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Retirement Topics – Plan Loans #student #aid


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Retirement Topics – Plan Loans

Retirement plans may offer loans to participants, but a plan sponsor is not required to include loan provisions in its plan. Profit-sharing, money purchase, 401(k), 403(b) and 457(b) plans may offer loans. To determine if a plan offers loans, check with the plan sponsor or the Summary Plan Description.

IRAs and IRA-based plans (SEP, SIMPLE IRA and SARSEP plans) cannot offer participant loans. A loan from an IRA or IRA-based plan would result in a prohibited transaction .

To receive a plan loan, a participant must apply for the loan and the loan must meet certain requirements. The participant should receive information from the plan administrator describing the availability of and terms for obtaining a loan.

Maximum loan amount

The maximum amount a participant may borrow from his or her plan is 50% of his or her vested account balance or $50,000, whichever is less. An exception to this limit is if 50% of the vested account balance is less than $10,000: in such case, the participant may borrow up to $10,000. Plans are not required to include this exception.

Bill’s vested account balance is $80,000. Bill may take a loan up to $40,000, which is the lesser of 50% of his vested account balance and $50,000.

Sue has a vested account balance of $120,000. Sue may take a loan up to $50,000, which is the lesser of 50% of her vested account balance of $120,000 ($60,000) or $50,000.

Repayment periods

Generally, the employee must repay a plan loan within five years and must make payments at least quarterly. The law provides an exception to the 5-year requirement if the employee uses the loan to purchase a primary residence.

Loans to an employee that leaves the company

Plan sponsors may require an employee to repay completely a loan if he or she terminates employment. If the employee is unable to repay the loan, then the employer will treat it as a distribution and will report it to the IRS on Form 1099-R. The employee can avoid the immediate income tax consequences if he or she is able to come up with the loan’s outstanding balance, within 60 days and rolls over this amount to an IRA or eligible retirement plan.

Loans that do not meet legal requirements

Loans that exceed the maximum amount or don’t not follow the required repayment schedule are considered “deemed distributions.” If the loan repayments are not made at least quarterly, the remaining balance is treated as a distribution that is subject to income tax and may be subject to the 10% early distribution tax. If the employee continues to participate in the plan after the deemed distribution occurs, he or she is still required to make loan repayments. These amounts are treated as basis and will not be taxable when later distributed by the plan.

Loans to an employee in the armed forces

If the employee is in the armed forces, the employer may suspend the loan repayments during the employee’s period of active duty and then extend the loan repayment period by this period.

If during a leave of absence from his or her employer, an employee’s salary is reduced to the point at which the salary is insufficient to repay the loan, the employer may suspend repayment up to a year. Unlike the exception for active members of the armed forces, the loan repayment period is not extended and the employee may be required to increase the scheduled payment amounts in order to pay off the loan in the originally scheduled period.

Spouse’s consent

Some qualified plans require a participant’s spouse’s written consent before giving a loan greater than $5,000. Other qualified plans may not require the participant’s spouse to sign for a loan, regardless of amount, if the plan:

  1. is a profit-sharing plan (e.g. a 401(k) plan);
  2. requires that the plan’s death benefit be paid in full to the surviving spouse (unless the spouse has consented to another beneficiary);
  3. does not offer a life annuity option in the plan; and
  4. does not contain a direct transfer from another plan that was required to provide a survivor annuity.

Should you borrow from your retirement plan?

Before you decide to take a loan from your retirement account, you should consult with a financial planner, who will help you decide if this is the best option or if you would be better off obtaining a loan from a financial institution or other sources.

When a participant requests a loan from your plan

The participant should receive information describing the availability of and terms for obtaining a loan. Some information that may be provided to a participant is as follows:

  • loans are/are not permitted;
  • minimum dollar amount required to obtain a loan;
  • maximum number of loans permitted by the plan
  • maximum dollar amount permitted;
  • term of repayment (number of years);
  • interest rate information;
  • security for the loan;
  • how repayment may be made (for instance, payroll deduction); and
  • spousal consent requirements

The participant should also receive an application and/or instructions for how to apply for the loan.

Correcting problems with plan loans

If participant loans under your plan do not meet the legal requirements, or if repayments have not been made according to the schedule set out in the loan document, you may be able to correct these problems using the Voluntary Correction Program. The program allows you to reamortize loans over the remaining loan period or report past-due loans as distributions in the year of the correction.

Additional resources

Page Last Reviewed or Updated: 20-Jan-2015


Short Story Ideas and Creative Writing Prompts #short #story #ideas,short #story #topics,fiction #writing #prompts,creative #writing #ideas


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Forty-Four Short Story Ideas

Here are lots of short story ideas that you can use as writing prompts. Use these story starters on their own or to get ideas for the CWN online writing courses. You’ll also find links to more creative writing prompts at the bottom of the page.

Any of these ideas can be used either humorously or dramatically. or you can try both. Have fun!

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Story ideas – three elements

Choose a set of three elements and write a story that contains all three of them!

Extreme challenge: combine three of the elements with one of the other short story ideas on this page.

  1. A stolen ring, fear of spiders, and a sinister stranger.
  2. A taxi, an old enemy, and Valentine’s Day.
  3. Identical twins, a party invitation, and a locked closet.
  4. A broken wristwatch, peppermints, and a hug that goes too far.
  5. Aerobics, a secret diary, and something unpleasant under the bed.
  6. An ex-boyfriend, a pair of binoculars, and a good-luck charm.
  7. An annoying boss, a bikini, and a fake illness.
  8. The first day of school, a love note, and a recipe with a significant mistake.
  9. A horoscope, makeup, and a missing tooth.
  10. A campfire, a scream, and a small lie that gets bigger and bigger.

More short story ideas

Challenge: 4 stories in 4 weeks using these short story ideas. Are you up to it?

Extreme challenge: Why not write a book of short stories? Choose seven or eight short story ideas to get started.

  1. A babysitter is snooping around her employer’s house and finds a disturbing photograph.
  2. At a Chinese restaurant, your character opens his fortune cookie and reads the following message: “Your life is in danger. Say nothing to anyone. You must leave the city immediately and never return. Repeat: say nothing.”.
  3. Your character’s boss invites her and her husband to dinner. Your character wants to make a good impression, but her husband has a tendency to drink too much and say exactly what’s on his mind.
  4. It’s your character’s first day at a new school. He or she wants to get a fresh start, develop a new identity. But in his or her homeroom, your character encounters a kid he or she knows from summer camp.
  5. Your character has to tell his parents that he’s getting a divorce. He knows his parents will take his wife’s side, and he is right.
  6. At the airport, a stranger offers your character money to carry a mysterious package onto the plane. The stranger assures your character that it’s nothing illegal and points out that it has already been through the security check. Your character has serious doubts, but needs the money, and therefore agrees.
  7. Your character suspects her husband is having an affair and decides to spy on him. What she discovers is not what she was expecting.
  8. A man elbows your character in a crowd. After he is gone, she discovers her cell phone is too. She calls her own number, and the man answers. She explains that the cell phone has personal information on it and asks the man to send it back to her. He hangs up. Instead of going to the police, your character decides to take matters into her own hands.
  9. After your character loses his job, he is home during the day. That’s how he discovers that his teenage son has a small marijuana plantation behind the garage. Your character confronts his son, who, instead of acting repentant, explains to your character exactly how much money he is making from the marijuana and tries to persuade your character to join in the business.
  10. At a garage sale, your character buys an antique urn which she thinks will look nice decorating her bookcase. But when she gets home, she realizes there are someone’s ashes in it.

Learn to make your story a page-turner with our online course Irresistible Fiction.

Even more short story ideas

  1. Your character starts receiving flowers and anonymous gifts. She doesn’t know who is sending them. Her husband is suspicious, and the gifts begin to get stranger.
  2. A missionary visits your character’s house and attempts to convert her to his religion. Your character is trying to get rid of him just as storm warning sirens go off. Your character feels she can’t send the missionary out into the storm, so she lets him come down into her basement with her. This is going to be a long storm.
  3. Your character is caught shoplifting. The shop owner says that she won’t call the police in exchange for a personal favor.
  4. Your character is visiting his parents over a holiday. He is returning some books to the library for his mother and is startled to notice that the librarian looks exactly like him, only about thirty years older. He immediately begins to suspect that his mother had an affair at one time and the librarian is his real father.
  5. Your character picks up a hitch-hiker on her way home from work. The hitch-hiker tries to persuade your character to leave everything and drive her across the country.
  6. Your character has to sell the house where she grew up. A potential buyer comes to look at it and begins to talk about all of the changes she would make to the place. This upsets your character, who decides she wants to find a buyer who will leave everything the way it has always been.
  7. A bat gets in the house. Your character’s husband becomes hysterical, frightened that it might be rabid. In his panic, he ends up shutting the bat in a room with your character while he calls an exterminator from a safe place in the house. His behavior makes your character see her husband in a new way.
  8. Your character changes jobs in order to have more time with his family. But his family doesn’t seem interested in having him around.
  9. Your character develops the idea that she can hear the voices of the dead on a certain radio channel. She decides to take advantage of this channel to find answers to some questions that are bothering her about her dead parents.
  10. Your character’s dream is to be a professional dancer. At a party, she mentions this dream to a stranger, who says that he has contacts in the dance world and gets her an audition for a prestigious dance troupe. One problem: your character doesn’t know how to dance. Your character decides to accept the audition anyway and look for a solution.

And still more short story ideas

  1. Your character thinks her boss is looking for an excuse to fire her. She decides to fight back.
  2. Your character goes out for dinner on a date and becomes attracted to the waiter or waitress.
  3. Your character notices that a stranger is following her. She pretends not to notice. The stranger follows her home and watches her go inside. Then when he leaves, your character turns the tables and starts to follow him.
  4. A child moves into a new house and finds out that the other kids in town think it’s haunted. She begins to invent ghost stories to tell at school in order to get attention. But the more stories she tells, the more frightened she becomes of the house.
  5. Your elderly character escapes from the retirement home where his or her children have placed him or her.
  6. Your character gets cosmetic surgery in an attempt to make her boyfriend love her more. But then she worries he only loves her for her looks.
  7. Your character is a writer. But his new neighbors are so noisy that he can neither work nor sleep. He decides to take action.
  8. Your character’s mother-in-law comes to visit for a week, and your character suspects she is trying to poison him. He shares his suspicion with his wife, who says he’s always hated her mother but this accusation is going too far. Meanwhile, your character has stomach cramps, and his mother-in-law is downstairs making breakfast again.
  9. It’s a freezing cold night. Your character finds a homeless family on his doorstep and invites them into his home to sleep. But in the morning, the family doesn’t leave.
  10. Your character has recently married a man with two teenage children. The children resent her, and she tries to avoid them altogether. Then her new husband (their father) disappears suddenly, leaving only a short good-bye note.

Short story ideas – personal creative writing challenges

  1. Make a list of five things you’re afraid of happening to you. Then write a story in which one of them happens to your character..
  2. Think of a big problem that one of your friends had to face. Then write a story in which your character battles with that problem..
  3. What is one of your bad habits? Invent a character who has the bad habit, but a much worse case of it than you have. Write a story where this habit gets your character into trouble.
  4. What is one of your greatest strengths? Invent a character who doesn’t have this strength. Create a situation in which having this strength is very important for your character. What does your character do? Write the story.

Keep the short story ideas flowing

  • Looking for more detailed short story ideas? Find them here .
  • Use our free worksheet to develop your story plot.
  • Our online writing course Irresistible Fiction will show you how to write stories people can’t put down.
  • Click here for a list of CWN pages with creative writing prompts and short story ideas.

If you like this page, please click the +1 button to recommend it.


Emerging Issues: The Privacy of Medical Records #arthritis,asthma,behavior,bioethics,cancer,diabetes,new #treatments,heart,nutrition,aging,women’s #health,other #topics,kids,dieting,exercise,healthcare,infections,men,public #health,sports #medicine,gastro,addiction,anxiety,autoimmune,depression,senior #living, #emergencies,migraine,mind,pain,stress,stroke,diet,emotional #health,fitness,sex,sleep,travel


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Emerging Issues: The Privacy of Medical Records

Within the past two years, a substantial amount of attention has been paid to the issue of the privacy of patient records. The Health Insurance Portability and Accountability Act of 1996 required the Secretary of Health and Human Services to make recommendations to Congress on ways to protect the privacy of medical records. Secretary Shalala submitted her proposals to Congress on September 11, 1997. The National Academy of Sciences and the National Association of Insurance Commissioners have issued recommendations of their own. Senator Robert Bennett (R. – Utah) has circulated draft legislation entitled the “Medical Information Confidentiality Act” that may well be the focus of congressional action.

Two developments account for this flurry of interest. The first is the growth of electronic medical record-keeping in place of paper records. The National Academy of Sciences report states that the health care industry spent between $10 and $15 billion on information technology in 1996. Much of this expenditure is attributable to creating electronic records systems and converting conventionally stored data to electronic formats.

Electronic medical records (“EMRs”) appear to present new threats to maintaining the privacy of patient-identifiable medical records. An EMR can be called up instantaneously by someone with access to the data system and the relevant passwords. Although a paper record can be photocopied and faxed, it is less easy to distribute widely, and requires physical possession for accessibility. Computerized records systems are “black boxes” to many health professionals who are otherwise familiar with traditional records systems; they fear losing control of the systems and having to rely on computer experts who may not have internalized the privacy-related ethics of the medical profession. At the same time, one hears proposals to link all medical records systems so that patient data can be accessed wherever and whenever patients require medical services. This raises the prospect that access to one portion of one record may afford access to all records on an individual.

The Managed Care Conflict

A second reason for the increased concern over medical records privacy is the growth of managed care organizations. In the traditional, fee-for-service model of health care delivery, patient records would be produced and retained by the physician or other provider of services. The patient’s health insurer would be given access to selected records needed for claims review. Disclosure of the records required patient authorization, although, typically, patients executed these authorizations automatically and in blanket fashion. In a managed care organization, on the other hand, the provider of care and the insurer, in some sense, are the same entity. Any medical information in the possession of the provider also is held by the insurer. This is clearest in a closed-panel HMO like Kaiser but is present, to a varying degree, in all forms of managed care.

The fear here is that the insurer will gain access to medical records that the patient and the provider would not normally transmit and that the insurer will use the data to take action adverse to the patient’s interest, such as limiting benefits or terminating the patient’s insurance coverage.

Special problems are created by employer-sponsored health plans. Here, the plan is essentially the same entity as the employer and the concern is that the employer will have access to medical information possessed by the health plan and will use the information contrary to the employee’s interests, such as to terminate employment.

The basic solutions that are being proposed are, first, to require record makers and keepers to implement a set of technical steps to protect the security of medical records and, second, to impose penalties on makers and keepers of records who release them for unauthorized or inappropriate purposes.

Technical steps being touted include unique patient and access identifiers; “audit trails,” which are electronic methods of detecting and recording the identities of anyone who accesses a record; encryption of external transmissions of record information; appointment of internal information security officers with responsibility to police record-keeping practices; and “firewalls,” which are electronic barriers that isolate records systems from unauthorized access or penetration.

The problem is that these techniques are expensive and no one is sure how well they work. I received a glimpse of how unrealistic these solutions might be at a meeting on medical records privacy I attended as a member of a joint working group of the Joint Commission on the Accreditation of Healthcare Organizations (“JCAHO”) and the National Committee for Quality Assurance (“NCQA”), the organization that accredits managed care organizations. One member of the working group, the person in charge of medical records at a large managed care plan, pointed out that neither she nor anyone else in her organization knew what records existed or where they were! She suspected that this was likely to be true of most managed care plans and provider organizations. Moreover, she explained that the greatest single threat to the privacy of medical records was post-it notes: people jotted down their passwords and pasted them on or near their computers. The more passwords, personal identifiers and other electronic steps a person had to take to access records, the more these little reminders would be necessary, rendering the fancy security techniques ineffective.

Some of the other issues that are being debated by policy-makers include:

  • Whether to require patient enrollees to authorize each release of medical records or only to require them to give a blanket release, say upon enrollment. Advocates of blanket releases argue that requiring a signed authorization for every record release would be burdensome and most patients don’t care. Proponents of individual authorization respond that this is necessary to alert patients that their records are being disclosed so they can take steps to prevent inappropriate disclosures.
  • Whether to establish uniform standards or minimum standards. Managed care organizations and other record makers and keepers like uniform standards because it tells them clearly what they have to do. Some patient advocates propose minimum standards to enable plans to compete for enrollees on the basis of how well they maintain privacy: plans that adopted more stringent security measures could publicize this fact to potential enrollees who have a choice of plan.
  • Whether to enact a federal law that pre-empts stricter state laws. A uniform law would facilitate interstate business by allowing a managed care plan to comply with one standard nation-wide. But some patient advocates urge that states be allowed to adopt more stringent security requirements, if only to permit experimentation to see what works best at protecting privacy.
  • How much control to give patients over what goes in and what stays in their medical records. Most privacy proposals would give patients the right to correct inaccuracies in their records but not to delete material. Some patient advocates argue that patients should have the right to block the entry or remove information that they fear would stigmatize them or lead to insurance or employment discrimination. Health care professionals are concerned that incomplete records could interfere with proper medical management. Patient advocates respond that, so long as the incomplete records are marked as such, patients should be permitted to weigh the risks of stigma or discrimination against the risks of a reduced quality of care.

There is almost certainly going to be federal legislation on medical record privacy. But this will not end the debate. Accreditation organizations such as the JCAHO and the NCQA will establish their own standards; managed care plans and provider organizations will adopt their own internal policies and procedures. Meanwhile, the science of electronic records and their security will develop, presenting new options and challenges. Stand by for further reports.

NOTE: We regret that we cannot answer personal medical questions.


Tax Topics – Topic 456 Student Loan Interest Deduction #low #interest #loan


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Topic 456 – Student Loan Interest Deduction

You may be able to deduct interest you pay on a qualified student loan. Generally, the amount you may deduct is the lesser of $2,500 or the amount of interest you actually paid and it is subject to a phaseout, which means the amount of the deduction gradually decreases and phases out completely if and when your modified adjusted gross income (MAGI) amount reaches the annual limit.

You claim this deduction as an adjustment to income so you do not need to itemize your deductions on Form 1040, Schedule A (PDF), Itemized Deductions .

You can claim the deduction if all of the following apply:

  • You paid interest on a qualified student loan in tax year 2014
  • You are legally obligated to pay interest on a qualified student loan
  • Your filing status is not married filing separately
  • Your MAGI is less than a specified amount which is set annually, and
  • You or your spouse, if filing jointly, cannot be claimed as dependents on someone else’s return

A qualified student loan is a loan you took out solely to pay qualified higher education expenses. See Publication 970. Tax Benefits for Education . and the Form 1040 Instructions (PDF) to determine if your expenses qualify.

If you file a Form 2555 (PDF), Foreign Earned Income . Form 2555-EZ (PDF), Foreign Earned Income Exclusion . or Form 4563 (PDF), Exclusion of Income for Bona Fide Residents of American Samoa . or if you exclude income from sources inside Puerto Rico, refer to Worksheet 4-1, Student Loan Interest Deduction Worksheet in Publication 970. instead of the worksheet in the Form 1040 Instructions.

If you paid $600 or more of interest on a qualified student loan during the year, you will receive a Form 1098-E (PDF), Student Loan Interest Statement . from the entity to which you paid the student loan interest.

For more information about the student loan interest deduction and how your MAGI affects the deduction amount, refer to Publication 970.

Page Last Reviewed or Updated: May 27, 2015


Retirement Topics – Plan Loans #medical #school #loans


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Retirement Topics – Plan Loans

Retirement plans may offer loans to participants, but a plan sponsor is not required to include loan provisions in its plan. Profit-sharing, money purchase, 401(k), 403(b) and 457(b) plans may offer loans. To determine if a plan offers loans, check with the plan sponsor or the Summary Plan Description.

IRAs and IRA-based plans (SEP, SIMPLE IRA and SARSEP plans) cannot offer participant loans. A loan from an IRA or IRA-based plan would result in a prohibited transaction .

To receive a plan loan, a participant must apply for the loan and the loan must meet certain requirements. The participant should receive information from the plan administrator describing the availability of and terms for obtaining a loan.

Maximum loan amount

The maximum amount a participant may borrow from his or her plan is 50% of his or her vested account balance or $50,000, whichever is less. An exception to this limit is if 50% of the vested account balance is less than $10,000: in such case, the participant may borrow up to $10,000. Plans are not required to include this exception.

Bill’s vested account balance is $80,000. Bill may take a loan up to $40,000, which is the lesser of 50% of his vested account balance and $50,000.

Sue has a vested account balance of $120,000. Sue may take a loan up to $50,000, which is the lesser of 50% of her vested account balance of $120,000 ($60,000) or $50,000.

Repayment periods

Generally, the employee must repay a plan loan within five years and must make payments at least quarterly. The law provides an exception to the 5-year requirement if the employee uses the loan to purchase a primary residence.

Loans to an employee that leaves the company

Plan sponsors may require an employee to repay completely a loan if he or she terminates employment. If the employee is unable to repay the loan, then the employer will treat it as a distribution and will report it to the IRS on Form 1099-R. The employee can avoid the immediate income tax consequences if he or she is able to come up with the loan’s outstanding balance, within 60 days and rolls over this amount to an IRA or eligible retirement plan.

Loans that do not meet legal requirements

Loans that exceed the maximum amount or don’t not follow the required repayment schedule are considered “deemed distributions.” If the loan repayments are not made at least quarterly, the remaining balance is treated as a distribution that is subject to income tax and may be subject to the 10% early distribution tax. If the employee continues to participate in the plan after the deemed distribution occurs, he or she is still required to make loan repayments. These amounts are treated as basis and will not be taxable when later distributed by the plan.

Loans to an employee in the armed forces

If the employee is in the armed forces, the employer may suspend the loan repayments during the employee’s period of active duty and then extend the loan repayment period by this period.

If during a leave of absence from his or her employer, an employee’s salary is reduced to the point at which the salary is insufficient to repay the loan, the employer may suspend repayment up to a year. Unlike the exception for active members of the armed forces, the loan repayment period is not extended and the employee may be required to increase the scheduled payment amounts in order to pay off the loan in the originally scheduled period.

Spouse’s consent

Some qualified plans require a participant’s spouse’s written consent before giving a loan greater than $5,000. Other qualified plans may not require the participant’s spouse to sign for a loan, regardless of amount, if the plan:

  1. is a profit-sharing plan (e.g. a 401(k) plan);
  2. requires that the plan’s death benefit be paid in full to the surviving spouse (unless the spouse has consented to another beneficiary);
  3. does not offer a life annuity option in the plan; and
  4. does not contain a direct transfer from another plan that was required to provide a survivor annuity.

Should you borrow from your retirement plan?

Before you decide to take a loan from your retirement account, you should consult with a financial planner, who will help you decide if this is the best option or if you would be better off obtaining a loan from a financial institution or other sources.

When a participant requests a loan from your plan

The participant should receive information describing the availability of and terms for obtaining a loan. Some information that may be provided to a participant is as follows:

  • loans are/are not permitted;
  • minimum dollar amount required to obtain a loan;
  • maximum number of loans permitted by the plan
  • maximum dollar amount permitted;
  • term of repayment (number of years);
  • interest rate information;
  • security for the loan;
  • how repayment may be made (for instance, payroll deduction); and
  • spousal consent requirements

The participant should also receive an application and/or instructions for how to apply for the loan.

Correcting problems with plan loans

If participant loans under your plan do not meet the legal requirements, or if repayments have not been made according to the schedule set out in the loan document, you may be able to correct these problems using the Voluntary Correction Program. The program allows you to reamortize loans over the remaining loan period or report past-due loans as distributions in the year of the correction.

Additional resources

Page Last Reviewed or Updated: 20-Jan-2015


How much home can you afford? Advanced Topics #money #for #college


#where can i get a loan
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How much home can I afford? and

Our How much home can you afford? page gave you a rough idea of the maximum price you can afford to pay for a home, with an easy-to-use calculator. The page you’re reading now gives you more of the story behind those numbers, and helps you better understand the factors influencing how much money the bank will loan you. This won’t necessarily help you compute your borrowing power any better (that’s what the calculator is for), rather it’s just to help you understand the concepts behind those numbers better. This discussion isn’t absolutely essential for most homebuyers, but it’s provided for those who want to know as much as possible — especially those having trouble affording a home who want to look for way to improve their house-buying chances.

Of course, if you haven’t already gone through the basics of how much home you can afford and haven’t used the calculator then you should go back there now before reading any further the page you’re on now is the advanced stuff.

Okay, on with the advanced stuff.

You’ll remember the simple formula from the previous page — since you pay for your house with a combination of a down payment and a bank loan, the total of both is the cost of the home:

Down Payment + Biggest Loan You Can Get = How Much Home You Can Afford

You know how much you can afford for a down payment, so that part’s easy. (At least you should know — if you don’t you should probably figure that out before going any further.) So that leaves us with finding the biggest loan we can get. So really, the rest of this page is really How much loan can I get? and not How much home can I afford? To find how much home you can afford just add the amount you can afford for a down payment to the amount you can get for a loan.

We’ve left one thing out of our simple equation above — closing costs . You’ll need to either pay the closing costs from your savings (lowering the amount you have available for a down payment), or qualify for a loan that’s a little larger than the house you want to buy, and have the closing costs added to the loan.

Returning our focus to getting the biggest loan possible, here are the things that can get us a bigger loan:

  • Higher monthly income
  • Lower existing monthly debt payments
  • Bigger down payment
  • 30-year mortgage (vs. 15)
  • A better credit score
  • A lower property tax insurance rate

Let’s look at each of these in detail.

Higher Monthly Income. Obviously the more you can afford to pay for a home, the bigger the loan you can get. The bank limits your monthly mortgage payment (including taxes and insurance) to no more than 28 to 36% of your monthly income. What determines where you fall on that scale is the size of your down payment and your credit score. In any event, the higher monthly payment the bank allows, the bigger the loan they’ll give you.

This 28 to 36% figure is called the Housing Ratio. For example, if you make $3000/mo. and the bank uses a housing ratio of 33% then the bank figures you can afford $990/mo. in mortgage payments ($3000 x 28%). Note that the amount you can borrow is also limited by how much debt you have. Just because the Housing Ratio says your payments can be up to $990/mo. any debt you have couldbring that figure down. We’ll cover that later on.

Usually there’s not much you can do in the short-term about your income, but in one case there is: Buy a duplex or a house with a separate garage apartment that you can rent out. Then you can count the amount you’ll collect in rent towards your income. Some lenders are finicky about counting the rental income, but you can almost certainly find one who will. Your chances improve if the space is already rented and the renter has a long-term lease. Being able to count this extra rental income can help you buy a more expensive home — which will be a much better investment.

Here’s an example of how having a higher income means a bigger potential loan amount. These are estimates of loan amounts available at various income levels, assuming: $10,000 down, $500/mo. in debt, 7% interest, 30-year mortgage, and 2% property taxes and insurance.

Lower Monthly Debt payments. The less money you already owe, the bigger the loan you can get. The bank limits your monthly mortgage payment (including taxes and insurance) to no more than 36 to 42% of your total monthly debt, including your mortgage payment. This figure is called the Debt Ratio. For example, you make $3000/mo. have $500/mo. in debt, and the bank uses a debt ratio of 38%. They limit your total monthly debt to $1140 ($3000 x 38%). But you already have $500/mo. in debt, so that means you have $640/mo. left over for your mortgage payment.

What determines where you fall on the 36 to 42% scale is the size of your down payment and your credit score. In any event, the higher monthly payment the bank allows, the bigger the loan they’ll give you.

Note that the amount you can borrow is also limited by the housing ratio discussed above. The bank figures your monthly limit using the Housing Ratio, then they figure your limit using the Debt Ratio, and they take the lower of the two. Here are some examples, with your monthly limit in each case highlighted.


How much home can you afford? Advanced Topics #cheap #car #loan


#where can i get a loan
#

How much home can I afford? and

Our How much home can you afford? page gave you a rough idea of the maximum price you can afford to pay for a home, with an easy-to-use calculator. The page you’re reading now gives you more of the story behind those numbers, and helps you better understand the factors influencing how much money the bank will loan you. This won’t necessarily help you compute your borrowing power any better (that’s what the calculator is for), rather it’s just to help you understand the concepts behind those numbers better. This discussion isn’t absolutely essential for most homebuyers, but it’s provided for those who want to know as much as possible — especially those having trouble affording a home who want to look for way to improve their house-buying chances.

Of course, if you haven’t already gone through the basics of how much home you can afford and haven’t used the calculator then you should go back there now before reading any further the page you’re on now is the advanced stuff.

Okay, on with the advanced stuff.

You’ll remember the simple formula from the previous page — since you pay for your house with a combination of a down payment and a bank loan, the total of both is the cost of the home:

Down Payment + Biggest Loan You Can Get = How Much Home You Can Afford

You know how much you can afford for a down payment, so that part’s easy. (At least you should know — if you don’t you should probably figure that out before going any further.) So that leaves us with finding the biggest loan we can get. So really, the rest of this page is really How much loan can I get? and not How much home can I afford? To find how much home you can afford just add the amount you can afford for a down payment to the amount you can get for a loan.

We’ve left one thing out of our simple equation above — closing costs . You’ll need to either pay the closing costs from your savings (lowering the amount you have available for a down payment), or qualify for a loan that’s a little larger than the house you want to buy, and have the closing costs added to the loan.

Returning our focus to getting the biggest loan possible, here are the things that can get us a bigger loan:

  • Higher monthly income
  • Lower existing monthly debt payments
  • Bigger down payment
  • 30-year mortgage (vs. 15)
  • A better credit score
  • A lower property tax insurance rate

Let’s look at each of these in detail.

Higher Monthly Income. Obviously the more you can afford to pay for a home, the bigger the loan you can get. The bank limits your monthly mortgage payment (including taxes and insurance) to no more than 28 to 36% of your monthly income. What determines where you fall on that scale is the size of your down payment and your credit score. In any event, the higher monthly payment the bank allows, the bigger the loan they’ll give you.

This 28 to 36% figure is called the Housing Ratio. For example, if you make $3000/mo. and the bank uses a housing ratio of 33% then the bank figures you can afford $990/mo. in mortgage payments ($3000 x 28%). Note that the amount you can borrow is also limited by how much debt you have. Just because the Housing Ratio says your payments can be up to $990/mo. any debt you have couldbring that figure down. We’ll cover that later on.

Usually there’s not much you can do in the short-term about your income, but in one case there is: Buy a duplex or a house with a separate garage apartment that you can rent out. Then you can count the amount you’ll collect in rent towards your income. Some lenders are finicky about counting the rental income, but you can almost certainly find one who will. Your chances improve if the space is already rented and the renter has a long-term lease. Being able to count this extra rental income can help you buy a more expensive home — which will be a much better investment.

Here’s an example of how having a higher income means a bigger potential loan amount. These are estimates of loan amounts available at various income levels, assuming: $10,000 down, $500/mo. in debt, 7% interest, 30-year mortgage, and 2% property taxes and insurance.

Lower Monthly Debt payments. The less money you already owe, the bigger the loan you can get. The bank limits your monthly mortgage payment (including taxes and insurance) to no more than 36 to 42% of your total monthly debt, including your mortgage payment. This figure is called the Debt Ratio. For example, you make $3000/mo. have $500/mo. in debt, and the bank uses a debt ratio of 38%. They limit your total monthly debt to $1140 ($3000 x 38%). But you already have $500/mo. in debt, so that means you have $640/mo. left over for your mortgage payment.

What determines where you fall on the 36 to 42% scale is the size of your down payment and your credit score. In any event, the higher monthly payment the bank allows, the bigger the loan they’ll give you.

Note that the amount you can borrow is also limited by the housing ratio discussed above. The bank figures your monthly limit using the Housing Ratio, then they figure your limit using the Debt Ratio, and they take the lower of the two. Here are some examples, with your monthly limit in each case highlighted.


Tax Topics – Topic 453 Bad Debt Deduction #defaulted #student #loans


#bad debt loans
#

Topic 453 – Bad Debt Deduction

If someone owes you money that you cannot collect, you may have a bad debt. For a discussion of what constitutes a valid debt, refer to Publication 550. Investment Income and Expenses . and Publication 535. Business Expenses . Generally, to deduct a bad debt, you must have previously included the amount in your income or loaned out your cash. If you are a cash basis taxpayer, you may not take a bad debt deduction for money you expected to receive but did not (for example, for money owed to you for services performed, or rent) because that amount was never included in your income. For a bad debt, you must show that you intended at the time of the transaction to make a loan and not a gift. If you lend money to a relative or friend with the understanding the relative or friend may not repay it, you must consider it as a gift and not as a loan.

There are two kinds of bad debts business and nonbusiness.

Generally, a business bad debt is one that comes from operating your trade or business. You can deduct it on your business income tax return.

The following are examples of business bad debts (if previously included in income):

  • Loans to clients and suppliers
  • Credit sales to customers, or
  • Business loan guarantees

A business deducts its bad debts from gross income when figuring its taxable income. You can deduct business bad debts in part or in full. You can claim a business bad debt using either the specific charge-off method or the nonaccrual-experience method.

All other bad debts are nonbusiness. Nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially worthless nonbusiness bad debt.

A debt becomes worthless when the surrounding facts and circumstances indicate there is no reasonable expectation of payment. To show that a debt is worthless, you must establish that you have taken reasonable steps to collect the debt. It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. You may take the deduction only in the year the debt becomes worthless. You do not have to wait until a debt is due to determine that it is worthless.

Report a nonbusiness bad debt as a short-term capital loss on Form 8949 (PDF), Sales and Other Dispositions of Capital Assets . Part 1, line 1. Enter the name of the debtor and “bad debt statement attached” in column (a). Enter your basis in the bad debt in column (e) and enter zero in column (d). Use a separate line for each bad debt. It is subject to the capital loss limitations. A nonbusiness bad debt deduction requires a separate detailed statement attached to your return.

For more information on nonbusiness bad debts, refer to Publication 550. Investment Income and Expenses . For more information on business bad debts, refer to Publication 535. Business Expenses .

Page Last Reviewed or Updated: May 27, 2015


How much home can you afford? Advanced Topics #money #loans #online


#where can i get a loan
#

How much home can I afford? and

Our How much home can you afford? page gave you a rough idea of the maximum price you can afford to pay for a home, with an easy-to-use calculator. The page you’re reading now gives you more of the story behind those numbers, and helps you better understand the factors influencing how much money the bank will loan you. This won’t necessarily help you compute your borrowing power any better (that’s what the calculator is for), rather it’s just to help you understand the concepts behind those numbers better. This discussion isn’t absolutely essential for most homebuyers, but it’s provided for those who want to know as much as possible — especially those having trouble affording a home who want to look for way to improve their house-buying chances.

Of course, if you haven’t already gone through the basics of how much home you can afford and haven’t used the calculator then you should go back there now before reading any further the page you’re on now is the advanced stuff.

Okay, on with the advanced stuff.

You’ll remember the simple formula from the previous page — since you pay for your house with a combination of a down payment and a bank loan, the total of both is the cost of the home:

Down Payment + Biggest Loan You Can Get = How Much Home You Can Afford

You know how much you can afford for a down payment, so that part’s easy. (At least you should know — if you don’t you should probably figure that out before going any further.) So that leaves us with finding the biggest loan we can get. So really, the rest of this page is really How much loan can I get? and not How much home can I afford? To find how much home you can afford just add the amount you can afford for a down payment to the amount you can get for a loan.

We’ve left one thing out of our simple equation above — closing costs . You’ll need to either pay the closing costs from your savings (lowering the amount you have available for a down payment), or qualify for a loan that’s a little larger than the house you want to buy, and have the closing costs added to the loan.

Returning our focus to getting the biggest loan possible, here are the things that can get us a bigger loan:

  • Higher monthly income
  • Lower existing monthly debt payments
  • Bigger down payment
  • 30-year mortgage (vs. 15)
  • A better credit score
  • A lower property tax insurance rate

Let’s look at each of these in detail.

Higher Monthly Income. Obviously the more you can afford to pay for a home, the bigger the loan you can get. The bank limits your monthly mortgage payment (including taxes and insurance) to no more than 28 to 36% of your monthly income. What determines where you fall on that scale is the size of your down payment and your credit score. In any event, the higher monthly payment the bank allows, the bigger the loan they’ll give you.

This 28 to 36% figure is called the Housing Ratio. For example, if you make $3000/mo. and the bank uses a housing ratio of 33% then the bank figures you can afford $990/mo. in mortgage payments ($3000 x 28%). Note that the amount you can borrow is also limited by how much debt you have. Just because the Housing Ratio says your payments can be up to $990/mo. any debt you have couldbring that figure down. We’ll cover that later on.

Usually there’s not much you can do in the short-term about your income, but in one case there is: Buy a duplex or a house with a separate garage apartment that you can rent out. Then you can count the amount you’ll collect in rent towards your income. Some lenders are finicky about counting the rental income, but you can almost certainly find one who will. Your chances improve if the space is already rented and the renter has a long-term lease. Being able to count this extra rental income can help you buy a more expensive home — which will be a much better investment.

Here’s an example of how having a higher income means a bigger potential loan amount. These are estimates of loan amounts available at various income levels, assuming: $10,000 down, $500/mo. in debt, 7% interest, 30-year mortgage, and 2% property taxes and insurance.

Lower Monthly Debt payments. The less money you already owe, the bigger the loan you can get. The bank limits your monthly mortgage payment (including taxes and insurance) to no more than 36 to 42% of your total monthly debt, including your mortgage payment. This figure is called the Debt Ratio. For example, you make $3000/mo. have $500/mo. in debt, and the bank uses a debt ratio of 38%. They limit your total monthly debt to $1140 ($3000 x 38%). But you already have $500/mo. in debt, so that means you have $640/mo. left over for your mortgage payment.

What determines where you fall on the 36 to 42% scale is the size of your down payment and your credit score. In any event, the higher monthly payment the bank allows, the bigger the loan they’ll give you.

Note that the amount you can borrow is also limited by the housing ratio discussed above. The bank figures your monthly limit using the Housing Ratio, then they figure your limit using the Debt Ratio, and they take the lower of the two. Here are some examples, with your monthly limit in each case highlighted.


Tax Topics – Topic 456 Student Loan Interest Deduction #online #personal #loans


#school loan
#

Topic 456 – Student Loan Interest Deduction

You may be able to deduct interest you pay on a qualified student loan. Generally, the amount you may deduct is the lesser of $2,500 or the amount of interest you actually paid and it is subject to a phaseout, which means the amount of the deduction gradually decreases and phases out completely if and when your modified adjusted gross income (MAGI) amount reaches the annual limit.

You claim this deduction as an adjustment to income so you do not need to itemize your deductions on Form 1040, Schedule A (PDF), Itemized Deductions .

You can claim the deduction if all of the following apply:

  • You paid interest on a qualified student loan in tax year 2014
  • You are legally obligated to pay interest on a qualified student loan
  • Your filing status is not married filing separately
  • Your MAGI is less than a specified amount which is set annually, and
  • You or your spouse, if filing jointly, cannot be claimed as dependents on someone else’s return

A qualified student loan is a loan you took out solely to pay qualified higher education expenses. See Publication 970. Tax Benefits for Education . and the Form 1040 Instructions (PDF) to determine if your expenses qualify.

If you file a Form 2555 (PDF), Foreign Earned Income . Form 2555-EZ (PDF), Foreign Earned Income Exclusion . or Form 4563 (PDF), Exclusion of Income for Bona Fide Residents of American Samoa . or if you exclude income from sources inside Puerto Rico, refer to Worksheet 4-1, Student Loan Interest Deduction Worksheet in Publication 970. instead of the worksheet in the Form 1040 Instructions.

If you paid $600 or more of interest on a qualified student loan during the year, you will receive a Form 1098-E (PDF), Student Loan Interest Statement . from the entity to which you paid the student loan interest.

For more information about the student loan interest deduction and how your MAGI affects the deduction amount, refer to Publication 970.

Page Last Reviewed or Updated: May 27, 2015