Impacts to Your Wallet in 2014

by Gerri Willis

By Gerri Willis

2014 promises to be a busy year for news that hits your wallet. The biggest consumer story this year – the rollout of Obamacare – has legs. Glitches, problems and out-right failures on the website have persisted. And, that means the government has had to delay deadlines for signup. Previously, Health and Human Services delayed the deadline for enrolling in coverage that starts Jan. 1 from Dec. 15 to Dec. 23. But now the agency has also made it clear that not only will shoppers have until Dec. 31 to pay their first month’s premium, they are also encouraging insurers to allow people who sign up after the Dec. 23 deadline to start coverage as of Jan. 1. What’s more, the Obama administration is also extending coverage under the health care law’s state high-risk pool to the end of the year. That program covers about 84,000 people.

One way to find out what you might pay for Obamacare coverage and what sorts of subsidies you might be eligible for is to go to www.kff.org, where you can get details on coverage and costs.

Watch for more difficulties with the Obamacare program to emerge in the coming months. Health care experts say that the coverage of people under corporate plans will likely change late next year as companies get ready for more changes under Obamacare. Taxes on so-called Cadillac plans will likely result in higher costs for workers and less extensive coverage. We may see even more companies opt to put employees into part-time roles to get around Obamacare requirements.

Another big story that will play out next year, are tax changes. High earners and people with large portfolios will find their taxes rising dramatically next year. Experts say that high earners will find their taxes tipping 50 percent of their earnings in many parts of the country, not just the big cities on the coasts. If you earn more than $200,000 filing singly or $250,000 married, filing jointly, you’ll pay a new additional tax on earned income of 0.9 percent. If you earn above $400,000 as a single filer or $450,000 married filing jointly, you’ll find yourself subject to a new income tax bracket of 39.6 percent.  A new Medicare tax on investment income of 3.8 percent will also sting investors.

Cherished deductions, like mortgage interest, state income and sales taxes and home office deductions, are on phase-out schedules for high earners. We’ll also be keeping an eye on housing to determine whether rising mortgage rates puts the housing recovery on hold or simply fires up eager buyers.

In short, next year is shaping up as a complicated one for consumers and The Willis Report will be there every step of the way to help you figure out how you can negotiate these changes that impact your wallet. Don't miss The Willis Report starting tonight 6pmET on FOX Business.

The Truth About Taxes

by Gerri Willis

By Gerri Willis

Have you ever noticed that taxes move in one direction: Up. And, so it is with property taxes. During the housing bubble, taxes rose as values climbed and in many parts of the country they are still stuck in the stratosphere, even after prices have plunged. Fortunately, you can do something about it.

In fact, Pete Sepp of the National Taxpayers Union says that high property taxes are a rare example of levies that taxpayers can reduce this year as investment and income grow like topsy.

Contesting your home’s assessment is a tried and true method of cutting your property taxes if those taxes are stuck at nosebleed levels. Start by reviewing your home assessment for errors. The dirty little secret is that many local governments use real estate software to assess properties. In other words, local tax officials may never have as much as driven by your house. Errors are common. Your first stop is the property assessor’s office where you’ll ask for the “property card” that describes your home in detail, including square footage, bathrooms and the like. Look for errors. Then pull your neighbors’ property cards, especially those with houses that are similar in features and age as yours. Look at as many as a dozen to find out whether your home’s assessment is significantly higher than the others. Even a 10 percent difference can be the basis for a case. Online resources are like Zillow.com can be valuable as well.

Typically you can appeal your bill 30 to 60 days after receiving it. Ask for an administrative review and gather evidence to support your claim that your home isn’t worth as much as the local government says it is. If you don’t get a resolution you like, you can typically appeal. If you don’t have time to go through the process yourself, you can typically hire a local expert to help, but don’t pay too much for the service. After all, you don’t want to give away all your tax savings to somebody else.

Don’t miss our special User’s Guide to Taxes on The Willis Report tonight 6pmET on FOX Business.

 

 

Consumer's Guide to Year-End Tax Moves

by Gerri Willis

By Gerri Willis

 

Get ready to be socked if you’re wealthy. Or maybe the better word is soaked. Tax changes for the 2013 tax year are huge and if there was ever a year to run projections on your tax bill ahead of April 15, this is it. The nation’s top earners are likely to see their tax rates rise above a whopping 50 percent.

At risk for the biggest changes, are Americans earning over $200,000, says Melissa Labant, director of tax advocacy for the American Institute of Certified Public Accountants.  To be sure, though, earners above $400,000 for single filers and $450,000 for married filers filing jointly will get the biggest bite. And, it’s not just wages that will get more heavily taxed; investment income taxes are rising, and tax benefits that you might have taken for granted like personal exemptions and itemized deductions are under assault too. These changes come thanks to Obamacare and the American Taxpayer Relief Act of 2012.

“I think high earners may be surprised that multiple increases are hitting them,” says Rich Coppa, of Wealth Health LLC. “If they didn't pay attention to these changes from last year they are going to find a bigger bill to Uncle Sam.”

Here’s what you can expect: You likely already know about the increase in the Medicare payroll tax. In 2012, the tax was 2.9 percent and employee’s share of the tax, 1.45 percent, was automatically deducted from your paycheck. Effective this calendar year, however, high-wage earners owed an additional 0.9 percent tax on earned income above $200,000 for single filers and $250,000 for those married and filing jointly. This year also starts a new income tax bracket for people earning $400,000 for single filers and $450,000 for joint filers – a top tax rate of 39.6 percent up from 35 percent last year. That’s the easy stuff to understand. Some of the other changes are more complicated.

Your personal exemption of $3,900 last year is phased out. The amount of the reduction is 2 percent for each $2,500 in excess of adjusted gross income amounts of $250,000 for single filers and $250,000 for those married, filing jointly. The result is a complete elimination of the exemption for single filers with an adjusted gross income above $372,501, and for couples filing jointly over $422,501. What’s more, itemized deductions, such as mortgage interest, state income and sales tax and home office deductions, will be on phase-out schedules as well. (These are sometimes Pease deductions). This change will reduce the value of itemized deductions by 3 percent of adjusted gross income above $300,000 for couples and $250,000 for single filers to a maximum reduction of 80 percent of its value.

Even more pernicious are higher taxes on investment income. If your income is greater than $200,000 as a single filer or $250,000 married and filing jointly, a 3.8 percent Medicare surtax on investment income will be due. (The tax applies to the lesser of your net investment income for the year or the amount by which your modified adjusted gross income exceeds the income thresholds). Note that a taxpayer could be subject to both the additional 0.9 percent tax on earned income and the 3.8 percent tax.

In addition, Obamacare makes it more difficult to deduct unreimbursed medical expenses. Before the Affordable Care Act was passed, unreimbursed medical expenses could be deducted after they exceed 7.5 percent of adjusted gross income. The threshold is now 10 percent.

One single ray of sunshine for middle-class taxpayers: the Alternative Minimum Tax has been permanently indexed for inflation. In previous years, Congress would pass a patch each year to limit the number of people who might fall victim to this alternative to traditional income taxes. People subject to AMT paid more than they might have under the traditional system.

 

Don’t miss a special User's Guide to Taxes on The Wills Report starting 6pmET tonight on FOX Business.

 

Avoid the Holiday Shopping Hangover

by Gerri Willis

By Gerri Willis

It’s the most wonderful time of the year! Ah, the holidays. For those of us who like to shop, it doesn’t get any better than this. Massive discounts. Price matching. Shopping apps. This year in particular, retailers are going to all kinds of lengths to get your attention. Some are opening on Thanksgiving, others are starting their Black Friday offers a week in advance. But consumers’ zeal for the deal sometimes gives way to getting all your shopping chores crossed off your list at any price. And, that can leave you with a holiday shopping hangover come January when you get your credit card bill at the end of the month.

The truth is December is the single, most active month on the calendar for credit card usage.  On average, we load our cards with $131 billion in December, that’s 16.4 percent more than the average month. During November and December of last year, consumers spent more than $246 billion on their bank credit cards, according to TransUnion, the credit monitoring company. With $847 billion dollars ALREADY on our charge cards this year, according to the Federal Reserve, we could be facing a particularly debt-heavy Christmas season.

Holiday debt is bad enough, but when you consider that the average interest rate on a balance transfer card is 15.8 percent, well, you can begin to see just how dangerous this debt can be. In other words, your debt is going to grow like topsy until you pay it off.  Let’s say you charge the average amount of money that middle income homes are expected to spend this holiday season, or $1,035.00, according to a Gallup survey. If you make minimum monthly payments on that debt of interest plus 1 percent of your balance (or $23.29 to start), it will take you nine years to pay off. Worse, you will have paid a total of $773 in interest alone—nearly the amount that you borrowed. You’re probably too smart to pay only credit card minimums, but even so it makes sense to analyze how long it will take you to pay off your holiday debt. Let’s face it; nothing is worse than postponing your summer vacation because you are still paying off holiday debt. A good place to go to analyze your credit card debt is bankrate.com, where there are loads of calculators to help you determine the best way to reduce your debt.

Other ways to save this holiday season: Don’t succumb to the offers by department stores for discounts if you open a new charge card. That’s because while you bank the one-time discount, you’ll also be likely to spend more. Plus, department store charge cards typically carry higher interest rates. For that reason, I like to shop in the virtual world with a list in hand. I find it more difficult to overspend when I’m not in the mall fingering the merchandise. Plus, having a list can keep you focused on what you really need to buy. For the adults in my family, each of us buys a single, funny gift and we play a game in which they are traded and exchanged. It’s fun and nobody spends too much. I typically pay with a credit card with a rich rewards program and pay it off as fast as I can.  That means no holiday hangovers and no spending regrets.

Don't miss The Willis Report TONIGHT starting 6pmET on FOX Business.

The Harsh Realities of Online Shopping

by Gerri Willis

By Gerri Willis

I couldn’t blame you if you decided to do all of your holiday shopping online this year. After all, fighting the crowds seems a lot worse than wrestling the mouse. But the reality is this: There are pitfalls to online shopping as well and the most pernicious are not obvious.  This is the time of year that thieves are out in full force, hoping that you make a mistake so they can sell you counterfeit goods, steal your credit card number or even your identity.

Here’s what you need to know to avoid the downsides of online shopping:

  • Don’t rely on your own powers of observation to determine whether a website is shady or not. There was a time when you could spot fakers because the sites were loaded with bad spelling and grammar. Not anymore.  Consumer Reports’ Tod Marks says it is almost impossible to determine whether a site is legit or not by just looking at it. Instead, make sure that the URL contains “https:” that “s” stands for secure. Check our retailer ratings at Better Business Bureau, where you can also find consumer complaints and reviews. It doesn’t hurt to stick with retailers you already know, and avoid obscure vendors. And, by the way, pay by credit card rather than debit card. That way, if there is a problem with merchandise, you can get your money back.

2.) Watch out for the shyster moves. The fine print is what can get you online. Watch out for sites that say you can’t return defective items. That means the sites are revoking an implied warranty that is acknowledged in many states. If you are buying a high end item make sure that the site is an authorized dealer for the goods by reading the terms and conditions on line.

3.) Check out the online privacy policy. Many retailers give you the option to opt into special offers or promotions. My suggestion is to limit the information you provide to what is needed to actually make the purchase. I prefer dealing with retailers who allow me to decide whether they can share my information with others.

Ultimately, it looks like the majority of us will spend some time online shopping for holiday gifts. My suggestion: Don’t allow the pressure of getting that last minute gift compromise your security. Don't miss tonight's Willis Report starting 6pmET on FOX Business.

User's Guide to Shopping: The Best Toys Ever

TOYS:

  • Monopoly
  • Etch A Sketch
  • Slinky
  • Easy Bake Oven
  • Hot Wheels
  • Mr. Potato Head
  • Hula Hoop
  • LEGOs
  • Bears
  • Barbie

 

  • Monopoly—The best-selling board game actually has its roots in an earlier game called The Landlord’s Game that aimed to teach people what an awful thing it was to have (or be) a money-grubbing, price-gouging landlord. Instead, people adapted that game, added street names from their own communities, and created a folk game with the goal of driving their friends and family into bankruptcy—it’s fun! Charles Darrow applied Atlantic City properties to that folk game and created the game we know and love today. I have a Monopoly: Here and Now version from about six years ago in my office that would be easy to bring. It updates the game with new playing pieces (Toyota Prius, Motorola cell phone, Starbucks mug), substitutes airports for railroads, and uses famous landmarks from across the U.S. like the Mall of America and Fenway Park rather than Boardwalk and Park Place.
  • Etch A Sketch—This toy was invented in France and was originally called the Magic Screen. Based on the principle of static cling, just like acrylic sweaters coming out of the dryer, it operates by using a stylus that scrapes a coating of aluminum powder off the back of the clear screen to leave a black line. A little company from northwest Ohio called Ohio Art finally paid what they considered an outrageous sum--$25,000—on the rights to make the toy in the U.S. Renamed Etch A Sketch, it was a big hit for the holidays in 1960 and remains a popular drawing toy to today, with no paper, markers, or crayons required.
  • Slinky—The springy toy started as an invention to cushion naval instruments in World War II but, once its creator saw it walk off a shelf, he marketed it as a plaything instead. Slinky got off to a slow start in the market—who wants to pay $1 for what looks like a mattress spring?—but sales soared once people saw demonstrations of it walking down stairs and making that slinkety sound (a good advertising jingle helped too).
  • Mr. Potato Head—Originally the famous spud was going to be a cereal box premium. You’d find eyes, ears, nose, and a mouth in a packet at the bottom of your cornflake box. The Hassenfeld Brothers (they later shortened their company name to Hasbro) got wind of the concept and thought it was way too good to be a giveaway. So Mr. Potato Head was born and he received one of the very first toy product launches with TV advertising, a strategy that proved exceptionally successful. Originally, kids had to supply their own potato and jab it with the facial features. Pierced potatoes moldering under beds and in closets undoubtedly led to smelly tuber meltdowns that weren’t popular with moms and later versions came with plastic potatoes.
  • Hula Hoop—The miracle material of molded plastic turned bamboo exercise hoops from Australia into a pop culture sensation. In 1958, WHAM-O could hardly make them fast enough to keep up with demand. Eventually the craze passed but the fad toy didn’t go away. It had BBs added in the 1960s for Shoop-Shoop Hula Hoops and has enjoyed a recent comeback as an exercise device. (As a bonus, Susan and Shane can testify that I’m willing and ready to Hula Hoop at any time, including a clip on The Tonight Show with Jay Leno about 10 years ago.)

What to Put on and Take Off Your Holiday Shopping List

by Gerri Willis

Don't miss our special "User's Guide to Shopping" tonight on The Willis Report 6pmET FOX Business. Black Friday beckons shoppers to malls all over the country with the promise of good deals. Last year, day-after Thanksgiving sales totaled $59.1 million and this year 55 percent of us are expected to shop on Black Friday. But getting good deals is more art than science. In truth, some of the so-called deals aren’t all they are hyped up to be. In fact, Black Friday may benefit retailers more than it helps consumers. After all, that’s where Black Friday gets its name. It marks the first day of the year that some retailers actually stop operating in the red, and begin to make a profit. The good news is this: Because forecasts for the season show consumers may be stingier this year, spending 2 percent less than 2012, retailers are likely to be more aggressive with markdowns.

 So what should you put on your shopping list and what should you leave off? According to the folks at dealnews.com, there are three things you will want to avoid buying on Black Friday. First off, toys are typically better bought closer to Christmas. No doubt you might get some kind of discount on Black Friday, but ask yourself how you will feel if you buy now and see a lower price later. Likewise, stay away from the brand-name high definition televisions.  Other sets are typically discounted at this time of the year, but not the brand name ones. You’ll have to wait until after Christmas to get the best deals. And, finally, hands off the Christmas decorations (for now at least.) You’re probably not shopping on Black Friday to snag decorations, but it’s all too common to add them to your shopping basket. Hold off on the impulse buys and wait till closer to the holiday (or even after) to get that Musical Charlie Brown Christmas tree.

 To get the real deals, the biggest markdowns will go to the most creative. Demand for wedding dresses nearly disappears at Christmas, so the markdowns are the biggest. Likewise, most of us aren’t shopping for apparel or shoes. Apparel, especially high-end apparel, is heavily discounted at luxury retailers on Black Friday. Last year, Nike, Puma and Rockport had site wide sales of up to 50 percent off. For the techies in the crowd, watch for Microsoft Surface tablets – the first generation – to be marked down.

Good luck, and remember, the best deals will go to those with the most patience. 

Holiday Shopping: Not So Simple Anymore

by Gerri Willis

Don't miss our special "User's Guide to Shopping" 6pmET tonight on FOX Business. Remember the good old days when you would go to an actual, physical store to get a look at a product you wanted to buy, and then go back home and purchase that same product online for less money? This year, it just won’t be that simple anymore. That’s because major retailers and big box stores who experienced the brunt of the “showrooming” trend, that is to say squeezing the Charmin in the real world and going home to buy online, are having their revenge. They are beefing up their price matching policies this year and hoping more of us “webroom,” that is shop online and buy in store.

They may win. A survey of shoppers conducted by Accenture, shows 65% of shoppers this year will browse online and buy in store versus 63% who will buy online.

If the trend is the friend of brick and mortar retailers, they are trying to exploit it to their advantage. More and more of them are opening their doors on Thanksgiving. Best Buy will open at 6 p.m. next Thursday, while Toys R Us will open for four hours from 5 p.m. tp 9 p.m. Target will open at 8 p.m. Macy’s and Kohl’s will open on Thanksgiving for the first time this year. And, then there are the stunt promotions. Best Buy just announced the exclusive sales of the blue Samsung Galaxy S4 starting Nov. 14.  

There is a lot at stake in this year’s holiday shopping season. Sales are expected to be down 2% from last year and retailers are using every trick in the book to land sales. For example, retailers have found that people who access a store’s website or app while in the store are 33% more likely to buy an item that day, says Andrea Woroch of Kinoli Inc. For that reason, Target is offering free Wi-Fi in its 1,750 stores. Macy’s is using what it calls “social retailing” to lure buyers, for example, promoting a “Magic Fitting Room” in which shoppers can try on styles virtually and put up the results online.

Watch, too, for location based deals. Brick and mortar retailers, taking a page from daily deal and flash websites, will offer coupons and discounts to shoppers via their mobile devices. Watch CouponSherpa, Foursquare and Shopkick for rewards and “check-in” deals.

It’s a brave new world when it comes to shopping for the holidays. Let’s just hope Mom and Dad can keep up!  

Is Black Friday Turning into Black November?

by Gerri Willis

Don't miss our "User's Guide to Shopping" special starting 6pmET tonight on The Willis Report. Does it feel like holiday shopping sales are starting earlier and earlier? You’re not wrong. Faced with a short holiday shopping season and forecasts of lower spending, retailers are expected to be more aggressive than ever in rolling out early sales before Thanksgiving. According to the National Retail Federation, we’ll spend $738 on average for gifts, that’s 2 percent less than last year. But the retail industry’s pain is going to be your gain. Retail experts say to watch for big discounting as retailers try to lock in sales early.

So what should you put on your shopping list if you are headed to the mall the day after Thanksgiving? Black Friday is typically the only day of the year Apple discounts its products. If they don’t offer discounts, check out retailers like Best Buy to see if they are offering any price breaks or discounts for people who buy multiple Apple products at one time.

Other categories which are typically discounted this time of year: non brand-name televisions, cookware and household appliances and clothing (but not coats or other winter apparel). Better label cookware seldom gets discounted and so it’s a good opportunity to get a low price for you or a loved one.

What should you leave off your shopping list? According to the folks at dealnews.com, there are three things you will want to avoid buying on Black Friday. First off, toys are typically better bought closer to Christmas. No doubt you might get some kind of discount on Black Friday, but ask yourself how you will feel if you buy now and see a lower price later. Likewise, stay away from the brand-name high definition televisions.  Other sets are typically discounted at this time of the year, but not the brand name ones. You’ll have to wait until after Christmas to get the best deals. And, finally, hands off the Christmas decorations (for now at least.) You’re probably not shopping on Black Friday to snag decorations, but it’s all too common to add them to your shopping basket. Hold off on the impulse buys and wait till closer to the holiday (or even after) to get that Musical Charlie Brown Christmas tree.

Cyber Monday is typically the biggest day for online discounts. Candice Cerro, a consumer savings expert, says the big theme this year will be online deals and sales, which could be bigger than Black Friday sales. So, in your search for the best price on any given gift go online first this year.

Obamacare: What to Expect

by Gerri Willis

Join us for a special show tomorrow night starting 6pmET – a panel of experts answers all your Obamacare questions! E-mail me, tweet me @GerriWillisFBN & call our show at 1-877-249-9626 to have your questions answered LIVE!

All week we’ve been talking about open enrollment for the Obamacare insurance exchanges but October is also when sign ups start for corporate health plans. Of Americans who are of working age, 58 percent get their health insurance coverage through employers and for those who do it’s an essential part of their compensation.  Last year, employees paid just 21 percent of overall health care premiums. Employers picked up the rest.

So what can we expect this year?

  • You’ll pay more for coverage. Aon Hewitt’s experts see prices rising – not because employers are spending less but because they are keeping the percentage of their contribution at year-ago levels while overall healthcare prices rise. Aon forecast last year that for 2013 premiums would rise a whopping 6.3 percent. Employee costs  were expected to rise to $2,385 for premiums and  $2,429 for out of pocket costs like co pays and employee contributions. Employer costs were expected to rise to $11,188 for the year. What’s more, almost one in five employers are facing increased surcharges for adult dependents for access to coverage elsewhere.
  • Watch out for more high-deductible plans, also called consumer-driven health care. These plans carry low premiums but employees with this coverage can be on the hook for huge costs if they experience an emergency health problem or life-threatening illness. But the low costs of these plans have made them popular with younger workers, and employers are moving to satisfy that demand. In fact, some employers are making these plans more attractive by subsidizing premiums at higher levels than other plan options.
  •  More free stuff for people who engage in healthy behaviors, like smoking cessation classes or gym memberships. (Of course, more companies may offer more penalties, as well.)
  • A redrawing of the lines of who gets coverage. Aon says Obamacare and the individual mandate is pushing companies to reconsider who can get coverage.

Bottom line, employers are trying to reduce or at least hold even their costs for employee health care. For that reason and the fact that the plans are changing, you’ll want to do more than just check the box for the plan you had last year. Aon health and welfare benefits leader Craig Rosenberg recommends carefully reading and understanding the details of each of the plans you are offered.

 

 

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