IRS Must Define Political Activity

From the WashingtonPost.com:

The Aug. 22 article "Ruling sets up IRS as overseer of groups' gifts to campaigns" portrayed the ineffectiveness of the Internal Revenue Service enforcing disclosure on political spending. While the problem stems in part from an agency operating on "tax time," a fundamental reason the IRS cannot meaningfully enforce rules on nonprofit groups' political activity is its failure to give clear rules defining what is considered "political”.

For decades, the agency has relied on a "know it when we see it" approach, otherwise called the "facts and circumstances" test. In contrast to clear, practical rules that define lobbying for nonprofits, groups interested in political advocacy have little guidance and must guess how regulators will characterize their messages. It is this regulatory failure that allows Americans for Job Security to claim that its ads are issue advocacy and not electoral activity.

In the wake of the Citizens United Supreme Court decision, the IRS needs to step up and take on the hard task of providing guidance that defines political activity. Nonprofit organizations struggling to comply with vague rules and the public deserve no less.

Save Dough When Dining Out: Top 10 Ways to Cut Your Restaurant Bill

Eating out is a great way to get a good meal with out much effort, but it does come at a price, especially if you dine out often. One of my favorite finance blogs (WalletPop.com) recently put together a great list of tips to save money when you dine out. I have included a few of their tips below, but you can find the full list here.

1. Forget about the "Joneses"

Unless I am at a business dinner, I could care less what other people think of me when I order -- or for that matter, not ordering. If I'm so worried about what my friends think, maybe they're not really my friends. As long as I am content and have followed the proper tipping etiquette guidelines, I'm not going to worry. To me, this is the number one way to keep your bill in line, hands down.

2. Eat those freebies

It could be bread and butter, chips, or just about anything. Take full advantage of these freebies! Am I saying to stuff yourself silly with bread and butter so much that you don't even order an entrée? Of course not. But if restaurants give you some food that comes out before your main meal, isn't that kind of like an appetizer? Do yourself a favor: Fill up on the chips and salsa or bread and butter within reason and skip the paid appetizer. And don't be shy about asking for a refill.

Continue reading at WalletPop.com…

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New York Cuts Fees for College Savings Plan by Almost 50% to Aid Families

The state of New York is giving families who participate in their 529 college savings plan a break, by cutting fees almost in half. Comptroller Thomas DiNapoli claims that the reduction will help families save more for college and assist residences of the states who are strapped financially. Bloomberg published a great piece on the announcement; you can find a snippet of it below or read the full article at Bloomberg.com.

New Yorkers who participate in the state’s 529 college savings direct plan will see fees cut by almost 50 percent, New York State Comptroller Thomas DiNapoli said.

The direct plan’s total annual asset-based fee declined to 0.25 percent from 0.49 percent starting Aug. 29, according to a statement today from the comptroller’s office. The reduction could result in savings of almost $20 million annually for plan participants.

“Family budgets are getting tighter, but families still need to save for college,” DiNapoli said in the statement. “When you’re saving for college, every dime counts.”

The reduced cost means New York’s fees are among the lowest for directly sold 529 plans, said Laura Pavlenko Lutton, editorial director in the fund research group at Chicago-based Morningstar Inc. The New York plan offers investors 16 investment choices from Vanguard including three that change the investment mix as beneficiaries near college. Account fees for age-based options, which are the most popular nationwide, range from 0.20 percent to as high as 2.27 percent, Lutton said.

‘Pressure on Fees’

“There’s pressure on fees, which is a great thing for parents and grandparents investing in 529 plans because that’s more of your nest egg that you get to keep,” she said.

How to Donate a Vehicle Without Leading to IRS Problems

Over the past few years the IRS has cracked down on vehicle donations, but you should not let the reports of new IRS regulations stop you from making a charitable contribution. Earlier this week the Roni Deutch Tax Center - Tax Help Blog posted a great new article explaining how to donate a vehicle to charity without leading to IRS problems. You can find a section of the blog entry below, or click here for the full text.

Selecting an Organization

One of the most important steps in donating a vehicle is choosing a qualified charity. Although you might want to help a specific organization, in order to claim the charitable contribution deduction you will need to donate your vehicle to an organization that is qualified by the IRS. You can use IRS Publication 78 to find a qualified charity, or just ask the organization if they have proof of their tax-exempt status.

Fair Market Value

Before you donate the vehicle, you will need to determine the fair market value of your car for tax purposes. Be sure to document the condition of your vehicle, and get estimates from a handful of sources. Make sure you find substantial proof to support the value you assign to the car.

Deduction Amount

The deduction you can claim for your vehicle depends on what the charity does with it. If the organization auctions off the car, then you should claim the amount that the vehicle was sold for. However, in some cases charities will give away vehicles to low-income families, or sell it for significantly less than fair market value. In these instances, the IRS will allow you to deduct the fair market value of the vehicle, but you will need proof of both how you determined the value, and proof that the charity sold the vehicle for less than fair market value.

Cash-Strapped Calif. County Approves Hospital Tax

From the WashingtonPost.com:

Voters in a rural California county are in such a dire financial condition that it's seeking a state bailout.

The vote gives Modoc County, in the state's northeastern corner, a much-needed infusion of cash and likely means it will avoid bankruptcy.

Voters approved two measures - one to impose a $195-a-year parcel tax to keep their struggling hospital, and another to create a hospital district to oversee its operations. The tax required two-thirds voter approval.

Local officials said they needed the tax because the hospital's operating costs have overwhelmed county finances. They had hired a bankruptcy attorney and have requested a $12.5 million loan from the state.

State finance officials are considering the request and said they want to be assured the county could repay the loan. The vote results make that more likely.

Obama Considering Tax Cuts to Boost Economy

Earlier today new reports emerged predicting that the Obama administration will propose a set of new cuts to Congress. These tax incentives are said to be aimed at helping small business owners to help with the country’s ongoing unemployment problem.

CBS News reports:

On the morning after President Obama told Americans in a primetime address from the Oval Office on Iraq that getting the economy moving again was his "central responsibility as president," The Wall Street Journal ($) reported the administration is considering tax cuts to give the economy a boost.

Unnamed sources tell the newspaper that Mr. Obama's economic team might ask Congress for additional tax cuts for small businesses in addition to the $30 billion of similar cuts awaiting a vote in the Senate.

The Journal reports there's not a clear view of what kinds of small businesses would benefit from the yet-to-be-proposed cuts or how much revenue the government would lose.

The administration might also propose a payroll tax cut for businesses and individuals, the sources told the newspaper. Tax cuts passed during the president of George W. Bush are scheduled to expire at the end of the year, which would make income taxes rise.

Whether any major proposal will receive congressional approval between now and the pivotal mid-term elections is uncertain. The House and the Senate aren't scheduled to convene again until Sept. 13. Democratic aides on Capitol Hill told the newspaper that there's not much of a chance for any immediate action with the party's majorities at stake.

Read more here

FDIC Says 829 U.S. Banks Remain at Risk for Failure

According to Wallet Pop, the FDIC has 829 financial institutions – or 1/10th of the banks in this country – on their “problem” list that need to be watched for potential failure. 118 banks have already gone under this year, compared with 140 in 2009.

Around 829 of the country's 7,800 banks were on the Federal Deposit Insurance Corp.'s "problem list" at the end of June, up from 775 at the end of the first three months of the year, the Wall Street Journal reported. Already this year 118 banks have failed, well ahead of last year when 140 went under.

It's still difficult to get a loan; total loan and lease balances fell 1.3 percent from April through the end of June. Total banking assets fell 1% to $13.2 trillion during the quarter.

FDIC Chairman Sheila Bair says banks are starting to ease lending standards in some cases but warned that "lending will not pick up until businesses and consumers gain the confidence they need to hire and spend."

The FDIC also says there were 104 fewer banks in the second quarter compared with the first quarter, and for the first time in the last 38 years, no new banks were added.

Continue reading at Wallet Pop.com…

The Bush Tax Cuts and Small Business Owners

The Economic Growth and Tax Relief Reconciliation Act of 2001, and the Jobs and Growth Tax Relief Reconciliation Act of 2003, are the two pieces of legislation that are commonly referred to as the Bush tax cuts. They offer different forms of relief to most taxpayers in this country, and have been getting plenty of attention in the media as pressure mounts on Congress to either extend the tax laws, or let them expire at the end of the year. However, reporters and bloggers are focusing on the effect these cuts have had on small business owners specifically, as unemployment problems continue to hinder economic recovery.

Tax Rates and Incentives

The two pieces of legislation from the early 2000’s had a handful of effects on U.S. tax law. They reduced the “marriage penalty,” provided incentives to parents and low income working Americans, and also increased credits for education and retirement saving accounts. Most importantly, however the cuts reduced tax rates across the board. The Economic Growth and Tax Relief Reconciliation Act created six tax brackets based on income level (10%, 15%, 25%, 28%, 33%, and 35%). If the laws expire, the 10% bracket would disappear, and the brackets would revert back to 15%, 28%, 31%, 36% and 39.6%. This would represent an increase for nearly all Americans who pay taxes. Additionally, changes to itemized deduction phase outs could eliminate up to 80% of deductions for higher income taxpayers.

Capital Gains and Qualified Dividends

The 2001 and 2003 tax cuts also reduced the maximum tax rate on capital gains and qualified dividends from 20% to 15%. If allowed to expire, the top capital gains rate would return to 20% and qualified dividends would be taxed at the same rate as a taxpayer’s income, or up to 39.6%.

Looming Expiration

Unless extended, the Bush tax cuts are scheduled to expire at the end of the year. If Congress fails to act before they take their winter break, then the tax rates will automatically revert to what they were in 2000. Some experts are asserting that extending all of the cuts would provide a temporary economic stimulus, however the Congressional Budget Office asserts doing so would only have a slight impact on the economy. Others are warning that letting all the tax cuts expire could hurt small business owners, and hinder job creation.

Obama's Proposal

Instead of choosing to extend the cuts, or let them all expire, the White House has proposed a compromise. President Obama would like to extend all of the cuts for low and middle income Americans, while letting the cuts that impact taxpayers making over $200,000 ($250,000 for joint filers) expire.

Small Businesses and Job Creation

One of the most confusing aspects of the Bush tax cuts is how they will affect business owners, and the ongoing unemployment problem in this country. Many conservative experts have argued that even letting only the cuts that affect high-income taxpayers would hurt the recovering economy. Senator Orrin Hatch even said that allowing the cuts to expire would amount to "a job-killing tax hike on small business during tough economic times."

This statement is somewhat misleading. We can assume that a business owner making over $200,000 does not own a mom-and-pop store in a struggling neighborhood. Although 24% of taxpayers report some income from a business, only about 2.5% of Americans – or 900,000 taxpayers – would be affected Obama’s proposal. However, that 2.5% reports an estimated $400 billion in income, or nearly 44% of all business income in the country.

Impact on Larger Businesses

It is also important to note that there are over half a million taxpayers in the country who report business income over $700,000. These taxpayers would be significantly impacted by Obama’s proposal to let some of the Bush tax cuts expire. In addition to an increased income tax rate, they would also be hurt by capital gains tax increases, and the new deduction phase-outs. Although not technically small business owners, these doctors, investors, or successful owners of multiple franchise locations, employ a number of taxpayers.

Unemployment Problems

Although it is easy to review statistics from the IRS regarding income levels, it is difficult to predict exactly what impact the tax cuts have on job creation and unemployment. Some claim that any additional taxes would stop a business owner from hiring more employees. Others argue that the revenue from letting some cuts expire would lead to less government borrowing, and a better economy where small business credit is more easily accessible.

Federal Revenue

If Congress went with President Obama’s proposal and passed legislation allowing the Bush tax cuts to expire for taxpayers earning over $200,000 ($250,000 for joint filers), this it could generate an estimated $1.5 trillion in federal revenue over the next 10 years.

Future of the Bush Tax Cuts

When Congress returns after Labor Day, they will have a hand full of tax issues to consider, including the Bush tax cuts. However, with elections in only a few months, there is a lot of pressure on members of Congress to act a certain way. With the Democratic Party fighting to keep their majority, we might see a politically motivated compromise designed to please taxpayers.

Loan Picture Improves but Troubles Remain: FDIC

For the first time in four years, loans that are 90 days or more past due have decreased instead of increased. While this is no doubt a good sign for the housing industry, it comes just days after the National Association of Realtors reported a record 27% drop home sales.

According to Reuters the Federal Deposit Insurance Corp earned $21.6 billion during the quarter largely due to banks putting away less money to cover expected loan losses.

During the first quarter, the industry earned $17.8 billion.

In other signs of improvement, the total assets of banks characterized as "problem" institutions fell during the quarter to $403 billion from $431 billion, and the FDIC's insurance fund increased by $5.5 billion during the quarter.

But there are still troubling indicators.

Loan balances continued to decline during the second quarter, with net loan and lease balances declining by 1.3 percent. Loans to small businesses and farms -- a major focus of the Obama administration -- fell by 1.8 percent during the quarter.

Odds Brightening For Tax Cut Extension

While America waits for Congress to return from their summer break, experts are weighing in on whether the Bush tax cuts will be extended or not. As the January 1^st deadline approaches, the lack of information about tax rates for 2011 is frustrating many taxpayers.

Forbes reports:

On Jan. 1, 2011 the top income tax rate on ordinary income and dividends will go back to 39.6%, the top tax rate on capital gains will revert to 20%, and the top tax rate on estates will go back to 55%. Some in Congress want to extend the tax cuts for everyone, some want to extend them but not for the "rich," and others want to hold the dividend tax rate to 20%. These decisions make a huge difference to American business. But rather than putting it up for a vote, Congress is playing political games.

Our best guess is that, ultimately, all the current tax rates on regular income, dividends and capital gains get extended for another year. When this happens remains a major mystery, and no matter what we say or think, uncertainty about all of this remains extremely high.

Ideally, it would happen before the election this year. But this would require President Barack Obama and the Democrats to turn dramatically, just when the public is paying more attention to politics. It would look opportunistic, demoralize some liberal voters and undermine the Democratic position that tax rates on the rich don't matter that much to the economy.

How about in a lame duck session? If the consensus is right and Republicans take the House and make large gains in the Senate, it would give Democrats a chance to say they are listening to the voters. But in a lame duck session, Speaker Nancy Pelosi would still rule the House with little to no incentive to do the heavy lifting needed to pass a bill.

Continue reading at Forbes.com…

Consumer confidence rises in August

From CNNMoney.com:

A key measure of consumer morale made a surprising turn higher in August, but Americans still feel jittery about the economy.

The Consumer Confidence Index rose to 53.5 in August, from July's upwardly revised level of 51.0, the Conference Board, a New York-based research group that compiles the index, said Tuesday.

The rise follows two months of losses and beats the drop to 50 that economists surveyed by Briefing.com were expecting. But the index is still painfully low, falling far below 90 -- a level that typically indicates a stable economy.

"Markets are broadly interpreting this as an improvement in the economy, but overall consumer confidence is still very, very bad," said Tim Quinlan, an economist with Wells Fargo. "We went from being severely depressed about the outlook, to just being depressed about the outlook."

While the uptick means consumers' short-term outlook for the economy has improved slightly, a weak job market continues to weigh on their attitudes, Lynn Franco, director of the Conference Board Consumer Research Center said in a statement.

IRS Seeks New Issues for the Industry Issue Resolution Program

In a new press release, the IRS encouraged business owners and other interested taxpayers to participate in the Industry Resolution Program by submitting tax issues that are in need of a resolution.

The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. In past years, issues have been submitted by associations and others representing both small and large business taxpayers, resulting in tax guidance that helps thousands of taxpayers.

Recent submissions accepted into the IIR program include:

• Network assets in the telecommunications industry (unit of property)
• Asset class determination under Revenue Procedure 87-56 for wireless telecommunication assets
• Vendor mark down allowances in calculation of inventory under the retail inventory method
• Network assets in the utilities industry (unit of property)

Guidance issued as a result of the IIR program includes:

• Technical terminations of publicly traded partnerships - procedures for requesting relief, delegation of authority for granting relief, and a sample closing agreement documenting the conditions under which relief is granted. (Industry Director Communication LMSB-04-0210-006)
• Auto Last In First Out - for automobile wholesalers, manufacturers and dealers regarding the proper treatment of the dollar-value, LIFO inventory method for pooling purposes of crossover vehicles, which have characteristics of trucks and cars. (Revenue Procedure 2008-33)

Ask the Tax Lady: August 30th, 2010

Check out the following new Ask the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: My wife and I make around $75,000 per year, and file a joint return. If Congress does not extend the Bush tax cuts will our federal income tax rate increase?

That is the big question being asked all over this country. The answer is, probably. Even if your official tax rate does not change, you might be facing a bigger tax bill. The Bush tax cuts involved a lot more than just marginal tax rates. Also included were a number of deductions and credits that reduced tax liabilities for people in every tax bracket.

There are a number of plans for the Bush tax cuts being circulated in Congress. Some groups want them all extended. Some want them all to expire. Some Congress members propose letting some of the cuts expire. To see how each plan may impact your tax bill, check out the Tax Foundation’s calculators here: (http://www.mytaxburden.org/).

Question #2: Can I make my quarterly tax payments electronically?

Yes. You can either make a one-time payment or recurring monthly payments using the IRS’ Electronic Federal Tax Payment System (EFTPS). For more information, check out Eftps.gov.

How to Stop the IRS Machine

Taxpayers all over the country are receiving letters from the IRS with unsettling news. According to Forbes, the IRS has been sending out bills to taxpayers because of discrepancies between their 2008 tax return and income totals reported by employers and other sources. However, before you reach for your checkbook, be sure to take a careful look at the notice. Many of the letters are reportedly incorrect and/or misleading.

Forbes.com reports:

It's document matching time at the Internal Revenue Service. Millions of taxpayers are opening their mailboxes to find a boldly stated notice shouting "Summary of Proposed Changes" identifying an increase to their 2008 taxes, penalties, interest and a whooping Proposed Balance Due. These notices are often more than 10 pages long, and not until you've gotten to page five do you find out what the IRS alleges created the problem: discrepancies between the amounts reported to them by others and what you included in your return. This is the meat of the letter (known as a CP-2000 notice) and often where you will find what led to the notice "mis-match."

Do not reach for your check book in defeat. Do not immediately scream obscenities about your tax preparer. These letters are often wrong. They are directed at getting your attention. They are machine-generated, generally unseen or untouched by human eyes or hands until the taxpayer responds to the notice. Until a response is received and logged in by IRS personnel, the machine will control the process. Uninterrupted, this automation will lead the IRS to be legally entitled to collection of the balance being proposed. Here are a few examples illustrating the variety of issues on notices I've seen recently:

Shock and Awe Proposed Balance Due: $54,871; Actual Balance Due: Zero

The IRS computers concluded the taxpayer had an IRA distribution of $198,981, but showed a taxable IRA distribution of just $40,000 on the return. The real story is this: The taxpayer converted a pre-tax IRA worth $198,981 to a Roth IRA early in 2008, and he correctly reported this as an IRA distribution on his 2008 return. The stock market dropped dramatically toward the end of 2008. Not willing to pay taxes on an amount well in excess of the account value in early 2009, he properly "re-characterized" (returned to his traditional IRA before filing) all but $40,000 of the converted amount, reporting that amount as taxable on the return. He correctly disclosed this and included Form 8606 on his return. It was all explained, but the IRS machines had not checked for those entries. (For 10 Reasons To Convert To A Roth IRA, click here.)

Shock and Awe Proposed Balance Due: $524; Actual Balance Due: Zero

The taxpayer authorized $2,000 of her 2008 IRA distribution to be donated to her local church. Her tax return correctly indicated a $21,690 distribution with $19,691 taxable. As the IRS instructions dictated, the code "QCD" (for qualified charitable distribution) was indicated on the return. But the IRS' "automated underreporter" systems apparently did not notice the code.

Read more here

Official Statement

I believe the California Attorney General’s civil complaint against my law firm and me to simply be election year politics. My law firm has been representing taxpayers before the IRS for almost 20 years. We have saved thousands of people tens of millions of dollars. And I have fully cooperated with the California Attorney General’s Office over the past few months. As a result, I am very disappointed in their decision to file a complaint, but I look forward to a full and fair airing of this matter in a court of law where my law firm and I will aggressively and vigorously defend the claims against us, and I am absolutely confident we will prevail.

Ask the Tax Lady: August 23rd, 2010

Check out the following new Ask the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: Is it true that the child tax credit would be reduced if the Bush tax cuts expire?

Yes. The Economic Growth and Tax Relief Reconciliation Act passed in 2001 doubled the child tax credit form $500 to $1,000. It is set to expire at the end of the year, and unless extended by Congress, would revert back to $500 in 2011.

Question #2: What is the difference between an Individual Taxpayer Identification Number (ITIN) and a Social Security Number (SSN)

Taxpayer identification numbers are assigned to individuals that do not qualify for a Social Security number but may need to file a tax return. ITINs are often given to resident aliens living in the United States. While a taxpayer may use his or her social security card as proof to work in the United States, an ITIN does not serve as verification of one’s ability to work in the United States.

Tax Implications of Early IRA Withdrawals

Last week, the Roni Deutch Tax Center – Tax Help Blog posted an article on the tax implications of early IRA withdrawals. As the blog entry explains, although the purpose of an IRA is to save for the future, it is not uncommon for taxpayers to ‘borrow’ money from their account. Here are excerpts from the article:

Taxes and Penalties

Unless you qualify for a special exemption, every early withdrawal will be subject to a 10% tax penalty. In addition to the flat penalty, you will also have to pay income taxes on the money you take out.

Qualified Distributions

Fortunately, there are tax laws in place that allow taxpayers who have IRAs to take penalty-free withdrawals in certain situations. These instances are known as qualified distributions, and are made to assist those in special financial situations. If you have a Roth IRA which has been open at least five years, distributions can be taken both penalty, and tax-free.

Continue reading at RDTC.com…

Obama Housing Program Slowing To A Crawl While Homeowners Suffer

From Huffington Post.com:

More than 18 months after President Barack Obama announced a $75 billion program to help three to four million homeowners avoid foreclosure, the administration's primary foreclosure-prevention initiative is slowing to a crawl.

Less than 17,000 homeowners were offered temporary trial plans in July under the Home Affordable Modification Program to reduce their monthly mortgage payments, an 86 percent decrease from the same period last year, according to Treasury Department data released Friday. About 37,000 homeowners transitioned from trial plans into permanently-modified mortgages, which offer years of lower monthly payments thanks to cuts in the mortgage's interest rate and extensions to the life of the mortgage. It's the lowest figure since December, and a 28 percent decrease from June's total.

More than 100,000 homeowners were bounced from the program, known as HAMP, last month as homeowners either fail to provide documentation verifying their situation, fell behind on their new, reduced payments (an indication of how deeply in debt they are) or their mortgage servicers simply kicked them out due to error, a common occurrence, according to homeowners, their advocates, and government auditors. It's a seven percent increase from June. An average of 108,000 homeowners per month have been kicked out since March 1.

About half, or 48 percent, of struggling homeowners who have entered the program since the spring of 2009 have been kicked out.

IRS Announces New Return Preparer Application System and User Fee

In their newest press release, the IRS announced that they would launch a new online application system for tax return preparers in September.

The IRS has proposed to require all individuals who receive compensation for preparing all or substantially all of a federal tax return or claim for refund after Dec. 31, 2010, to have a Preparer Tax Identification Number (PTIN).

Under the proposed regulations, compensated tax return preparers will need to obtain, or reapply for, a PTIN and pay a user fee using this new comprehensive system, which is part of a series of steps planned to increase oversight of federal tax return preparation. Tax return preparers will be creating PTIN accounts with the IRS when they use the new system.

“This is an important first step because it lays the groundwork in our efforts to ensure the quality and integrity of professional tax return preparation, which most taxpayers rely on in one form or another,” said IRS Commissioner Doug Shulman.

Compensated tax return preparers would pay a $64.25 user fee the first year for a PTIN based on two underlying costs. The IRS proposes to collect $50 per user to pay for outreach, technology, and compliance efforts associated with the new program. And the third-party vendor will receive $14.25 per user to operate the online system and provide customer support.

Under the proposed regulations, compensated tax return preparers will be required to renew their PTINs annually and pay the associated user fee. The amount of the fee may change in future years as the actual program costs are periodically reevaluated.

Continue reading at IRS.gov…

Jobless Claims Hit Half A Million

In a disappointing turn of events, the number of people applying for unemployment benefits hit half a million last week. The represents the highest unemployment numbers since November of 2009. This also marks the third week in a row claims have increased, which is a major disappointment to those who thought the economy was recovering.

"These numbers are important because they indicate the rate of growth in the economy is weakening and that the rate for growth is now insufficient to stop unemployment from rising," said Mark Zandi, chief economist for Moody's Analytics.

The latest jobless claims numbers, released by the Labor Department today, mark the third straight week that they've risen. In a healthy economy, jobless claims usually drop below 400,000. Right now, they've risen to 500,000.

In Washington, the grim numbers prompted a statement from President Obama.

"This morning's news that unemployment claims rose again compels us to act," he said this morning, touting a plan to promote hiring by small business.

Continue reading at ABCNews.com…

15 Things You Shouldn't Be Paying For

In the past few years, many Americans have been forced to tighten their personal budgets. However, as this article from Yahoo! Finance there are a lot of things you are probably paying for that you do not necessarily need to. You can find a snippet of their article below, or read the full text here.

So much money and energy is wasted on things we could get for free. If you're into new, shiny things and collecting stuff, this is not for you. But if you want less clutter in your life and want to keep more of your money, then check out these 15 things you shouldn't be paying for.

Basic Computer Software -- Thinking of purchasing a new computer? Think twice before you fork over the funds for a bunch of extra software. There are some great alternatives to the name brand software programs. The most notable is OpenOffice, the open-source alternative to those other guys. It's completely free and files can be exported in compatible formats.

Your Credit Report -- You don't have to pay for your credit report. You could sign up for one of the free credit monitoring services online to get a quick look at your credit report. You just have to remember to cancel the service before the end of the free trial. Or you could do one better and visit www.annualcreditreport.com, the only truly free place to see all three of your credit reports for free once a year.

Cell Phone -- The service plan may be expensive, but the phone itself doesn't have to cost a thing. Most major carriers will give you a free phone, even a free smart phone, with a two-year contract.

Books -- There's a cool place in your town that's renting out books for free: the library. Remember that place? Stop by and put your favorite book on reserve. And if you don't feel like getting out, visit www.paperbackswap.com and find your books there (small shipping fees apply).

U.S. Insurance Regulators Issue Consumer Alert on Death Benefits

From Bloomberg.com:

State insurance regulators, under pressure to improve disclosure of death-benefit payment options, issued a consumer alert about the industry practice of retaining funds rather than paying them in a lump sum.

“You may be able to earn a higher rate of interest on the life insurance proceeds if you select a different payout option,” the National Association of Insurance Commissioners said in the alert. “While the documents you receive might look like a checkbook, it might actually be drafts, which are similar to checks, but different in some ways.”

The alert was issued after an NAIC panel met yesterday in Seattle to review retained-asset accounts. The regulators created the panel after Bloomberg Markets magazine reported in July that insurers profit by holding and investing $28 billion owed to 1 million beneficiaries.

“Disclosure is paramount,” said Thomas R. Sullivan, co- chair of the working group, at its first meeting yesterday. “That seems to be the central issue.”

Retained-asset accounts let insurers keep proceeds of a life insurance policy in their general corporate accounts, earning investment income, while providing the beneficiary with a checkbook-like account that’s not insured by the Federal Deposit Insurance Corp. The NAIC heard testimony from Peter Gallanis of the National Organization of Life & Health Insurance Guaranty Associations that the accounts are covered by state insurance backstops. While beneficiaries can draw drafts on the funds, they don’t always clear as easily as checks.

California State Budget Crunch Brings Back Furlough Fridays

The California Supreme Court agreed to allow furloughs to resume on Friday, until they have enough time to thoroughly review the case. The judges must decide whether or not Governor Arnold Schwarzenegger has the right to order unpaid days off for state workers.

News10.net reports:

150,000 state workers will take an unpaid day off Friday in an effort to curb the state's budget crisis. Furloughing state employees three days a month will save $150 million a month.

The California Supreme Court cleared the way for furloughs to resume Wednesday, saying furloughs can resume while it reviews whether the governor has the authority to mandate unpaid days off for state employees.

Gov. Arnold Schwarzenegger recently ordered workers to be furloughed three days a month, following a previous round that ended in June.

It's a move that has an impact on the private sector as well as state employees.

Read more here