Monday, April 12, 2010

How Does the Credit Scoring System Really Work

Image representing Experian as depicted in Cru...Image via CrunchBase

First Tax Solution LLC offers Debt Reduction Consultation, Online Advisory Service. We really care about you, your family and your future. We will help you get out of debt and stay out debt while improving your credit at the same time.

Raise your credit score to 740

As lenders continue to tighten credit requirements, getting a good interest rate -- or a loan at all -- requires that you understand how the scoring system works.

In our post-crisis economy, good credit isn't just nice to have -- it's essential if you want to level the playing field with lenders.

Credit scores are three-digit numbers lenders use to gauge your creditworthiness, and until the financial crisis hit, a 720 FICO credit score was enough to get the best loan terms. Even people with lower scores could get decent deals, and at the peak of the lending boom it seemed that no score was so low that it merited a rejection.

How to fix credit report errors
These days, lenders typically demand 740 scores for the best mortgage rates. Lower scores mean higher rates or perhaps no loans at all. Fannie Mae, the giant mortgage-buying agency, recently lifted its minimum score requirement from 580 to 620.

People with top scores are still getting credit card and balance transfer offers. If their issuers raise their rates or lower their limits, they can move their business elsewhere. People with weaker scores, by contrast, are finding their access to credit slowly strangled. Issuers can push them around, and credit seekers have little recourse.

* See which states have the best credit

Less-than-stellar credit can hurt in other ways. After all, credit information is used by:

* Insurance companies to evaluate applicants and set premiums.
* Landlords to decide who gets apartments.
* Employers concerned about higher risk of theft from those with troubled finances.

Clearly, cultivating good credit scores is an essential 21st-century skill.

The good news is that it's possible to boost your numbers if you have a handle on your finances and you know how credit scores work. After all, the median credit score is 720 on the 300-to-850 FICO scale, meaning half the adult U.S. population has a higher score and half has a lower score. Forty percent have scores over 750, and 13% have scores above 800, according to Fair Isaac, the company that created FICO scoring.

Plenty of folks are handling their credit well enough to earn good scores. You can, too. But first you need to recognize that:

* You can't raise your scores if your finances are still in free fall. If you're unable to pay your bills, you certainly can't fix your credit. Real credit score repair will have to wait until your financial crisis has been solved and you have enough money to cover your expenses, plus some extra to begin paying down your debts.
* You can't raise your scores if you don't use credit. Credit scores try to predict how well you're likely to use credit in the future by how well you've used it in the past. So while living a cash-only lifestyle may do wonders for your wallet, it won't boost your scores -- in fact, without continuing use of some type of credit, eventually your credit reports won't even generate credit scores.
* You don't have to pay credit card interest to achieve great scores. "Using credit" is not the same as "carrying a balance on your credit cards." Carrying a balance is expensive, bad for your finances and completely unnecessary. Many of us who have achieved 800-plus scores pay off our balances religiously, and we know you can build and keep great credit scores without ever paying a dime of credit card interest.
* You can't expect overnight results. You're likely to see improvement in your scores within 30 days if you pay down significant chunks of your credit card debt. But otherwise, credit repair takes time, and how much time depends on the many details of your credit reports. If you have serious black marks, such as bankruptcies or foreclosures, you can see significant improvement in your scores as time passes but you may have to wait until those negatives drop off your credit reports before you can join the 700-Plus Club.

Now that you understand the basics, you can use the following techniques to get your scores over 740.
You have to nail the basics
Patrol your credit reports. Your credit scores are based entirely on the information in your credit reports on file at the big three credit bureaus: Equifax, Experian and TransUnion. If the information is wrong, your credit scores could suffer. You can get your reports once a year for free from the government-run; you can buy subsequent copies directly from the bureaus or from Dispute any serious errors, such as:

* Accounts that aren't yours.
* Reports of late payments when you paid on time.
* Bankruptcies older than 10 years or accounts that were wiped out in bankruptcy but are listed as still due.
* Other negative information that's older than seven years. (The seven-year clock typically starts 180 days after the account first went delinquent.)

Get a major credit card. Retail cards and gas cards can help you build your credit history initially, but to get your scores into 700-plus territory you'll want at least one big kahuna: Visa, MasterCard, Discover or American Express. If you can't qualify for a regular card, consider a secured version, for which you make a deposit with an issuing bank. You can find offers at,, and Index Credit Cards, among other sites. Just make sure the card reports to all three bureaus, and try to get a card that converts to a regular credit card after 12 to 18 months of on-time payments.

Arrange automatic payments for every card or loan. Credit scores are extraordinarily sensitive to whether you pay your bills on time, so don't let travel, a busy schedule or a simple brain cramp trash your scores. Most lenders will let you set up automatic payments that take an amount you specify -- the minimum payment, a set dollar amount or the full balance -- every month from your checking account.

Don't let disputes go to collections. Yes, your insurance should have covered that bill; no, you shouldn't have to pay for a broadband connection that doesn't work. But if you let a commonplace problem like these escalate, your account will be turned over to collections and become a big black mark on your credit reports. Pay under protest and get your revenge in small claims court. (Don't get sued yourself, though: Lawsuits and judgments are another major stain on your credit reports.)

First Tax Solution LLC is your answers to all your accounting needs. With our Professional Personalized Accounting Management Team we have the solutions for your tax needs.

Our Motto is Accounting and Tax Service When You Need It

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Saturday, April 10, 2010

Debt Reduction and Yes It Does Work

First 4 digits of a credit cardImage via Wikipedia

Debt-settlement companies promise that you can get out of your debts for pennies on the dollar. Typically, these outfits demand that you stop paying your creditors and instead send the money to them. After a few months, the debt-settlement company promises to open negotiations with your lenders and use the money you've sent to pay them.

The idea is that after a few months of not getting paid, your creditors will agree to a fraction of what they're owed.

Of course, your credit will be trashed at this point, you'll have paid fat fees to the debt-settlement company, and you may be facing lawsuits from your lenders. That's if you're lucky. If you're not, you'll risk all this, and the debt-settlement company will disappear with your money. If you need more details, read "Debt settlement: A costly escape."

Better alternatives include: Debt Reduction Tips.

* Credit counseling. Legitimate credit counselors have debt-management plans that reduce or eliminate the interest rates on your credit card debt.

* Bankruptcy. If you can't pay your debts, you may be better off getting a fresh start through bankruptcy. Your credit rating may recover more quickly, and you'll be able to keep the cash you would have otherwise sent to the debt-settlement company. Consult an experienced bankruptcy attorney who can evaluate your situation and discuss your options.

Debt-consolidation loans from private lenders

A big mistake
If you owe money to lots of creditors, you may be a sucker for pitches from debt consolidators, which promise to combine all your debts into one "affordable" loan.

Unfortunately, though, these loans often come with high interest rates and hidden fees. Instead of helping you pay your debt off faster, a debt-consolidation loan can stretch out your repayment schedule so you actually end up paying more.

Better alternatives include:

* A do-it-yourself plan. If your credit's good, you may be able to negotiate lower interest rates on your debt. (See "Get a better deal . . . with a threat" for techniques.) Then you can tackle your bills one at a time, starting with the highest-rate debt or the credit card that's closest to its limit, while paying the minimums on your other debt. Once this high-priority debt is paid off, make the same-size payment to the next-highest-priority debt. Continue until you're debt-free.

* A debt-consolidation loan from a credit union. Because they're member-owned, credit unions tend to offer more-reasonable interest rates than other lenders.

* Credit counseling. If you can't afford to make the minimum payments on the debt you have, a credit counselor's debt-management plan might be your best option.

* A home-equity loan. Consider this option only if you have plenty of equity in your home, you stop the behavior that got you into debt in the first place and you pay off the loan as quickly as possible. Otherwise, you'll just be draining one of your most important assets, and you'll wind up deeper in debt in short order.

This is my last option. I almost choose not to list it. Only use this if you can and are willing to make life changes in controlling your financial future.

First Tax Solution LLC Offers Debt Reduction Tips and Consultation and it does really work.

Our Professional Personalized Accounting Management Team will help you get our of debt and stay out of debt. We work with you hand and hand. We teach you how to pay your own bills with our proven system. AND YES IT WORKS.

Our Motto is Accounting and Tax Service When You Need It

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Friday, April 9, 2010

Don't Stop Advertising During a Recession

When money is tight we cut everything: including our advertising budget.

Believe me when I tell you that is the last thing you should do.

The key is to look at your marketing dollars as an investment not an expense. Use the customer knowledge that you have and implement smart marketing during these times of financial distress.

* First take look at where you have spent your marketing dollars in the past.
* Second do they or are they able to track your marketing results for you?
* Third think about who your customers are? What do they want? and how can you give them what they want? and how much are they willing to pay for your service?
* Be creative
* This is not the time to become a stressed out hermit
* This is the time to do more networking.
* Offer a special lunch to have the local Chamber have their weekly meetings at your restaurants.
* Partner with local business's that are not in direct competition with your business
* Write community letters in your local newspaper about that great things you are doing for your community.

The items listed above are free. But if you decide to spend money on marketing make sure the marketing company can track your results for you. And remember that it takes more than just a couple weeks to see if an add campaign is working. Another thing to know: it takes the average person to have your NAME SHOVED INTO THEIR FACE 7 OR 8 TIMES before they react to your add ; SO BE CONSISTENT. AND SPECIFIC AS WHAT YOUR ADD IS ABOUT.

First Tax Solution LLC we specialize in Accounting for Restaurants. Our CEO has owned and operated restaurants and She knows first hand the challenges associated with owning your own restaurant.

We also specialize in Start Up Business Accounting for any industry. With our Professional Personalized Accounting Management Team we will fill your every need.

Our Motto is Accounting and Tax Service When You Need It

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Tuesday, April 6, 2010

Starting Your First Business with little or no money!!

Clipart of bills and coinsImage via Wikipedia

For starters starting a small business with very little money is not going to be easy, but you can do it.

* Think business, A clear mindset. Open up Word or get a clean sheet of paper and write down in not more than 1 sentence the goal of your business. If you can not do this, then you need to refine your business goal into a clear statement. Here is an example: "The goal of my company is to sell wholesale disposable Eco friendly table ware to all fast food restaurants in Arizona.

* Act business, Advertisement. Most likely the goal of your business will be centered around selling a product or providing a service. Take advantage of free advertising sites such as craigslist and community bulletin websites. Many people use these websites and you need as much exposure as possible. Post more than one ad on more than one category using different wording.

* Run business. If they won't come to you, go to them! If you are selling a product or providing a service then communicate with who you might think is interested. Examples: If you are selling a product you know a restaurant can use, then make a list of restaurants and call asking if they would be interested. Give people a great reason of why they might need your service or product. An example would be: I will beat the price of your current saffron provider, guaranteed.

* Be business-y. Professional. You have to sound and look professional once you are out there. Hint hint, don't wear those ripped jeans or talk in slang (slang including words like "hey" "whazzup" "hows it going"). Try not to use umm's and you-know's either. The more professional you sound the more people take you and your business seriously.

* Work for your business. If you need to make money for your business, consider the internet! Writing articles such as this on ehow or blogging and adding adsense and other advertising add-ons can earn you money. You can buy a domain name and make a website. If you are not computer savvy there are websites that do the work for you. Yahoo eCommerce charges about 40 bucks a months.

* Do not purchase any inventory. When your customers orders the product then you order it directly from the manufacturer.

* You can easily make enough money a month online to cover the expenses of a website that caters to your costumers needs and most importantly, YOU! Good luck!

First Tax Solution LLC is the Number One Virtual Accounting firm for Small Business. We offer Start Up Business Accounting for any type of business on the planet.

Our motto is Accounting and Tax Service When You Need It
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Sunday, April 4, 2010

Tips to Tracking and Calculating your business Mileage

Documenting Mileage is a big Deal according to the IRS. If you do not have accurate and proper documentation the IRS will disallow the deduction.
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Quick Techniques to make sure you have everything you need for your Mileage deduction:

* Keep a mileage log. In each vehicle at all times. ( a calendar with boxes for each day is perfect) Say, Toni House CEO First Tax Solution LLC

* Write your beginning Odometer reading on the applicable day and where you are going and the ending Odometer when the day is finished

* Calculate your personal Mileage and business Mileage weekly, Write the total at the end of each week for personal and for business.

* Write in the appropriate box for the each time you fill up with gas, change the oil, rotate the tires.

* Keep a large envelope in the back flap of the calendar for all your receipts.

* Keep the calendar, a pen and the envelope in the glove box or console of your vehicle.

* This only takes 30 seconds to record and trust me when I say it is simple yet effective.

* Or you can choose many electronic devices that are on the market today. But, the calendar and envelope system really works.

Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

* 50 cents per mile for business miles driven
* 16.5 cents per mile driven for medical or moving purposes
* 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year’s. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Revenue Procedure 2009-54 contains additional details regarding the standard mileage rates.

For information regarding vehicle deductions for your business or an employee business expense Contact First Tax Solution LLC. We are the number 1 accounting firm for Small Businesses. We offer Virtual Accounting Solutions for your convenience. Contact First Tax Solution LLC, with our Professional Personalized Accounting Management Team we have the solution to meet your every Accounting and Tax needs.

Our Motto is Accounting and Tax Solutions When You Need It.

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Tuesday, March 30, 2010

Tax Debt Reduction: New Flexibility for Offers In Compromise

New Flexibility for Offers in Compromise

For some taxpayers, an offer in compromise –– an agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed –– continues to be a viable option. IRS employees will now have additional flexibility when considering offers in compromise from taxpayers facing economic troubles, including the recently unemployed.

Specifically, IRS employees will be permitted to consider a taxpayer’s current income and potential for future income when negotiating an offer in compromise. Normally, the standard practice is to judge an offer amount on a taxpayer’s earnings in prior years. This new step provides greater flexibility when considering offers in compromise from the unemployed. The IRS may also require that a taxpayer entering into such an offer in compromise agree to pay more if the taxpayer’s financial situation improves significantly.

These immediate steps are part of an on-going effort by the IRS to ensure the availability of the Offer in Compromise program for taxpayers.

Contact First Tax Solution to see if you qualify for assistance. With our Professional Personalized Accounting Management Team we can find any tax solution to fit your personal needs.

Our Motto is Accounting and Tax Service When You Need It

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Tuesday, March 16, 2010

When Did The Inter Net Revolution Really Start?

Image representing Skype as depicted in CrunchBaseImage via CrunchBase

The beginning legs actually started back in 1969. Scientists at the University of California, Los Angeles, were ready for a critical experiment. They had a computer and communications node, while colleagues installed similar equipment up the coast in Menlo Park. They planned to test whether they could link the two computers over telephone lines to operate as one system. The researchers began to tap in the message: 'log in' to make the link. The system crashed.

Thus was the beginning of internet revolution. By the end of the month they achieved the link. Of course, the purpose in those days was to ensure that nuclear missile systems could be kept operative even if part of the network was put out of commission in a war.

With the telecom boom and bust of the 90"s. Technology continued to grow and expand world wide.

Fax machines, cell phones, e-mail and hi speed internet service was the norm, smaller and faster the connection to communicate the better.

With Skype and Google Chat and Video we could now see each other while online.

2010 brings another step into the future of technology with the Internet Video phone.

More and More businesses today will continue to use the internet and more will be home based businesses and more will become virtual with the use of advanced technology like the video phone.

Accounting firms historically have always been very conservative and so therefore are behind the 8 ball in the online virtual world, except for First Tax Solution LLC.

First Tax Solution with their sister company started Online Tax Preparation and Filing Services as far back as 2000 and today First Tax Solution is ahead of the accounting industry by offering Virtual Tax Prep, Virtual bookkeeping and Virtual accounting services.

With the use of the video phone, skype and google chat and video individuals and businesses can have all their accounting needs met and never leave home or their office.

First Tax Solution offers Tax Service When You Need It.

contact us today for all your accounting needs First Tax Solution

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Small Business Owners Under more Scrutiny from the IRS

Self-employed business owners will continue to be the target of more scrutiny, thanks to the Internal Revenue Service's new Small Business/Self-Employed Operating Division. This Division will focus on partnerships and sole proprietors with more than $100,000 in total gross revenues, and small corporations with less than $5 million on their balance sheets. In addition, Congress has approved an increase in funding that the IRS is going to use to try to increase the number of audits conducted.

Congress wants to make sure that every deduction is legal and is documented. Stressed Out Try our Virtual Bookkeeping

Is your record keeping a nightmare? Most small business owners are very unorganized when it comes to bookkeeping and accounting. There just isn't enough hours in the day and enough of us to go around.

Here are some tips to help make the task less painful.

* Keep all your receipts. (everything: whether you need it or not)
* Keep a large envelope in your car; put every receipt in it. Not in your visor, glove box or console.
* Buy a calendar with small boxes for each day. Write down the odometer reading in the box for that day and where you are going. Do this every day.
* At the end of the month calculate the miles driven for business and personal: write the total for each on the calendar.
* Compile your receipts from the envelope and match with credit cards, debit cards and bank account.

And then upload the information to your client portal at First Tax Solution and we will do the rest for you. First Tax Solution is the Number 1 Small Business Accounting Firm. We really do make your life easier. With our On line Business Tax Preparation, our IRS Problem Resolution and Virtual Bookkeeping. We have you covered.

We are the Nations first Virtual Accounting Firm, Our motto is Accounting, Business Consultation and Tax Service When You Need It.

Contact us today First Tax Solution

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Sunday, March 14, 2010


Corporate taxes are due. Are you a small business? even though you file a corporate tax return.

Your 1120 C or 1120 S corporate return is due on March 15, 2010.

Are you one of the many 1120C's and 1120S corporate tax filers that are required to file electronically?

If you do not meet the requirements to file electronically, small Corporate Business's may elect to file electronically for convenience.

Filing Electronically save a great deal of time and money for you the tax payer. First Tax Solution LLC is a Small Business Accounting Firm; that specializes in Online Business Tax Preparation.

We can help you file you Corporate Business Tax Return in plenty of time to meet the March 15, 2010 deadline.

Our Motto is Accounting and Tax Service When You Need It

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Help I am drowning in Tax worries!!

Are you a working mom or dad? or a professional business person consistently on the go?
Do you regret tax season? Do you regret having to gather all your receipts for the entire year?

And gosh where in the world are all your receipts. In the sofa cushions, on the kitchen counter, in the junk drawer, on your desk under all the paperwork that has been laying there for 3 months.

In the ash tray in the car, in the console in the car, in the glove box or stuck in the visor of the car. How many have you washed because you forgot to take them out of your pockets before putting your clothes in the washing machine.

And you look at the calender and see Oh! no it is April 14, and you have not even thought about scheduling an appointment with a tax preparer to file your taxes.

Believe me when I tell you, been there done that and it is no picnic. But, there is a solution. First Tax Solution offers not only full accounting services but Tax Service When You Need It.

First Tax Solution offers Virtual Accounting, Virtual Bookkeeping and Virtual Tax Preparation, while you are in the comforts of your own home. You scan and up load your tax information using our secure on line client portals and 'voila" your taxes are done.

Contact First Tax Solution to schedule an appointment.

Free Tax Organizer
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Most of us can't tackle all of our spending and saving needs at once. But following this outline can make it a lot easier to keep your finances on track.

By Liz Pulliam Weston
MSN Money

Here's a money secret that might keep you from driving yourself crazy: You can't do it all.

We're supposed to max out our retirement savings, pile up huge emergency funds, pay off all our debts and buy tons of insurance. Yet we've also got other bills to pay, kids to raise and, yes, fun to have.

Even in good times, many of us can't cover all the bases perfectly. Now that many are facing pay cuts, unemployment or unpaid furloughs, more of us are facing painful trade-offs on less income.

Here's what you need to know now to properly prioritize your spending and manage your money. You may not be able to cover everything right away, but as more money comes in you can work your way down the list and be reasonably sure you're getting the important stuff right.
Priority No. 1: Pay your bills
Obviously, you need to keep a roof over your head and food in the fridge. But your ability to manage all your other financial priorities will be greatly enhanced if you can get a handle on your basic living expenses.

Bankruptcy expert Elizabeth Warren recommends limiting your "must-have" bills to 50% of your after-tax income. Must-haves, as she wrote in "All Your Worth" (co-written by her daughter Amelia Warren Tyagi), include shelter, utilities, transportation, food, insurance, child care and minimum loan payments.
More from MSN Money
Poor © image100/Corbis

* Your 5-minute guide to managing debt
* 6 steps to dumping toxic debt
* When paying off debt is a bad idea
* 5 money mistakes in a bad economy
* Calculator: Too much debt for your income?

Her plan leaves 30% for "wants" such as new clothes, entertainment and vacations, and 20% for savings and debt repayment.

If your must-haves balloon over 50% of your after-tax pay, you may be able to rein in your costs by trimming your food bills and lowering your home's thermostat. If not, you may have to make more painful adjustments, such as finding a cheaper place to live or getting rid of a too-expensive car.

What you shouldn't do is cut your insurance coverage. Shopping around for coverage and choosing higher deductibles are better ways to lower costs than dropping your policies altogether, since that can leave you exposed to catastrophic expenses from accidents, illness or lawsuits. What you need:

* If you have a car, you need liability coverage, at least. Comprehensive and collision insurance is a good idea on newer cars and may be required by your lender.

* If you own a home, homeowners insurance is essential. Make sure you have enough coverage to rebuild your home, plus adequate liability insurance ($500,000 is good, and more is better).

* If you rent, renters coverage is a smart buy. Your landlord's policy doesn't cover your stuff or your liability.

* Health insurance is a basic expense you shouldn't forgo if you have any choice, because a single accident or illness can bankrupt you. If you don't have or can't afford coverage, read "A survival guide for the uninsured."

* Life insurance may be an essential, but only if you have financial dependents (people who need your income to survive). Term insurance is the cheapest way to go; learn more at MSN Money's Save on Life Insurance Decision Center.

Video on MSN Money
Credit cards © Fancy/Veer/Corbis
Dump your credit cards
Liz Pulliam Weston says your best investment move now is paying off credit card debt.

If your income isn't stretching far enough to cover your must-have bills, read "How not to pay your bills" and consider a consultation with a bankruptcy attorney. For more on bankruptcy, visit MSN Money's "Guide to Personal Bankruptcy."
Priority No.2: Save $500
Just a few hundred bucks in the bank can eliminate expensive bounced-check and late-payment fees. Having $500 in the bank also allows you to pay for minor emergencies without adding to your credit card debt. Furthermore, there's a huge psychological advantage to having even this small cushion, as I wrote in "Want to sleep better? Save $500."

Eventually, you'll want a bigger stash to guard against financial setbacks, but $500 is a good initial goal. Set up an automatic transfer from your into a high-yield , or jump-start your savings with a windfall, such as your tax refund check.
Priority No. 3: Start saving for retirement
You may be surprised to see retirement so high on the list. Surely your credit card debt and your kids' college educations are more important.

Except they're not. You have only so many working years to set aside enough cash to last you for the rest of your life, and any delay in getting started will cost you big time. Waiting just five years to begin can reduce your total nest egg by as much as 30%.

* Facebook users: Become a fan of Liz Pulliam Weston

Stopping or reducing your contributions is another bad move. It may be hard to contribute when markets are so volatile, but it's still important if you hope to build a nest egg. (Read "Under 35? Hurray for the meltdown" for more.)

But how much should you save? In "16 favorite money rules of thumb," I suggested that you save "10% for basics, 15% for comfort, 20% to escape." If you start saving for retirement by your early 30s, putting aside 10% of your income should cover your basic expenses in retirement, while a 15% contribution rate should give you a more comfortable nest egg. A 20% rate should allow you to retire early or enjoy luxuries such as extensive travel.

Continued: What if you can't manage 10%?

Your money priorities, first to last

Continued from page 1
[Related content: savings, budgeting, Liz Pulliam Weston, 401k, financial planning]

What if you can't manage even 10% right now? Then:

* If your 401(k) still offers a match, contribute at least enough to get that.

* If there's no match, start by contributing whatever you can, and bump it up a percentage point or two whenever you get another raise. (See "No 401(k) match? Save anyway.")

* If you don't have a retirement plan at work, contribute to a traditional individual retirement account. You can contribute up to $5,000 a year if you're under 50 or up to $6,000 if you're 50 or older, and your contribution is tax-deductible.

Need some inspiration to put the money aside? Think about how hard it is to live on your current income. Now image living on about $12,000. That's the typical Social Security benefit, and it's all you'll get if you don't start saving. For more, read "Could you survive on Social Security?"
Priority No. 4: Pay off 'toxic' debt
Now it's time to tackle your credit card bills and other dangerous debts, including payday, car title and pawnshop loans.

As I explained in "6 steps to dumping 'toxic' debt," debt is toxic if:

* The lender can change rates and terms at any time, with little or no provocation.

* The standard or default interest rate is in the double digits, or higher, which typically prolongs the time you remain in debt.

* Initially easy payment terms encourage you to rack up more debt than you can comfortably repay.

The best way to pay off toxic debt is usually to target the highest-rate debt first, paying as much on that as possible while paying the minimums on your other debts. But you also could tackle your smallest debt first, just to give yourself the psychological boost of retiring a bill.
More from MSN Money
Poor © image100/Corbis

* Your 5-minute guide to managing debt
* 6 steps to dumping toxic debt
* When paying off debt is a bad idea
* 5 money mistakes in a bad economy
* Calculator: Too much debt for your income?

Priority No. 5: Bolster your emergency fund
As layoffs mount, the perils of living paycheck to paycheck become more obvious, and your $500 cushion will disappear fast if you lose your job.

So focus on building up an emergency stash worth at least three times your must-have expenses. That should tide you through a typical spell of unemployment if you cut all nonessential costs. (The median duration of unemployment was 11 weeks in February, according to the Bureau of Labor Statistics, up from 8.9 weeks a year earlier.)

You might want to bolster your cushion even more in many cases. If you work in a troubled industry that's already swamped with job seekers -- say, newspapers, real estate or auto manufacturing -- your joblessness might extend for months. The bigger your fund, the better you'll sleep. (See "Why I'm saving up $15,000 this year.")
Priority No. 6: Check out long-term-disability insurance
You've probably heard it before: Your earning power is your greatest asset. Meanwhile, your chances of a disabling accident or injury during your working life are much higher than your risk of dying in the same period.

But workers' compensation will pay you only if you're injured on the job, and disability benefits from Social Security are tough to get. So long-term-disability insurance is a smart purchase if you can afford it.

The cheapest way to get coverage is usually from your employer. If your job doesn't offer it, check with any professional organizations to which you belong to see whether disability coverage is offered.

If not, you may need to look for an individual policy. These can be prohibitively expensive, so you may need to compromise by agreeing to a longer waiting period before benefits begin (such as 90 or 180 days, instead of 30 or 60) and/or by limiting the benefit period to five years instead of to age 65. For more, see "Disability insurance can save your life."
Video on MSN Money
Credit cards © Fancy/Veer/Corbis
Dump your credit cards
Liz Pulliam Weston says your best investment move now is paying off credit card debt.
Priority No. 7: Enhance your retirement savings
Once you're contributing at least 10% of your income to a tax-deductible retirement plan, you can consider what's known as tax diversification.

That means putting money in various retirement buckets that will receive different tax treatment in retirement.

Retirement plans that give you a tax break upfront, such as 401(k)s and traditional IRAs, will require you to pay income taxes on withdrawals in retirement.

* Your 5-minute guide to retirement

* Retirement planner

Contributions to a Roth IRA, by contrast, don't give you an upfront deduction, but you can withdraw from them tax-free in retirement.

If you can't contribute to a Roth (the ability to contribute begins to phase out once your modified adjusted gross income exceeds $105,000 for single filers or $166,000 for those who are married filing jointly), consider putting money into a taxable brokerage account. Again, there's no upfront tax break, but investments held a year or more qualify for more-attractive capital-gains tax rates.

Continued: Start saving for college

ontinued from page 2
[Related content: savings, budgeting, Liz Pulliam Weston, 401k, financial planning]

Priority No. 8: Start saving for college
You're on track for retirement, your toxic debts are retired, and you've got a decent emergency fund going. Only now should you lift your sights from your future to that of your kids.

Putting your progeny so low on the list is hard, I know. But they have other options to pay for school, including loans. Nobody will lend you money for retirement.

The best way to save is likely to be through a 529 college savings plan (though not everyone would agree). You can contribute lump sums or set up automatic withdrawals of as little as $25 a month.

* Your 5-minute guide to saving for college

How much should you save? If you're trying to pay the full freight at Harvard, one heck of a lot: $819 a month, starting at birth, according to the college savings calculator at

A more realistic goal for most families might be to save for one-third to one-half the cost of public-school education and rely on borrowing to cover the rest. That would require a contribution of $80 to $125 a month for a child who just entered kindergarten.
More from MSN Money
Poor © image100/Corbis

* Your 5-minute guide to managing debt
* 6 steps to dumping toxic debt
* When paying off debt is a bad idea
* 5 money mistakes in a bad economy
* Calculator: Too much debt for your income?

Priority No. 9: Save for spectacular experiences
If you've covered all the priorities and have cash left over, it's time to start putting money aside for something wonderful: a special trip, a family reunion, a sabbatical. (Yes, people take those, even in recessions.)

Because money isn't just about covering the essentials; it's also a tool for living life to its fullest.

We tend to forget that when we focus only on the bills, the retirement accounts or the tangible stuff money can buy. Yes, purchasing a new car or TV can give you a rush, but that fades fast. What lasts are our connections to other people and our memories of happy events.

Make sure you're getting enough of those.

First Tax solution LLC

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Tuesday, March 9, 2010

Tax Credits Help Homeowners Winterize Their Homes and Save Energy

People can now weatherize their homes and be rewarded for their efforts. According to the Internal Revenue Service, homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well.

The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the non business energy property credit and the residential energy efficient property credit.

Non-business Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions on Schedule A.

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contact First Tax Solution Our Motto is Accounting and Tax Service When You Need It

Thursday, March 4, 2010

The 19 most-overlooked tax deductions

Don't throw money away by missing these easy tax breaks. Pay attention if you've hired child care, bought or improved a home, sent kids to college or given to charity.

[Related content: taxes, cut taxes, tax breaks, tax write-offs, deductions]
By Kiplinger's Personal Finance Magazine
Every year, the Internal Revenue Service dutifully reports the most common blunders that taxpayers make on their returns. And every year, at or near the top of the "oops" list, is forgetting to enter a Social Security number at the top of the tax form -- or entering those nine digits wrong.

No doubt about it: The opportunity to make mistakes is almost unlimited, and missed deductions can be the most costly. About 46 million of us itemize on our Form 1040s, claiming nearly $1 trillion worth of deductions. That's right, $1,000,000,000,000 -- a number rarely spoken out loud until Congress started debating economic-stimulus plans to combat the Great Recession.

Strategies for saving more and spending less

An additional 85 million taxpayers claim more than half a trillion dollars' worth using standard deductions, and some of you who take the easy way out probably shortchange yourselves. (If you turned 65 in 2009, for example, remember that you now deserve a bigger standard deduction than younger folks.)

Yes, friends, tax season is a dangerous time. It's all too easy to miss a trick and pay too much. Years ago, the fellow who ran the IRS at the time told Kiplinger that he figured millions of taxpayers overpaid their taxes every year by overlooking just one of the items listed below.

1. State sales taxes: Although all taxpayers have a shot at this write-off, it makes sense primarily for those who live in states that do not impose an income tax. You must choose between deducting state and local income taxes or state and local sales taxes. For most citizens of income tax states, the income tax is a bigger burden than the sales tax, so the income tax deduction is a better deal.

The IRS has tables that show how much residents of various states can deduct. But the tables aren't the last word. If you purchased a vehicle, boat or airplane, you get to add the state sales tax you paid to the amount shown in the IRS tables for your state, to the extent that the sales tax rate you paid doesn't exceed the state's general sales tax rate.

The same goes for any home building materials you purchased. These items are easy to overlook, but they could make the sales tax deduction a better deal even if you live in a state with an income tax. The IRS has a calculator on its Web site to help you figure the deduction, which varies depending on the state where you live and your income level.

2. Reinvested dividends: This isn't really a deduction, but it is a subtraction that can save you a bundle. And this is the break that former IRS Commissioner Fred Goldberg told Kiplinger that a lot of taxpayers miss.

If, like most investors, your mutual fund dividends are automatically used to buy extra shares, remember that each reinvestment increases your tax basis in the fund. That, in turn, reduces the taxable capital gain (or increases the tax saving loss) when you redeem shares. Forgetting to include the reinvested dividends in your basis results in double taxation of the dividends -- once when you receive them and later when they're included in the proceeds of the sale. Don't make that costly mistake. If you're not sure what your basis is, ask the fund for help.

3. Out-of-pocket charitable contributions: It's hard to overlook the big charitable gifts you made during the year, by check or payroll deduction (look at your December pay stub).

But little things add up, too, and you can write off out-of-pocket costs you incur while doing good works. For example, ingredients for casseroles you prepare for a nonprofit organization's soup kitchen and stamps you buy for your school's fund raising mailing count as charitable contributions. If you drove your car for charity in 2009, remember to deduct 14 cents per mile. For more, read "Give and grow rich with charitable deductions."

4. Student-loan interest paid by Mom and Dad: Generally, you can deduct mortgage or student loan interest only if you are legally required to repay the debt. But if parents pay back a child's student loans, the IRS treats the money as if it were given to the child, who then paid the debt.

So a child who is not claimed as a dependent can qualify to deduct up to $2,500 in student loan interest paid by Mom and Dad. And he or she doesn't have to itemize.

5. Moving expenses to take your first job: Job-hunting expenses you incur while you're looking for your first job are not deductible. But moving expenses to get to the job are. And you get this write-off even if you don't itemize. If you moved more than 50 miles, you can deduct the cost of getting yourself and your household goods to the new area -- including 24 cents per mile for driving your own vehicle for a 2009 move -- plus parking fees and tolls. The same holds true for any new job you take. For more, read "On the move? Watch for deductions."

6. Military reservists' travel expenses: Members of the National Guard or military reserve may tap a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles from home and be away from home overnight. If you qualify, you can deduct the cost of lodging and half the cost of your meals, plus 55 cents per mile for 2009 for driving your own car to get to and from drills. In any event, add parking fees and tolls. You get this deduction regardless of whether you itemize.

7. Child care credit: A credit is so much better than a deduction, as it reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax.

If you pay your child care bills through a reimbursement account at work, it's easy to overlook the child care credit. Although only $5,000 in expenses can be paid through a tax-favored reimbursement account, up to $6,000 (for the care of two or more children) can qualify for the credit. So if you run the maximum through a plan at work but spend even more for work-related child care, you can claim the credit on as much as $1,000 in additional expenses. That would cut your tax bill by at least $200.

8. Inherited IRA assets: This break can save you a lot of money if you inherited an from someone whose estate was big enough to be subject to the federal estate tax.

Basically, you get an income tax deduction for the amount of estate tax paid on the IRA assets you received. Let's say you inherited a $100,000 IRA, and the fact that the money was included in your benefactor's estate added $45,000 to the estate tax bill. You get to deduct that $45,000 on your tax return as you withdraw the money from the IRA. If you withdraw $50,000 in one year, for example, you get to claim a $22,500 itemized deduction on Schedule A. That would save you $6,300 in the 28% bracket.

9. State tax paid last spring: Did you owe tax when you filed your 2008 state tax return in 2009? Then, for goodness' sake, remember to include that amount in your state tax deduction on your 2009 return, along with state income taxes withheld from your paychecks or paid via quarterly estimated payments.

10. Refinancing points: When you buy a house, you get to deduct in one fell swoop the points paid to get your mortgage. When you refinance a mortgage, though, you have to deduct the points over the life of the loan. That means you can deduct 1/30th of the points each year if it's a 30-year mortgage. That's $33 a year for each $1,000 in points you paid -- not much, maybe, but don't throw it away.

Even more important, in the year you pay off the loan -- because you sell the house or refinance again -- you get to deduct all points that have not yet been deducted. There's one exception to this sweet rule: If you refinance a refinanced loan with the same lender, you add the points paid on the latest deal to the leftovers from the previous refinancing, then deduct the amount gradually over the life of the new loan.

11. Jury pay turned over to your employer: Many employers continue to pay employees' full salary while they serve on jury duty, and some require employees to turn over their jury pay to the company. The only problem is that the IRS demands that you report those payments as taxable income. To even things out, you get to deduct the amount you pay to your employer.

But how do you do it? There's no line on Form 1040 labeled "jury fees." Instead, the write-off goes on line 36, which purports to be for simply totaling up the deductions that get their own lines. Add your jury fees to the total of your other write-offs and write "jury pay" on the dotted line.

12. Property tax deduction for non itemizers: This break, new in 2008, also works in 2009, but millions of taxpayers who claim the standard deduction might miss it. Normally, to write off property taxes, you must itemize deductions. But this new rule lets homeowners who don't itemize boost their standard deduction amount -- by up to $500 if they're single and up to $1,000 if they're married and file a joint return -- to account for property taxes paid during 2009.

You'll need to include Schedule L with your 2009 tax return to get this break.

13. Casualty-loss deduction for non itemizers: For 2009, taxpayers who claim the standard deduction can add casualty losses to their standard deduction amounts -- if the loss occurred in a presidentially designated disaster area. Also, this deduction is not subject to the usual reduction equal to 10% of your adjusted gross income. If you suffered such a loss, be sure to let Uncle Sam help you by lowering your tax bill.

As with the property tax deduction for non itemizers, you'll need to file a Schedule L with your return to pump up your standard deduction to include the loss.

14. Credit for college students: Parents of college kids know the $2,000 Hope credit is just for the first two years of college. After that, the lower Lifetime Learning credit applies.

But that's not how it works for 2009. Instead, the credit has been renamed, increased and expanded. It's now called the American Opportunity Credit, and it will rebate up to $2,500 for each qualifying student for the first four years of college.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above those levels. The income limits are higher than last year's. (Read more on the American Opportunity Credit here.)

15. Making Work Pay credit: You've probably been enjoying the fruits of this credit via reduced payroll tax withholding since spring 2009. But to lock in your savings -- by reducing your tax bill by $400 if you're single or $800 if you're married and file a joint return -- you'll need to claim the credit on your 2009 tax return. You'll use the brand-new Schedule M to do so.

The credit is equal to 6.2% of your earned income, capped at $400 or $800. For single filers, it starts phasing out at $75,000 of adjusted gross income and dries up at $95,000. The phase-out zone for couples is $150,000 to $190,000.

16. Sales tax deduction for new vehicles: If you bought a new car, truck, motorcycle or motor home after Feb. 16, 2009, and before the end of the year, you can deduct the sales tax paid -- up to a maximum purchase price of $49,500 per vehicle -- as an itemized deduction or, if you claim the standard deduction, as a supercharged standard deduction.

The benefit begins phasing out for married couples with adjusted gross income above $250,000 and singles with AGI above $125,000. It is completely gone for single filers with AGI of $135,000 or more and joint filers with AGI of at least $260,000. Non itemizers need to file a Schedule L with to get the benefit. Itemizers who elect to deduct state income taxes will claim the car sales tax as a separate itemized deduction.

17. Credit for energy-saving home improvements: The tax credit equal to 10% of the cost of energy-saving home improvements is increased to 30% for 2009 and 2010, up to a maximum of $1,500 in the two-year period. The credit applies to biomass-fuel stoves; qualifying skylights, windows and outside doors; and high-efficiency furnaces, water heaters and central air conditioners. The dollar limit on a particular type of improvement, such as the $200 cap on the credit for windows, has been repealed, so don't limit yourself to the old rules.

Finally, there's also no dollar limit on the credit for qualified residential alternative-energy equipment, such as solar water heaters, geothermal heat pumps and wind turbines. Your credit can be 30% of the total cost of such systems.

18. Sale of demutualized stock: Taxpayers won an important court battle with the IRS in 2009 over the issue of demutualized stock. That's stock that a life insurance policyholder receives when the insurer switches from being a mutual company owned by policyholders to a stock company owned by stockholders. The IRS' long-standing position was that such stock had no tax basis, so that when the shares were sold, the taxpayer owed tax on 100% of the proceeds of the sale. But after a long legal struggle, a federal court ruled that the IRS was wrong. The court didn't say what the basis of the stock should be, but many experts think it's whatever the shares were worth when they were distributed to policyholders. If you sold stock in 2009 that you received in a demutualization, be sure to claim a basis to hold down your tax bill.

19. Homebuyer credit: We put this last on the list because it's hard to imagine any taxpayer missing this big a tax break. But the rules changed late in the year, so snafus are certain.

For most of the year, only first-time homebuyers qualified for this credit. A first-time buyer is defined as someone who didn't own a home in the three years leading up to the purchase of a new home. But big changes apply to homes purchased after Nov. 6, 2009. First, in addition to the $8,000 credit for first-time homebuyers, there's a $6,500 credit for longtime homeowners, those who continuously owned a home for at least five of the eight years leading up to the purchase of a new home.

The new law also increases how much buyers may earn and still claim the credit. For deals closed before Nov. 7, the right to the first-time-buyer credit gradually disappears as adjusted gross income rises between $75,000 and $95,000 on single returns and between $150,000 and $170,000 on joint returns. For purchases after Nov. 6, the phase-out zones -- for both the $8,000 credit and the $6,500 credit -- are $125,000 to $145,000 for singles and $225,000 to $245,000 for married couples. More questions? See "Homebuyer credits: Who qualifies now?"

This article was reported by Kevin McCormally for Kiplinger's Personal Finance Magazine.
Re published

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Wednesday, March 3, 2010

Help for Business Owners

Help for Business Owners
Established as "the Official Link to the U.S. Government," Business.GOV
at is a unique
website for business owners. Operated by the Small Business Administration,
this website offers business owners information on how to find loans and
grants, start a home-based business, register a business name, search or
register a corporation, obtain a business license, get information on
employment laws, and bid on government contracts.
Within the loans and grants area, for example, business owners can search
for loans, grants, and financing using a checklist starting with the
business type. The user may then select the type of financing needed, e.g.,
working capital. He or she is then given a list of several loan programs to
review and pursue to obtain a working capital loan.
This website provides an avenue for business owners to locate financing
or other assistance to help survive the current economic situation.
Contact us at First Tax Solution

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Friday, February 26, 2010

Tax And Accounting Services When You Need It.

Are you a working mom or dad? or a professional business person consistently on the go?
Do you regret tax season? Do you regret having to gather all your receipts for the entire year?

And gosh where in the world are all your receipts. In the sofa cushions, on the kitchen counter, in the junk drawer, on your desk under all the paperwork that has been laying there for 3 months.

In the ash tray in the car, in the console in the car, in the glove box or stuck in the visor of the car. How many have you washed because you forgot to take them out of your pockets before putting your clothes in the washing machine.

And you look at the calender and see Oh! no it is April 14, and you have not even thought about scheduling an appointment with a tax preparer to file your taxes.

Believe me when I tell you, been there done that and it is no picnic. But, there is a solution. First Tax Solution offers not only full accounting services but Tax Service When You Need It.

First Tax Solution offers Virtual Accounting, Virtual Bookkeeping and Virtual Tax Preparation, while you are in the comforts of your own home. You scan and up load your tax information in our secure on line client portals and walla your taxes are done.

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Monday, February 22, 2010

Sarah Palin One Of Jay Leno's First 'Tonight Show' Guests

Well, hopefully we will get to see if she has a since of humor. We don't see that side of her out side of politics.
Read the Article at HuffingtonPost

Sunday, February 21, 2010

Charitable Contributions Must Be Made to Qualified Organizations

Tax Payers Be Ware The Irs is cracking down on Charitable Contributions.

1. If your contribution entitles you to merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.

2. For a contribution of cash, check, or other monetary gift (regardless of amount), you must maintain as a record of the contribution either a bank record or a written communication from the qualified organization containing the date and amount of the contribution and the name of the organization.

3. You generally can deduct the fair market value of any property you donate, as well as your cash contributions, to qualified organizations. See Publication 561, Determining the Value of Donated Property.

4. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified organization indicating the amount of the cash and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift.

5. One document from the qualified organization may satisfy both the written communication requirement for monetary gifts and the contemporaneous written acknowledgment requirement for all contributions of $250 or more.

6. You must fill out Form 8283, and attach it to your return, if your total deduction for all noncash contributions is more than $500.

7. If you claim a deduction for a contribution of noncash property worth $5,000 or less, you must fill out Form 8283, Section A. If you claim a deduction for a contribution of noncash property worth more than $5,000, you will need a qualified appraisal of the noncash property and must fill out Form 8283, Section B. If you claim a deduction for a contribution of noncash property worth more than $5,000,000, you will also need to attach the qualified appraisal to your return.

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