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Tuesday, March 31, 2009

Dealing with IRS notices

With the Apr 15th deadline approaching, the article stresses the importance of not sending out a check simply because you have received a notice from the IRS and instead do some checking into the issue. Reason? Because IRS notices are often times incorrect, unresponsive or incomplete.

Getting an IRS notice is always a jolt. But whatever you do, don't reach for your checkbook—especially if the bill is for $600 or less.

According to the Government Accounting Office (GAO), 48% of these notices are "incorrect, unresponsive or incomplete—"in other words, many audit notice bills are bogus. So, if many notices are wrong, why does the IRS keep sending them? Because IRS research has shown that, rather than fight the IRS, most taxpayers would rather cough up the money—as long as it's less than $600!

If you think the notice was sent in error, the article recommends replying with a certified mail and providing the necessary documentation supporting your case.

...The IRS often incorrectly calculates the interest you owe. If you receive one of these notices and you think the IRS is wrong—fight back! The IRS works on 90% bluff. To call the IRS' bluff, send a letter and copies of your supporting documents (receipts, canceled checks, etc.) via certified mail, return receipt requested to the IRS office which issued the notice. In your letter tell the IRS you don't owe the tax and why. Ask them to quickly clear up this mistake. The problem should be resolved in a matter of a few weeks. If it isn't, call the IRS' Problem Resolution Department (800/829-1040). This department has access to all IRS information and can work with you to get the problem taken care of for good.

For complete article, see:

Dolans.com: What to Do if You Get an IRS Notice

posted by Little Rishi @ Tuesday, March 31, 2009 0 comments

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Sunday, March 22, 2009

Weekend Quote - Price of fame

I've come to realize people want to bring you up, but more people want to bring you down.

- Michael Phelps, Olympic swimmer

posted by Little Rishi @ Sunday, March 22, 2009 0 comments

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Saturday, March 21, 2009

Just a thought: High taxes and limits on executive bonuses

Many bankers and Wall Streeters aren't happy about the high taxes and limits on executive bonuses being imposed on firms that have taken TARP money. Reason - they say that it will make highly talented people leave their firms! The questions that should be asked is:

- If these guys were so talented, how come their firms ended up needing TARP money?
- If these executives leave their current job, who will hire these so called "talented people"? If these talented people show the "same acumen" and "briliance" as they showed at their previous firms, then it's quite possible that their new employers could very well end up on looking to TARP money to bail them out.

If these executives hate the high taxes and limits on bonus, they should do the simple thing - return the taxpayers money back to the government. They are free to do anything with their own money. Just a thought.

Related Links:

WeeklyWorldNews: Taxing AIG Bonuses

CNN.com: Obama tries to stop AIG bonuses: 'How do they justify this outrage?'

WSJ.com: Treasury Will Make Grab to Recoup Bonus Funds

Labels: investing, investment, salary, taxes

posted by Little Rishi @ Saturday, March 21, 2009 0 comments

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Saturday, March 14, 2009

Just a thought: Walking away from home when underwater?

One of the questions that even some financially-stable people, who have jobs and the money to comfortably pay for their mortgage but are underwater on their fixed-rate mortgages, asking these days is "Should I just walk away from my house rather than continuing to pay mortgage on it? In my view, the answer is very simple - you should feel free to walk away from house, sticking any losses to your lender, if:

- you would have also walked away from your house if your house had appreciated substantially instead of going down in value, ie, you would have shown the same generosity of passing any home value appreciation to the lender as you are showing when your house value has declined below your mortgage.
- you were the lender and had issued the mortgage to another homeowner, and you would have also liked that person to just walk away from his/her house simply because s/he was underwater on his mortgage even though s/he had the money to pay for it.

Just a thought.

posted by Little Rishi @ Saturday, March 14, 2009 0 comments

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Thursday, March 5, 2009

More job losses and economic pain ahead?

Stock market is considered a leading economic indicator. It tends to peak 6 to 9 months before the ecomomy recovers, even though job losses are still approaching their peak. Currently, some analysts think that stock market will drop further - further drop has become all the more possible now that the stock market broke through the 7000 support level on the Dow and 700 level on S&P500 earlier this week. Since stock market is a leading indicator and it's expected to fall further, does this mean that there is still more room for the job losses and the economy to deteriorate further? Just a thought.

posted by Little Rishi @ Thursday, March 05, 2009 0 comments

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Tuesday, March 3, 2009

Applying for Penfed HELOC

Given all the negative news about layoffs etc, we recently decided to open home equity line of credit (HELOC). After doing some research, we realized that HELOC from Pentagon Federal Credit Union worked out best for us. At the time of opening the HELOC, Penfed was offering prime minus 0.5% which came to about 2.75%.

Opening the account was pretty straight forward. We simply called them and provided the required info over the phone. Basically, they asked info about our jobs, salary, how much credit limit we want and other info. Initially, they told us that most likely there will not be any appraisal required as they can model the prices in our neighborhood without requiring an appraisal. However, a few days after our conversation, we received a letter in the mail as well as a phone call that they require an appraisal for which we will have to pay $290. The letter also indicated the deadline by which we need to contact Penfed to proceed ahead with our application. We called Penfed a couple of times and asked if there was way to avoid the appraisal fee such as if we opened the HELOC for a lower amount but each time, we were told that we will have to pay the fee.

Since we didn't want to pay any appraisal fee, we decided to forget about opening HELOC. However, a couple of days before the stated deadline, my spouse called Penfed again and this time, there was a different customer service rep who told us to contact the mortgage department directly to see if that was possible. Fortunately, the loan officer was very good. She told us that we could avoid the appraisal but our line of credit will be reduced to a lower amount than what we had requested. This was fine with us and we ended with the HELOC account. We received our paperwork shortly afterwards via Fedex, got them notarized and the line of credit was established for us. We also had to call our Home Insurance company and list Penfed as the second mortgagee - the entire conversation with the home insurance lasted for less than 10 minutes, and they automatically sent a letter to Penfed. Within few days of submitting the paperwork, we also received the checks.

The good thing about Penfed is that the entire process was pretty stateforward. I guess, being a member of that credit union as well as having a credit card from them helped speed up the process to some extent. Unless we use the credit line (in which case, we will be incurring interest charges), we won't have to pay fees of any kind. The only fee Penfed said that they will be charging is the closing cost in case we close our line of credit within two years of opening. The good faith estimate gave a closing cost of about $300 but our actual closing cost listed in our closing papers was $275.53 and consisted of the following charges:

Credit Report Fee: $1.20
Flood Determination: $7.00
Quick Close Fee/Title Guarantee: $68
Recording Fee: $46
City/County tax/stampts: $143.33
Total = $275.53

So $275.53 is all we will have to pay in case we close the line of credit before two years. We are planning to leave it open, so hopefully that's something we can avoid. However, having the HELOC does give some sense of security although considering the current circumstances, financial institutions can always cancel or reduce them any time.

Labels: HELOC, investing, investment, line of credit, loans, mortgage

posted by Little Rishi @ Tuesday, March 03, 2009 0 comments

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