AIG Shareholders Give U.S. Taxpayers the Middle Finger (And Other Unbelievably True Stories from the Week in News)

by John Kiernan on January 9, 2013

AIG shareholder suitHold on – is this the news, a dream, or some sort of Oscar Wilde-type satire?  That’s along the lines of what I was thinking last night while watching Anderson Cooper and Erin Burnett report a pair of stories seemingly straight out of The Twilight Zone or Ripley’s Believe it or Not.

I mean, could AIG actually be SUING the U.S. government (as well as you, me, and every other taxpayer by extension)?  Are U.S. politics really so flawed that rape is actually LEGAL in California if the victim is single and the perpetrator impersonates her boyfriend?

Will Coming Face to Face with Your Future Self Help You Plan for Retirement?

by John Kiernan on December 12, 2012

Retirement and Face RecognitionHave you ever seen one of those movies where the police or some super-secret spy agency uses cutting-edge technology to project what a fugitive or rogue agent looks like today based on a really old picture?  I’m pretty sure they used something along those lines in The Fugitive, U.S. Marshalls, and the Bourne series.  Well, as it turns out, such predictive appearance tools aren’t the sole domain of the authorities.  Retirement planners are getting in the act too.

I’ll give you a second to let that sink in.

Could Consumer Dispute Resolution Have a Class Problem, Not an Arbitration Issue?

by John Kiernan on December 5, 2012

supreme courtHow can we fix arbitration?  That’s the question we posed last week after The Pew Charitable Trusts released a study that revealed how disturbingly prevalent mandatory arbitration clauses are in the fine print of checking account agreements.  The thing is, after exploring the issue a bit further and talking to some of the country’s foremost experts on arbitration and consumer disputes, a new question arose:  Is the arbitration process actually broken?

Don’t worry if you’re a little lost right now because a bit of background is certainly in order.

Are Banks Making You Sign Away Your Rights?

by John Kiernan on November 27, 2012

signing away rightsPrepare to be astonished:  Banks aren’t the most consumer-friendly businesses out there.  I know, I know, you’re flabbergasted, right?  After the excessive fees, bait-and-switch pricing, lawsuits, and sketchy customer service issues we’ve seen over the years, that news must come as an absolute shock.

At the risk of surprising you into cardiac arrest (or, you know, killing you with sarcasm), allow me to fill you in on some new research that adds another contentious chapter to the financial institution-consumer saga and will likely fuel distrust of big banks even further.  The Pew Charitable Trusts today released a study on the dispute resolution policies employed by the nation’s largest banks and credit unions, aptly titled “Banking on Arbitration:  Big Banks, Consumers, and Checking Account Dispute Resolution.”

What Do We Really Know About the Underground Market for Stolen Credit Card Info?

by John Kiernan on November 20, 2012

We’ve all seen the news reports about consumer credit card data being stolen as a result of a major retailer, card network, payment processor, gaming company, etc., having its network breached by hackers.  But unless you were directly affected, the details of the crimes and the scope of the damage were likely quickly forgotten.

For example, you may not recall that 94 million credit card accounts were exposed when hackers broke through the firewalls of TJX Companies, Inc. – the holding company for T.J. Maxx and Marshalls – in late 2006 or that 134 million more accounts were breached when Heartland Payment Systems’ records were compromised by spyware in 2008.  There are indeed countless examples, including more recently when, in 2011, an attack on the PlayStation Network unearthed 12 million unencrypted credit card numbers, along with 77 million accountholders’ full names, e-mails, and home addresses, costing Sony millions.

Is the Housing Market On Its Way Back?

by John Kiernan on October 31, 2012

mortgage recoveryAmidst all of Hurricane Sandy’s destruction, there is actually some good news when it comes to the housing market.  Foreclosures are down in more than 60% of the nation’s largest cities, according to RealtyTrac, and experts are pointing to that as a sign of stabilization in the housing market.

Not only did foreclosure rates fall by more than 25% in major cities such as San Francisco, Detroit, and Los Angeles during the third quarter of the year, but they actually dipped below 2007 levels for 58% of the country’s major metropolitan areas.  That’s undoubtedly good news for the economy in general and those of us who work in fields tied to the housing market, but things aren’t quite so peachy everywhere.

What is Reverse Redlining (And is Morgan Stanley Guilty of It)?

by John Kiernan on October 17, 2012

What do you call a card-carrying member of the American Civil Liberties Union (ACLU) who shows up at your door?  Well, if you’re a Morgan Stanley executive, you might not call him anything given the shock of hearing the words, “You’ve been served.”

morgan stanleyThe renowned advocacy group filed suit against the investment giant in New York district court on Monday on behalf of five Detroit residents, alleging that Morgan Stanley violated federal civil rights laws by engaging in a process known as reverse redlining.

Could Your Wish Actually Be Your Bank’s Command?

by John Kiernan on October 3, 2012

checking accountsEver think that those studies and recommendations you always see research firms coming out with don’t have much of an actual influence? Well, you’re wrong, and the way the Pew Charitable Trusts is changing how banks disclose checking account terms and conditions is a prime example of why.

Banks, as we all know too well, have long buried the true cost of their financial products in fine print.  However, it wasn’t until Pew conducted a study on the checking accounts offered by the nation’s 10 largest banks and found them hard to compare given that half boasted at least 97 pages of disclosures that any changes were made.

Why are Small Businesses Still Paying for the War of 1812?

by John Kiernan on September 19, 2012

As a small business owner, it’s easy to use a given state’s low corporate tax rate as a reason to base your operations there.  By doing so, however, you’ll be failing to take into account taxes assessed on a local level, which can cost you big time.

Take Virginia, for example, which has a tax rate of 6% that the state proudly showcases on its website as being one of the lowest in the nation.  What you won’t find in this glowing write-up is information about how you’ll also be footing the bill for a war long since concluded.  You see, the Virginia Business, Professional and Occupational License (BPOL) tax started as a way to raise money for the War of 1812, but now this tax on the gross receipts of Virginia-based companies serves primarily as a thorn in the side of small businesses and a way to fill the coffers of local municipalities.

Is Mortgage Tax Relief On Its Way Out?

by John Kiernan on September 5, 2012

The Republican National Convention is now behind us and the Democratic version is set to conclude Thursday, and while this might have you thinking there will be an entertainment void in the coming weeks, the truth is that the real fun starts when these idealistic celebrations are in the rear-view mirror.  I’m referring to the beginning of the debate season (though I would have accepted the start of the NFL regular season as well), when we can hear the candidates mix it up and offer retorts to each other’s grandiose claims.

The debates usually give ordinary citizens like you and me a chance to ask the candidates questions as well, and one question that I’m sure a lot of people would like answered is what will become of the mortgage forgiveness tax break that has helped lower the financial burden on so many people since 2007.

Next Man (Or Woman) Up: New Fed Chairman Will Face Long, Hard Road

by John Kiernan on August 29, 2012

federal reserve sealA couple of things occurred to me while watching coverage of the Republican National Convention this week (I’m an Independent, if you’re wondering): 1) What would Will McEvoy make of all this? and 2) The impending election season means forthcoming political turnover, and that could have a significant effect on our finances.

Quickly, I answered that first question for myself (he’d probably yell at everybody) and moved on to my second notion. Soon thereafter I realized that elected officials aren’t the only ones that will have some measure of control over our wallets in the near future. I mean, has anyone thought about the role Ben Bernanke’s successor will play in shaping financial policy as the next chairman of the Federal Reserve, an appointed position.

Do You Know Your Mortgage Credit Score?

by John Kiernan on August 22, 2012

mortgage approvalThere’s a new credit score in town, ladies and gentleman, and it’s just for mortgages. The score is formally called the FICO Mortgage Score Powered by CoreLogic, which brings to mind the mouthful of a name change the Anaheim Angels underwent in 2005 when they became the Los Angeles Angels of Anaheim, but that’s a whole other story.

This new score is said to better predict mortgage applicant risk and is obviously looking to capitalize on the recent memory of the housing crisis and the ensuing Great Recession. It supposedly does so by incorporating information that is not typically included in credit scores, such as rent and utility payments and certain public records.

Checking Accounts for Students & Seniors: Are They Worth It?

by John Kiernan on August 15, 2012

checking accountsWhat’s one thing that young people and the elderly have in common? Some of our more immature readers might answer “diapers,” but if the folks over at the Pew Charitable Trusts had a chance to respond, they’d probably say “bank accounts.” That’s right, certain bank accounts are specifically targeted to students and seniors, and while they’re supposedly tailored to the unique needs of these consumer demographics, a pair of recent Pew studies can help shed some light on whether they’re actually valuable or not.


How High Fees and Conflicts of Interest Are Hurting Your 401(k)

by John Kiernan on August 1, 2012

401k feesWhether you love or hate your job, the freedom to retire is inescapably appealing. In fact, it’s the American Dream – work hard in order to attain the requisite financial freedom to retire to a comfy home with a white picket fence, pursue your interests irrespective of earning potential, and provide for your family. Unfortunately, the changing dynamics of retirement accounts, Social Security, and the economy at large may be making this dream harder to realize, if not turning it into a nightmare for many folks.

Not only does the aging American populous put Social Security in jeopardy, but the increasing reliance on 401(k)s instead of pension plans has also made many Americans’ safety nets less reliable, especially since a lot of people do not fully understand these plans or their true effectiveness.

Upcoming Changes to Gift-Tax Exemption May Cost Your Children Millions

by John Kiernan on July 25, 2012

gift tax exemptionParents, if your children have unexpectedly started cleaning their rooms, adhering to curfews, and making you breakfast in bed, there’s good reason to be suspicious. Kids, start doing those things immediately and casually mention that you saw something on the Web about an upcoming change to the gift tax exemption. This holiday season could result in a lot more value changing hands than usual, which means we can expect a lot more sucking up in the coming months.

All kidding aside, New Year’s marks an important date for the way wealth in the United States is passed down from generation to generation. This is when the federal lifetime gift-tax exemption will revert back from the roughly $5 million threshold now in place thanks to the Tax Relief Act of 2010 to the standard $1 million. In other words, through December 31, 2012 you can give another individual (presumably a loved one) up to $5.12 million without it being taxed, but come New Year’s, amounts over $1 million may be taxed at rates upwards of 50%.

Should Small Business Owners be Worried About Their Money in December 2012?

by John Kiernan on July 18, 2012

FDICThe countdown to December and the date that could alter our future is on. Have you started thinking about what you’ll do if the prognosticators are right? Do you have contingency plans? Will you remove your money from the neighborhood bank? After all, the impending elimination of Federal Deposit Insurance Corporation (FDIC) insurance on small business bank accounts is no joke (raise your hand if you thought I was talking about the Mayan prediction that the world will end on 12/12/12).

The fate of FDIC insurance on business accounts has certainly garnered less mainstream attention than the latest, greatest doomsday prediction, but with the more than 27 million small businesses in the United States employing half of all private sector employees, according to the U.S. Small Business Administration, it’s certainly significant nonetheless.

It’s Time to Bring Shadow Banking into the Light

by John Kiernan on July 11, 2012

shadow bankingThey exist in the shadows, operating outside the law and making monumental moves with the fate of society resting in their hands. They are thrust into the headlines only during times of trouble, yet are unquestionably a major part of history. Their importance must not be overlooked by politicians and regulators any longer. No, I’m not referring to the Illuminati, Batman, or even the CIA, but rather the entities that comprise the so-called shadow banking system, which played a significant role in causing the Great Recession and are finally on Washington’s radar.

For those of you who don’t know, the shadow banking system is the collection of financial institutions and investment vehicles that are not subject to the same laws and regulations as traditional banks and bank accounts given that they do not allow you to make deposits. It includes hedge funds, money market funds, and many securities. It’s also common for investment banks to engage in shadow banking practices in order to keep certain transactions off their balance sheets and therefore hidden from regulators and investors alike.

How Old is Too Old for Hands-On Financial Management?

by John Kiernan on June 28, 2012

RetirementEver pull up to a stoplight and glance over to see an elderly driver beside you hunched over the steering wheel, peering through goggle-like glasses and express concern over their ability to continue driving safely? Perhaps, but I bet you haven’t given much thought to their ability to manage their finances into old age. That’s a big mistake.

People are becoming increasingly reliant on their 401(k) as a source of retirement income, and while that might not seem like too big of a deal on the face of things, a 401(k) is inherently volatile and requires consistent maintenance in order to provide maximum value. This can prove problematic no matter how old you are.

Why You Should Think Twice Before Hitting a Toll Road in a Rental Car

by John Kiernan on June 6, 2012

automated toll roadYou know the toll that usually costs around $3? Well, imagine how you’d feel if the price tag suddenly rose to $53. Unfortunately, this is not a hypothetical scenario for many consumers, but rather an all-too-common headache associated with renting a car in the age of automated toll plazas.

Typically, when a driver goes through an automated toll without an EZ-Pass or another similar electronic payment device, the toll’s cameras will snap a picture of the license plate and mail a bill to the registered driver. This is obviously impossible with a rental, however. So when a rental company gets charged, it typically passes the cost on to the driver, along with a hefty surcharge, through a company like the aptly-named Violation Management Services (VMS), which works with Fox Rent a Car.

How’s a Little Medical Bill Transparency Sound?

by John Kiernan on May 16, 2012

medical expense transparencyImagine entering a restaurant and being told to wait for a table by a surly host, who shrugs off your repeated contention that you have reservations before handing over a questionnaire about your history as a restaurant patron and instructing you to complete it. Then, when you’re finally led into the dining room, you’re given a menu written completely in French that lists a whole bunch of foreign-sounding dishes, but no accompanying prices. You inquire and are told that the bill will be worked out at the end of the meal. Now, is that something you’re likely to put up with?

Of course you would, but not in a restaurant setting. We as Americans reserve such treatment for our doctor’s offices.

Mortgage Rates Hit Record Lows

by John Kiernan on May 9, 2012

Record Low Mortgage RatesIt might just be time to buy that home of your dreams or refinance your existing mortgage. According to a Freddie Mac survey released May 3, average rates for a number of fixed and adjustable rate mortgages hit record lows last week, creating a significant savings opportunity for refinancers and prospective homebuyers who’ve recovered sufficiently from the negative effects of the Great Recession.

Ok, but how much savings are we talking here?

Students with Summer Jobs Shouldn’t Forget the Tax Man

by John Kiernan on May 2, 2012

Taxes for Summer JobsOnce that final bell rings on the last day of school before summer break, the minds of students across the country will immediately shift from history, math, and science to pools, beaches, summer sports leagues and free time. For most, summer jobs will be a means to an end, a way to afford summer fun, and taxes won’t even be on their radar. That’s a dangerous oversight, according to the California Society of CPAs (CalCPA). Understanding the implications of taxes on summer earnings can save student workers both time and money down the road, and the California accountants have a number of tips for how to do so

1.  Understand the IRS forms you fill out

It's Their Fee Party, and Prepaid Card Issuers Will Charge If They Want To

by John Kiernan on April 25, 2012

prepaid card feesThere’s no doubt that prepaid cards are growing in popularity. Only 11% of consumers used them just two years ago, and not only has the number since grown to 15%, but we’re also seeing big-time celebrities like Lil Wayne, Suze Orman, and George Lopez sign up as endorsers, highlighting the growing mainstream appeal of these products. While some of the best prepaid cards can be cheaper to use than a checking account for certain folks, reaching this conclusion can also be quite difficult. In short, prepaid card fees are out of control, and the problem needs to be fixed.

I’m not talking about the cost of these fees, but rather their sheer number and lack of a consistent naming convention. Prepaid card issuers are known for both charging what seems like a million different fees and calling them by different names in order to hide the true cost of their products.

6 Fun Facts about Credit Cards

by John Kiernan on April 18, 2012

6 fun facts about credit cardsWe use credit cards on a daily basis, but how much do we truly know about them? That’s probably not a question you’ve ever given much thought, and even so, you might find it hard to believe that such a small piece of plastic could carry many secrets or surprises. The truth, however, is that while we take the ubiquity of credit cards for granted, they have a rich and complicated history, and many facets of their usage and evolution do offer the kind of interesting tidbits that one could pull out at a cocktail party or game night (‘cause that’d really impress your friends, huh?).

So, without further ado, here are 6 of my favorite credit card nuggets:

Last-Minute Tips for Filing Your 2012 Tax Return

by John Kiernan on April 9, 2012

2012 TaxesIt’s getting to be that time. April 17 (i.e. tax day) is nearly upon us, and as was the case in school, such a major deadline is inevitably met with a bit of procrastination. Luckily for those of us who’ve put off preparing our tax returns, CalCPA has some Cliff’s Notes of sorts that will help get them filed correctly, on time, and with the greatest possible savings. The Internal Revenue Service is not going to accept the trite “dog ate my taxes” excuse, after all.

  • State Tax Refunds: Don’t make the mistake many taxpayers do by blindly reporting prior-year state tax deductions as income in the current year. Even if the state taxing authorities notified you of your refund, they have no idea whether that refund is taxable. If you didn’t benefit from a state tax refund on your 2011 federal return (e.g. if you took the standard deduction or deducted for sales taxes instead of state income taxes), then your refund might not be taxable, either in part of in full.
  • Unnecessary Itemization: Many taxpayers assume they’re better off itemizing expenses, but those who have already paid off a mortgage or who live in a state without an income tax might be better served just taking the standard deduction.
  • Alternative Minimum Tax: Trying to figure out whether this type of income tax is applicable can be confusing, but you could wind up being on the hook for penalty fees and interest if you mistakenly don’t account for it. The IRS has an online Alternative Minimum Tax (AMT) Assistant that can help you make this determination.
  • 2011 Carry-overs: You can often deduct losses from previous years (e.g. bad stock choices) on your current year’s taxes.

Logistical Tips
In addition, CalCPA has some basic logistical tips that may seem obvious but can easily be overlooked with the filing deadline looming:

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