that cost money.

2. Don't expect to be notified when it's time to sign up: Unless you're already receiving Social Security benefits, you must apply for Medicare. But you won't get any official notice on when or how to enroll.

3. Do enroll when you're supposed to: To avoid permanent late penalties, enroll at age 65 if you're not working, don't have employer insurance or live abroad; or, beyond 65, enroll within eight months of stopping work — even if you continue to receive COBRA or retiree health benefits from an employer.

4. Don't despair if you haven't worked long enough to qualify: You may qualify for Medicare on your current or former spouse's work record. Or you may be able to buy into the program.

5. Don't worry that poor health will affect your coverage: If you qualify for Medicare, you receive full benefits. You can't be denied coverage or charged higher premiums because of current or past health problems.

6. Do remember that Medicare is not free: You pay premiums for coverage and copayments for most services, unless you qualify for a low-income program or have other, extra insurance.

7. Don't assume that Medicare covers everything: It covers a wide range of health services (including expensive ones like organ transplants), prescription drugs and medical equipment. But there are gaps.

8. Don't expect Medicare to cover your dependents: Nobody can get Medicare under age 65, except those who qualify through disability. Medicare has no family coverage.

This is only a small taste of what the Medicare Starter Kit has to offer, get over to AARP.org and find out more.

How Can I Correct Errors Found In My Credit Report?

Image via CrunchBaseIf you find errors in your credit report, you may dispute the information and request that the information be deleted or corrected. To do so, you should contact either the credit bureau that provided the report or the company or person that provided the incorrect information to the credit bureau.

To contact the credit bureau, call the toll-free number on your credit report or visit their website:

• Equifax www.equifax.com/answers/correct-credit-report-errors/en_cp 
• Experian www.experian.com/disputes/ 
• TransUnion www.transunion.com/corporate/personal/creditDisputes.page 

To contact the company or person that provided the incorrect information to the credit bureau, look on your credit report, in an account statement, or on the company's website for contact information for handling such disputes.

When disputing information on your credit report, you should:

• Provide information about yourself, such as your name, address, date of birth, and Social Security number;
• Identify specific details about the information that is being disputed and explain the basis of your dispute;
• Have a copy of your credit report that contains the disputed information available; and
• Provide supporting documentation, such as a copy of the relevant portion of the consumer report, a police report, a fraud or identity theft affidavit, or account statements.

If you submit your dispute through a credit bureau or directly to the company or person that provided the incorrect information to the credit bureau, your dispute must be investigated, usually within thirty days. If you provide additional information during the thirty-day investigation, that investigation period may be extended an additional 15 days in some circumstances. When the investigation is completed, either the credit bureau or the company or person that provided the incorrect information to the credit bureau must give you the written results of its investigation.

If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit bureaus so they can correct the information in your credit report. You can get a free copy of your report if the dispute results in a change. This free report is in addition to your annual free report. If an item is changed or deleted, a credit bureau cannot put the disputed information back in your credit report unless the company or person that provided the incorrect information to the credit bureau verifies that the information is, indeed, accurate and complete.

You can request that the credit bureau send notices of any correction to anyone who received your report in the past six months. A corrected copy of your report can be sent to anyone who received a copy during the past two years for employment purposes.

If an investigation does not resolve your dispute, you can ask that a statement of the dispute be included in your future credit reports. You also can ask the credit bureau to provide your statement to anyone who received a copy of your report in the recent past, but you may have to pay a fee for this service.

How Private Is My Credit Report Data And Who Can See It?

Image via WikipediaCredit bureaus get information from your creditors, such as a bank, credit card issuer, or auto finance company. They also get information about you from public records, such as property or court records. Each credit bureau gets its information from different sources, so the information in one credit bureau's report may not be the same as the information in another credit bureau's report.

Because credit reports contain sensitive personal information, access to them is limited. Credit bureaus can provide credit reports only to

• lenders from whom you are seeking credit;
• lenders that have granted you credit;
• telephone, cell phone, and utility companies that may provide services to you;
• your employer or prospective employer, but only if you agree;
• insurance companies that have issued or may issue an insurance policy for you;
• government agencies reviewing your financial status for government benefits; and
• anyone else with a legitimate business need for the information, such as a potential landlord or a bank at which you are opening a checking account.

Credit bureaus also furnish reports if required by court orders or federal grand jury subpoenas. Upon your written request, they will also issue your report to a third party.

But what if the credit report data has mistakes in it?

If you are denied credit, insurance, or employment--or some other adverse action is taken against you, such as lowering your credit limit on credit card account--because of information in your credit report, the lender, insurance company, or employer must notify you and provide you with the name, address, and phone number of the credit bureau that provided the credit report used to make the decision. You can get a free credit report from this credit bureau if you request it within sixty days after receiving the notice. This free report is in addition to your annual free report.

In addition, lenders may use a credit report to set the terms of credit they offer you. If a lender offers you terms less favorable (for example, a higher rate) than the terms offered to consumers with better credit histories based on the information in your credit report, the lender may give you a notice with information about the credit bureau that provided the credit report used to make the decision. Again, you can get a free credit report (in addition to your annual free report) from this credit bureau if you request it within sixty days after receiving the notice.

If you receive one of these notices, it's a good idea to get your free credit report and review the information in it right away. If you think your credit report contains inaccurate or incomplete information, to try to resolve the issue.

What Is A Credit Report And Why Is It Important?

Image via Wikipedia

Your credit history is important to a lot of people: mortgage lenders, banks, utility companies, prospective employers, and more. So it's especially important that you understand your credit report, credit score, and the companies that compile that information, credit bureaus.

Q: What is a credit report?

A: A credit report is a record of your credit history that includes information about:

• Your identity. Your name, address, full or partial Social Security number, date of birth, and possibly employment information.
• Your existing credit. Information about credit that you have, such as your credit card accounts, mortgages, car loans, and student loans. It may also include the terms of your credit, how much you owe your creditors, and your history of making payments.
• Your public record. Information about any court judgments against you, any tax liens against your property, or whether you have filed for bankruptcy.
• Inquiries about you. A list of companies or persons who recently requested a copy of your report.

Q: Why is a credit report important?

A: Your credit report is important because lenders, insurers, employers, and others may obtain your credit report from credit bureaus to assess how you manage financial responsibilities. For example:

• Lenders may use your credit report information to decide whether you can get a loan and the terms you get for a loan (for example, the interest rate they will charge you).
• Insurance companies may use the information to decide whether you can get insurance and to set the rates you will pay.
• Employers may use your credit report, if you give them permission to do so, to decide whether to hire you.
• Telephone and utility companies may use information in your credit report to decide whether to provide services to you.
• Landlords may use the information to determine whether to rent an apartment to you.

Today the credit report is your introduction to to companies that you need to do business with. If it's good you will receive lower insurance rates and lower interest rates on borrowing money. It's up to you to take of it.

Would You Like To Have A Financial Tsunami Happen To Your Life?

Image via WikipediaI have been watching the videos coming back from Japan depicting the devastation. Peoples whole lives completely erased. Seeing pictures of cars and houses going past in the oncoming waters. Then seeing them as they come back and go out to sea. What do they have left? The house is gone so is their cars, clothes, furnishings, and every physical thing they have.

What if this happened to you? Would you want it to happen to you? I believe there are some people who would want this to happen. Not the tsunami, but a financial tsunami. Imagine no more mortgage. No more car payment. No more bills. Your totally free to start over. Your financial tsunami has given you a clean slate, a fresh start. Your getting a do over to get it right this time.

Think about it for a minute. You still have your job, your income. What would you change this time around? Would you buy the big house again? Or get something more affordable so you can save more for retirement. What about the expensive car, would you get another one or a good used car this time. Would you save more in your 401k? How about living within a budget and not going into credit card debt.

Many people are doing the money thing right, but many of us have screwed it up big time. A fresh start sounds pretty good. Getting a fresh start can still be done without a tsunami. It takes a little discipline and a plan.

To make it happen you must be sick and tired of being sick and tired. You must be ready and determined to turn your finances around. Without this complete commitment you will not succeed. Are you fed up enough to make it happen this time?

If you are ready then the first thing you must do is make a spending plan, in other words a budget. At the top of the page you write your income and list down the page, in priority, what you need to pay. You pay each bill with the money and when the money runs out you don't spend anymore. Of course credit cards are cut up and thrown out. No more added debt. This time you will live within your means and no more debt.

For further information on budget creation read this post on making a budget. Here.

This is the first step on a journey that will take you on to be financially successful. You won't need a tsunami to clean your life up. You are capable of doing it your self.