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III your Credit and Insurance

What does my credit rating have to do with purchasing insurance?

Credit scores are based on an analysis of an individual’s credit history. Insurers often generate a numerical ranking based on a person’s credit history, known as an “insurance score,” when underwriting and setting the rates for insurance policies. Actuarial studies show that how a person manages his or her financial affairs, which is what an insurance score indicates, is a good predictor of insurance claims. Insurance scores are used to help insurers differentiate between lower and higher insurance risks and thus charge a premium equal to the risk they are assuming. Statistically, people who have a poor insurance score are more likely to file a claim.

Your credit history can work for you or against you. Your proven ability to manage your money and meet your financial obligations is an indication of your maturity and stability and can open many doors. Prospective employers, landlords, lenders and even your insurance company view a strong credit history as a positive sign that you will meet your obligations and responsibilities to them as well. A poor credit history could result in not getting that apartment or dream job, and paying more for insurance coverage and higher interest rates on your mortgage and other loans.

IRS: Top Ten facts about the Tuition and Fees Deduction

The Tuition and Fees deduction of up to $4,000 is available to help parents and students pay for post-secondary education. Below are ten important facts about this deduction every student and parent should know.

You do not have to itemize to take the Tuition and Fees deduction. You claim a tuition and fees deduction by completing Form 8917 and submitting it with your Form 1040 or Form 1040A.
You may be able to claim qualified tuition and fees expenses as either an adjustment to income, a Hope or Lifetime Learning credit, or – if applicable – as a business expense.
You cannot take the tuition and fees deduction on your income tax return if your filing status is married filing separately.
You cannot take the deduction if you are claimed, or can be claimed, as a dependent on someone else's return.
The deduction is reduced or eliminated if your modified adjusted gross income exceeds certain limits, based on your filing status.
You cannot claim the tuition and fees deduction if you or anyone else claims the Hope or Lifetime Learning credit for the same student in the same year.
If the educational expenses are also allowable as a business expense, the tuition and fees deduction may be claimed in conjunction with a business expense deduction, but the same expenses cannot be deducted twice.
You cannot claim a deduction or credit based on expenses paid with tax-free scholarship, fellowship, grant, or education savings account funds such as a Coverdell education savings account, tax-free savings bond interest or employer-provided education assistance.
The same rule applies to expenses you pay with a tax-exempt distribution from a qualified tuition plan, except that you can deduct qualified expenses you pay only with that part of the distribution that is a return of your contribution to the plan.
IRS Publication 970, Tax Benefits for Education, can help eligible parents and students understand the special rules that apply and decide which tax break to claim. The publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

Form 8863, Education Credits (PDF 82K)
Publication 970, Tax Benefits for Education (PDF 368K)
Tax Topic 605

Bankrate.com: 10 tips for getting the best financial aid package

10 tips for getting the best financial aid package

Get Tax Help

For more information, check out these resources:

Read these publications online from FCIC:

Doing Your Taxes

Websites*

* Names of resources and organizations included in this online article are provided as examples only, and their inclusion does not mean that they are endorsed by the Federal Citizen Information Center or any other Government agency. Also, if a particular resource or organization is not mentioned, this does not mean or imply that it is unsatisfactory.

Get FREE Tax Help

Free Tax Help

There are lots of free tax help programs out there for people who need it. The IRS offers a guide of tax services. Some highlights:

Volunteer Income Tax Assistance Program (VITA)

VITA offers free tax help for low-to-moderate income earners ($42,000 and below) who cannot prepare their own returns. To locate the nearest VITA site, call (800) 829-1040.

Tax Counseling for Seniors

Free tax help for senior citizens from trained volunteers. Call (888) 227-7669 to locate an AARP Tax-Aide site in your neighborhood.

Low Income Taxpayer Clinics (LITCs)

LITCs provide help to low income taxpayers, either free or at nominal cost. Some non-English assistance provided. The IRS has more information on low income tax clinics in your area.

Military Personnel Resources

The Armed Forces Tax Council (AFTC) offers free tax help for members of the Army, Air Force, Navy, Marine Corps, and Coast Guard, and their families. Visit this IRS page for general information about notifying the IRS on overseas deployment, and learn about combat zone tax benefits and other items.

E-File your taxes

E-filing

According to the IRS, 90 million people filed their taxes electronically in 2008. There are many advantages to e-filing your taxes – it’s easier, it reduces the risk of error and you’ll receive your refund faster (especially if you use direct deposit to receive your refund electronically). According to the IRS, e-filing is “virtually error-proof with an error rate of less than one percent.” There are three ways to e-file:

Go to a Tax Professional

See an authorized e-file provider who can electronically file e-files your taxes for you, usually at a fee. Fees may vary depending on the tax professional you choose and the specific services requested.

Do it Yourself on your Computer

Use purchased / free software on your home computer.

Free File (IRS)

If you made less than $56,000 in 2008, you can e-file your taxes directly with the IRS through their Free File program. It offers:

Free service
Services in English / Spanish
Automatic accuracy checks
Quick refunds (sometimes less than 10 days)

Note: Free File only works with your Federal taxes – you still need to file your state taxes.

What if you cannot pay your taxes?

If you have lost your job, your home or are in serious debt, the thought of paying taxes on top of all this may make you want to pull your hair out. The IRS has released the following resources to answer questions about paying taxes while under financial duress.

Example: What if I can’t pay my taxes?
“Don’t panic. If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-829-1040.”