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6 Tips for Deducting Donations - December 17, 2013 by WWFCU

DonationIf you’ve donated to a charity this year, the IRS wants you to know about few things about deducting it:

Tax-exempt status – Contributions must be made to qualified charitable organizations to be deductible. Ask the charity about its tax-exempt status, or look for it on IRS.gov in the Exempt Organizations Select Check, an online search tool that allows users to select an exempt organization and check certain information about its federal tax status as well as information about tax forms an organization may file that are available for public review. This search tool can also be used to find which charities have had their exempt status automatically revoked.

Itemizing – Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.

Fair market value – Cash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to several types of donated property, including cars, boats, clothing and household items. If you receive something in return for your donation, such as merchandise, goods, services, admission to a charity banquet or sporting event only the amount exceeding the fair market value of the benefit received can be deducted.

Records to keep – You should keep good records of any donation you make, regardless of the amount. All cash contributions must be documented to be deductible – even donations of small amounts. A cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity that includes the charity’s name, contribution date and amount usually fulfill this record-keeping requirement.

Large donations – All contributions valued at $250 and above require additional documentation to be deductible. For these, you should receive a written statement from the charity acknowledging your donation. The statement should specify the amount of cash donated and/or provide a description and fair market value of the property donated. It should also say whether the charity provided any goods or services in exchange for your donation. If you donate non-cash items valued at $500 or more, you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a contribution of non-cash property worth more than $5,000, you typically must obtain a property appraisal and attach it to your return along with Form 8283.

Timing – If you pledge to donate to a qualified charity, keep in mind that for most taxpayers contributions are only deductible in the tax year they are actually made. For example, if you pledged $500 in September but paid the charity just $200 by Dec. 31 of that same year, only $200 of the pledged amount may qualify as tax-deductible for that tax year. End-of-year donations by check or credit card usually qualify as tax-deductible for that tax year, even though you may not pay the credit card bill or have your bank account debited until after Dec. 31.

Bottom line: your support of a qualified charitable organization may provide you with a money-saving tax deduction, but conditions do apply. For more information, see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

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Taxes–What to Stash and What to Trash - December 10, 2013 by WWFCU

Tax_DocsWhat records and documents should you keep in case the IRS ever decides to audit you—and for how long should you keep them?

Here’s some advice to consider:

  • The standard statute of limitations is three years, but the IRS can audit up to six years after a filing if it suspects under-reporting of income by more than 25 percent.
  • If auditors find fraud, or if you fail to file a return at all, there is no statute of limitations. For this reason, many tax advisers recommend hanging on to your tax returns forever. Then, if the IRS claims it has no record of you filing for a certain year, you will have a copy to defend yourself.
  • It also makes sense to keep backup documents to your tax returns, such as W-2 forms, receipts for charitable donations, and other deductible expenses for at least six years.
  • As for investment statements, you only need to keep monthly or quarterly documents until you receive a year-end summary. These summaries, along with stock certificates and any documents related to investment purchases or sales, should be kept for as long as you own the investment plus an additional seven years after you file taxes reflecting the sale.
  • This same schedule applies to mortgages. Keep the monthly statements until the year-end statement arrives. Save these annual statements for the term of the mortgage, plus seven years.
  • Unless you are being audited, monthly bank and credit card statements can be discarded after a year.
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Know Your Obligations when Cosigning a Loan - December 3, 2013 by WWFCU

Loan_Co-SignOften, parents cosign for their sons or daughters who have adequate income but a lack of credit or employment history. By cosigning, parents help their offspring get the loan and establish credit in their own names.

But many borrowers, be they the cosigner or the primary borrower (also known as the maker), don’t recognize the magnitude of the responsibilities borne by cosigning a loan.

What responsibilities do you have when you cosign a loan?

Cosigners lend their names and good credit histories to the maker. Should the maker die, lose a job, or otherwise fail to make payments, all responsibility for meeting the terms of the loan transfers to the cosigner.

An often-overlooked aspect of cosigning a loan is the fact that the loan appears on both the maker’s and cosigner’s credit reports.

If the maker doesn’t pay, the lender will notify you to make the payments. In most cases, however, your credit report already will contain the delinquency by the time you receive the notification.

How might a cosigned loan affect your ability to get new credit?
Even if it is not delinquent, a cosigned loan is part of your credit history. Since financial institutions consider a cosigned loan your responsibility, they’ll include it when calculating your debt-to-income ratio.

This ratio helps lenders judge whether you have too many bills to pay relative to your income. The cut-off point varies widely among financial institutions and the type of loan. If it’s too high, though, the result is the same: your loan application will be denied—even when the primary borrower never misses a payment on the cosigned loan.

Should you cosign a loan?

Before making a decision whether to cosign a loan, consider the following advice offered by Experian:

  • As a cosigner, you should know the purpose of the loan, the type of loan, the terms, and why your friend or relative needs a cosigner.
  • Understand your legal and financial obligations. Federal law requires financial institutions to tell you in writing that you are responsible for paying the debt if the primary borrower can’t or won’t make loan payments.
  • Read and understand the credit contract. Be aware that a lender may be able to collect from you even when there is collateral. In the case of a car loan, for example, the lender might demand payment from you instead of repossessing the car. And even if the car is repossessed, its value may not be sufficient to pay off the loan.
  • If the primary borrower defaults on the loan, then you as the cosigner may have to pay late fees or collections costs in additions to the loan amount.
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How to Establish Credit - November 26, 2013 by WWFCU

Establish_CreditHow do I establish credit? You need a steady work record and continued residence at the same address. If you do not have a checking account, open one and be careful not to bounce checks.

You may apply for credit at a local department store or credit union. You might also consider a secured card, which requires you to deposit money as security for the charges you make on the card.

Where can I get a copy of my credit report? You can get a copy of your credit report by contacting AnnualCreditReport.com.

Can you fix my credit report or clean it up? No. If negative comments on your credit report are correct, they can remain in your file for up to seven years—except for bankruptcy, which can remain for up to 10 years.

If you believe there are errors in your credit report, you must notify the credit bureau in writing. The bureau will follow up your request with your creditor. If the creditor agrees with you, your report will be changed.

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Spend Less This Holiday Season - November 12, 2013 by WWFCU

Holiday_ShoppingIt’s easy to forget about your budget when shopping for holiday gifts.Here are some tips to stop that from happening:

  • Create a written plan for holiday spending and gift giving a month or two in advance. Include possible gifts, dollar amounts and alternative choices.
  • Establish spending limits for each person on your list and start looking for bargains early.
  • If it has been a challenging year financially, shrink your holiday gift list.
  • Separate shopping trips (when comparing prices, quality, and value) from spending trips (when making a purchase), and resist taking cash, credit cards or a checkbook on the shopping trips.
  • Wait for sales. Increased food and energy costs this year could bite into holiday sales, so sales and clearances could come earlier than usual.
  • Watch the advertising and sale flyers for items you intend to purchase.
  • Spend cash and avoid using credit cards. Charge cards tend to promote indiscriminate spending. Credit card users often say they had no idea how much they spent on the holidays until the credit card bills arrive in January or February of the next year.
  • Make more of your gifts at home. A freshly baked loaf of bread, cookies or desserts are always appreciated. Also art, crafts, needle work or a collage of photographs can make excellent gifts.
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Preparing Your Car for Winter - November 6, 2013 by WWFCU
Winter_CarFrom a mechanical aspect, winter conditions – wet, cold and icy weather – present the greatest challenge to your vehicle’s operating efficiency. Since these conditions cannot be avoided, prepare for winter by performing a complete vehicle checkup in the fall. Check, or have your mechanic check, the following items:1. Electrical System

  1. Battery – Have your alternator or generator, voltage regulator and drive belts checked also.
  2. Ignition System – Damaged ignition wires, a cracked distributor cap or worn spark plugs can make starting difficult or may cause a sudden vehicle breakdown.
  3. Lights – Make sure all your lights and lenses are clean and functioning properly. Grime on headlight lenses reduces their effectiveness by as much as 90%.

2. Brake System – Have your breaks checked regularly and do not delay any necessary maintenance or repairs.

3. Tires – Make certain your tires are properly inflated and in good condition. While it is best to purchase tires in sets of four, if you only purchase two, mount them on the rear wheels.

4. Exhaust System – Have a mechanic check your exhaust system for leaks in order to minimize the chances of carbon monoxide poisoning. If your car is stuck in the snow and you have the engine running, open a window slightly and clear snow away from the exhaust pipe.

5. Heating & Cooling System – Make sure your vehicle’s cooling system contains enough antifreeze to prevent freezing in cold weather. Keep the mixture fresh by changing it regularly and having the entire system checked for leaks.

6. Windshield Wipers, Washer, Glass & Vehicle Exterior – Clean windows offer optimal visibility. An antifreeze washer solvent should be used in the water reservoir bottle.

It is also recommended that you have a winter driving kit in your vehicle. The following items will be invaluable should an emergency develop:

  • Bag of abrasive material (sand, salt or cat litter)
  • Small snow shovel, snow brush and ice scraper
  • Traction mats
  • Flashlight & extra batteries
  • Window-washing solvent; cloth or paper towels
  • Booster cables; warning flares or triangles
  • Gloves or mittens and blanket
  • Cell phone

Compliments of AAA.

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Tips for Shopping for a Vehicle for Your Teen - October 28, 2013 by WWFCU

Shopping teen vehicleAccording to the National Highway Traffic Safety Administration (NHTSA), auto accidents are still the leading cause of death for American teenagers. However, due to safer vehicles graduated license laws, the numbers have decreased 65% from 8,748 teen deaths in 1975 to 3,023 in 2011.

Regardless of statistics and new vehicle safety precautions, automakers still haven’t come up with a vehicle that can drive itself when the weather gets bad, when a tire blows out or when another driver becomes distracted and wanders into your lane. Seasoned drivers rely on their experience and split-second-decision-making abilities to negotiate these perilous moments. Teens don’t have that experience.

Automobile crash experts cite inexperience, low seat belt use, driving with too many passengers in the car, inattention, drugs and alcohol and excessive speeds as the reasons why teens are involved in so many fatal crashes.

Another culprit is the size and type of vehicle they drive. In an emergency situation, because a young driver has little or no driving experience to draw on, he’s forced to rely on the structural integrity of his vehicle to see him through a collision. The kind of car a teen drives could mean the difference between injury and death.

Does that mean you should rush out and buy a brand new car with all the latest safety options?

Not necessarily. However, the Insurance Institute for Highway Safety recommends newer models. They do better in crash tests than older cars and have extra safety features like air bags, anti-lock brakes and passive restraints.

How a vehicle does in a frontal impact depends on its structural integrity and its crumple and crash zones. Crumple zones absorb energy on impact, and since their collapse is controlled, the energy that would otherwise damage a passenger area gets channeled to different parts of the vehicle.

Bigger vehicles have longer crumple zones, providing more protection to the passenger areas. However, they’re not an ideal fit for everyone. Consider a young petite woman. If she can’t comfortably reach the gas pedals or see over the steering wheel, she’s not going to have good control of her car. Consider, too, the rollover issue with sport utility vehicles. Because they have a high center of gravity, they are more prone to rollover than cars. Experts cite speed and inattention — two culprits behind teen crash fatalities — as the causal factors in rollovers.

NHTSA conducts front and side crash testing on vehicles predicted to have a high sales volume, vehicles that include a new safety feature or have been structurally redesigned. The agency also assigns vehicle rollover resistance ratings. They publish their results on their website. Before you begin to research your automobile’s crash test scores, take a moment to look at the website’s “Frequently Asked Questions” page. You’ll glean insight into the different kinds of tests they perform, under which conditions they perform them, and the factors they use to rate performance. Another source for crash test information is the Insurance Institute for Highway Safety.

If you’re in the market for an older model, experts recommend buying a sturdy and reliable — but not overpowered — sedan. Your teen won’t be able to drive at excessive speeds, but if he loses control of the vehicle, he won’t face the increased rollover risk he would if he was in a high profile vehicle. Make sure the car’s tires and brakes are in excellent shape. Examine seatbelts for loose or fraying fabric and make sure they attach and retract properly. Consider having the car thoroughly checked out by a trusted mechanic.

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New Financial Habits in the Post-Recession Age - October 17, 2013 by WWFCU

Good financial habitsIf you’re like many, you’ve spent the past few years scrimping and saving. These are great habits to keep, even if your financial situation has improved. 

If you still haven’t taken those steps, you might want to think about making these changes:

Restart your finances with a thorough financial plan. If you’ve lost a job or have been struggling to get control of your debt, savings or investments, plan a visit now with a Certified Financial Planner™ professional. At the meeting you can also examine spending patterns and the emotional drivers behind many of your financial decisions. If you don’t have a planner in mind, the Financial Planning Association has a website where you can search by location and specific planning issues.

Create a budget. If you’ve never tracked your spending before, make a commitment to do so for at least two months as you pull together financial statements, income sources and your bills. Start separating all your expenses into both fixed (amounts that don’t change) and variable (amounts that may change, such as restaurant meals, gasoline expenditures and entertainment expenses). Take into account any major expenses that are coming up within the year. Total your monthly income and expenses and then start identifying the expenses that you can trim and figure out whether you can direct the money you save to spending or debt. Congratulations! You’ve created your first budget. Also, don’t ignore planning for perks and vacations and make sure you plan ahead for big expenditures, such as cars and retirement.

Go cash or debit. Return credit cards to their correct status—a way to afford emergencies. Debit cards with a bankcard logo are typically welcome at most stores where credit cards are accepted. This way, you pay cash without carrying cash. If you don’t have such a card, you can probably get one from your bank or credit union to replace your traditional ATM card, but remember to tell them to limit your buying power to the cash balance in your account. Also check to make sure what protections exist on that card if it is lost or stolen and if they will forgive the balance in the event of the cardholder’s death. Be aware that some banks freeze your underlying checking account for your debit card until a dispute regarding an item purchased with a stolen card is resolved.

Live off lists. Yes, everyone makes shopping lists from time to time so they don’t forget to bring home milk and bananas. But the advantage of making very detailed shopping lists for everything—preferably on one page—is that it’s really a good way to keep impulse spending down. If, for example, you have a week of unexpected expenses (car repair, home repair, unexpected fees for your child at school), you can see what real priority items are and what you might be able to do without.

Set a schedule for checking your credit report. This is not so much a spending issue as a way to monitor the ongoing safety of your accounts and your borrowing status. You have three credit reports to check—TransUnion, Equifax and Experian—and you have the right to get all three of these for free once a year. The best way to do this is to request each report at staggered points during the year at annualcreditreport.com, which is the only guaranteed free site to order these reports. If any credit report site requests a credit card number before it surrenders a report, chances are good that you’ll be paying for that “free” report. Why should you stagger your reports? Because the same information travels between each agency and if there is an error or security breach, you may catch it faster if you’re checking throughout the year rather than at one time only.

Comparison shop at your desk. Shopping online has its own risks, including paying expensive shipping fees and overspending with a simple click among them. However, using the Internet to browse and compare prices can save time, gasoline and money. Websites like eBay, Amazon or mySimon.com can help you determine general price ranges for gifts you need that are sold online. Once you have those ranges, get on the phone and determine whether you can buy the same items more affordably at retailers close to home.

Don’t shop without coupons and discount codes. You don’t have to buy a newspaper to get coupons anymore. If you know particular stores where you’ll shop, sign up for their email lists. You’ll start receiving coupons and news of specials on a regular basis. If you buy particular products regularly, go to the manufacturer’s website and see if you can sign up for regular discounts online and in the mail. Also, if you do shop online, sites like BradsDeals.com and CouponCabin.com have promotional codes that you can type in for discounts before you hit the “total” button on an order. Usually, these codes will cover free shipping, but they might also buy additional discounts on an order. Never complete an online order without searching for a promotional code.

This article was submitted by the Financial Planning Association, the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.

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Why Your Hobby May Be Taxed - October 7, 2013 by WWFCU

Hobby-taxedHere are eight questions that will help determine if your activity is a hobby or a business:

  1. Is the purpose of your activity to make a profit? Generally, your activity is considered a business if you expect to earn a profit.
  2. Do you participate in your activity just for fun? Hobbies, also called not-for-profit activities, are those activities that are not pursued for profit.
  3. Do you depend on income from the activity? If so, your activity is likely considered a business.
  4. Have you changed methods of operation to improve profitability? If so, your hobby may actually be a business.
  5. Do you have the knowledge you need to turn your activity into a successful business? People who carry out hobbies just for fun often don’t have the business acumen to turn their not-for-profit activity into a profitable business venture.
  6. Have you made a profit in similar activities in the past? This may mean your activity is a business instead of a not-for-profit hobby. An activity carries a profit if it makes a profit in at least three of the last five tax years, including the current year—or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.
  7. Does the activity make a profit in some years? Even if your activity does not make a profit every year, it still may be considered a business.
  8. Do you expect to make a profit in the future from the appreciation of assets used in the activity? This indicates your activity may be a business rather than a hobby.

If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity. If you are conducting a trade or business you may deduct your ordinary and necessary expenses.

More information about not-for-profit activities is available in Publication 535, Business Expenses, available on the IRS website or by calling 800-TAX-FORM (800-829-3676).

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Millionaire Secrets to Success - September 30, 2013 by WWFCU

Millionaire tipsPatience and hard work aren’t all you need to reach financial success. We’ve got some secrets from self-made millionaires to help you make your own fortune:

  • Set some clear goals. You’ve got to dream big if you want to succeed on a large scale. Don’t be afraid of your ambitions. Start with a list of what you want to achieve this year, and then select the one goal that would have the greatest positive impact on your life, something you feel real passion for. Then get to work.
  • Educate yourself about money. Even if you don’t have your sights set on becoming the next Warren Buffett, a good understanding of finance will help you set priorities and make decisions about spending, investments, and savings. Immerse yourself in all the information you can find about the field that interests you. Knowledge is power.
  • Think of yourself as your own CEO. Whether you work for a boss or for yourself, view your career and success as your own. That means taking full responsi­bility for what happens to you—your decisions, failures, and triumphs. It also means putting all your energy into your goals. Motivational guru Brian Tracy advises taking the “40+” approach: You work 40 hours a week for survival, but that’s only the beginning. Every minute you devote past that 40 hours is devoted to your success.
  • Serve other people. Structure your goals so they’re not just about you. You’ll earn support from the people whose help you need by showing them how your achievements will benefit them—and you’ll feel better about yourself than you would if you concentrate only on what’s in it for you.
  • Learn to sell yourself. Whatever you create, you have to sell to someone else. You’ll need to understand sales and marketing no matter what industry you’re in. But at the same time, you have to sell others on your abilities. Be honest and reliable so customers, investors, and other important stakeholders know they can trust you to take care of them.
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