Tuesday, August 31, 2010

Jan 1, 2011 Largest Tax Hikes!

In just six months, on January 1, 2011, the largest tax hikes in the history of America will take effect.

They will hit families and small businesses in three great waves.

On January 1, 2011, here’s what happens... (read it to the end, so you see all three waves)...

First Wave:

Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.

These will all expire on January 1, 2011.

Personal income tax rates will rise.

The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).

The lowest rate will rise from 10 to 15 percent.

All the rates in between will also rise.

Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.

The full list of marginal rate hikes is below:
• The 10% bracket rises to an expanded 15%
• The 25% bracket rises to 28%
• The 28% bracket rises to 31%
• The 33% bracket rises to 36%
• The 35% bracket rises to 39.6%
Higher taxes on marriage and family.

The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.

The child tax credit will be cut in half from $1000 to $500 per child.

The standard deduction will no longer be doubled for married couples relative to the single level.

The dependent care and adoption tax credits will be cut.

The return of the Death Tax.

This year only, there is no death tax. (It’s a quirk!) For those dying on or after January 1, 2011, there is a 55 percent
top death tax rate on estates over $1 million. A person leaving behind two homes, a business, a retirement account, could easily pass along a death tax bill to their loved ones. Think of the farmers who don’t make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don’t have the cash sitting around to pay the tax. Think about your own family’s assets. Maybe your family owns real estate, or a business that doesn’t make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That’s 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?

Higher tax rates on savers and investors.

The capital gains tax will rise from 15 percent this year to 20 percent in 2011.

The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.

These rates will rise another 3.8 percent in 2013.

Second Wave:


There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The "Medicine Cabinet Tax"

Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The "Special Needs Kids Tax"

This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.

There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education.

Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year.

Under tax rules, FSA dollars can not be used to pay for this type of special needs education.

The HSA (Health Savings Account) Withdrawal Tax Hike.

This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave:

The Alternative Minimum Tax (AMT) and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.

The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year.

According to the left-leaning Tax Policy Center, Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear.

Small businesses can normally expense (rather than slowly-deduct, or "depreciate") equipment purchases up to $250,000.

This will be cut all the way down to $25,000. Larger businesses can currently expense half of their purchases of equipment.

In January of 2011, all of it will have to be "depreciated."

Taxes will be raised on all types of businesses.

There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced.

The deduction for tuition and fees will not be available.

Tax credits for education will be limited.

Teachers will no longer be able to deduct classroom expenses.

Coverdell Education Savings Accounts will be cut.

Employer-provided educational assistance is curtailed.

The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed.

Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.

This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.

PDF Version Read more: http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171

And worse yet?

Now, your insurance will be INCOME on your W2's!

One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation . . . those who backed this administration will be astonished!

Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.

If you're retired? So what... your gross will go up by the amount of insurance you get.

You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.

For many, it also puts you into a new higher bracket so it's even worse.

This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.

Not believing this??? Here is a research of the summaries.....

as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income."

- Joan Pryde is the senior tax editor for the Kiplinger letters.
- Go to Kiplinger’s and read about 13 tax changes that could affect you. Number 3 is what is above.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book.

People have the right to know the truth because an election is coming in November!

Monday, August 30, 2010

Market Snapshot by Sigma Research by SC Mortgage Assoc

Bonds and mortgages got spanked hard last Friday, rocked around all week...again with the market given back all the week's gains and then some on the shorter dated stuff. The data, the Bernanke, the technical, all played into the beat down and got some added help as markets in general decided to put risk back into play, consequences be darned. The 10-yr was able to take out a batch of key levels fairly easily with thinned Fri in Aug volume not helping any while traders reported mortgage players were not in as a presence.

This morning, after the strong selling on Friday, the bond market is opening better with those key equity market indexes trading weaker after their strong rally Friday. Churning, churning; that is what we have in the equity markets. The key indexes are trendless, every time it looks like a trend will develop it is thwarted by uncertainty whether traders to sell or buy. The bond market is running out of steam with the 10 yr note finding resistance at the 2.50% area. Bernanke last Friday continued his windmill tilting; comments that the economy is continuing to improve but very slowly; that the Fed stands ready to do more quantative easing if necessary (using unconventional means). The Fed is relatively helpless now; the Fed can talk the talk, walk the walk but it is out of bullets. How many times? The US economy is stuck and won't loosen until the housing markets stabilize and job security increases; neither is on the horizon until at least the end of 2011.

July personal income and spending was out at 8:30; income up 0.2% in line with estimates, spending was slightly better, up 0.4%. Not any noticeable reaction to the report. At 9:00 the DJIA -37, the 10 yr note +16/32 (-46/32 on Friday) at 2.59% +7 BPs (+17 BPs on Friday). At 9:30 this morning mortgage prices were +8/32 (.25 bp) after falling 18/32 (.56 bp) on Friday. The DJIA opened at 9:30 -30, 10 yr +15/32.

This week has a lot on the plate of data culminating on Friday with the big bopper, the August employment report. Reports on the August manufacturing and services sectors, weekly jobless claims and July pending home sales.

This Week's Economic Calendar:
9:00 am Case/Shiller 20 City index (+3.1%)
9:45 am Chicago Purchasing Mgrs index (57.0 frm 62.3
10:00 am Aug Consumer confidence index (50.0 frm 50.4)
2:00 pm FOMC minutes from 8/11 meeting
8:15 am ADP Aug private sector job estimate +13K
10:00 am July Construction spending (-0.7%)
ISM Manufacturing index (52.9 frm 55.5 in July
2:00 pm Aug auto and truck sales (N/A)
8:30 weekly jobless claims (+2K to 475K)
Q2 productivity revision (-1.7% frm -0.9% initially)
Q2 unit labor costs revision ( +1.1% frm +0.2% initially)
10:00 July pending home sales (unch frm June which were down -2.6%)
8:30 am August unemployment at 9.6% +0.1%)
Non- farm jobs -120K but private sector jobs +44K)
10:00 am August ISM Services sector index (53.0 frm 54.3)

Last Friday's strong selling should not be ignored; the magnitude of the price declines and yield increases in treasuries suggests investors and traders are increasingly fearful that long term rates may struggle to decline more from their recent lows (2.48% on the 10 yr) and mortgage rates at their recent lows. However; there is still no longer term evidence that rates will increase with the economy struggling just to hold on. This week will likely see continued volatility in the financial markets (stocks, bonds and mortgages). Short staffed street and Fed statements produced second largest %change this year on the 10 yr note Friday.

Tuesday, August 17, 2010

Rules that were set up by the Credit Card Act of 2009

As you may know, a few of the rules that were set up by the Credit Card Act of 2009 have started going into effect recently. There are a lot of changes on the horizon, so this is a perfect time to see if you need to clean up your credit score.

The first thing you want to do is see what your credit score actually is. Most creditors rely on the three-digit FICO credit score, which range between 300 and 850, when determining your level of risk as a borrower.

The higher your score, the lower the risk is for the lender and the better your interest rate will be. The lower your score, the more likely you'll run the risk of getting denied credit as well as having higher interest rates.

Your best bet is to contact a credit reporting agency to obtain your FICO score to see where you stand. To get your actual credit score, the actual three-digit FICO number, you will have to pay. You usually only have to pay around $25, so it's not much to get your credit score.

Additionally, you can get a free credit report at www.annualcreditreport.com (NOT www.freecreditreport.com). Annualcreditreport.com is the only authorized online source for a free credit report.

Once you have your credit report and score in hand, you can take the following steps to bolster them:

1. Pay Off Non-Installment Debt First
If you have credit cards, you'll want to focus your debt repayments on them. By paying credit card bills on time, and paying down the balances (or paying them off completely) you'll improve your score faster than paying off installment loans like car, student, or mortgage payments.

2. Get your debt under 30% of your credit limit:
This increases the amount of your "available credit" and will improve your credit score as you will be seen as less of a risk. Look at your credit card balances and send higher payments to the cards with balances closest to the credit limit first--to work toward the goal of decreasing your overall debt to less than 30% of available credit limits. Once you've obtained that goal, you can focus on paying back high interest debts first.

3. Only Use When Necessary
Each month, the balance from your last statement is reported to the credit bureaus, and whether you made your payment on time. Using a card that already has a balance isn't going to improve your score, so save yourself the extra interest and stop using the cards while you're working to improve your credit score.

You especially don't need to use credit cards from issuers who don't report your credit limit. If your credit card company doesn't report your limit, the credit bureau assumes your highest balance is your credit limit. This will make it look like you've maxed out your credit card, which affects your score negatively. Be sure to call your credit card issuer and find out.

4. Check Your Limits
Verify that the credit limits shown on your credit report match your actual credit limit for each credit card account. If the report is showing a lower limit than you really have, it can cause artificially lower credit scores because it will appear you're using more of your available credit than you really are. If you find any errors, just ask the credit-card issuer to update the information with the credit bureaus.

5. Fix Your Reports
Have your credit report corrected if there are errors with any of the following situations, as they negatively affect your credit score. Here's a checklist to have when you're looking over your report:

* Late payments, collections, charge-offs that aren't yours
* Credit limits that are reported lower than they really are
* Accounts which are listed as anything other than "paid as agreed" or "current". Things to ask about are things such as "settled", "paid charge-off", or "paid derogatory".
* Accounts listed as unpaid that were included in a previous bankruptcy.
* Any negative items older than 7 years that are still appearing on your report (it should automatically come off the report after 7 years --10 if you filed bankruptcy)

For more information, click here to see the Federal Reserve's five tips to help out your credit score: http://www.federalreserve.gov/consumerinfo/fivetips_creditscore.htm. Feel free to pass this along to your friends, especially those who are considering a major purchase, such as a car or new home. Improving your credit score will be able to protect you from the coming storm and help you make those major purchases more easily.

Monday, August 2, 2010

New Listing in Taylors,SC

Market Snapshot by Sigma Research by SC Mortgage Assoc

Stock indexes this morning started stronger and pushed prices lower in mortgages and treasuries. Nothing significant, just the continuation of the choppy market conditions. On the rate markets, the 10 yr note yield fell 10 basis points last week to run to the lowest levels seen in the past six weeks but didn't break the resistance at 2.88%, closing at 2.91% on Friday. This week has much to think about with many data points through the week, but the key this week that should keep a lid on any significant changes is Friday's July employment report. Between now and Friday data interest rates may increase slightly but in choppy trading as estimates of employment are soft with lots of talk but not much conviction.

At 9:00 this morning the DJIA traded up 128, the 10 yr note -9/32 at 2.95% +4 bp and mortgage prices -5/32 (.15 bp) frm Friday's close. At 9:30 the DJIA opened +130, the 10 yr note -10/32 at 2.95% +4 bp and mortgage prices -7/32 (.22 bp) frm Friday's close.

At 10:00 two reports; June construction spending was expected down 0.8% it was up 0.1%, all of the increase was in government spending no increase in private construction. The July ISM manufacturing index fell to 55.5 frm 56.2 but was anticipated to have declined to 54.2, the new orders component fell to 53.5 frm 58.5, employment at 58.6 frm 57.8 and priced pd index at 57.5 frm 57.0. The ISM data was better overall than expected and jumped stock indexes and pushed treasury prices lower on the initial knee jerk. Any index read over 50 is considered expansion, traders are encouraged that the report is considered better than forecast.

This week's Economic Calendar;
8:30 July personal income and spending (income +0.1%, spending unch)
10:00 June factory orders (-0.5%)
June pending home sales -5.0%
2:00 July auto and truck sales
7:00 weekly MBA mortgage applications
8:15 ADP July private jobs estimate (+25K)
10:00 ISM Services sector index (53.0 frm 53.8 in June)
8:30 weekly jobless claims (-2K to 455K, continuing claims 4.530 mil frm 4.565 mil)
8:30 July employment from BLS ( non-farm jobs -70K; private jobs +100K)
July unemployment rate (9.6% frm 9.5%)
3:00 June Consumer Credit (-$5.7B)
In recognition that employment is the key this week click on this address for an interesting view of unemployment from 2007 now. A picture they say is worth a lot.

On Wednesday Treasury will announce next week's auctions of 3 yr, 10 yr and 30 yr treasuries. Every other week Treasury borrows to fund the continuing budget deficits; back in the day auctions usually pressured the rate markets but over the past 18 months the demand for treasuries has been very strong and in turn we don't have the pushback in prices that was mostly the norm prior to the recession.

Three times in the month of July the bellwether 10 yr note yield fell to 2.88% area and so each time that has capped rallies in treasuries and mortgages. Last Friday the 10 yr note fell to 2.90% close enough for us to consider it the third run lower, this morning rates are softer as a result and on the strong trading early this morning in the stock market. While rates are soft against technical resistance, the larger perspective remains constructive for rates and still questionable in our view

Although the equity markets started strong this morning the odds the key indexes will maintain the huge gains are not high. Equity markets and rate markets are likely to churn through the week with little overall changes until employment on Friday. On Friday the Q2 GDP advance data with its revisions is still out there in the minds of investors, traders don't much care because their time frames are measured in hours and days. In 2009 GDP was revised from -2.4% to -2.6%; 2008 revised from +0.4% to unchanged and 2007 revised from +2.1% to +1.9%. Will the lowered GDP revisions finally wake up markets and media that unless consumers spend the economy will not grow? Or will this data be swept under again in favor of corporate earnings as the economic driver? How many times do markets need to be reminded that until consumers open up and spend the economy is not going to improve, and eventually those better than expected corporate earnings built on massive cost cutting will wane?