Dear Dr. Don,
If your current credit card provider does a soft inquiry on your credit report, does it show up on your report’s credit history like your own inquiries?
— Dee Details
Dear Dee,
The difference between a hard inquiry and a soft inquiry on your credit report is the difference between applying for credit and having your credit monitored. Read the rest of this entry »
Dear Dr. Don,
I am 24 and put 10 percent of my income into my 401(k). If my company does not match my 401(k) contribution, am I better off contributing that money to a Roth IRA?
— Regina Retirement
Dear Regina,
Your ability to contribute to a Roth IRA account in 2008 is determined by your income. Here’s what Read the rest of this entry »
Dear Bankruptcy Adviser,
I have filed for Chapter 7 after failing the income test but passing the means test. I was unemployed for four months and have $85,000 in unsecured debt that I have been barely paying off, and $500,000 on a secured debt associated with a house in foreclosure.
The problem is that for the last two months I have had Read the rest of this entry »
Dear Real Estate Adviser,
I am giving my house back to the bank. Can they go after my savings? What about other assets? I am near retirement age.
— Kitty
Dear Kitty,
Depending on the state where you live, the bank could conceivably come after your savings through a deficiency judgment. However, these days there’s a better-than-average Read the rest of this entry »
Dear Dr. Don,
I lost my job at end of March and I have to decide both what to do with my 401(k) and my lump-sum retirement money.
Several years back, we had to decide between two plans for retirement — one was getting the money at 65 (or whenever you retire) and the other was taking a lump sum at the time you leave the company.
Since I had not been there very long, I decided
Dear Tax Talk,
My question is regarding my boyfriend and his ex-wife. They are divorced with two daughters. His ex is a very difficult person to deal with, to say the least. She has taken him to court several times over the last five years. One of those times, she added that they will alternate the girls as tax-exempt on their tax returns. The judge granted this request.
For 2008, he was to claim his youngest Read the rest of this entry »
Dear Tax Talk,
I bought a CD in January of 2008 that matured one year later, on Jan. 29, 2009. My bank sent a 1099 for a portion of the interest in 2008 and said I would receive another 1099 for the balance of the interest at the end of 2009. I never took interest from this account until the maturity date, at which time I closed the CD and took both the principal and interest.
The reason I bought a 12-month Read the rest of this entry »
Dear Tax Talk,
My employer takes out about $300 a month for health insurance from my gross pay, and I am told that this is before taxes to save me money. However, when I get my W-2 form, all the money I pay for health insurance is included as “wages, tips and compensation,” so it really saves me nothing at tax time.
I have argued this point with them, but they say that they have to include it. I don’t believe Read the rest of this entry »
Dear Tax Talk,
We are an S corp that was formed in May 2008. We have two shareholders who contribute about three hours a day, five days a week on a regular basis. We had zero revenue with about $17,000 of losses in 2008. In 2009, we will probably be incurring another $23,000 loss. We will not make cash distributions to our shareholder nor will they get any sort of remuneration for their services. Do we have Read the rest of this entry »
Dear Tax Talk,
My daughter is 24 and a student in veterinarian school. She had $2,400 in income. She took out student loans for her tuition, about $17,000. My husband and I paid the balance of all her medical bills after insurance, bought food and supplies, gave her a car, bought clothes but certainly not more than that $17,000 she borrowed for her tuition. Can we still claim her as a dependent under the qualifying Read the rest of this entry »
Dear Tax Talk,
We have a newborn who needs constant home nursing care due to a tracheotomy. We normally would put the child in day care right now, but can’t. Are any of our expenses (nursing care, medical supplies, etc.) deductible in terms of the child care credit? The nurse basically acts as a nanny so my wife and I can work. I know medical expenses have to be beyond 7.5 percent of income to be deducted, Read the rest of this entry »
Dear Tax Talk,
I’ve read a number of publications that explain how depreciation works for rental property; however, all the examples I have seen so far are covering situations when modified adjusted gross income (MAGI) is up to $150,000.
Here’s the scenario I am trying to figure out: The rental property was purchased for $800,000 (closing costs included). Depreciating over 27.5 years would be about $29,000 Read the rest of this entry »
Dear Bankruptcy Adviser,
Can a debt that was discharged in bankruptcy over 20 years ago be collected on? I noticed on my credit report recently that a company whose debt was discharged in 1982 has made a report on that same account and indicated it was delinquent. Is this legal? How can a discharged debt be resurrected?
— Dora
Dear Dora,
Read the rest of this entry »
Dear College Money Guru,
I paid my son’s tuition for his spring 2008 semester of college from my checking account in December 2007. I didn’t submit the 529 distribution request until April 2008. Then I read the 529 plan’s fine print. Have I created an unqualified withdrawal by not making the withdrawal in the same calendar year as I paid the tuition (even though it was only Read the rest of this entry »
Dear Debt Adviser,
My husband constantly spends small amounts of money. This month, his spending added up to $345. That amount is on top of our regular monthly spending deficit of $400 a month.
He seems to think he has the right to spend money because he is “stressed” or it’s “not a big deal” because he spends just the little amounts. Read the rest of this entry »
Dear Steve,
I want to get my home appraised but there have been only foreclosures and short sales lately in my neighborhood. I can’t see how an appraiser can produce enough “comps” to accurately determine my home’s true market value. What are your thoughts?
— William P.
Dear William,
Unfortunately for you, all sales Read the rest of this entry »
Dear Dr. Don,
I’ll soon be graduating from college and will (hopefully) be comparing job offers in the next few months.
I’ve been looking at Web sites with cost-of-living calculators, and I was wondering how heavily they should influence my decision on a job offer. I will rent an apartment for at least five to seven years, and it seems like the difference between two cities in rent is not as great as the difference in the cost
Dear Tax Talk,
Nine months before my husband’s IRA is available, we are starving. His part-time job and my business aren’t making it. The total we bring home is less than $1,800, and our rent is $1,300.
We have a car plus a personal loan payment of $331 per month, then the rest of the bills. I want my husband to live to see his IRA and I want us to live through this. My thoughts are to withdraw $30,000 Read the rest of this entry »
Dear Debt Adviser,
My mother, who has always lived for the here and now, is asking my sister and (me) to pay for her lifestyle since she quit her job two years ago. While my husband and I are trying to save every penny in case we lose our jobs, my mother has gone on vacations, racked up all her 12 credit cards, etc. Now, she is telling us that she needs our help financially.
What makes me upset is that Read the rest of this entry »
Dear Tax Talk,
My question is about the state income tax deduction. Do you only claim the additional amount you had to write a check for at tax time? For example, I have $50 withheld from my paycheck each month, for a total of $600. The total tax is $1,000. Do I claim the $400 I have to write a check for or the total $1,000?
— Jim
Dear Jim,
Read the rest of this entry »
Dear Debt Adviser,
If there are two individuals named on a mortgage with a home equity line of credit, or HELOC, and there is a draw on the HELOC, do both individuals need to sign for the amount drawn? (For example,) husband writes a check for $24,000 against the line of credit and the other individual is not aware.
— Teresa
Dear Teresa,
Read the rest of this entry »
Dear Dr. Don,
I have asked several people this question, and I hope you can give me an answer. I owe $70,000 on my mortgage. The interest rate is 5.75 percent fixed and it has 11 years remaining. I want to shorten the time of the years left because of my planned retirement in nine years.
If I pay $700 a month on my payment, how much do I need to pay toward the principal, and how often, to shorten the years Read the rest of this entry »
Dear Credit Card Adviser,
I heard that closing a credit card has a negative effect on the FICO score and have read your thread. My question is two parts: If I cancel a credit card that has never been activated, does this affect my FICO score? What about canceling a credit card that was unsolicited and sent to me (and) that was never activated? Thanks for your help.
— Elliot
Dear