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January 29, 2010

Tax season is on, IRS open weekends

The Internal Revenue Service – and social service agencies across Florida – kicked off the tax season Friday with events to highlight what one IRS official called “one of the largest and frankly most efficient anti-poverty program in the government.”k1653372.jpg

Director of Electronic Tax Administration David R. Williams said the Earned Income Tax Credit refunded nearly $50 billion to taxpayers last year. At amounts up to $5,700 for families with children, “It can make a significant difference in the lives of lower-income taxpayers.”

Yet 20 to 25 percent of those eligible for the credit, he said, don’t claim it. That would be around 5 million taxpayers.

IRS offices across South Florida will be open this weekend to help taxpayers get started on their returns. The goal is to kick-start the season, particularly for those who could claim the EITC.

The IRS and Volunteer Income Tax Assistance (VITA) sites will prepare tax returns for free for those whose income last year was $49,000 or less.

The IRS office in Plantation at 7850 SW 6th Court will be open Saturday from 9 a.m. to 2 p.m. It will be open every Saturday to help taxpayers through April 15 with the exception of April 3.

The IRS offices in Miami at 51 S.W. First Ave. and West Palm Beach at 1700 West Palm Beach Lakes Blvd. will also be open three Saturdays, Jan. 30, Feb. 6 and Feb. 20.
In addition, sites where you can get free tax help are scattered across South Florida.

To find a VITA site and its hours, call 211 in Broward or 561-383-1111 in Palm Beach County or 311 in Miami Dade.

To qualify for the EITC, your adjusted gross income must be less than:
• $43,279 ($48,279 married filing jointly) with three or more qualifying children
• $40,295 ($45,295 married filing jointly) with two qualifying children
• $35,463 ($40,463 married filing jointly) with one qualifying child
• $13,440 ($18,440 married filing jointly) with no qualifying children

The maximum EITC credit is:
• $5,657 with three or more qualifying children
• $5,028 with two qualifying children
• $3,043 with one qualifying child
• $457 with no qualifying children

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GDP looking good

People often ask me why the stock market rises when the economy is down. As in last year, from March 10 through the end of the year. It was a constant question.1242801883349649038Phon_gotique3.svg.thumb.png

I don't know why the flip of that situation doesn't seem to worry folks. No one ever seems to ask me why the market is down, about 2 percent for January as I write this, while the economy is up, as the Commerce Department reported this morning. GDP zoomed at a 5.7 percent annual growth rate in the fourth quarter, the fastest pace since 2003. That followed a 2.2 percent growth rate in the third quarter.

Maybe it's because they don't believe the economy is up.

Six months of economic growth makes this really look like the end of a recession. It's the textbook definition. That didn't stop the debate the other day in the newsroom over whether it was really over. The numbers say so, even if it doesn't feel so.

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January 28, 2010

Income Investing

My column from Sunday was about finding some income in a low-rate environment.
In case you missed it, you can read it here.

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Loan modifications: Streamlined application process to begin June1

Treasury officials said Thursday that starting June 1, borrowers will be able to submit a streamlined package of documents, including two pay stubs, to qualify for the Obama administration Making Home Affordable loan modifications. If borrowers make their initial trial payments ontime, they will be give a permanent loan modification.

"This is not about not getting documents back and forth and the servers losing it," said Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office.

The focus of the revised rules, she said, is to help move the almost 1 million borrowers nationwide in trial loan modifications into permanent new deals.

Streamlining the process is good for borrowers and banks were having trouble with the paperwork as well.

JPMorgan Chase CEO Jamie Dimon was in Miami last week to announce big expansion plans for the bank. He said the pace of load modifications "is getting better," but he also alluded to the paperwork problems that lenders and loan servicers face. The biggest problem, he said, was verifying income.

I've been told by some lenders that if an employee gets overtime pay, for example, that borrower has to get a letter from his employer saying the intention is to continue paying for overtime. That's a lot to ask.

Even so, Dimon said the Obama loan modification system is not a failure and that the number of loans receiving permanent modifications will improve over time.

At present, 25 percent of all mortgage loans that are behind have received any sort of offer of a modification. Within that group, only 14 percent have become a permanent modification.

That's for all lenders.

Loan modifications are supposed to be one way to head off foreclosure.

More than 441,000 Florida mortgages in foreclosure and payments are late on more than 422,000 Florida loans, according to figures from the Mortgage Bankers Association.

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January 27, 2010

Not so free W2s from H&R Block

A short while ago, I posted a blog about a service from H&R Block that would allow many people to get their W2 forms early, for free, even before the employer sends it in the mail.

Well, not really. A spokesperson for the company now says this service doesn’t work the way it was described to me.

So, let’s straighten it out.

What’s correct:

You can get a look at your W2 form online at H&R Block if your employer participates in their program – and many large employers do. (Mine does not, so I was not able to check my W2 and relied on the information supplied by Block's spokespeople.)

From there, you can have it sent to an H&R Block office where you are supposed to be able to pick it up for free.

I was told, however, that you could download it or print it, for free, on your home computer. No trek to the H&R Block office needed.

Not so. The earlier description was inaccurate.

The spokesperson now says you can only download it if you are using H&R Block’s online tax software. And the free version of that software won't get you the W2. You must upgrade to the $14.95 version or pay more for premium versions.

So, letting you know.

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Tax Q&A: What's the deduction?

What is the standard deduction? And are there extra benefits this year for anyone who doesn’t itemize?

The standard deduction for 2009 taxes is $11,400 for those who are married and filing jointly. For singles, it’s $5,700. 87655300.jpg
If you were 65 or older last year, you can add $1,100 to that amount for married filing jointly. If you are single, you can add $1,400.

For this tax year only, if you don’t itemize your taxes, you are allowed to add up to $500 for singles and up to $1,000 for married filing jointly if you paid state or local real estate taxes.

Also, those who don’t itemize may be able to add sales tax on the purchase of a new vehicle last year.

That purchase had to be made after Feb. 16 and the additional deduction is for sales tax on vehicles purchased for up to $49,500. If you paid more than that, you can’t add the entire sales tax amount to your bill. There are some income limits on this provision.

Ask your question at:

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January 26, 2010

Consumer confidence in Florida jumps

Florida’s consumer confidence unexpectedly rose in January five points to 74, the highest point in more than two years, according to a University of Florida survey.

“The sharp rise was somewhat of a surprise,” said Chris McCarty, survey director of UF’s Bureau of Economic and Business Research. “In the past we have seen similar jumps in the January index, perhaps in response to the financial stress associated with the holidays and the economic turbulence of the past year.”

The index measures consumers' view of finances and the economy. The largest increase in January is in the perception of whether this is a good time to buy big-ticket consumer items. That portion rose eight points to 83. Perceptions of people's personal finances also increased strongly.

The preliminary index reading was the highest since December 2007. McCarty said he expects the figure to be revised downward when a full month’s worth of data is included.

Last year, the index ranged from a low of 62 in February to a high of 72, in both September and October.

However, McCarty said he expects the January figure to fall in the coming months, as consumers absorb more bad news about high unemployment.

Consumer confidence is closely watched as an indicator of the direction of consumer spending, which accounts for about 70 percent of all economic activity.

-Harriet Johnson Brackey

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January 22, 2010

Talking mortgages, investments and the financial crisis

I've had a number of interesting conversations in recent days, with Jamie Dimon,Jaimie%20Dimon%20.jpg CEO of JPMorgan Chase and with best-selling author and money manager Joel Greenblattjoel%20greenblatt.jpg and with Robert Pozen,490px-Bob_Pozen.jpg chairman of MFS Investment Management and the author of a new book about the financial crisis. I'll let you in on more just as soon as I can. But in the meantime, there seems to be finally some movement on loan modifications, which have ensnared so many South Floridians in a frustrating process with few good outcomes. Here's an article today in the New York Times that indicates the help might flow in the direction where it is needed, toward the borrowers.

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January 21, 2010

Haiti tax breaks and texts

There’s a cool provision in the bill the House passed yesterday to make it easier to donate to charities that are helping Haiti.

If you gave by text message over your cell phone, the government will accept your bill as proof of the donation.

Ordinarily, the record has to be a paper check or a statement from the charity.

So text messages get into tax law. The House bill now moves to the Senate where it is expected to be taken up quickly.

If this law passes, it will speed up the tax break donors can get for making contributions to benefit Haiti. Instead of waiting until next year to take the write off on their 2010 tax return, donors can take the deductions now, on their 2009 taxes, which are due in April.

Under its provisions, donations must be made between Jan. 12 and the end of February. They have to be in cash or by check, credit card or text message.

Remember this: If you intend to take a tax deduction to a charity involved in Haiti relief, it must be a U.S.-based charity. Contributions to foreign-based groups don’t qualify. And you must take itemized deductions on your tax return in order to benefit.

Unfortunately, “Contributions to benefit specific individuals or families are not deductible,” according to a briefing from CCH, a Wolters Kluwer business that is a provider of tax and audit information.

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January 20, 2010

Haiti donations deductible now

This just in from the Associated Press:

WASHINGTON - Taxpayers who make donations for Haitian earthquake victims would be able to write off this charitable deduction when they file their 2009 taxes this spring, under a bill passed by the House Wednesday.

Under current law, donors would have to wait until they file their 2010 returns next year to take the deductions. But the newly advanced bill would allow donations made by the end of February to be deducted from 2009 returns.

The bill passed on a voice vote with no opposition. Quick Senate action is expected. A similar law was enacted in 2005 for donations to victims of the Indian Ocean tsunami that happened in December 2004.

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January 19, 2010

Tax: Time to file is now.

It's tax season. Start the party, right?
Well, it's not fun, but it can be a good thing for those who will get a refund.
Here's what you need to know in my latest.
And if you have a question about taxes, I'll get an expert to answer it. Just leave it for me in the box to the right.

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January 14, 2010

Madoff victims in South Florida want more

Attorney Helen Davis Chaitman came away from a series of meetings with about 350 Bernard Madoff victims in South Florida this week fighting mad.

She said she’d continue working with lawmakers to push for full compensation for victims of the ponzi scheme.

Chaitman, an attorney from New Jersey who also lost her retirement savings to Madoff, has testified before Congress about the Madoff scam and its impact. More than 2,000 Floridians were investors.

Chaitman was in South Florida to talk to Madoff investors about the Securities Investor Protection Corp. or SIPC, a privately funded corporation that insures brokerage accounts up to $500,000.

In the liquidation of the Madoff assets, SIPC has taken the position that investors won’t be reimbursed based on what their accounts were worth as of the last statement before Madoff’s Dec. 2008 arrest.

Instead, Chaitman said SIPC wants to compute its payouts on “net investments.” That would be the amount deposited into an account with Madoff, minus any withdrawals.

For long-term Madoff investors who thought their money was growing over the years, the “net investment” payouts would likely be far smaller than one based on the final statement. She says the "net investment" payouts would be the first time in 40 years that accounts are not liquidated based on their final values. And she claims this is not what is specified by the law governing SIPC.

"If they had told us before we made the investment, we wouldn't have a problem with it," she said. “I plan to get SIPC to abide by the law.”

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What really caused the financial crisis

It's like the system was all built on an angle. An angle that made a lot of our money flow toward housing and financial services.

That's the view of Sheila Bair of the FDIC, as quoted in today's New York Times, in her testimony before the Congressional panel looking into the causes of the financial crisis...

“This crisis represents the culmination of a decades-long process by which our national policies have distorted economic activity away from savings and toward consumption, away from investment in our industrial base and public infrastructure and toward housing, away from the real sectors of our economy and toward the financial sector,” she said..

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January 13, 2010

Madoff: Suit against bank continues

South Florida investors might have a legal claim against a Connecticut bank over retirement funds that were invested with Bernard Madoff.44871871-04093813.jpg

Stamford, Conn. Attorney David Golub said there are 15 or 20 South Floridians, mostly from Palm Beach county, who may have a claim against Westport National Bank.

He is representing more than 50 retirement plans and IRA account owners whose money was on deposit there. The bank had more than 200 retirement depositors with a total of $60 million at stake. The money was funneled to Madoff for investing. All of the retirement money was lost.

Some customers have said they didn’t know their money had been sent to Madoff’s firm. A number of them invested through an intermediary, Robert Silverman, an actuary from Connecticut.

Golub, of the firm Silver Golub & Teitell, is pursuing the case against the bank in federal court.

He said individual account owners have two choices, following a court ruling in December that denied the plaintiffs the right to form a class action suit. Instead, the individuals will have to file their own suits or join in a lawsuit that is ongoing.

While there is no specific deadline for bank depositors to file claims, Golub noted that they will be limited to trying to recoup their money going back three to six years.

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January 12, 2010

Mutual fund manager of the decade: Berkowitz

Manager Bruce Berkowitz of the Fairholme Fund Tuesday was named Domestic Stock Fund Manager of the Decade by Morningstar, an investment research firm. The fund, which has $10.6 billion in assets, is based in Miami.

The stock mutual fund's high, risk-adjusted returns since the year 2000 drew recognition. The value-oriented fund invests in out-of-favor companies that generate strong cash flows. It also tends to keep a large portion of its assets in cash at all times.

On an annual basis, the Fairholme fund earned a 13.2 percent return in what's being called the Lost Decade because major stock market indexes lost ground or were flat during that period.

“To have not only our long-term investment performance, but also our risk control, recognized by Morningstar is truly gratifying," Berkowitz said in a statement. "I thank Morningstar for the recognition and thank our shareholders whose trust and confidence we will never take for granted, as not losing money remains our number one goal.”

Other winners were David Herro of the Oakmark International Small Cap 1 fund for international stock fund manager and Bill Gross, of Pimco Total return, for fixed-income manager of the decade.

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January 11, 2010

Loan Modifications: Escaping from the battle

In case you missed it....I was talking about the Loan Modification Battlefield.....on Marketplace Money....on National Public Radio...this past weekend.

You can find the segment here.

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January 7, 2010

Tax time: And now, the scams

The start of tax season is a week away, so that means it’s time for the tax scams to begin.

Popping up in South Florida inboxes is an e-mail message asking the respondent to fill out an “updated version” of the W-2 form, the form most employees receive regarding their wages and taxes withheld.

This message is not from the Internal Revenue Service.

“One tipoff: The IRS does not send out unsolicited e-mails regarding tax returns, financial information or any personal identifying type of information,” said IRS spokesman Michael Dobzinski. The IRS won’t ask and generally won’t discuss any personal tax matters by e-mail, he said.

These e-mails look real. They sometimes even use the IRS logo. But there are obvious signs that they are fake.

One is bad grammar or misspellings.

Another: The e-mail is not from the IRS if the sender’s address doesn’t end in

If you get one of these e-mails, Dobzinski’s advice is to not open any attachments, and delete it or send it to

If you're really that anxious to get going on tax season, you can always go to and look at what's new for this year's filing season. You can start submitting returns Jan. 15.

POSTED IN: Taxes (41)

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January 5, 2010

Tip of the day on college financial aid

In the "Don't Fall for it" category, let's talk about college financial aid forms.

What you should not do: Fill out anything that comes in the mail, looks official, and asks you to send in a check. Those letters seem to be making the rounds in South Florida.

Those are scholarship matching services and they charge fees for what you can get for free through some very reputable web sites.

They might also be scams.

What you should do: Fill out the Free Application for Federal Student Aid.

This is the one and only form you need to submit for both federal and state aid. It's a good idea to do it now, before school deadlines hit.

You can find it online at:

There is no fee to fill out the FAFSA, to process it or to submit it.

And it's not as hard to do as you may have heard. With a tax return in hand, it's a snap.

The schools will access it automatically as they determine whether your student qualifies for financial aid.

Still want to look for scholarships?

Try or or

All free. All good.

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January 4, 2010

The first trading day

I love the first day of the market in the new year. 89678651.jpg

It's really just a game, but I'm addicted to watching it.

If it's up, I'm good.
And it was. Way up.

The Dow rose 155.91 points to close at 10,583.96, a 1.5 percent gain.
The S&P was up 17.89 points to 1,132.99, a 1.6 percent gain.
And the Nasdaq was up 39.27 points to 2,308.42, a 1.73 percent gain.

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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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