NDSU Agriculture
National Extension FAQs
How can I tell the difference between flying ants and termites?
By Contributors from eXtension Faqs- All. Published on Feb 10, 2012.
Although most ants are recognizable, the winged forms (alates) of some species of ants and termites are often confused, especially during the termite swarming season.
 Ant alate |
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Termite alate |
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| Anatomical differences between ant alate (top) and termite alate (bottom). Drawings courtesy of University of Florida Extension. | |
Related
- FAQ 3411: "How can I tell if those are flying ants or termites swarming at the foundation of my house, and when should I call an exterminator or pest management professional?"
- Subterranean Termites - University of Florida Extension
- Managing Household Ant Pests - Texas AgriLife Extension
- Ant vs Termite - University of Florida Extension
Find more information about fire ants in eXtension's Imported Fire Ant Resource Area.
How do invasive species cause harm?
By Contributors from eXtension Faqs- All. Published on Feb 10, 2012.
Invasive species can cause harm in so many different ways that it isn't practical to cover them all here. So, below is just a sample to give you an idea of how pervasive this problem is. Many of these changes are things you can see happening around you.
When a non-native species is introduced into a new environment it is freed from the natural predators, parasites, or competitors from its native habitat. This gives an advantage to non-native species competing with the native species that evolved in the ecosystem. These advantages allow the non-native species to outcompete native species for the available food, water, light, and space. Wherever an invasive plant is growing is where a native plant should be.
Invasive species also have the potential to disrupt vital ecosystem functions, such as water flow, nutrient cycling, fire systems, or soil composition. An example of this is the Tamarix species. It not only uses large amounts of water, it changes the soil chemistry, making it more saline. This can adversely affect and prevent the growth of many native plant species. Tamarix has significantly changed the hydrology, soil composition, and plant communities of many habitats in the western United States. An invasive plant may add significantly to the fuel load of an area, either in mass or because it contains volatile compounds. This can mean that fires burn hotter and faster than the native plants in that habitat have evolved for. After such a fire, the invasive plant quickly germinates or resprouts while the native plants are either killed or perhaps recover much more slowly.
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| Smallflower tamarisk - image by John M. Randall, The Nature Conservancy, bugwood.org |
Changes that damage native plant communities also affect the wildlife communities that depend on them for food and shelter. A wide range of effects have been seen in wildlife communities in these situations. Some animal species populations are reduced while others are increased. Someare even pushed to the point of extinction. Butthe overall trend seems to be a reduction in diversity. Even in cases where the same number of species are actually present, the balance between the species has been changed. We do not yet know what many of these changes herald for the future.
Invasive species can damage or contaminate crops from soybeans to pine plantations, greatly increasing costs to the agricultural industry and, in turn, to the American public for both food and other products. Industries such as the cattle industry can be affected when invasive plants that are basically inedible by cattle, infest ranges or contaminate forage. Other services such as electricity have cost increases resulting from the management and control of invasive species. A great deal of money is spent by power companies to keep invasive plants from growing in right of ways, up poles, onto buildings, and along power lines under control.
Natural areas used for recreation can be affected by invasive species. For example, Chinese privet and other invasive shrubs, trees, and vines can take over both clearings and the understories of forests making hunting, hiking, biking, and camping difficult or impossible.
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| Bighead Carp - image by Michigan Sea Grant Archive, University of Michigan and Michigan State University, bugwood.org |
Any body of water, river, or stream is especially vulnerable to invasive species. Water by its nature allows for much easier movement for invading organisms. The news has many examples of aquatic-invasive species that can and have spread very quickly causing significant changes in a very short period of time. From water hyacinth to lion fish or Asian carp, aquatic species are causing damage to these ecosystems and the organisms that inhabit them. It is often difficult, and sometimes impossible, to fish, boat, or swim on a lake covered by invasive plants. People have been hospitalized due to injuries received while boating on rivers infested by the Asian carp, which can easily leap over a boat.
What is the difference between invasive, exotic, and non-native species?
By Contributors from eXtension Faqs- All. Published on Feb 09, 2012.
Exotic and non-native basically mean the same thing. An organism is considered non-native or exotic if it is found in an ecosystem where it did not evolve. A large percentage of the food we produce in this country comes from non-native species. The majority of non-native species never causes a problem. Unfortunately, the few that do cause problems more than make up for the rest of them. This small percentage of non-native species causes a tremendous amount of harm to our native habitats and the plants and animals that inhabit them; to natural areas such as forests, lakes, and rivers that we use for recreation; to agriculture; to our economy; and directly to humans. These harmful exotic or non-native species are called invasive.
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| Jeremy Greene, Clemson University, bugwood.org | United States Environmental Protection Agency Great Lakes National Program Office, USEPA, bugwood.org |
Below are links to some websites that have useful information on invasive species:
Center for Invasive Species and Ecosystem Health
National Invasive Species Information Center
Invasive Species Advisory Committee - Invasive Species Definition Clarification and Guidance White Paper
I think I have found an invasive species. What information needs to be reported about an invasive species?
By Contributors from eXtension Faqs- All. Published on Feb 09, 2012.
Most reporting systems will need certain basic information about an invasive species when you report something to them:
1. Location of the invasive species. Get global positioning system (GPS) coordinates, if possible. If that is not possible, get an address, or describe the position relative to the nearest crossroads or some other easily identifiable landmark, town, county and state.
2. What invasive species did you see? Include the common name and scientific name, if you know it. If it is a pest, what was the host species (i.e., insects on a tree)?
3. Include the date you saw the invasive species.
4. Include your name and contact information.
5. Always take pictures whenever it is safe to do so without risk to yourself or others.
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| Charles T. Bargeron, University of Georgia, bugwood.org |
Gathering the GPS coordinates of an infestation of Chinese tallowtrees.
What is a FBAR report for income taxes?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
FBAR stands for Foreign Bank Account Report. It is a form that is required to be filed by U.S. taxpayers who hold one or more financial accounts overseas totaling more than $10,000 at any point during the year. The FBAR filing requirement includes bank accounts, non-bank accounts, and life insurance policies.
The FBAR is an informational return only, but penalties are extremely severe for intentional failure to file this form by the June 30 annual deadline. The FBAR is a Treasury Department form that is used to help the IRS make sure that U.S. taxpayers are paying what they owe on income earned from foreign accounts. It must be mailed in time to be received by June 30 and cannot be e-filed.
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Is there a way to avoid the kiddie tax on a child's income?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
The kiddie tax applies to children under age 19 and full-time college students younger than age 24. It is a tax on the unearned income of minors and young adults. In 2012, a dependent child's unearned income over $1,900 is taxed at his or her parents' marginal tax rate. The only way that young adults under age 24 can avoid the kiddie tax is to be at least partially financially emancipated from their parents.
To avoid the kiddie tax, they must provide more than one-half of the total cost of their support from their own earned income sources (salary, wages, or net income from a business). Unearned income from securities is excluded. More information can be found from the IRS at www.irs.gov/pub/irs-pdf/p929.pdf.
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How long do taxpayers have to claim a refund?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Tax law provides most taxpayers with a three-year window of opportunity for claiming a tax refund. If no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. The three-year limit begins on the date that the tax return was originally due.
For example, for 2011 returns that were due on April 15, 2012, the window of opportunity ends on April 15, 2015. The law requires that the tax return be properly addressed, mailed, and postmarked by that date. Since you don't owe the government any money, there is no penalty for filing a late return that qualifies for a refund.
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How do you calculate the five-year holding period required for tax-free withdrawals from a Roth IRA? When do you start counting?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
The five-year requirement is satisfied beginning January 1 of the fifth taxable year after a Roth IRA account is established. Here's an example: If a Roth IRA account is opened sometime in 2011, it will meet the five-year requirement on January 1, 2016. This is true even if you wait until April 15, 2012, to contribute to the 2011 Roth IRA, as is allowed under tax law. Here are a few more details related to the five-year rule:
* Once the five-year holding period is reached for one Roth IRA, it is considered met for all Roth IRAs (if you have multiple Roth IRA accounts) unless the Roth IRA was converted from a traditional IRA.
* Each separate Roth IRA conversion (i.e., when you convert a traditional IRA balance to a Roth IRA) must satisfy a separate five-year holding period.
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Who holds the U.S. national debt? Is it primarily people from foreign countries?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
The national debt is the amount of money the U.S. government owes to others. As of early 2011, it stood at about $14 trillion. The biggest holder of the national debt is Social Security and other government trust funds (about $4.5 trillion). In addition, the Federal Reserve holds another $1 trillion for a total of $5.5 trillion held by entities of the federal government.
Domestic investors hold about $4 trillion, and another $4 trillion is held by foreign investors. Of the $4 trillion held by foreign investors, China, Japan, and the United Kingdom are the largest U.S. debt instrument holders. Thus, foreign investors hold a lot of U.S. debt, but they do not hold a majority.
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I am putting together my taxes and found that I am over the income limit for the earned income tax credit by $250. What other options do I have for tax credits? We are a single-income family as my wife is a stay-at-home mom.
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Because you are a single-income family and don't utilize child care in order to work, you can't take the child and dependent care tax credit. You may, however, be able to take the child tax credit which is up to $1,000 per qualifying child in 2012.
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I'm thinking of filing my taxes electronically. Where can I get information about using IRS Free File Fillable Forms?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
The IRS provides the fillable forms option for people who are comfortable filling out tax forms and schedules without software help. It provides "do-it-yourself" tax filers with an experience similar to filling out paper forms (except you can type numbers into spaces on the form and print out the form instead of writing everything out). Fillable forms can be printed out and submitted by mail, or they can be filed electronically. For tax filers with an income less than $57,000 (2012 figure), there is also an option to access free tax preparation software.
To use Free File Fillable Forms and submit your tax return electronically, you create an account and input and submit your information as directed. For additional information, here is the link for the IRS Free File home page: https://www.freefilefillableforms.org/. Also, here is an IRS FAQ: www.irs.gov/efile/article/0,,id=226829,00.html. For even more information with step-by-step instructions to file electronically, go to: www.irs.gov/pub/foia/ig/wi/pdf_of_free_file_fillable_forms_faqs_1-14.pdf.
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I will be getting annual alimony payments of $160,000. I work part time, but my employer provides no benefits. Can I contribute to an IRA, or am I getting too much money? Is there any good way for me to set aside some of this money for retirement?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Taxable alimony is considered compensation for purposes of both traditional and Roth IRAs. You can only contribute to a Roth IRA if your income is under $125,000 as a single tax filer (2012 limit). You can invest the lesser of your annual earned income or $5,000 ($6,000 if age 50 or over) in a Roth IRA (if under the annual earnings limit) and/or a traditional IRA (no earnings limit). Other retirement savings options could include a tax-deferred account through another employer that offers this benefit, tax-deferred annuities (look for those with low expenses issued by companies with a high rating for financial stability), investments in taxable accounts, and whole life insurance that builds equity over time.
Your annual income by virtue of alimony plus some earned income gives you many options. Seek the advice of a qualified comprehensive financial planner who understands your goals for tomorrow and your needs for today and can help you develop a diverse long-term strategy to have the life you envision in retirement.
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My husband and I pay our own health insurance because his employer does not offer coverage. Can we claim those premiums on our taxes?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Health insurance premiums, along with a long list of additional medical and dental expenses (e.g., eye surgery, oxygen equipment, pregnancy test kits, eyeglasses, and crutches) are considered a deductible expense if you can itemize your tax deductions. In order to benefit from itemizing, the total of all of your itemized deductions must exceed your standard deduction, which is $11,900 for couples ($5,950 for singles) filing jointly in 2012.
Additionally, in order for any of your unreimbursed medical expenses to count as an itemized deduction, they must exceed 7.5% of your adjusted gross income (Form 1040, Bottom line of page 1). If you are unable to count unreimbursed medical expenses as an itemized deduction, check to see if your employer offers a flexible spending account which will allow you to set aside money every month on a pre-tax basis that you can use to pay for certain unreimbursed expenses. Contributions made to the account on a pre-tax basis reduce your income and thus lower your federal income tax.
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What credit card practices changed as a result of the 2009 credit card law (CARD Act)?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Below is a brief summary of credit card practices that changed in 2009-2010 as a result of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act:
* Universal default (that is, the practice of raising a person's interest rate as a result of late payments to another creditor) ended for existing credit card balances. Card issuers are still allowed to use universal default on future credit card balances if they give at least 45 days advance notice of the change.
* So-called "teaser" rates (that is, low initial rates for a short period of time) must be in effect for at least six months.
* Interest rates on an existing balance cannot be raised unless payments are more than 60 days late or a teaser rate expires. If a consumer pays at least the minimum balance on time for six consecutive months, the previous, lower, rate must be restored.
* Credit card applicants under age 21 must show proof of income or have a cosigner in order to be approved for a credit card.
* Credit cardholders have 21 calendar days from the time their statement is mailed (up from 14 days) to pay their bill.
* Late fee "traps" such as weekend due dates, shifting payment dates, and early morning deadlines are prohibited.
* Consumers must receive 45 days' notice (up from 15 days) before a change in account terms such as increased interest rates and fees.
* Payments that are greater than the required minimum payment must be applied, in descending order, starting with the balance with the highest interest rate.
* Over-the-limit fees can be charged only if consumers give their permission for creditors to process transactions that would place the account balance over the approved maximum limit. In other words, consumers must "opt in" for an over-the-limit fee to be charged.
* Two-cycle average daily balance calculations are prohibited. This means that lenders cannot use the balance from the previous month to calculate interest in the current month.
* Credit card issuers must display on billing statements how long it would take to pay off the existing balance and the total interest cost if only required minimum payments are made.
* With the exception of clearly disclosed "teaser" rates, initial credit card contract terms must remain stable for an entire year before any changes are made.
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What is the federal estate tax exemption and federal estate tax rate?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
The top estate tax rate for 2012 is 35% and there is a $5,120,000 exemption amount. Individuals can transfer up to $5,120,000 (indexed for inflation in $10,000 increments starting in 2012) to heirs free from estate tax. In addition, for married couples, if one spouse dies without using the full exclusion, the remainder can be added to the surviving spouse's own $5,120,000 exclusion.
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What is a "universal default policy," and how can it affect me?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
If you own a credit card and you're late with a payment, even by just one day, the credit card company can raise your interest rate in addition to charging you a late fee. They can also raise your interest rate if you've made a late payment on any of your credit cards, including those issued by other companies, if there is a universal default clause in the fine print of your credit card agreement.
With a universal default policy in effect, your interest rates can skyrocket to 30 percent or more if you make a late payment to an unrelated credit issuer such as a utility company or another creditor. Under the CARD Act, universal default has ended for existing credit card balances. However, card issuers are still allowed to use universal default on future credit card balances if they give at least 45 days' advance notice of the change.
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Why are so many credit card users today being charged late fees, and what can we do about it?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Late fees are the fees that are charged when consumers are late with credit card payments. They are a big revenue source for credit card issuers, although not as big as before the CARD Act of 2009 took effect. Under current credit card rules, first-time offenders, paying late, can be charged a maximum of $25. If you have more than one late payment in six billing cycles, a credit card company can charge $35 for a late payment. If you get hit with an unjustified late fee, call the credit card issuer and complain. If you are a customer in good standing, many creditors will reverse these charges, upon request, to avoid losing you as a customer.
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I was late on my credit card payment and was charged a $35 fee. Is this legal?
By Contributors from eXtension Faqs- All. Published on Feb 08, 2012.
Buried in the fine print of your credit card application, agreements, and correspondence from the card company are details about various fees. As a result of the 2009 CARD Act and subsequent regulations, first-time offenders, paying late, can only be charged a maximum of $25. If you have more than one late fee in six billing cycles, then the credit card company can charge you $35 for your late payment.
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Where can I buy Pseudacteon phorid flies (decapitating flies) to release in my yard?
By Contributors from eXtension Faqs- All. Published on Feb 07, 2012.
These natural enemies are not commercially available. You will not need to purchase them because the natural enemies are expected to spread on their own. It would be too expensive for the typical homeowner to purchase the natural enemies, even if the enemies were commercially available.
For example, it costs several thousand dollars to get a decapitating fly population started in a particular area. Phorid flies in the genus Pseudacteon, also called decapitating flies; and Kneallhazia, a fungus, have been released in most Southern states to determine if they will have an impact on fire ant populations. These natural enemies have spread rapidly from the point of release.
Related
- Natural Enemies of Fire Ants, eXtension.org Fire Ants
- Attack of the Phorids [VIDEO], USDA-ARS
Find more information about fire ants in eXtension's Imported Fire Ant Resource Area.
I would like to use an augmented experimental design to evaluate differences in a trait between families. How many checks should I include?
By Contributors from eXtension Faqs- All. Published on Feb 06, 2012.
The number of checks to include depends on the crop, heritability of the trait, magnitude of differences in the trait among the families, and power. With respect to power, the general rule of thumb is that the experiment should be designed so that there are at least ten degrees of freedom for error.
Watch the Introduction to Augmented Experimental Design Webinar to learn more.
If you have not earned the maximum amount allowed to be contributed to an IRA ($5,000 in 2012), can you still contribute that amount?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
You are allowed to contribute the greater of 100% of your earned income (salary or wages from a job or self-employment income) or $5,000 to a Roth and/or traditional IRA in 2012. If you are age 50 by year's end, or older, you can contribute up to an extra $1,000 ($6,000 total). However, if you earn less than $5,000 by the end of the calendar year, you can only contribute up to the amount of your annual earnings.
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Can you split your yearly IRA contribution (e.g., part in a traditional IRA and part in a Roth IRA)?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Yes, as long as the total amount of your contributions to more than one IRA does not exceed the maximum annual contribution limit which, in 2012, is $5,000 for workers under age 50 and $6,000 (with an additional $1,000 catch-up amount) for workers age 50 and over by year-end. Be sure to check the administrative fees and minimum deposit requirements of your IRA plan custodian(s), however. Multiple accounts could mean that you'll be charged multiple fees to administer your IRA accounts. You may also receive multiple account statements and more paperwork during tax season.
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Can someone who has a W-2 with $5,000 deducted for a 401(k) contribution also contribute $48,000 to a SEP (simplified employee pension) in his own LLC (limited liability company)?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
In general, the limit for total contributions to defined contribution plans in tax year 2012 is the lesser of 25% of compensation paid or accrued or $50,000. This total can be a combination of defined contribution plans including 401(k) plans and SEP IRAs from self-employment income. Excess contributions may be made, but generally are not to the taxpayer's advantage as they are nondeductible and may be subject to an additional tax.
For additional information visit: www.irs.gov/publications/p560/ch02.html#en_US_publink10008830 and www.irs.gov/retirement/article/0,,id=120297,00.html The calculation for SEP IRA contributions is somewhat complex. You may wish to use a tax preparation software package or consult a tax professional to discuss the specifics of your tax situation.
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How do I get less FICA tax taken out of my paycheck?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
The percentage of income for FICA tax that workers pay is determined by federal law and is the same for everyone. The only way to pay less FICA tax (as a dollar amount, not a percentage of pay) is to earn less income. FICA stands for Federal Insurance Contributions Act. FICA consists of two separate payroll taxes: Social Security (6.2% of pay; reduced to 4.2% during 2011 and 2012) and Medicare (1.45% of pay), for a total of 7.65% of pay (5.65% in 2011-12).
FICA tax is paid by workers and their employers. In the case of self-employed workers and independent contractors, they pay 13.3% tax (in 2012) as self-employment taxes on Schedule SE that is filed with their tax return. However, they also get to deduct 50% of what they pay in self-employment tax as an income tax deduction on IRS Form 1040 (see IRS Pub 334). Almost all employed and self-employed workers are covered by Social Security and are expected to pay FICA tax or self-employment taxes. The major exceptions are most civilian federal government employees hired before 1984 (they are covered by, and pay the 1.45% tax for, Medicare but not for Social Security retirement benefits) and about 25% of state and local government employees with a pension plan. Some other exceptions apply to ministers and members of religious orders and certain college students who work at on-campus jobs.
For additional information about FICA tax exemptions, check www.socialsecurity.gov.
How can I take advantage of the advance Earned Income Tax Credit (EITC) if I'm currently unemployed?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
The advance earned income tax credit (EITC) allows taxpayers who qualify for the EITC and have at least one qualifying child to receive part of the credit in each paycheck during the year instead of having to wait for a tax refund later. The amount of the EITC is the same but it is received gradually in paychecks throughout the year instead of all at once as part of a tax refund. In order to be eligible for advance Earned Income Tax Credit payments, you must meet all four of the following requirements:
1. You (and your spouse, if filing a joint return) have a valid Social Security number (SSN) issued by the Social Security Administration.
2. You expect to have at least one qualifying child and to be able to claim the credit using that child. If you do not expect to have a qualifying child, you may still be eligible for the EITC, but you cannot receive advance EITC payments.
3. You expect that your 2012 earned income and adjusted gross income (AGI) will each be less than $36,920 ($42,130 if you expect to file a joint return for 2012). Include your spouse’s income if you plan to file a joint return. Generally, earned income also does not include nontaxable earned income, but you can elect to include nontaxable combat pay in earned income.
4. You expect to be able to claim the EITC for 2012. Most importantly, you must be employed. The advance EITC is administered through your employer. You complete a W-5, Earned Income Credit Advance Payment Certificate to give to your employer, and then, based on your income, your employer adds additional money to your take-home pay in each paycheck. If you receive advance payments of EITC, you must file Form 1040 or Form 1040A to report the payments. Your Form W-2, box 9, will show the amount you received. If your only income is from self-employment, you cannot qualify for advance EITC payments. For additional information on the EITC, see IRS Publication 596 (www.irs.gov/pub/irs-pdf/p596.pdf).
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If I do not use my credit card, do I need to pay a fee?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
You are referring to what is called an "inactivity fee" in the credit card industry. An inactivity fee is a fee charged to credit card holders who do not use their credit card to make new purchases. When a credit card is not used for a specific time period, the account may be considered inactive by creditors. A Federal Reserve Board rule that went into effect on August 22, 2010, banned inactivity fees. This rule was one of many rules developed to implement provisions of the 2009 Credit Card Accountability, Responsibility, and Disclosure (CARD) Act.
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How does your age determine the amount of your Social Security benefits?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Basically, the longer you wait to claim a Social Security benefit, the more money you will receive. Under current Social Security guidelines, the earliest age that you can collect benefits is age 62. However, benefits at age 62 are permanently reduced by 25%. For example, if your monthly benefit at age 66 is $1,000, you would receive only $750 at age 62. If you wait until age 70 to start collecting benefits, the amount you will receive is 132% of the full retirement benefit at age 66. For example, that $1,000 benefit at age 66 would rise to $1,320 at age 70. Obviously, many personal factors need to be considered in addition to these mathematical calculations, including a need for income, health status, and a spouse's need for income, if married.
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My husband started receiving Social Security at age 62. When I am 62, can I start collecting spousal Social Security while I continue to work and then when I am 66, can I switch to collecting on my own work record which will be higher then?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
We are unable to directly answer your question because the advisability of your plans depends upon several unknown case-specific factors. One factor is your career salary history and that of your husband. Another is the amount of income that you plan to earn before you reach full retirement age (FRA). If you earn more than the annual earnings limit ($14,640 in 2012), $1 in benefits will be withheld for every $2 in earnings above the limit. In the year you reach full retirement age, your benefits will be reduced by $1 for every $3 you earn over the limit ($37,880 in 2012) in the months before your birthday.
If you continue to work, you might want to consider postponing an application for benefits until after age 62 while you are working and under FRA. As for the amount of your benefit, you are entitled to the higher of the benefit amount calculated from your own work record or half of the benefit calculated on your husband's work record. For additional information about Social Security rules, see www.socialsecurity.gov or call toll-free 1-800-772-1213. You may also find it helpful to read the publication, "What Every Woman Should Know" from the Social Security Administration available at: www.ssa.gov/pubs/10127.html.
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What are the effects of global financial crisis on the telecommunications industry?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
As would be expected, like all industry sectors, the telecommunications industry has been affected by the financial crisis. Many companies have cut their spending and/or seen their earnings decline in the short term as household and business customers postpone new equipment purchases and/or service upgrades. During an economic downturn, consumers and businesses both have less discretionary income. It has been predicted that big telecommunications companies may gain the upper hand because size matters during a financial crisis. Larger companies with sizable assets and more stability will have funds available to invest in potentially new game-changing products and services.
It has also been predicted that network equipment vendors may get squeezed by lower demand, requests for discounts, and tougher negotiating by large telecommunications providers. The mobile phone industry is now a mature industry. Marketing research indicates that newer customers spend less than early adopters, and, hence, average revenue per user is predicted to decline. In short, there have been and will be winners and losers in telecommunications as a result of the financial crisis. The cost of debt and inflation will greatly affect operators' costs, and new products in their pipeline will impact future earnings potential. The telecommunications industry is a hub for innovation and new product lines, and business models are likely to emerge in future years.
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After I retire and draw from my 403(b) plan, can I deposit money in a Roth IRA, even though I will be older than 65 years of age? How much can I deposit each year? Is it tax deductible?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
It depends. You must have earned income to contribute to an IRA of any type, including a Roth IRA. This means that you must have a salary, hourly wage, or net earnings from consulting or a small business. If you have earned income, the maximum amount that a person over age 50 can deposit in 2012 in a Roth IRA is the larger of 100% of earnings or $6,000 (the regular $5,000 contribution plus an additional $1,000 catch-up contribution). Roth IRA contributions are not tax deductible. Instead, they are funded with after-tax dollars (i.e., income that has already been taxed).
There's no age limit for contributions to Roth IRAs. For regular IRAs, you lose the ability to make contributions in the year you turn age 70½ but not for Roth IRAs. If you have earned income, you can set up a brand new Roth IRA at age 80, 85, or 90. There's also no lower age limit. A minor can set up a Roth IRA and contribute to it if aplan custodian allows.
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What would be the best way to invest since CD rates are low, savings rates are low, and the stock market seems too risky?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
You mention both saving (cash assets) and investing (stock market) in your question, so let's be clear about the difference between the two. Both saving and investing involve deferring money from current earnings for spending at a future date.
Saving provides funds for emergencies and short-term financial goals. Safety of the funds and ease of access are important considerations. Generally, savings yield a lower rate of return than investments.
The focus of investing is increasing one's net worth and achieving long-term financial goals. Investing offers the opportunity for a greater return. Along with this comes the trade-off of greater investment risk and potential loss of principal.
Yes, right now in 2012, interest rates on cash assets are very low, and the stock market is volatile, as it often is. eXtension does not provide specific investment advice, but we would note that places to earn a little higher return on cash assets include credit union savings accounts, a laddered purchase of CDs (i.e., buying CDs with different maturity dates to take advantage of changes in interest rates), U.S. savings bonds (if you can tie up your money for at least one year), and online bank accounts.
As for investing, we strongly suggest that you dollar-cost average the purchase of shares in stock and/or mutual funds. If you are making contributions to an employer retirement savings plan via payroll deduction, you are already doing this. You might consider the free online basic investment course called "Investing for Your Future" offered by eXtension.org: www.extension.org/pages/Investing_for_Your_Future. If you have debts, consider using money intended for investments to pay off debts. Interest payments on these debts are likely to eat up the interest gains from these potential investments.
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I enrolled in the wrong type of health care coverage. Is there a way out of it? We can't afford it.
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
If you are employed and enrolled in a group health care plan through your employer that is too expensive, you may have to wait until the next open enrollment period your employer offers before you can change to a different type of coverage. Call your human resources office and ask about the rules for switching.
If you purchased an individual health insurance policy, check with your agent or insurance carrier about available health care policy options. Enrollment in health insurance should have provided you with a policy. You will have to read the policy very carefully to determine if and how you can cancel it. Be careful before canceling any policy. Make sure that you will have alternative coverage from another source before canceling a policy. This is very important, especially if you or a covered family member has any pre-existing conditions for which you need coverage.
Continue to keep a close eye on your health benefits in the years ahead as many employers and health insurance carriers are making changes in the wake of 2010 health care legislation.
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I've heard that next year will be a really bad year for investments. Should I pull the money in my 401(k) out of stocks and put it elsewhere? If so, where? I'm 30 years old.
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
eXtension does not provide specific advice to tell people what to do with their money. Having said that, it is important to note that you are a very young investor and have 37 years ahead of you before you are eligible to collect full Social Security benefits at age 67 (under current law). This is a very long time to ride out the ups and downs (i.e., volatility) of the stock market. If market conditions are indeed poor next year, you will be able to buy stocks and mutual fund shares at very attractive (low) share prices. When markets eventually rebound, your low-cost shares will increase in value. "Buying low and selling high" is a key wealth accumulation strategy.
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How do you determine your required minimum distribution (RMD) from retirement savings plans?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Follow these five steps to calculate your RMD:
1. Determine the distribution year. The account balance used to compute the RMD is based on the balance in a person’s retirement account on December 31 of the previous tax year.
2. Calculate the account balance. Gather statements with information about the balances in retirement accounts. An exception is Roth IRAs, where withdrawals are tax free if an account has been open for at least five years. IRA accounts can be combined for the purposes of this calculation. In other words, account balances can be combined and the RMD taken from any one account or combination of accounts. The same is true if someone has multiple 403(b) plans (i.e., retirement savings plans for teachers, college professors, and other nonprofit sector employees). 403(b) plans cannot be combined with IRAs, however. In addition, distributions must be taken separately from individual 401(k) plan accounts (i.e., retirement savings plans at corporations for private sector employees), and 401(k)s cannot be combined for the purpose of taking RMDs.
3. Look up the life expectancy factor on which RMDs are based. It is based on your age at the end of each tax year. A copy of the IRS Retirement Plan Uniform Distribution Table can be found on the IRS Web site at www.irs.gov. Look for Publication 590 in the “Forms and Publications” section. This table is also available in the “Resources” section of the Rutgers Cooperative Extension “Money and Investing” Web site at http://njaes.rutgers.edu/money/ira-table.asp.
4. Divide the account balance by the life expectancy factor (divisor) in the Uniform Distribution Table. An example is that the life expectancy factor for a 70-year-old is 27.4. If a retiree has a $100,000 IRA balance the previous December 31, the RMD would be $3,649.64 ($100,000 divided by 27.4). For age 71, the divisor is 26.5, and the RMD would be $3,773.58 ($100,000 divided by 26.5). A separate table is used for married couples with more than a 10-year age difference between spouses.
5. Take the RMD. Retirees must make their RMD withdrawal by the end of the distribution year. For example, for investors who are age 72, the age-appropriate factor is 25.6. If a 72-year old had a balance of $100,000 in one or more IRAs on December 31, 2010, he or she would be required to withdraw at least $3,906.25 ($100,000 divided by 25.6) by December 31, 2011.
Retirees can always withdraw more than the RMD amount, however, as their living expenses require. Once the withdrawal is made, the money can be saved or spent. Caution should be taken, however, to avoid outliving invested assets.
After age 59½, retirement plan owners can withdraw as much money as they want from their tax-deferred accounts without having to pay a 10% penalty. Those withdrawals are optional. At age 70½, however, withdrawals become mandatory. The penalty for not withdrawing the proper amount is a very steep 50% of the amount that should have been withdrawn but wasn't. For example, the penalty would be $1,000 for taxpayers who are supposed to withdraw $2,000. Distributions can be taken in any manner that an investor sees fit as long as the minimum RMD amount is withdrawn annually. Specific methods include small regular monthly amounts or large lump-sum withdrawals at the beginning or end of each tax year.
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What are the income restrictions to qualify for a deductible traditional IRA?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
People with earned income who are not in an employer-sponsored retirement plan, regardless of income level, may qualify for a tax deductible traditional IRA. Another group of taxpayers who can deduct a traditional IRA contribution in full are those with an employer-sponsored plan who have incomes in 2012 under $58,000 (single) and $92,000 (married couples filing jointly). The phase-out ranges (where contributions are limited in gradual steps as income increases) for singles and couples are $58,000 to $68,000 and $92,000 to $112,000, respectively.
Above these amounts, taxpayers can make a non-deductible, tax-deferred traditional IRA contribution. A working spouse who is not covered by an employer-sponsored plan may have a fully deductible traditional IRA even if the other spouse is in an employer-sponsored plan if the household adjusted gross income is less than $169,000 in 2011. The phase-out range for deductible contributions is from $173,000 to $183,000.
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What are the income restrictions to qualify to contribute to a Roth IRA?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Below are the income restrictions for 2012 Roth IRA contributions:
• Roth IRAs are fully available to single filers whose adjusted gross income (AGI) is less than $110,000. No participation is allowed if your AGI is more than $125,000. Thus, the phase-out range, where contributions are limited in gradual steps as income increases, is between $110,000 and $125,000.
• Roth IRAs are fully available to joint filers whose AGI is less than $173,000. There is a phase-out range between $173,000 and $183,000. Married couples cannot contribute to a Roth IRA if their AGI is more than $183,000.
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What are the minimum and maximum amounts that can be saved each year in an IRA?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Federal tax law limits 2012 contributions to a traditional and/or Roth IRA to $5,000 for a worker with earned income ($6,000 for those who are age 50 or older before the end of the year). An additional $5,000 can also be saved for a worker’s spouse, regardless of whether or not the spouse is employed. In addition, spouses who are age 50 or older can contribute an additional $1,000 ($6,000 total) for a total of $12,000 of contributions if both individuals are age 50 and older.
If you don’t have this much money to contribute available, that’s O.K. Simply save whatever you can, subject to minimum deposit amounts required by an IRA custodian (e.g., bank or mutual fund). Any savings is better than no savings! Minimum deposits required to set up an IRA vary with the financial institution and type of investment. For example, a bank may require a minimum of $500 to purchase a CD for an IRA, and a mutual fund may require a $1,000 minimum deposit or higher.
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My mother recently had a stroke and requires constant care, which is taken care of. Her home is up for sale. Once the home sells, would she be allowed to gift any of the money to her grandchildren? If so, is it a $16,000 per year limit? She is 84.
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
The annual gift tax exclusion for 2012 is $13,000, not $16,000. Your mother can certainly make gifts to family members with the proceeds from the sale of her house. However, gifts could negatively impact her qualification for Medicaid benefits for nursing home care if she needs it. A consultation with an elderlaw attorney or certified financial planner is highly recommended to discuss the pros and cons of making gifts considering your mother's age and poor health status.
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What were traditional IRA contribution limits for an individual and non-working spouse for the years 1986-2000? Also, when did Roth IRAs begin, and what has been their contribution limit history?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Individual retirement accounts (IRAs) were introduced in 1974. Anyone with earned income can make the maximum traditional IRA contribution as long as they had at least that much income in a given year. A non-working spouse can establish his/her own traditional IRA if the earned income of the working spouse equals or exceeds the total contributions to both partners’ IRAs. From 1974 until 1980, the limit for contributions was $1,500 per individual.
From 1981 until 2001, it was $2,000. The IRS raised the contribution limit for individuals under 50 years old to $3,000 in 2002 through 2004, then to $4,000 in 2005 and 2006, and $5,000 in 2008 through 2011. Starting in 2002, individuals 50 years old and older were allowed to make higher "catch up" contributions to their traditional IRAs. In 2002, the IRS established "catch up" contributions for traditional IRAs at $3,500. In 2005, it was raised to $4,500, $5,000 in 2006, and $6,000 in 2008, which is still the current limit in 2012.
Individuals can no longer make contributions to traditional IRAs once they reach the age of 70½ years. This differs from Roth IRAs that allow contributions at any age as long as someone has earned income. Roth IRAs were established by the Taxpayer Relief Act of 1997 and first available in 1998. The total contributions allowed per year to all IRAs cannot exceed the amounts previously mentioned. For more information on IRAs, see Publication 590 on the IRS Web site at www.irs.gov or the retirement planning articles on www.extension.org.
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Was the $8,000 first-time home buyer tax credit extended beyond 2009?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Yes. The Worker, Homeownership, and Business Assistance Act of 2009 extended the deadline for qualifying home purchases from November 30, 2009 to April 30, 2010. In addition, if a buyer entered into a binding contract by April 30, 2010, he or she had until June 30, 2010 to close the home purchase.
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How does losing a job affect your income taxes?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
There are a number of ways that income taxes can be affected by the loss of a job. Below are descriptions of three common situations and information from the IRS about how they affect federal income taxes:
1. You get a new job but earn less than you did before: If you had a high income previously, where certain tax deductions were limited, you may no longer be subject to income-based phase-outs. If your income was more moderate before and is now reduced even further, you may be able to qualify for the earned income tax credit.
2. You lose your job and receive severance pay: Severance pay is taxable income, as are payments for accumulated vacation or sick time. You should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time and possible tax penalties.
3. You lose your job and receive unemployment compensation: Like severance pay, unemployment compensation payments are taxable. As with severance pay, you should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time and possible tax penalties.
Other possible ways that unemployment can affect income taxes include tax deductions for job search expenses, tax deductions for moving to a new job at least 50 miles from your home, and taxes on early withdrawals (prior to age 59½) from an IRA or 401(k). For additional information on tax topics, see the IRS Web site at www.irs.gov.
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Can my credit card company increase the fixed rate on my MasterCard?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Before August 2009, credit card companies could change the terms of a credit card at any time with 15 days' notice. Effective August 2009, credit card issuers must provide 45 days' notice before increasing interest rates and fees. In addition, effective February 2010, contract terms must be stable for a one-year period beginning when the account is opened.
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What is "Cash for Clunkers?"
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
"Cash for Clunkers" was the informal name given to a government program formally known as the Car Allowance Rebate System (CARS). For a limited time during the summer of 2009, owners of cars that met specific eligibility criteria received a rebate as high as $4,500 if they turned in a "gas guzzler" car with poor fuel efficiency and bought or leased a new, more fuel-efficient vehicle. Details about the program can be found at this Web site: www.cars.gov.
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I'm going to be 62 and would like to collect Social Security and continue working part time. My wife has a full-time job, and we gross around $70,000 a year. Explain how the earnings limit on Social Security benefits works at age 62 and when I'm older.
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
If you were born between January 2, 1943, and January 1, 1955, then your full retirement age for retirement insurance benefits is 66. If you work and are at full retirement age or older, you may keep all of your benefits no matter how much you earn. If you are younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits.
If you are younger than full retirement age during all of 2012, Social Security will deduct $1 from your benefits for each $2 you earned above $14,640. If you reach full retirement age during 2012, Social Security will deduct $1 from your benefits for each $3 you earn above $38,880 until the month you reach full retirement age. Benefit payments are made based on the projected amount of earnings that beneficiaries report to Social Security. If earnings will be different than what was originally estimated, it is important to let Social Security know as soon as possible so that payments can be adjusted accordingly.
Be aware also that, with your combined household income with your wife, your Social Security benefits will be subject to income tax. Be sure to plan for this in your tax withholding. You can either overwithold tax from your wife's paycheck or send the IRS estimated quarterly payments.
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I live in a condo and the developer went bankrupt. The association is broke and monthly fees are up to $320 without a clubhouse or pool. I am also $100,000 upside down on my mortgage and just barely hanging on. Should I just walk away?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Walking away from high condo fees and payments on an upside-down mortgage (i.e., loan amount greater than home value) can have serious consequences such as collection efforts from lenders and a lowering of your credit score. Nevertheless, increasing numbers of "upside down" homeowners who owe significantly more than their home is worth were reported to be doing this during 2008-2012 to escape what seems to be an impossible financial situation.
Before taking such drastic action, we recommend that you speak to your condo association and mortgage lender about possible concessions or new housing programs that might lower your monthly payments. If all else fails and you still want to "walk away," get legal advice first from a lawyer in your area who practices real estate law. The lawyer can tell you all the pros and cons of walking away in your state of residence and help you to make an informed decision.
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My husband and I have no equity in our house due to declining home values but would like to move into a larger home. Since it is nearly impossible to sell our house right now, are there any programs out there to "trade" the bank for a bank-owned property?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
We are not sure exactly what you mean by "trading the bank," so it is difficult to answer this question. Perhaps you are referring to buying a larger home at an attractive price from the bank's inventory of foreclosed properties. It certainly can't hurt to explore various financing and home-buying options with your lender and local realtors, although a swap like the one that you propose seems unlikely.
Local housing professionals would be able to tell you about available programs in your area to assist home buyers. Of course, you'll need good credit to receive any kind of new mortgage and cash to cover closing costs since you have no equity to take out of your current home. Other options to consider in your situation could include remodeling your current home to enlarge it or renting it out if you can't sell it right now. In times when housing values are depressed, another option is to simply stay in your current home and make the best of it until your situation changes.
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What provisions did the 2009 economic stimulus bill have?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
The 2009 economic stimulus bill – The American Recovery and Reinvestment Act – was intended to stimulate the economy by getting Americans working and spending again. Here are highlights of this law:
• Tax Credits Paid to Workers Individuals got a tax credit of $400, while couples will got $800. The tax credit payments were spread out in the form of reduced federal tax withholdings taken from workers’ paychecks. For 2009, the tax credit amounted to about $13 per week and about $7.70 a week in 2010. Individuals with annual taxable incomes in excess of $100,000 and couples filing jointly with incomes in excess of $200,000 were not eligible for the workers’ tax credits. The credit began to phase out at $75,000 for individuals and $150,000 for couples.
• Retirees A one-time payment of $250 was made to recipients of Social Security, Railroad Retirement, and veterans' benefits.
• Families with Children An expansion of the child tax credit allowed families with children to begin qualifying for the $1,000 tax credit with every dollar earned over $3,000. The change was made to help more low-income families who do not normally pay income tax and families with three or more children to get the child tax credit.
• Middle-Class Families About 29 million middle-class families were relieved of the threat of the Alternative Minimum Tax (AMT) burden. Congress created the AMT as a way to make sure wealthy people paid at least some income tax. Since it was never adjusted for inflation, the AMT quickly began to hit the middle class and must be adjusted yearly by Congress.
• First-Time Home Buyers First-time home buyers were able to qualify for an $8,000 tax credit (increased from $7,500). The initial deadline was extended for qualifying home purchases from November 30, 2009 to April 30, 2010. If a buyer entered into a binding contract by April 30, 2010, he or she had until June 30, 2010 to close on the purchase.
• New Car Buyers To help the U.S. auto industry, people who bought new cars, light trucks, and SUVs before Jan. 1, 2010, were allowed to deduct all state and local sales taxes paid on the purchase from their federal income tax. This deduction was subject to a phase-out for taxpayers with adjusted gross income in excess of $125,000 ($250,000 in the case of a joint return).
• Unemployed People People getting unemployment compensation during 2009 did not have to pay taxes on the first $2,400.
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Can someone without children claim his disabled and elderly mother, who lives with him, for an earned income tax credit?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
It is not possible to claim the Earned Income Tax Credit (EITC) for parents as dependents. The only qualified dependents that are allowed are minor children. However, the EITC is also available to certain taxpayers without children who have very low incomes. To qualify for this credit in 2011, a taxpayer must be at least 25 years old and no more than 65 years of age on December 31, 2011.
If you have no qualifying children, then you must have an adjusted gross income of less than $13,980 if single and $19,190 if married filing jointly. The amounts are higher if you have qualified dependents. The maximum EITC available to taxpayers without qualifying children in 2012 is $475. If a person meets the income and age requirements, then that person should file Schedule EIC to claim the tax credit. The EITC is a refundable tax credit that is available to certain individuals and families who have low-to-moderate levels of earned income (wages, salary, tips, bonuses, and net earnings from self-employment). If you have no taxes due, then the credit is paid as a refund to you.
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Should I continue funding my 401(k) during a recession/bear market? Most of it is in stock and I hope to retire in seven years.
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
It depends. The top priority for most people is to have an adequate emergency fund, especially in tough economic times. With an emergency fund, aim to have three to six months worth of expenses (some experts even suggest eight to 12 months) set aside in a liquid account such as a money market fund or short-term CD. Another high priority is to pay off outstanding debt balances as soon as possible.
Assuming that you have an adequate emergency reserve and no or low debt, then, yes, by all means, continue funding your 401(k), at least up to the maximum amount that is matched and, ideally, up to the maximum annual contribution limit ($17,000 in 2012 plus an extra $5,500—for a total of $22,500—if you are age 50 and over). When stock prices are down, you will buy them "on sale" by continuing to contribute to your 401(k) plan.
A word of caution: Your stock allocation seems high for someone so close to retirement. You are taking on substantial market risk by having so much of your portfolio invested in stock. If you consider your personal investment risk tolerance to be moderate at best, you might follow the frequently used guideline of using 110% minus your age as the target percentage of your portfolio in stock, For example, if you are 58 and plan to retire in seven years at 65, your stock percentage would be 110 - 58, or 52%. More conservative investors might place 100 minus their age in stock (e.g., 100 - 58, or 42%).
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What can teens do to help their family and others during a financial crisis?
By Contributors from eXtension Faqs- All. Published on Feb 03, 2012.
Teens can do a lot to assist others during a financial crisis, whether the crisis is family-specific or global such as the recession of 2007-2009. The first thing to do is practice responsible money management yourself, no matter how young you are! For every dollar you earn or are given, try to save 10 percent (a dollar from every $10) and not touch it so that it is there for a rainy day. Next, when shopping, avoid impulse purchases and compare price and quality of any item. Try to pause and ask yourself these questions: * "Do I really need this. or do I just want it?" * "Can I borrow it from someone else?" * "Is there another solution that does not require me to buy something?"
Beyond becoming more financially responsible with your own money, teens can mentor younger siblings or primary school children. Several good money-related storybooks for young children may be available at the local library. Consider volunteering in church groups, a community-based club like 4-H or Scouts, or in a primary school classroom to read a book about smart money habits for kids.
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