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Tracking the Changes - Tips for doing your Tax Return

by Alexandra Zega

That's anybody's guess, but one way to help prevent errors on your own return is to keep an eye on the myriad tax-law changes that occur each year.

Here are just seven to keep in mind as you sit down to do your 2008 return.

1. Home-buyer credit

Usually, once the year ends there's not much you can do to change that year's tax bill, other than making certain retirement-plan contributions. But in 2009, first-time home buyers eligible for the new $8,000 tax credit can opt to use that credit on their 2008 return, tax experts say.

Prepare to be confused, however. Since the new $8,000 credit was signed into law in the stimulus bill this month, the 2008 tax forms won't reflect the change.

Last year, Congress enacted a $7,500 credit for first-time buyers who purchased a home after April 8, 2008 and before July 1, 2009. That credit must be repaid. If you purchased your first home in 2008 (after April 8), then that's the credit you'll take and the IRS instructions and forms will reflect the rules for that credit.

But the recent stimulus bill changed the terms of that credit for 2009. Now, first-time buyers who purchase a house from Jan. 1 through Nov. 30, 2009, are eligible for an $8,000 credit that does not need to be repaid (unless you sell the home within three years of purchase). And they can claim that perk on their 2008 return, tax experts said.

"There's the $7,500 credit from 2008 that was supposed to be good through this coming June. Even properties you bought today could have been filed under that $7,500 credit for 2008," said Martin Kamenski, a certified public accountant and president of Rockstar CPA, a Chicago-based firm.

"Now there's this newer credit with more money that you don't have to pay back, but that's nowhere mentioned in any of the instructions for the forms," he said.

"While the professional tax software we use in-house to prepare taxes gets updated and these changes get made, for anybody that's at home doing their taxes they may not even be aware that this $8,000 credit that does not have to be paid back is available to them," he said. See this IRS page for more on the $7,500 tax credit.

2. Forgiven debt

People who lose their homes to foreclosure are often shocked at tax time to find that their forgiven mortgage debt is considered taxable income. But that's not the case for taxpayers who face foreclosure from 2007 through 2012.

"Under most circumstances, the forgiveness of debt that you owe to somebody else is considered taxable income to you in that year, but as a result of recent legislation, you get an exclusion of up to $2 million of [mortgage] debt," Kamenski said.

To qualify for this tax break, the mortgage debt forgiven had to be on your principal residence, and had to be used "to buy, build or substantially improve your principal residence" or was a refinance loan for that purpose, according to the IRS. See this IRS page for more.

Even though you don't owe the tax, you can't ignore this situation on your tax return. Fill out Form 982, though probably not the entire form, according to the IRS. "If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence," the IRS said, "you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b."

Also, taxpayers who file bankruptcy generally do not have to include debt forgiven in that situation as taxable. See this IRS page for other questions related to financial crisis.

3. That other stimulus payment

Fully 15% of filers made a mistake related to the "recovery rebate credit," according to an IRS review of returns filed early this year. This credit is available to taxpayers who are eligible to receive additional money from the fiscal stimulus enacted by the Bush administration in 2008.

Some filers are claiming more money than they're eligible for; others are entering on their tax return the amount of the stimulus payment they received in 2008. That's wrong -- the space on the tax return is for claiming additional money.

Most people who got a stimulus payment last year won't get more money this year, the IRS said.

"The recovery rebate credit is on the tax form to help those taxpayers whose financial situation changed in 2008 and they may be due more money. For example, they may have had a child born last year. Or, someone may have been a dependent on another's tax return in 2007 but was not in 2008," said Nancy Mathis, an IRS spokeswoman, in an email interview.

4. Tax breaks that didn't expire

As you do your 2008 taxes, don't forget that some tax breaks were renewed for 2008 and 2009. Those include the deduction for state and local sales taxes (for those who don't deduct state income taxes), the expense deduction for teachers who pay out-of-pocket for classroom materials, and the tuition and fees deduction for education costs (keep in mind for next year's filing that the recent stimulus bill created a new education credit for 2009 and 2010).

5. Standard deductions on the rise

The 2008 standard deduction rose to $10,900 for married-filing-jointly, $5,450 for single and married-filing-separate, and $8,000 for head-of-household filers. Also, taxpayers can claim an added standard deduction based on real-estate taxes paid in 2008. This applies to "any state or local real-estate taxes you paid that would be deductible on Schedule A if you were itemizing deductions, up to $500 ($1,000 if married filing jointly)," the IRS said. Also, a taxpayer can increase her standard deduction by the net disaster losses suffered from a federally declared disaster. See this IRS page for more on the standard deduction.

6. Kiddie tax

Be careful when it comes to the "kiddie tax" -- the levy whereby children's investment income is taxed at the parents' rate. This tax used to apply to children younger than 18. Now it applies to investment income greater than $1,800 for children who are younger than 18, or 18-years-old and with earned income that was less than half of their total support in 2008, or students older than 18 and younger than 24 who in 2008 had earned income that was less than half their total support, according to the IRS.

7. Withdrawing retirement savings early

No doubt some taxpayers last year found themselves forced to pull money earlier than expected from their retirement plans. Be sure to report that as income on your tax return.

"The retirement plan will send the IRS a Form 1099-R," Kamenski said. "They will send you a copy as well. It will be your responsibility to report that as income on your return," he said, noting that taxpayers use a separate form to calculate the tax owed. Generally, early withdrawals are assessed a 10% penalty, though exceptions apply for certain hardships. See IRS publication 575 and see "tax on early distributions."

Kamenski warns his clients not to pull all of their retirement funds at the first sign of economic distress. Don't "be rash or hasty," he said. People "will often just yank it all out, take a total distribution, when they may not need it all at once ... Take it out little by little as you need it. Even if you do get a penalty assessed for early withdrawal, it's a percentage, not a per-use thing."

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Friday, February 20, 2009
provided by Andrea Coombes - MARKET WATCH

Obama Unveils Plan to Stem Foreclosures

by Alexandra Zega
President Barack Obama rolled out a bold $75 billion, three-part plan Wednesday to halt the soaring rate of mortgage foreclosures nationwide, one that seeks to encourage refinancing of homes now worth less than their mortgages and provides incentives for lenders to lower the debt load on struggling homeowners.

The Homeowner Stability Initiative, which Obama unveiled in Phoenix, seeks to address one of the triggers of the global financial crisis: the 2.3 million U.S. foreclosures last year that are protracting the housing crisis and helping to drive down home prices across the nation.

“When the housing market collapsed, so did the availability of credit on which our economy depends. As that credit dried up, it has been harder for families to find affordable loans,” Obama said. “In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen _ a crisis which is unraveling homeownership, the middle class, and the American Dream itself.”

Specifically, the Obama plan seeks to provide low-cost refinancing for as many as 5 million Americans. It seeks to help delinquent or at-risk borrowers get their mortgages modified so that no more than 31 percent of their income is tied up in their mortgages. And it provides financial incentives to lenders and even a new insurance program to promote more mortgage modifications.

Like the failed efforts under the Bush administration, however, the Obama plan doesn’t compel banks and other lenders to modify troubled mortgages. Instead, it provides a menu of incentives that may or may not prove sufficient.

“This is not just the treasury secretary going into the room and asking people to do the right thing,” said a senior Treasury official, speaking on the condition of anonymity to speak more freely. “This is the first time there has really been a systemic incentive strategy for them (lenders).”

Banks joined two prior voluntary efforts during the Bush administration _ Hope for Homeowners and the Federal Housing Administration’s FHA Secure _ but these efforts have resulted in relatively few mortgage modifications.
Now they’ll have a stick waved at them if they don’t comply with the subsidy plan. It will come in the form of Obama’s support for legislation pending in Congress that would allow bankruptcy court judges to modify the terms of a mortgage.

That’s forbidden right now, and banks and other lending institutions fiercely oppose what they call “cram down” legislation, warning that it’ll bring uncertainty for lenders, who will respond by restricting mortgage lending.
Banks may soon have to choose between the lesser of two evils. They could either modify loans - with a subsidy - to provide lower lending rates, and lose what they might have made from the higher lending rate over the life of the loan. Or they can do nothing and run the risk that a homeowner could file for bankruptcy and then have a judge order new loan terms that allow the borrower to stay in the home - and pay the lender less money.

The president’s plan also offers payments to mortgage servicers, who collect mortgage payments on behalf of investors who own the mortgages originally issued by banks but were sold into a secondary market. Servicers apparently would be offered a payment for modification on par with what they would collect in the case of foreclosure.

Help for Homeowners Q&A: Will the President’s Plan Help Your Clients?

The White House website posted a Q&A on its blog yesterday for homeowners in distress to learn how the President’s plan will help them specifically.

The President will talk more about his plan a little later today. In the meantime, we’re sure you have a lot of questions, like, Am I eligible for assistance? Might I be able to modify my loan? When do I apply? We've put together an example sheet that will show you what options might be available to you, depending on the circumstances of your mortgage, as well as answers to some common questions (below).

Questions and Answers for Borrowers about the
Homeowner Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

  • What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan.   Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

  • I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property.   For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify.  The current value of your property will be determined after you apply to refinance.

  • How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts.  The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history.  The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

  • I have both a first and a second mortgage.  Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan.  Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage. 

  • Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan.  Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments.  Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate.  These borrowers, however, could save a great deal over the life of the loan.  When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan.  Compare this to your current loan terms.  If it is not an improvement, a refinancing may not be right for you.

  • What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment.  All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate.  The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender.  Interest rates may vary across lenders and over time as market rates adjust.  The refinanced loans will have no prepayment penalties or balloon notes.  

  • Will refinancing reduce the amount that I owe on my loan?

No.  The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans.  Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe.  However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

  • How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

  • When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.   

  • What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available.  This includes:

    • information about the gross monthly income of all borrowers,  including your most recent pay stubs if you receive them or documentation of income you receive from other sources
    • your most recent income tax return
    • information about any second mortgage on the house
    • payments on each of your credit cards if you are carrying balances from month to month, and
    • payments on other loans such as student loans and car loans.

Borrowers Who Are at Risk of Foreclosure Are Asking:

  • What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current.  By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

  • Do I need to be behind on my mortgage payments to be eligible for a modification? 

No.  Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default.  This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.   

  • How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits.  Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

  •  I do not live in the house that secures the mortgage I’d like to modify.  Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No.  For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible.  If you used to live in the home but you moved out, the mortgage is not eligible.  Only the mortgage on your primary residence is eligible.  The mortgage lender will check to see if the dwelling is your primary residence.

  • I have a mortgage on a duplex.  I live in one unit and rent the other.  Will I still be eligible?

Yes.  Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

  • I have two mortgages.   Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

  • I owe more than my house is worth.  Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford.  Lenders are likely to lower payments mainly by reducing loan interest rates.  However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

  • I heard the government was providing a financial incentive to borrowers.  Is that true?

Yes.  To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan.   The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt.  Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

  • How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan.  If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee.  Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance. 

  • Is my lender required to modify my loan?

No.  Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis.  But the government is offering substantial incentives and it is expected that most major lenders will participate.

  • I'm already working with my lender / housing counselor on a loan workout.  Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

  • How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time.  Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria.  After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks.   If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor.  Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

  • What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available.  This includes

    • information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
    • your most recent income tax return
    • information about any second mortgage on the house
    • payments on each of your credit cards if you are carrying balances from month to month, and
    • payments on other loans such as student loans and car loans.

  • My loan is scheduled for foreclosure soon.  What should I do?

Contact your mortgage servicer or credit counselor.  Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility.  We support this effort.

Will the Stimulus Benefit Homeowners and Buyers?

by Alexandra Zega

 

RISMEDIA, February 18, 2009-”There are four primary sections of the economic stimulus plan that will benefit home owners and buyers,” said Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. According to Nicholas, these include:

1. Expansion of Home Improvement Tax Credit.”The tax credit for making energy efficient home improvements is now 30% of the cost of the improvements up to a maximum of $1500,” Nicholas said. “This means that if the improvements cost you $4,500, you would receive a tax refund of $1,500 when you file your tax returns.”

Eligible improvements include energy efficient exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners and water heaters.

“Generally, most modern improvements like windows, furnaces, and air conditioners meet the necessary standards for energy efficiency,” Nicholas said. “If you’ve been holding off on making some of these improvements, now is a great time to get a move on it - especially with all the great deals being offered.”

2. Expansion of First-time Home Buyer Tax Credit.

The tax credit available to first-time home buyers was increased from $7,500 to $8,000 for homes purchased between January 1, 2009, and December 1, 2009. Also, the credit no longer needs to be paid back as long as the buyers live in the home without selling it for at least 3 years.

“The previous version of the credit expired on July 1, 2009, and required home buyers to pay the funds back over a 15 year time frame,” Nicholas said.

The income limitations remain the same ($75,000 for single tax payers claiming the full credit and $150,000 for married tax payers), as do most other qualification requirements. Also, the credit remains refundable. “This means that first-time home buyers who owe less than $8,000 in taxes for the year are still eligible for the full $8,000 credit when they file their tax returns, and the IRS will write them a check for the difference between $8,000 and their actual tax bill,” Nicholas said. “In fact, the credit can be claimed on your 2008 tax returns that you file by April 15 of this year, even if you buy the home in 2009.”

There is one catch, however: if you bought the home in 2008, the credit remains $7,500, and it still needs to be paid back over a 15 year timeframe beginning in 2011 when you file your 2010 returns.

3. Higher Reverse Mortgage Loan Limits.

The loan limits for FHA-insured reverse mortgages have been increased to $625,500 across the entire country-not just the higher cost areas. The previous limit was $417,000 across the country.

“This is especially important because the FHA program is virtually the only game in town as private and jumbo reverse mortgage programs have nearly all evaporated,” Nicholas said.

This coincides with another little-known change in the reverse mortgage
arena: the availability of reverse mortgages on home purchase transactions.

“This is a fantastic opportunity for senior citizens to buy a new home and live mortgage payment-free without having to wait for their old home to sell,” Nicholas said. “Seniors could also use this strategy to buy a new home and turn the old home into a rental or otherwise wait for market conditions to improve before trying to sell the old home.”

4. $729,750 FHA and Conforming Loan Limits Restored in High Cost Areas.

“The $729,750 maximum loan limit had been in force throughout 2008, but was reduced to $625,500 in 2009,” Nicholas said. “The economic stimulus plan restores the $729,750 maximum. This makes higher cost homes more affordable - especially in the coastal housing markets that tend to have higher than average home values.”

White House, Congress Reach Final Compromise on Stimulus

by Alexandra Zega
RISMEDIA, - Congress is now poised to approve a $789 billion economic recovery plan that includes billions of new dollars to help states pay education and health costs as well as tax breaks for those who buy new cars and homes.

The House of Representatives could vote as soon as today (Thursday), and passage there is certain. Democratic negotiators from the House and Senate - and three key moderate Republican senators - quickly agreed Wednesday to a final compromise package.

The State Fiscal Stabilization Fund, designed to help pay education expenses, was a $79 billion program in the original House stimulus package. The Senate version cut it to $39 billion; the House-Senate compromise settled on $54 billion. The House’s $20 billion school construction fund, eliminated by the Senate, remains out.

Also scaled back are Senate-passed car and home tax breaks, as well as the tax rebates that President Barack Obama championed. This includes an $8,000 tax credit to first-time home buyers.

The American Homeowners Grassroots Alliance (AHGA) thanked members of Congress for reaching agreement on the economic stimulus package.

“Congress deserves much credit for its speedy action and President Obama also deserves much credit for his flexibility on the specifics of the package,” said Bruce Hahn, President of the American Homeowners Grassroots Alliance (AHGA). “Both recognized that the economy continues to deteriorate rapidly. What is most important is to immediately put into place a recovery package that will help stop the bleeding,” he added. “Even if they didn’t get everything right or come up with a total solution, as is likely when you put together such a major piece of legislation in a hurry, we can go back later and make necessary modifications.”

The Act contains numerous provisions that will help homeowners with the economic challenges faced by so many of them. The creation of a 10% first time buyer’s tax credit will help quell the worries of potential home buyers fearful of another 10% annual drop in housing values this year. A first time buyer typically generates two additional upstream sales, which will help many existing home sellers who have been unable to find buyers. It will also help clear the bloated inventory of unsold new homes and foreclosed properties owned by lenders.

Lawmakers Reach Compromise

“The middle ground we’ve reached creates more jobs than the original Senate bill and spends less than the original House bill,” said Senate Majority Leader Harry Reid of Nevada.

The stimulus package aims to counter an economic recession that’s entered its 15th month and shows few signs of easing. Some 3.6 million jobs have been lost during the downturn, half of them in the past three months. The bill, Obama’s first major legislative initiative, aims to create about 3.5 million new jobs.

Obama, speaking at a highway construction site in Springfield, Va., made the political stakes clear. “As president, I expect to be judged - and should be judged - by the results of this program,” he said.

The compromise negotiations hit only one snag. Some House Democrats, led by Speaker Nancy Pelosi, D-Calif., were angry about the spending reductions for education, but after talking to Senate leaders they agreed to move ahead.

“I’m sure this (bill) will be criticized for being so large, but it is certainly no larger than the problem it confronts,” said House Appropriations Committee Chairman David Obey, D-Wis.

The measure is expected to win support from virtually all Democrats and a handful of moderate Republicans. The final compromise was largely shaped by two forces: the White House, represented at the bargaining by chief of staff Rahm Emanuel, and moderate GOP senators Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania.

Since Democrats control 58 Senate seats, and 60 votes are needed under Senate rules to overcome procedural hurdles, support from at least two Republicans remains crucial.

Lawmakers were confident that they’ll have the bill on Obama’s desk so he can sign it on Monday, Presidents Day.
“To delay this any further would lead to consequences that could be horrendous,” said Senate Appropriations Committee Chairman Daniel Inouye, D-Hawaii. “And if we delay this, it could lead to a crisis worse than the Great Depression because today we’re much more than just a nation, we’re a superpower. If we go down, there will be chaos in this globe.”

The White House made it clear that it wanted some of the education money restored. Emanuel and Budget Director Peter Orszag met privately with lawmakers, and the result was the $54 billion compromise, which can be used for school modernization and other expenses, according to Collins.

Also important to the moderates was the overall cost of the bill. Obama said he wanted something in the $800 billion range, but the Republicans insisted that some tax cuts be preserved.

So the $70 billion “patch” in the alternative minimum tax this year was preserved.

Two Senate-approved tax breaks were scaled back, however, though it wasn’t clear how much. The measure provides help for buyers of cars and homes.

The price, though, was a favorite Obama tax break. The “Making Work Pay” tax credit, a $500 rebate he proposed for 95 percent of taxpayers, was cut back to $400.

There was general agreement on a number of other items. Highway, bridge and other infrastructure spending will total about $49 billion, while states will get about $90 billion to help Medicaid subsidize health care for the poor and disabled.

The negotiators also agreed to subsidize health care under the COBRA insurance program for nine months, at a cost of $21.4 billion, as well as an additional 20 to 33 weeks of jobless benefits in high-unemployment states.
Republican congressional leaders were annoyed at the process and the product.

“My question is what is the majority trying to hide by never allowing any ventilation of ideas, any discussion of what we have brought forward as the Republican vision to stimulate this economy,” complained House Minority Whip Eric Cantor of Virginia.

Senate Republicans are expected to try to delay final passage with some procedural measures on Thursday, but a final Senate vote is nonetheless expected on Friday.

© 2009, McClatchy-Tribune Information Services.

By David Lightman

Valuable Valentine’s Day Tips for a Romantic and Affordable Holiday

by Alexandra Zega
RISMEDIA, February 4, 2009-The hype surrounding Valentine’s Day has long influenced American consumers to dig deep into their pockets for the traditional roses, chocolates, and jewelry. According to a 2008 report from the National Retail Federation, consumers expected to spend $122 on Valentine’s gifts last year. But this February, in the midst of a roller-coaster economy, the flutter many Americans are feeling has more to do with financial worries than a quickened heartbeat caused by love. While times are tough, The Debt Diva, Clarky Davis, suggests we take a page from Cupid’s book to have a frugal but still romantic Valentine’s Day by focusing on the heart.

 

“Remember, Cupid inspires love with his bow and arrow, not an expensive bouquet of flowers or diamond ring,” Davis says. “Don’t be pressured to go overboard with expensive gifts to celebrate your love. Stay on track with your budget. There are plenty of ways to show how you feel without spending a fortune. I like to call these special moments, Debt-Free Dates”

The Debt Diva’s Debt-Free Dates

1. Romantic Dinner: Have a nice candlelit dinner at home. Cooking at home costs much less than going to fancy restaurant. Dress up in something nice and make something new.

2. Treasure Hunt: Create a map and go to all your special places or favorite spots. Hide a little gift at the end to wrap it all up.

3. Day of Fun: Since Valentine’s falls on a Saturday this year, you can plan a whole day of activities, which could include breakfast in bed, a day at the park, a movie marathon and a romantic dinner.

4. Movie Marathon: Movies are a great way to spend time together cuddled up on the couch. Pick movies that are special to you both or find something you each like and want to share with one another. Another idea is to watch home videos to bring back memories from your wedding or kid’s younger years.

5. Live Music: Check out a concert in your town that you both enjoy. There are also local cover bands that play music of a favorite artist at an inexpensive venue or even for free.

6. Wine Tasting: Many vineyards offer a tasting for around $10. This is a romantic fun way to spend the day. If you make a purchase at the end, many vineyards will even apply the tasting fee to the product.

7. Relax: Take the day to spend relaxing together at a bookstore, a coffee shop or even at home. Sometimes you just need to rest and know you are there for each other.

8. Take a scenic drive: Drive to special place or get out of town for the day. Talk and reminisce about good times.

9. Do a second “first date”: Ask all the get to know you questions. Give yourself a low budget and have some fun doing the things you did when you first met.

10. Dance: Take a slow dance at home after dinner or find somewhere free to dance the night away later in the evening.

“Your budget is probably already tight this year as you are paying down debt, adding to savings and trying to survive with current economic conditions. Your efforts will pay off,” Davis says. “But if you still want to give your loved one something special, here are some gift ideas that say ‘I love you’ without making your piggy bank squeal.”

Frugal Valentine’s Day Gifts

1. Homemade card: Get creative and make a card yourself instead of spending money on a generic store bought one. Cut out heart shapes and add a loving note.

2. Sweet tooth: Make something yummy for him or her. Pull out the cookie cutters and make heart shaped cookies or brownies. Another idea is chocolate covered pretzels or cupcakes.

3. Flowers: Instead of buying an expensive bouquet from a florist, make it yourself. Check out your local big box retailer or even local grocer for great deals. Try and get creative as well. Roses are classic, but there are cheaper options that may be even more impressive. Even a single flower shows you care if you can’t afford a full bouquet.

4. Express yourself: Write a poem or sentimental love note. This is something they will keep forever. Buy a sheet of scrapbook paper or parchment to write on to add a little something extra.

5. Coupons: Create coupons or vouchers for him or her to do something special at a later date and time. Some ideas include a massage, a car wash, a day with the kids, or something else that best fits them.

6. Pictures: There are lots of ways to make photos special. Make a photo album online at sites like myphotoalbum or shutterfly. Create a scrapbook of the special moments together from the year. You can also add things to the scrapbook like ticket stubs, program covers, etc.

7. Music: Create a CD full of romantic music or make a CD of your loved one’s favorite music.

8. Book: If your sweetie loves to read, buy a book they have been wanting or one from a favorite author, and add a special note.

9. Spa Day: Look for discount deals on spa packages. You can probably find lots of discounts this year. Do a couple’s massage or purchase a day of pampering for your loved one.

10. Wrap it all up: Create a basket or box full of great items. Add the CD, the book, a framed photo, scented candles, gourmet coffee/tea and some bubble bath.

“There are lots of ways to have a frugal and affectionate Valentine’s Day,” says Davis. “It just takes a little bit of creativity and planning. And most people will appreciate a special date or gift from the heart that shows you really care.”

A High-Tech Spin on Drive-Through Order-Taking

by Alexandra Zega

RISMEDIA, February 3, 2009-(MCT)-That crackling voice taking your order at a fast food drive-through may come from a lot farther away than the restaurant: Try Texas, or even overseas.

San Diego-based Jack in the Box has tested outsourced drive-through order-taking since mid-2008 at seven of its 30 Charlotte, N.C.-area restaurants. Spokeswoman Kathleen Anthony declined to specify the locations, though workers at the Cotswold restaurant in Charlotte recently said it uses the system.

The technology is intended to improve speed, accuracy and service, freeing up restaurant employees to process orders, accept payment and address other needs, Anthony said. The chain has not reduced staffing as a result of the remote order-taking, and the restaurants can turn the system on and off as they wish, she said.

Still, it’s piqued curiosity among local customers who have encountered heavy accents with order-takers, then rounded the bend to find different people handing them food.

“I had noticed it (several months ago), but I just thought the person taking the order was somewhere else in the store where we couldn’t see them,” said Elizabeth Banks, a Charlotte teacher and mother of three who takes her 15-year-old daughter and her daughter’s friends to Jack in the Box for Oreo milkshakes most Friday afternoons. “It never occurred to me they might be out of the country.”

The Jack in the Box test orders are routed to a Texas call center operated by Bronco Communications, a company specializing in fast food order-taking, Anthony said. Some may be routed outside the U.S., she said, but she wouldn’t specify where.

Companies began trying remote ordering in 2005. As with outsourcing in other industries, technological advances-namely high-speed Internet-made it possible. When customers pull up to the menu, a call center worker takes the order on a computer. The order pops up on a screen inside the restaurant.

Even where people have grown accustomed to seeing bank and computer questions directed overseas, international order-taking is rare in the realm of cheeseburger combos and large Cokes, said Sherri Daye Scott, editor of QSR Magazine, dedicated to the quick-service restaurant industry.

A greater number of restaurants, including McDonald’s and Wendy’s franchisees, have tried centralized order-takers within the United States. None has introduced the technology nationally, in part because they’ve found it difficult to prove it saves money, Scott said. The parent company of Hardee’s has conducted a limited test, too.

Other chains said they have not tried it and don’t plan to at this point, including Burger King and Taco Bell, spokespersons for both said.

The technology has the potential to eliminate language barriers between Spanish-speaking employees and English-speaking customers, said Kate Mosteller, marketing director of Massachusetts-based Exit 41, which focuses on off-site order taking. Yet time zones and regional dialects can also present hurdles.

“You want someone who’s friendly and articulate and who can understand … different nuances,” Mosteller said. “(Otherwise) you’re going to know you’re (being routed) somewhere else, and that’s exactly what you don’t want to do.”

Jack in the Box’s Anthony declined to discuss the results of the Charlotte trial, noting that the company doesn’t speak in depth about its tests. “It is something we’re testing, not something we’re necessarily committed to at this point,” she said.

Though the local run is wrapping up soon, Jack in the Box will continue to try the approach in other markets “here and there,” Anthony said.

Customers such as Banks say the system can sound a bit distant: After all, fast-food order takers aren’t always the easiest to hear even when they’re around the corner, let alone around the world. But it hasn’t posed any other issues, and the speakers are very polite. Then again, Banks said, that was the case with the old method, too.

“It would be nice to understand what the rationale was behind (the change),” she said. “It seems like an awful lot of trouble.”

Even so, she noted, it hasn’t bothered her family so much that they’ve stopped visiting for milkshakes.

 

© 2009, The Charlotte Observer (Charlotte, N.C.).By Jen Aronoff
Distributed by McClatchy-Tribune Information Services.

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