Student Tax Break: Students Lose Millions in TAX FREE MONEY

Students Miss Out on $$$ Millions in Tax Refunds

Follow these 5 steps to get a major tax refund this year. You'll get a double bonus reward!

1. Source of Funds: Take the "excess credit", extra money from your latest student loans. Many students just take this money and spend it wastefully. Follow the steps below and you'll have much more money each semester.


2. Invest Tax Free: Invest the money into an IRA (qualified retirement savings account). Tax free investing increases your net returns. It provides more growth and money in your account.


3. Call Tax Pros: Contact your Tax Pros advisor to open your IRA account. Click here for investment advice on which fund to choose.


4. Tax Deductions: Process your tax return with Tax Pros Online. Include our recommended tax deductions listed below.


5. Get Your Refund Check Fast: Use e-file and direct deposit to your bank account. our refund can be processed in a few short days. If you are really smart, deposit the funds to your new IRA investment account for extra TAX FREE growth.

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Top 3 Student Tax Deductions

These tips are best for working students with part-time or full-time jobs. A student must have a job, current year income to benefit from these deductions.

1. Tuition & Books: Keep your receipts. If your education and training courses are related to your current job/industry, you can deduct tuition expenses.


2. Books: Books are expensive. You can resell your books, PLUS take a tax deduction for their original cost. Keep a record of the purchase receipts, syllabus and reading list with your financial documents.


3. Activity Fees & Expenses: Your school may have additional fees for trips and other career training related activities. If you purchased special equipment (computers, lab gear etc) they can be be great deductions too. Seniors: don't forget your professional suits, uniforms and travel expenses for interviews.

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FYI,

Most students think that they don't have to file taxes.

WRONG

Besides the fact that many students work while attending school, there are some major benefits to filing your taxes on time.

• Tax Refunds and Credits provide "extra" cash (tax free)
• Good tax records help with financial aid (loans and grants)
• Improves financial status for credit, loans and major purchases

Want to learn more ways to get TAX FREE MONEY for college students? Contact your personal advisor at Tax Pros.

Email your question and/or Talk to an advisor

Pros and Cons of Self-Directed 401Ks & IRAs

Pros and Cons of Self-Directed 401Ks & IRAs

By: Financial Planning Association

 

An increasing number of 401(k) and other types of qualified retirement plans are giving plan participants the option of opening a self-directed brokerage account within the plan. While this option offers participants a much broader universe of investment options, it is not without its risks, caution many financial planners and other investment experts.

Traditionally, employer-sponsored retirement plans have offered participants a varied but limited menu of mutual funds, ranging from a handful to 20 or more, and perhaps access to company stock. But some participants began pushing for more choices, especially with the explosion of online trading and the long bull market, so more employers have begun offering the option of self-directed brokerage accounts. The participant opens up an account with a brokerage firm of their choosing through the plan, which offers up a much wider universe of investment selections, sometimes including individual stocks and bonds.

 

Despite the market skid since the spring of 2000, the push for self-directed accounts continues to grow. In a survey earlier this year by Hewitt Associates, nearly 20 percent of employers offer self-directed accounts, another 5 percent will be offering them soon and another 30 percent are considering adding them.

 

How exactly do self-directed accounts work, and are they a good idea for both employer and employees? To begin with, self-directed accounts aren't usually as wide open as you might think. Most impose some limits on the participants. For example, participants might be able to invest only a portion of their retirement plan assets -- say 20 percent or a maximum monthly dollar amount -- in the self-directed option. The plan may limit investments to mutual funds. Others may allow individual stocks and bonds, but not municipal bonds, commodities, derivatives or buying on margin.

 

The main advantage of self-directed accounts is the increase in investment options, especially beneficial if the current plan offers a poor menu of mutual funds or the funds are performing poorly. Self-directing participants can then find better-performing funds or buy individual securities.

 

But this new flexibility comes with some risks and expenses, warn financial planners. First, is added investment responsibility on the part of the participant. Choosing from a large number of funds can be overwhelming, or the investor may end up buying only an individual stock or two that dramatically boosts the portfolio's level of risk.

It's also more tempting to trade frequently through such accounts, reacting to the ups and downs of the market.

 

Research shows that most workers using a plan's mutual fund menu tend to trade very little. That's why planners often say only more sophisticated investors willing to do their homework, including a careful review of their overall investment portfolio, should consider a self-directed option. In fact, according to the Profit Sharing/401(k) Council of America, less than five percent of employees take advantage of the self-directed option when it's made available.

Furthermore, self-directed accounts add to participants' cost. There typically is an administrative fee and there are transaction fees, though online trading may help keep these down. Usually these fees must be paid for by the participant.

 

Employers have mixed feelings about offering such plans. On the one hand, self-directed accounts help employers keep down the number of mutual funds they might otherwise be pressured to offer. More mutual funds mean more expenses and administrative headaches. Self-directed accounts are especially appealing to higher-paid executives, and by offering them, employers improve their ability to recruit and retain those executives.

 

On the other hand, surveys show that many employers refuse to offer self-directed brokerage accounts because they are concerned that employees will make poor investment choices -- and possibly sue the employer as a result. (Numerous studies have shown that plan participants already make poor investment choices with the limited fund menus.) How liable an employer may be with self-directed options is open to debate, but at a minimum, agree many experts, employers have to be very forceful in educating their employees about the risks.

 

U.S. Economy: Leading Indicators Down

U.S. Economy: Leading Indicators Dropped in November (Update1)

By Bob Willis

Dec. 20 (Bloomberg) --

 

The U.S. economy is at greater risk of faltering next year, according to an index of leading indicators, and a gauge of manufacturing in the Philadelphia region fell the most since the last recession.

 

The Conference Board's leading-indicator measure dropped 0.4 percent, more than forecast, to the lowest level in more than two years, the New York-based research group said today. The Philadelphia Federal Reserve said its factory index declined to minus 5.7, the weakest reading since December 2006.

 

The deepest housing slump in 16 years is likely to worsen as foreclosures mount and banks restrict lending, economists said. Declining property values, rising energy costs and a softening labor market may also hurt consumer spending, which accounts for more than two-thirds of gross domestic product.

 

``It's certainly pointing to a slowdown,'' said Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York. ``The fourth quarter is going to be much weaker than what we've been seeing.''

 

A separate report from the Labor Department showed the number of Americans filing for jobless benefits rose a greater- than-anticipated 12,000 to 346,000 last week. The Commerce Department said the economy expanded 4.9 percent last quarter, unchanged from the previous estimate published last month.

 

Economists' Forecasts

Economists forecast the Conference Board's index would decline 0.3 percent following a 0.5 percent drop the prior month, according to the median of estimates in a Bloomberg News survey. The measure, which signals the likely performance of the economy over the next three to six months, dropped to 136.3, the lowest since September 2005.

 

The drop in the Philadelphia Fed's gauge coincided with gains in some of the survey's other indexes. The headline reading is based on a separate question, not always reflecting underlying trends. Measures of orders and sales rose, while inventories and employment fell, the report showed.

 

FedEx Corp., the second-largest U.S. package-delivery company, today said quarterly profit fell as fuel costs rose and demand for freight shipments slowed. The Memphis, Tennessee- based company said its third-quarter earnings would be lower than a year earlier and cut its capital-spending forecast.

 

``We see challenging near-term economic trends,'' Chief Executive Officer Fred Smith said in the statement.

Rite Aid Corp., the third-largest U.S. drugstore chain, posted a wider quarterly loss than analysts estimated and reduced its full-year forecasts for the second time in three months today. Sales of non-pharmacy goods such as snacks and health and beauty products fell 0.4 percent.

 

Sales Forecast

The National Retail Federation in Washington has forecast holiday sales this year will show the smallest gain since 2002.

 

The leading index is down at an annual pace of 2.3 percent over the last six months, short of the approximate 4 percent to 4.5 percent drop that Conference Board economists say signals recession.

 

``I still think we have a good chance of avoiding recession although we are in store for a couple of quarters of slower growth,'' said Michael Moran, chief economist at Daiwa Securities America Inc. in New York.

 

Former Treasury Secretary Lawrence Summers said yesterday it's ``quite likely'' a contraction will develop next year, while former Federal Reserve Chairman Allan Greenspan has given it about even odds.

 

Slower Growth

The economy is projected to grow at a 1 percent annual rate this quarter and at a 1.5 percent pace in the first three months of 2008, according to a Bloomberg News survey taken earlier this month. The last recession was in 2001, when the economy grew 0.8 percent.

 

The slowdown is all the more pronounced because of the surge in growth last quarter. The world's largest economy grew at a 4.9 percent annual pace from July through September, the most in four years, the Commerce Department's final estimate showed today.

 

Declines in stock prices, the money supply, consumer sentiment and an increase in firings pushed the leading index down, the Conference Board said. Gains in the factory workweek, orders for capital equipment and slower supplier deliveries limited the drop.

 

The Standard and Poor's 500 Index fell 5 percent on average in November to 1463.39 from the prior month, as mounting defaults on subprime mortgages forced banks to write off losses, leading to spreading declines in financial markets.

 

An average 336,400 workers a week filed first-time claims for jobless benefits in November, up from 327,500 a month earlier.

 

Consumer Headwinds

The softening job market combined with declining home values and rising fuel costs may contribute to a slackening in spending during the holidays.

 

``It looks as though consumer spending is going to slow considerably from the third quarter,'' said Paul Kasriel, chief economist at the Northern Trust Company in Chicago. ``I really do think the odds are better than 50 percent that we will have a recession.''

 

Seven of the 10 components of the leading economic indicators index are known before the report: initial jobless claims, consumer expectations, building permits, supplier deliveries, the yield curve, stock prices and factory hours.

 

The Conference Board estimates money supply adjusted for inflation, new orders for consumer goods and orders for non- defense capital goods.

 

The Conference Board's index of coincident indicators, a gauge of current economic activity, rose 0.2 percent in November after falling 0.1 percent in October. The index tracks payrolls, incomes, sales and production. Combined with gross domestic product, these are the figures tracked by the National Bureau of Economic Research to determine when recessions start and end.

 

The gauge of lagging indicators also increased 0.2 percent after rising 0.3 percent in October. The index measures business lending, length of unemployment, service prices and ratios of labor costs, inventories and consumer credit.

 

full article

US 30-Year Mortgage Rates Rise

US 30-year mortgage rates increase this week

Thu Dec 20, 2007 11:37am EST

WASHINGTON, Dec 20 (Reuters) -

 

 Interest rates on U.S. 30-year mortgages rose slightly this week, mortgage giant Freddie Mac (FRE.N: Quote, Profile, Research) said on Thursday.

 

U.S. 30-year mortgage rates rose to an average of 6.14 percent from 6.11 percent last week. Fifteen-year mortgages also rose slightly to an average of 5.79 percent from 5.78 percent last week.

 

One-year adjustable rate mortgages inched upward to an average of 5.51 percent from 5.50 percent, Freddie Mac said.

 

Freddie Mac said the "5/1" ARM, set at a fixed rate for five years and adjustable each following year, averaged 5.90 percent, also up from 5.89 percent last week.

 

A year ago, 30-year mortgages averaged 6.13 percent, 15-year mortgages averaged 5.89 percent and the one-year ARM averaged 5.44 percent. The 5/1 ARM averaged 5.96 percent.

 

"Stronger-than-expected inflation reports and retail sales for November put upward pressure on long-term interest rates late last week," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement.

 

"However, ensuing data releases suggested further weakness in the housing market over November and December and allowed interest rates to drift back down. The net effect left mortgage rates little changed this week," he said.

 

Lenders charged an average of 0.4 percent in fees and points on 30- and 15-year mortgages, both down from 0.5 percent the prior week. They charged 0.6 percent on the one-year ARM, unchanged from last week.

 

Fees and points charged on the 5/1 ARM averaged 0.5 percent, down from 0.6 percent last week.

 

Freddie Mac is a mortgage finance company chartered by Congress that buys mortgages from lenders and packages them into securities to sell to investors or to hold in its own portfolio.

 

 

The Mortgage Bailout Helps Only A Few People

What the Mortgage Bailout Means for You

On Dec. 6, Treasury Secretary Henry Paulson, with the support of President George W. Bush, unveiled a plan to aid certain homeowners who face the prospect of higher mortgage rates in the next few years. Paulson worked with banks and other mortgage companies to develop the initiative, and thanked them for their involvement. "We have worked through an evolving process to help minimize the impact of the housing downturn on homeowners, neighborhoods and the U.S. economy," he said. While the plan is ambitious and is designed to bring stability to the shaken economy, it will affect only a narrow slice of homeowners in the U.S. "This is not a silver bullet," said Paulson. Here are some answers to questions you may have.

Can you get your mortgage payments lowered because of the bailout?

It depends. If you've got an adjustable-rate mortgage, you may qualify under certain conditions. If you've got a standard mortgage with a fixed interest rate, you're not affected.

 

Which adjustable-rate mortgage holders are affected?

Only a small group. To qualify, you need to have received your loan sometime between Jan. 1, 2005 and July 31, 2007, and you need to be facing a reset of your interest rate sometime between Jan. 1, 2008 and July 31, 2010. If you're within this range, you may be eligible to have your interest rate frozen, so you can keep your current, lower rate for five years.

 

Who qualifies within that range?

The bailout is really designed for homeowners who could run into trouble if their mortgage payments are raised sharply and face the prospect of losing their homes. If you're well enough off that you can afford the higher mortgage payments after a reset, you won't qualify. And if you're in bad enough shape that you can't handle the current low interest rate, you won't qualify. For example, if you've already fallen behind on your mortgage payments, you're not eligible for the rate freeze.

 

Do you need to live in your home to qualify?

Yes. The plan excludes people who don't live in the homes for which they have mortgages so that speculators can't benefit.

 

Why is there going to be a bailout?

Bush, Paulson, and the Administration are concerned about the fallout from the housing slump. If many people fall behind on their mortgages and have to give up their houses, there will be a series of negative repercussions. First, tens of thousands of Americans could be forced to leave their homes. They would lose whatever equity they had. Consumer spending more broadly would likely slow, hurting the economy overall. In addition, home prices could fall even more quickly than they are now. That could hurt consumer confidence well beyond those people directly affected.

 

Is the bailout going to be enough?

It depends on your definition of enough. The deal will add some stability to the housing market, but it won't stop all the problems in the troubled sector. The same day Bush unveiled his plan, the Mortgage Bankers Assn. said that foreclosures had reached a record high in the third quarter. The share of mortgages that have entered foreclosure hit 0.78% in the quarter, up from the previous high of 0.65% set in the previous quarter. At the same time, delinquencies for all mortgages rose to 5.59%, from 5.12%, in the second quarter. None of the people who are delinquent or facing foreclosure will be helped by the plan.

 

The deal almost certainly won't stop the decline in housing prices. Investors are betting that there will be double-digit declines in home prices in nine of 10 major markets over the next year. The only exception is Chicago, and there the estimate is for a 5.6% drop in home prices.

 

So why not go further?

Some Democrats are criticizing the Bush Administration on that exact point. Senator Hillary Clinton (D.-N.Y.), among others, is arguing for a more ambitious approach, including at least a seven-year freeze on interest rates.

 

Who stands in the way of such an effort?

Investors in mortgages and mortgage-backed securities. If homeowners are going to pay less on their mortgages than originally planned, then somebody is going to lose money. These aren't just fat cats on Wall Street—although many such firms have invested in these securities—they're also pension funds for teachers, firemen, and police, as well as mutual funds whose clients include all sorts of individual investors. They probably even include homeowners who are facing the prospect of higher payments on their adjustable-rate mortgages.

 

Questions about your mortgage?

We can help.  If you have  a reset coming due call your Tax Pros Advisor for better morgtage options.  We can help restructure your payments and protect your home.

 

Call:     718-875-0556

 

Credit Crunch: Bush's Bad Mortgage Medicine

Credit Crunch: Bush's Bad Mortgage Medicine

The Bush Administration's plan to rescue the housing market and keep the economy from slipping into recession took flak yesterday for freezing interest rate hikes for a mere fraction of subprime, adjustable-rate borrowers. But there's a bigger risk: It could deepen and lengthen the credit crisis.

According to analysis by Barclays Capital, the "freezer-teaser" plan applies to just 240,000 subprime loans. The Mortgage Bankers Association reports the number of subprime adjustable rate mortgages at 2.9 million.

It also won't help the 16% of subprime borrowers who are already delinquent or in default, and it won't help millions of other homeowners who either will be deemed able to pay the higher rates when they adjust, starting in January, or who have the unhappy circumstance of having a house worth less than their mortgage or a loan that has already reset to the higher rates.

President Bush, along with Treasury Secretary Henry Paulson and Housing and Urban Development Secretary Alphonso Jackson, outlined other proposals Thursday that are meant to help the 2 million borrowers facing sharply rising rates on their adjustable-rate mortgages beginning next month. The plan includes refinancing some of the borrowers into private, fixed-rate mortgages, or putting them into Federal Housing Administration loans.

The loan modification, or rate freeze, would apply to a limited subset of subprime borrowers who meet a series of criteria, not least of which is that they must have paid their loans on time. Also, the freeze applies to loans taken between January 2005 and July 2007, excluding other adjustable loans that have already reset to higher rates.

The expected backlash to the plan started immediately after the Administration announced it. Housing advocates said it leaves millions of struggling borrowers at risk of foreclosure. Others decried it as a shameful bailout of irresponsible lenders and borrowers.

"President Bush's plan may make good politics, but it is terrible economics," said Edward Ketz, an accounting professor at Penn State University. "It punishes those who have acted prudently and rewards bad decisions by homeowners who bought what they could not afford. It gives incentives for future homebuyers to act rashly, because they may believe Washington will rescue them from error and greed."

Perhaps more significantly, Ketz and others warn the plan could further choke off the credit markets and result in higher mortgage rates in the long run.

Declining values in mortgage securities have plagued banks and investors since the summer, with banks writing off some $70 billion in mortgage and credit securities in the last three months. Modifying the terms of the underlying mortgages for some of these securities will mean payments even lower than the amounts investors had counted on when they bought the mortgage pools in the first place.

Mortgage servicers either originate their own loans or buy loan-servicing rights to them. The loans are sold to banks, which then chop them up and repackage them in securities, complete with ratings and tranches to appeal to different types of investors. These investors buy the securities expecting certain performance characteristics, including payment flows from the borrowers of the underlying loans.

If an investor can't count on the terms of a mortgage security at the time he buys it, he has less incentive to continue investing in them in the future. That would reduce demand for mortgage paper, in addition to embedding a risk premium in the rate for those investors still willing to take the gamble.

Investor demand for mortgage-backed securities--and banks' eagerness to buy loans, package and sell them to this hungry crowd--helped create the incredible run-up in the mortgage market over the last three years. Paulson's plan does not protect the investors of these securities--increasingly, as it turns out, public pensions and other public funds.

In a report Thursday, Standard & Poor's said freezing rates without assuring against further defaults "would have a negative impact on the ratings of certain U.S. first-lien subprime" mortgage securities. "Declining investor participation means reduced capital and liquidity, which may affect homeownership and borrowing opportunities," the company said.

In other words, this plan could make the whole situation worse, not better.

Secretary Paulson has been eager to show he is trying to alleviate the crisis, though many say he and the rest of the Administration have been slow to make a move. Mortgage payment delinquencies hit a 20-year high in the third quarter, according to the Mortgage Bankers Association, as borrowers were unable to refinance or sell their homes to get out of a credit pinch. The percentage of loans with payments more than 30 days late, including prime mortgages, rose to 5.59%, its highest level since 1986.

"Politicians want to look like they are doing something while not doing something," says Joseph Mason, a professor at Drexel University who studies banking regulation and capital markets. "This plan fits that perfectly."

What it also does is pass the problem on to the next president, who will be elected next fall, well before the freeze on those mortgages lifts--and possibly before the markets turn around. Despite a strong showing in many financial stocks Thursday after the plan was announced, analysts forecast slower growth for banks as they come to terms with rising credit costs and a slowdown in their bond divisions.

University of Maryland business professor Peter Morici puts is this way: "The Treasury seems obsessed with what investment bankers do best in a pinch--short-term workouts that punt difficulties into the high grass."

full article

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