After a big storm or other disaster, a criminal element may be drawn to the area. Fraud can range from shoddy repairs to price gouging to people who take the money and run. Here are 4 tips for protecting yourself from contractor scams:

1. Get written estimates. These should be on the company’s letterhead, with clear contact information.

2. Get more than one bid. This will help you decide which offers are legitimate and which may be too high or too good to be true.

3. Use local companies. Make sure to check references and phone numbers.

4. Don’t pay up front. You may be left with new damage to your finances and the same old damage to your property. Good contractors will typically require a partial payment up front to get started, but your final payment should be made after the job is finished.

Information originally published by Texas Department of Insurance at http://www.tdi.texas.gov/takefive/contractorscamsdisaster.html.

If you’re new to budgeting, figuring out how to manage your money each month can feel overwhelming. Not only do you need to organize, but you also have to make difficult decisions about how to spend your cash. Relying on the experiences of others can help only so much, because your income and expenses are unique. Someone may be able to spend $2,000 per month on rent in Arlington, VA, but that kind of spending may not work for you.

But there’s good news: You don’t need complicated spreadsheets with countless spending categories, and you don’t need to be a financial expert to understand how much money you can spend. You simply need to follow the 50-20-30 Rule.

What is the 50-20-30 Rule?

The 50-20-30 Rule helps you build a budget by using three spending categories:

  • 50% of your income should go to living expenses and essentials. This includes your rent, utilities, and things like groceries and transportation for work.
  • 20% of your income should go to financial goals, meaning your savings, investments, and debt-reduction payments (if you have debt, such as credit card payments).
  • 30% of your income should be used for flexible spending. This is everything you buy that you want but don’t necessarily need (like money spent on movies and travel).

Keep in mind that the percentages for essentials and flexible spending are the maximum you should spend. Falling under those guidelines can leave more money for other financial goals.

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How to start a 50-20-30 budget

Figure out what’s currently happening with your finances. First, look at your pay stubs to determine exactly how much money you bring home each month. That’s your income and what you’ll base your 50-20-30 split on. (If you’re self-employed, be careful to track your earnings and understand your average income per month so you can budget accordingly.)

Next, track your spending. Yes, that means keeping up with every last cent, from the big stuff such as rent to the coffee that you grab on the way to work. Then divide your spending into one of the three categories: essentials, financial goals, and flexible spending. From here, adjust your spending to ensure you’re falling into the 50-20-30 parameters. If you’re overspending on stuff you want but don’t need, it’s time to cut back to save more.

Why the 50-20-30 Rule works

It keeps your personal finances simple so you can pay your bills, add to your savings, and have the freedom to use some money just for fun. It’s also a good starting point for the budgeting novice. There’s no uncertainty, your action steps are clear, and it even provides for savings, investments, and other financial goals. This makes it much more likely that you’ll stay the course over time, ultimately reaching your desired financial stability.

The 50-20-30 Rule also offers some flexibility. You can bend it a bit by altering the percentages to make it work better for you. “It’s not about the exact percentage breakdown, because all budgets will be slightly different,” says Eric Roberge, a financial planner who specializes in helping professionals and entrepreneurs at Beyond Your Hammock. “The key is to take action and use a system to help you stay consistent in managing your money every month, and making sure you’re covering your expenses, being responsible by saving for tomorrow, and giving yourself some room to enjoy life today.”

– Published by Forbes on June 11, 2016

The FAFSA is Changing This Year

People starting college in the fall of 2017 probably haven’t yet decided where they’re going to school, let alone figured out how much money they’ll need to do it, but it’s almost time to start applying for financial aid. In the past, students and their families could turn in the Free Application for Federal Student Aid (FAFSA) starting Jan. 1 of the year they’ll need the aid, but that date has been moved up.

It’s coming up quickly, too. For the 2017-18 academic year, people can turn in the FAFSA as early as Oct. 1, 2016. That’s in less than 3 months.

Why So Early?

Before we get into the specifics of this change, it’s important to point out why you’d want to turn in the FAFSA so early. Figuring out how you’re paying for college is one of those “the sooner, the better” kind of things. Though the application has “federal” in the name, states and schools also use the FAFSA to dole out financial aid, and every state and school has different ways of doing that. Some distribute aid on a first-come, first-served basis, so the longer you wait to turn in your FAFSA, the lower your chances of receiving assistance.

With that sort of pressure, you’d think college-bound people (or their parents) would greet the stroke of midnight with a toast of “Happy New Year! But first, FAFSA.” It doesn’t tend to happen that way, for a few reasons. First, a lot of people don’t realize how important it is in getting financial aid, or they assume they won’t qualify for aid, so they don’t bother with the paperwork. (Insert “you won’t know if you never try” cliche here.) In addition to the common mistakes of not knowing deadlines or underestimating the importance of the FAFSA, people put it off because they think they won’t have all the information they need to complete it until after they’ve filed their taxes.

For example: The FAFSA for the 2016-17 school year required applicants to enter their income information from the 2015 tax year. The deadline for submitting your 2015 income tax return was April 18, 2016. At that point, the FAFSA deadline in many states had passed, or states had already awarded all available aid. How could an application that requires 2015 tax information come due before your 2015 taxes, you ask? You can estimate your financial information on the FAFSA, allowing you to turn in the application before you file your taxes, which is something a lot of people may not realize.

Yes, it’s confusing, which brings us to the new policies coming in a few months.

What Changed?

For the 2017-18 academic year, students and their families will use their financial information from the 2015 tax year to fill out the FAFSA. The idea is that this will make it easier to fill out the form earlier. It also allows more people to take advantage of the IRS Data Retrieval tool. It transfers your tax information to the FAFSA, but because many people have traditionally filled out the FAFSA before completing their taxes, that tool hasn’t been as helpful as it could be.

“This will simplify the FAFSA, cutting about a page of questions from the form,” Mark Kantrowitz, said in an email to Credit.com. Kantrowitz is a financial aid expert and publisher and vice president of strategy at Cappex, an online platform for researching colleges and scholarships. “Also, any data element that is transferred unmodified from the IRS will not be subject to verification … This is especially important for low-income students, who often have difficulty completing verification.”

What You Need to Know Before October

The Education Department recommends filling out the FAFSA online, but you can also fill out a PDF version (you submit that through the mail) or request a paper form be sent to you. You also need a federal student aid ID (FSA ID) to sign your FAFSA, and it can take up to 3 days after registering for your FSA ID before you can use it to sign your application.

You still don’t need to have filed your taxes in order to fill out the FAFSA (though it’s easier that way, with the IRS Data Retrieval tool), and you also don’t have to know where you’re going to school. You can list a college on your FAFSA, if you want them to receive your FAFSA, even if you haven’t yet decided if you’re applying there. Keep in mind you have to fill out the FAFSA every year you’re applying for aid, as well, so for people who have gone through this process before, now you can start it earlier.

“The switch to prior-prior year also increases the amount of time available to apply for financial aid, from 18 months to 21 months,” Kantrowitz said. He said he hoped the earlier availability of the form would lead to more low-income students filing their FAFSAs early, consequently allowing them to qualify for more state aid.

Changes to how people apply for federal student aid hardly solves the burden of rising education costs and the ever-growing student loan debt in the U.S., but they simplify a process that many people find intimidating.

Of course, paying for college goes beyond this single form. Figuring out how much you can afford to spend (and borrow) to get a degree can be really tricky, but it’s important that students and their families consider the future cost of these decisions. Student loans have a significant impact on borrowers’ credit scores (you can see just how much by reviewing two of your free credit scores each month on Credit.com), and falling behind on loan payments can seriously damage your financial stability.

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Article courtesy of Credit.com, Christine DiGangi – July 19, 2016

Choosing a Tax PreparerTax season is in full swing. Looking for the perfect tax preparer can be a daunting task, and unfortunately, there’s no one size fits all with this search. Below are a few tips to help you figure out how to find the best tax preparer for you. The key, as with hiring any professional, is to ask questions. Lots of questions. And not just about pricing. Here are 12 recommended questions to ask a potential tax preparer:

  1. Do you have a PTIN (Preparer Tax Identification Number)?This should be your first question. Anyone who prepares federal tax returns for compensation must have a valid 2016 PTIN before preparing returns. Without a PTIN, a tax preparer is not allowed to prepare your return – this isn’t something you want to find out at the end. You can check out PTIN qualifications on your own by using the Internal Revenue Service (IRS) online PTIN directory.
  2. What is your tax background?A slew of letters following a name on a business card doesn’t necessarily mean more qualified. It can mean that the person has passed certain tests or has specific tax training. So ask what those letters mean – and how they would relate to the preparation of your return. Don’t be blinded by the alphabet soup. Here’s a quick guide to help you sort it out in advance:
    • A certified financial planner (CFP) is a designation for financial planners given by the Certified Financial Planner Board of Standards. A CFP must meet certain education requirements, pass an exam, have experience in the field, pass fitness standards and pay a certification fee: the coursework and exam do have tax and tax planning components as determined by the Board. A CFP may have tax experience but tax may not necessarily be the focus of their practice.
    • A certified public accountants (CPA) is certified by the state to act as a public accountant. All CPAs are accountants but not all accountants are CPAs.To qualify as a CPA, candidates are required to pass an exam. Most states also require an ethics exam or course as well as continuing education credits. A CPA may specialize in tax but not necessarily: there’s a wide range of CPA services including accounting, auditing, financial planning, technology consulting and business valuation.
    • An enrolled agent (EA)has earned the privilege of representing taxpayers before by either passing a three-part comprehensive IRS test or through experience as a former IRS employee. EA status is the highest credential the IRS awards. EAs must adhere to ethical standards and complete 72 hours of continuing education courses every three years.
    • AFSP (Annual Filing Season Program) participants are non-credentialed return preparers who have met voluntary requirements established by IRS. Those requirements include 18 hours of continuing education, (includes a six-hour federal tax law refresher course with an exam). AFSP participants who have met the criteria receive a Record of Completion and are included in a public database of return preparers on the IRS website.
    • A JD (Juris Doctor) is a law degree: having a JD means that you’ve graduated from law school but does not always mean you’ve passed the bar exam. An LLM (Master of Laws) is a second law degree, kind of like a specialty (though ethics rules in many states won’t allow you to say that). An LLM could be focused on taxation but may not be (you could have an LLM in Trial Advocacy, for example). As with a CPA, JD candidates are required to pass an exam, an ethics exam or course and take continuing education credits. Having a law degree or two doesn’t necessarily mean that an attorney prepares returns or has tax experience (you don’t have to demonstrate competence in tax law to pass the bar in most states). Avoid a lawyer who promises to do your taxes, get you out of that DUI and help you with your divorce all in the same breath.
    • A Volunteer Income Tax Assistance (VITA)volunteer is trained by the IRS to prepare basic returns.
    • Other accountants, bookkeepers, and tax preparers may be able to demonstrate competence but may not have formal credentials. That doesn’t mean you shouldn’t give them a look. Ask about what they do and why they’re qualified to do it.
  3. Have you prepared a (fill in the blank) tax return before? There’s no one size fits all – that’s because tax returns are not all the same. Some tax preparers can do forms 1040-EZ in their sleep. Others are fluent in Schedules C (business) and/or E (rentals). Some may focus on pass-through entities, tax-exempt organizations or fiduciary returns. Tax preparers may focus on international taxpayers and expats or small businesses. There are as many variations as there are schedules and forms. It’s not uncommon for tax preparers – especially those that have been around for a while – to have a pretty wide scope of knowledge. But nobody can do it all and don’t trust anyone who tells you otherwise. If you have special circumstances because of your investments, occupation or residency status, find a tax preparer who has experience with your specific situation.
  4. Do you know the requirements of the states and localities where I am required to file?Yes, federal income taxes know no boundaries – those rules don’t change from one state to the next. But that’s not true when it comes to states and localities. Your state or locality may have quirky filing requirements, especially for business owners. It can get even more complicated if you’ve moved from state to state during the year or if you live in one state and work in another. You may also need special guidance if you own a business or real estate in a state outside of your residency or if you are the beneficiary of a trust or estate in another state. Make sure that your preparer knows – and can handle – all of those filing requirements.
  5. What records and other documentation will you need from me? While you shouldn’t be expected to haul in the contents of your entire home office, a reputable preparer should insist that you provide your forms W-2, 1099, 1098and other verification of income and expenses in order to prepare a proper return. You shouldn’t use a preparer willing to e-file your return just by using a pay stub (that’s against IRS rules). A tax preparer should be able to explain what will be needed for special schedules, forms or circumstances. If a preparer isn’t inclined to do the necessary due diligence (especially for something like the Earned Income Tax Credit) in the beginning, it should give you pause about what other corners the preparer might be willing to cut later – at your expense.
  6. How do you determine your fees?Note the wording on this one. This doesn’t say ask how much the fees would be but how the fees are determined. Prices may vary based on the complexity of your return, whether you require additional schedules (such as dividend and interest on Schedule B, business information on Schedule C, capital gains and losses on Schedule D and/or rental income and losses on Schedule E); supporting forms (such as those for the child tax credit or additional charitable donation information); or whether your return has out of the ordinary line items (like Roth IRA conversions). Some preparers offer reduced costs for federal return but add on for state and local returns: make sure you understand the total cost. Finally, be wary of preparers who base their fee on a percentage of your anticipated refund: they have a financial incentive to encourage inappropriate credits and deductions.
  7. What about the extras?There’s nothing wrong with paying for the extras: just make sure that you know what those might be ahead of time. When asking about fees (see #6), be sure to ask about the cost of extra services, like the cost to fix any mistakes or to file electronically (see #7). A tax preparer should not charge you extra for a copy of your return when the return is prepared (though charging you extra for additional copies may be appropriate).
  8. Can I file electronically?More than 1 billion individual tax returns have been processed since the debut of electronic filing in 1990. It’s the fastest way to get your refund and tends to result in fewer math errors. It may also be required: a paid preparer who prepares and files more than ten client returns must generally file returns electronically unless the client opts out.
  9. Who will sign my return?Remember that your preparer must have a PTIN (see again #1). The PTIN and the preparer’s signature need to appear on your tax return. Don’t trust a preparer who refuses to sign a return or asks you to sign as self-prepared.
  10. When will I receive a copy of my return?It’s not unreasonable to leave your preparer’s office without a copy of your completed return; assembly may be required. However, you should receive a complete copy of your return within a reasonable amount of time following your appointment. If your preparer can’t offer a window of time to expect the copy, it might be indicative of a time management problem. If your preparer can’t promise you a copy at all, run, don’t walk away: you will need a copy for your own records.
  11. How do I find you if I have a question or a problem after tax season is over?Be wary of tax preparers with shops that pop up on street corners during tax season and then go missing for half the year. Clients often receive requests from taxing authorities for additional information in October or November: make sure that you know how to contact the tax preparer after your return has been filed. If your tax preparer won’t be around, consider taking your business elsewhere.
  12. What happens if I get audited?Nobody wants to think about an audit when filing a return. But you need to ask: find out how the tax preparer handles audits or examinations from IRS. Will he or she respond to those questions? Can the tax preparer represent you in front of IRS or Tax Court? Remember that attorneys, CPAs, and Enrolled Agents are the only tax professionals with unlimited representation rights, meaning they can represent their clients on any matters including audits, payment/collection issues, and appeals in front of the IRS. AFSP participants have limited representation rights, meaning they can represent clients whose returns they prepared and signed, but only before revenue agents, customer service representatives, and similar IRS employees, including the Taxpayer Advocate Service. For 2016, PTIN holders without an Annual Filing Season Program – Record of Completion or other professional credential are only be permitted to prepare tax returns. That doesn’t have to be a deal breaker (there are professionals who focus on audits if you need to hire someone later) but you should understand the scope of services and representation before you agree to become a client.

This is a long list. But don’t feel self-conscious about asking lots of questions: most of these require pretty simple answers. Choosing a good tax preparer does require a little bit of research and effort on your part but it’s worth it. And admit it: you asked at least this many questions when finding a hairdresser or a pediatrician. Just as you wouldn’t dream of going to a different doctor every year or skipping from one auto mechanic to the next, you’re looking for constancy. The goal of hiring a tax preparer isn’t to find someone who can merely fill out a form this year but to establish a professional relationship. A good tax preparer wants that, too, and won’t mind answering your questions.

Article sourced from Forbes.com, Jan. 18, 2016 (edited)