January 25, 2007
At the University of Missouri, students in the Personal Financial Planning Department and University of Missouri Extension Faculty have partnered to sponsor several community VITA (Volunteer Income Tax Assistance) sites as well as a campus site (that will be housed in the Office for Financial Success). These IRS-certified volunteers will prepare tax returns for students and working individuals/families with incomes under $40,000. The returns are prepared and filed electronically with the opportunity to have refunds direct deposited into checking, savings, IRAs, and other types of accounts (up to three) – see last week’s tip for more information. This is a great resource to help consumers avoid preparation fees and costly refund anticipation loans. This filing also includes your state returns and everything is done at no cost! Services will begin next Monday – January 29th. Walk-ins only – no appointments needed. Locations and availability are provided below.
Additional Tax Helps.
Additional information on tax issues is available at the OFS site. Information available includes:
- Current tax info (standard deductions, exemptions, tax brackets, etc.)
- Information on deducting student loan interest
- Do I have to file? [normally is worthwhile even if you “don’t have to”]
- Information on earned income tax credit
- Information on education tax benefits
- Tax forms
- Link for free online filing (AGI below $52,000)
- Tax tips, recent law changes, and other tax topics
- “Understanding Taxes” – an interactive, instructional IRS tax program
Getting FREE Assistance.
Free volunteer tax preparation sites are available across the country. VITA locations are available in most communities as is AARP locations for the elderly. Missouri VITA sites can be found by clicking here... The VITA link above can help you locate VITA sites if you live outside Missouri. Andrew Zumwalt is the University contact for VITA.
Columbia Locations (1/29 – 4/14/07).
OFS – 61 Stanley Hall (basement)
Tuesday & Wednesday (4:30 – 8:00), Saturday (10:00 – 1:30)
*Bank of Missouri
3610 Buttonwood Drive
Monday (4:30 – 8:00) FEBRUARY ONLY
*Central Missouri Community Action
Monday & Wednesday (10:00 – 1:30)
Friday (10:00 – 1:30)
*All sites closed March 24 – April 1 (Spring Break).
January 18, 2007
Three months ago I sent a tip about the Pension Protection Act of 2006; a bill passed late last summer that primarily included provisions geared toward helping consumers improve on long-term savings habits. Item #3 of those mentioned was an interesting change, one that you will likely have the opportunity to participate in shortly … splitting your tax refund.
Each year, more than 75% of U.S. taxpayers are entitled to a refund (of more than $2,000 on average). Studies have demonstrated that individuals are more likely to save if it is easy and automatic. The government is attempting to accommodate this tendency. In the past, the majority of refunds were provided via direct deposit to one’s checking account. With the new “split refund” option, individuals can opt to have their refund split into up to three different accounts. Account options include checking, savings, IRAs, and health savings accounts. Doing so appears very simple. Just include Form 8888 – Direct Deposit of Refund to More Than One Account – with your return. Indicate the account number and routing number for the financial account(s) where you want your refund deposited and instruct how you want the refund allocated among the accounts.
What you need to know …
- What is a split refund? A split refund allows you to divide your refund [in any proportions you want] among up to 3 accounts with U.S. financial institutions.
- Does my refund have to exceed a certain amount to be eligible? The deposit into each account must be at least $1.
- Can I split my refund among different financial institutions? Yes.
- Must I split my refund equally? No. You have the flexibility to divide your refund however you choose.
- What types of accounts are eligible? Checking and savings accounts, IRAs, Health Savings Accts, Archer MSAs, and Coverdell Education Savings Accts.
Things to do …
- Confirm that your financial institution will accept direct deposits.
- Confirm your account numbers and routing numbers.
- YOU WILL NEED TO SET UP YOUR ACCOUNTS FIRST! If you want to have all or a portion of a refund put into [for example] a Roth IRA, you will need to have an account established in order to have money directed to the account.
More information about splitting your Federal Income Tax Refund can be found at the FAQ section of IRS.gov.
If you are interested in reading more about this piece of legislation, or about the expected reintroduction of the Student Debt Relief Act (which proposes to: cut student loan rates, increase Pell Grant Assistance, cap student loan payments, and provide loan forgiveness options to individuals in public service areas). Here are some helpful resources:
- National Association of Student Financial Aid Administrators
- Student Debt Relief Act Press Release
January 11, 2007
Reviewing your monthly charges is very important. The most obvious reason is to make sure that your actual expenses match what the credit card company is reflecting (mistakes do happen); but this will also alert you to fraudulent charges as identity theft is becoming a bigger problem by the day. By law, you have 60 days to dispute [in writing] errors on your credit card statement.
This is the smallest payment (normally 2% - 4% of your balance) your credit card company will allow you to make and remain in good standing. Making this payment on time is important for maintaining your credit; ideally you will pay the balance in full and thus avoid all interest charges.
Interest Rate/Annual Percentage Rate (APR).
Most of us are familiar with the interest rate – the amount of interest paid per month typically stated as an annual rate. The APR, however, documents the “bottom line” cost you’re paying for your card. The APR includes not only interest charges, but also fees [such as late and over-limit] and other transaction costs.
This is the “free” period of time that you can avoid interest charges by paying your balance in full each month. The law requires the grace period to be minimally 14 days (meaning that the bill must be mailed at least 14 days before the due date). Most cards have grace periods of 20-25 days. If you fail to pay your balance in full, you will forfeit the grace period (in addition, most cards will forfeit your grace period when cash advances, balance transfers, or convenience checks are used – even if you paid the balance in full the prior month).
Credit Card Limit/Available Credit.
This is the maximum debt allowed by the credit card company on the particular card. Your maximum credit as well as your available credit (maximum credit minus current balance) will be listed on each statement. Keep an eye on your limits – card companies will regularly increase your limit when you pay on time as they want to encourage you to spend more. You can call and request that they lower your limit if you’d like.
Owning a credit card includes with it the responsibility of learning how to use the credit card. Understanding the monthly credit card statement is essential to your success as a consumer. Take the time to review the information on your credit card statement and seek assistance if you have questions/concerns/problems.
This week [expected tomorrow], the new House of Representatives leadership plans to introduce legislation that would cut the interest rate on certain student loans in half!
The Project on Student Debt has prepared a brief analysis of this bill, which would reduce interest rates on Federal Subsidized Stafford Loans for undergraduates from the current 6.8% to 3.4% over the next five years. When fully phased in, borrowers on a 10-year repayment plan would see their payments reduced by 14% and save $4,000 in interest costs on $20,000 in covered loans.
The proposed interest rate phase-in would occur according to the following schedule:
6.12 percent in 2007
5.44 percent in 2008
4.76 percent in 2009
4.08 percent in 2010
3.4 percent in 2011 and subsequent years.
To read more ...
- Project on Student Debt
- Inside Higher Education
January 04, 2007
The FAFSA is the first step in the financial aid process. It is used to apply for federal aid such as grants, student loans, and work study or University aid in the form of scholarships. Even if you don’t think you are eligible for financial aid, you should still fill it out because schools also use it to award non-federal aid. Schools have different “priority deadlines” for submitting the FAFSA (March 1 at Mizzou) – students meeting the appropriate deadlines are given first consideration for aid. After that, aid will be administered based upon fund availability.
Even if you don’t have a need for loans, you can fill out the FAFSA to apply for scholarships, work study, etc. and you can refuse the loans if you don’t want or need them. You aren’t required to take the loan because you filled out the FAFSA. Don’t wait till the last minute to file – if you [and/or your parents] haven’t filed your taxes and the priority deadline is approaching, you can estimate the needed information [use last year’s tax info if the situation is similar]. You can then update the numbers when you get them.
Information you will need to fill out the FAFSA.
- Student driver’s license and Social Security card
- Income tax returns or as close an estimate a possible
- W-2 forms and other records of money earned
- Parents tax return [if dependent student]
- Current bank statements
- Records and documentation of other untaxed income received
- Records of investments (stocks, bonds, etc.)
- Current mortgage information
- Your alien registration card [if not a U.S. citizen]
- Business or farm records [if applicable]
Additional FAFSA Resources.
- http://www.fafsa.ed.gov (fill out the FAFSA online)
- 1-800-4-FED-AID (Dept of Ed can address questions or complications related to completing the FAFSA)
- Financial Aid – your financial aid office is another great resource for addressing FAFSA-related questions.
- Five common mistakes/errors to avoid (https://sfa.missouri.edu/FAFSA_Errors.pdf)