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Weekly Spotlight:
Don’t forget to drop off your non-perishable donations at any GCF Branch this week! GCF Bank proudly participates in the Gloucester County Cares About Hunger Food Donation Collection Drive. Visit our Web site for a list of preferred items.
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There has been a lot of information in the news over the past year about the First-Time Home Buyer Tax Credit. Unfortunately, there are still many people who are confused over exactly what this tax credit is, how to claim it, and whether or not they would qualify. If you purchased a home in 2009 or are thinking about purchasing a home now, there are some important deadlines coming up that you do not want to miss.
The First-Time Home Buyer tax credit is for people that have not owned a principal residence within the three-year period immediately prior to the purchase of any home that will be used as a principal residence. This only applies to homes that are priced under $800,000 and includes single-family homes, townhouses, condos, manufactured homes, and houseboats.
The amount of the tax credit is calculated as 10 percent of the home's purchase price, up to a maximum of $8,000, and applies to homes purchased on or after January 1, 2009 through April 30, 2010. In addition, if you have a binding sales contract in place by April 30, 2010, and close on the new home by June 30, 2010, you will also qualify for the tax credit.
There are some income limits on the program in order to qualify for the full tax credit. The limits are based on your modified adjusted gross income and vary by when you actually purchased the home as follows:
Homes purchased on/after January 1, 2009 through November 6, 2009:
single taxpayers - up to $75,000
married couples filing jointly - up to $150,000
Homes purchased after November 6, 2009 through April 30, 2010:
single taxpayers - up to $125,000
married couples filing jointly - up to $225,000
A partial tax credit is available for those making up to $20,000 more per year than the limits shown above. If you make over $20,000 more per year than the limits shown above, you do not qualify for this tax credit.
To determine how much of a partial tax credit you may qualify for, divide the amount of your income over the limit shown above for your category by $20,000, then subtract your answer from 1.0. Take this result and multiply it by $8,000 to obtain the amount of the partial credit for which you may qualify. For example, if you are a single individual that purchased a home prior to November 6, 2009, and your modified adjusted gross income in 2009 was $85,000; you would determine the amount of your credit as follows:
Income over the limit: $10,000 ($85,000 - limit of $75,000 = $10,000) Divide by $20,000: $10,000 / $20,000 = .50 Subtract from 1.0: 1.0 - .50 = .50 Multiply by $8,000: $8,000 x .50 = $4,000
In this example, the amount of the partial tax credit available to you would be $4,000. Of course, you should consult your tax advisor to determine the amount of the tax credit you qualify for based on your financial circumstances.
Obtain your tax credit by claiming the credit on your federal income tax return. If you purchased your home in 2009, you can claim the credit on your 2009 tax return; however, in some circumstances you may want to claim the credit on your 2008 tax return (consult your tax advisor). If your purchase a home in 2010, you can claim the credit on your 2010 tax return; however, in some circumstances you may want to claim the credit on your 2009 tax return (again, consult your tax advisor).
As long as you use the home as your principal residence for a period of three years after the purchase date, you will not need to repay the tax credit. However, if you do cease to use the home as your primary residence within that three-year period, you will have to repay the entire amount of the credit that you received.
There are ways to obtain your tax credit sooner than waiting to file your tax return. One option is to reduce the amount of income tax being withheld from your paycheck, up to the amount of the tax credit you would receive. This would raise your take home pay, thereby giving you more money in your pocket to be used as a down payment. You would still claim the tax credit on your income tax at the end of the year; you just would have paid less tax during the year. Please note that if you choose this option and the purchase does not go through or if you subsequently do not qualify for the tax credit for any reason, you would be responsible for repayment of all the income tax to this IRS, along with any possible charges or penalties assessed.
Another option would be to obtain a FHA-insured mortgage. The Department of Housing and Urban Development (HUD) is allowing buyers to use their anticipated tax credit for some down payment and closing costs on FHA-insured mortgages. See HUD's Web site for more information.
There is also a less well-advertised "Repeat Home Buyer" Tax Credit that is currently available. Look for information on the Repeat Home Buyer Tax Credit in an upcoming edition of the GCFlash.
For more information on the First-Time Home Buyer Tax Credit check out the IRS Web site or the National Association of Home Builders Web site. For information on how to determine your modified adjusted gross income or how to determine if you qualify for the tax credit, see the IRS Web site or consult your tax advisor.
Scratch that image of a homeless vagrant. Poverty in America today transcends those living in urban blight areas or on street corners.
Sugar-coat the current financial crisis any way you want by calling it an economic downturn or recession. You still can't hide the stark reality that high unemployment, spiraling healthcare costs and the housing crisis have forced millions of Americans into a category they never imagined they would belong.
What once was considered our national dream has become a nightmare. We grew up believing that if we led a responsible lifestyle of maintaining a job and owning a home, we would one day retire with benefits to enjoy our golden years. Yet millions of older Americans don't have enough money to put food on the table or buy essential prescription medications.
Official government figures report 9.7 percent of senior citizens live below the poverty level. Add to those numbers an additional 15 million Americans who are officially jobless and the facts are alarming. The numbers of those with true need for assistance are catapulting at an alarming rate at the same time our government is struggling to meet its prior obligations.
The federal poverty level was defined in the early 1960s based on research performed by a woman named Mollie Orshansky. Orshansky was an economist with the Social Security Administration who sought a way to measure how differences in opportunity affected different demographic groups of families with children. She developed two sets of standards. One was based on the Agriculture Department's economy food plan and a second from their low-cost food plan.
Around that same time, the Johnson Administration announced a War on Poverty that adopted the lower of Orshansky's two standards as the working definition of poverty in the United States. The formula took the cost of a bare-bones diet and multiplied it by three to establish the poverty level. She based her calculations on 1955 consumption patterns when food accounted for one-third of the average household budget.
This formula has only seen two minor adjustments since the time of its inception, most recently in 1981. It may be time to rethink this method.
Official statistics are derived from the Annual Social and Economic Supplement (ASEC), a joint effort between the U.S. Census Bureau and Bureau of Labor and Statistics. The 2009 release reflects conditions during the previous calendar year. It determined the official poverty rate in 2008 was 13.2 percent, or 39.8 million people. It was the second consecutive annual increase in the poverty population, and the highest number since 1960.
For 2009, the poverty level for a one-person family in the contiguous 48 states is $10,830. Add $3,740 for each additional family member. The number is slightly higher in Alaska and Hawaii.
Realize this figure is based solely on bare-bones food costs. By factoring in housing and health costs, we have a much greater problem than government statistics would reveal.
Poverty guidelines determine your eligibility for assistance programs. Some agencies use pre-tax figures, others after-tax income. Many programs use a percentage multiplier of them, such as 125 percent or 150 percent, realizing that those only earning $13,537.50 may still require some form of help. The Department of Health & Human Services offers a list of programs available to the needy along with frequently asked questions about poverty on their Web site at http://aspe.hhs.gov/poverty/faq.shtml.
Save this information. One never knows when they'll find themselves needing help.
The consumer report this week reflects a sharp decline in customer optimism from 55.9 to 46. This follows an increase in the consumer price index from .1 percent to .2 percent, a slow increase of prices that don't indicate a high inflation rate in themselves. The travel industry pulled down the pricing with price drops to draw customers. The gain was largely attributed to increasing gasoline prices.
The producer price index also increased from .2 percent to 1.4 percent, reflecting higher energy costs with gasoline up 11.5 percent. These prices get passed on to consumers, tending to foretell consumer price inflation and profits. If businesses are paying more for their goods, their profits will reflect that unless they increase prices to consumers.
Jobs claims continued to inch up with 475,000 new claims, an increase over the prior week of 440,000. The expectation is that the unemployment status will remain relatively constant for February.
Slow movement in the economy seems to be the current watchword.
Dow Jones Industrial Average 10,282.41
(-0.97%)
(Down 145.64 or 1.40% since 12/31/09)
9,505.96
7,114.78
10,673.79
S&P 500 1,094.60
(-1.21%)
(Down 20.50 or 1.84% since 12/31/09)
1,026.13
743.33
1,190.80
NASDAQ 2,213.44
(-1.28%) (Down 55.71 or 2.46% since 12/31/08)
2,020.90
1,387.72
2,031.25
10 Year
Treasury Bond Yield
3.691%
3.56%
2.78%
4.27%
British Sterling 1.5415
1.6515
1.4433
1.9111
Euro
1.3508
1.4331
1.2827
1.3259
On The World Wide Web
The staggering unemployment rate is more than a number reported on the nightly news. It's human beings who are stripped of their ability to provide for their family. For a gripping image of this reality, watch this graphic depicting the growth in unemployment figures monthly from January 2007 to December 2009. WARNING: the YouTube video version available has some X-rated comments from angry viewers. You may want to watch the slideshow here instead.
The National Foundation for Credit Counseling (NFCC) was founded in 1951 and now the nation's largest and longest serving nonprofit credit counseling network. Their Web site offers consumer alerts, credit or housing counseling and a wealth of consumer financial education tools, including a list of member agencies in your area. Visit them online.
Travel down the virtual turnpike to check out an old residence or get acquainted with an area before you visit.
Tip of the Week
An old scam is seeing renewed activity. Someone calls or emails with information about a family member who is ill, been arrested or died. You get a phone call announcing you won a prize. In every case you're told to immediately call a phone number that's in the 809, 284 or 876 area code. Don't do it. The phone number is registered to the Dominican Republic. Callers from the U.S. are charged $2,425 PER MINUTE! Since you truly made the call, neither your local phone company or long distance provider can issue a credit.
Quotable
"A people that values its privileges above its principles will soon lose both." - Dwight D. Eisenhower
Today in History
1846 - The Liberty Bell tolls for the last time to mark George Washington's birthday.
Flash Fact
The poverty rate for children is higher than for any other age group in America. In 2008, over 14 million children, 19 percent of all children in this country, were living below the poverty line.
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