Categories
Budgeting

Smart Bill Paying Tips for Online Families

Back in the analog days before personal computers, the internet and smartphones, paying monthly bills was an event! Bills arrived in the mail and were collected in a specific location and saved for that special day each month when they were paid. The bills were reviewed to make sure all expected items had arrived and each check was written out with a corresponding entry added to the (paper) check register. It was a manual exercise requiring good organization, basic math skills and the concentration to ensure the accounting was properly logged. Mailing out the checks and tracking them in the register was the end of the process – it was imperative to scrutinize the monthly bank statement and balance the checkbook to ensure that there were no math errors, the checks hadn't gotten lost in the mail, they were actually cashed by the creditor and correctly credited to the account. Because there was always a lag between the bills coming due and the bank statement arriving, sometimes it was difficult to avoid unpleasantness such as the power or telephone company threatening to turn off service due to a clerical error or post office delay.

Since that time, things have changed dramatically. First was the introduction of financial software that could help with monthly budgeting and bill-paying. Computerization increased organization and cut down math errors, making it easier to keep control of monthly obligations. Today's consumer has a wealth of tools at their disposal to pay bills, track accounts and keep their personal finances organized. Instead of a shoebox full of paper and a checkbook, bills can be paid with a computer or smartphone connected to the internet. Payments made using either a checking account or credit card can be monitored almost in real-time. Even the role of the post office has diminished considerably because of changes in the bill-paying process. Many people use automatic bill bill payment options that are available directly from vendors such as the phone company or insurance company, as well as from many banks. Consumers may still have a checkbook in their possession, but most of the time it gathers dust on a shelf or in a drawer while bills are paid in a variety of other ways.

Automatic bill payments are the most convenient of all, with options to pay each vendor directly from a bank account or credit card. Auto-pay is great for convenience and flexibility, but the responsibility still falls to each consumer to ensure the process works as expected and to maintain control of their finances. What are some things to be aware of with auto-bill pay and what are some tips for keeping control of your budget while still taking advantage of the automation available?

  • Choose the payment method that works for you: Many people find it more convenient to set up their auto-pay on a credit card instead of having the money deducted instantly from their checking accounts. That way, monthly bills appear together in 1 place, and there is less worry about cash flow during the month. And with credit card accounts accessible online, the balance can be monitored as needed. Many credit cards can offer consumer benefits such as frequent flyer miles, free merchandise and other perks. Using a credit card as the payment method is great for organization, but be careful !! Accruing charges on a credit card makes it easy to exceed your budget and get into trouble at the end of the month. Only use this method if you are prepared to pay off the balance on your credit card each month to avoid paying high finance charges on your fixed monthly expenses. If you're on a very tight budget or have trouble limiting credit card spending, paying bills directly from your checking account is a better solution.
  • Be prepared for changes: When using a credit card to pay most monthly bills, if your credit card is stolen or hacked, or when it expires and a new card is issued, be aware that any auto-payments you set up using that card will no longer process. Keep a list of accounts that use auto-pay, including which credit card is used as the payment method for each account. This way, you can quickly update them all when a new credit card is received. If you're tempted to just check your most recent statement instead of keeping a list, remember – some bills come monthly, others are quarterly and still others are annual so they won't all appear on your most recent statement. Keeping a list is most efficient way to easily update all applicable accounts.
  • Stay involved in the process: Many banks help in the process and provide alerts when an expected bill arrives or does not arrive when scheduled – bill payment is a great feature of online banking and can help you stay on top of your obligations! Make time to review the bills each month to make sure there aren't any unforeseen or erroneous charges; Especially if you are on a tight budget and paying directly from your bank account. Unanticipated charges that are automatically deducted from your account can cause unexpected drops in your bank balance.
  • Be smart when it comes to cash management: If possible, don't set up auto-pay on bills that can vary greatly from month to month, such as credit card bills. And always avoid paying off the balance of one credit card by adding it to the balance of another.
  • Keep your credit rating in good standing: Due dates for items such as credit cards, health insurance, mortgage and auto payments are typically due on the same day each month, making it easy to ensure that auto-pay bills arrive on time. However, the due date on some bills may vary. Be sure the payment date that you set up for each bill allows sufficient time for the creditor to process the payment in order to avoid late charges. Similarly, if using your bank's bill-paying service, for some vendors there is a lag between the date paid and the date received – make sure you allow sufficient time to stave off late fees and avoid bad credit.

The most important concept to remember is that even though paying bills has become extremely convenient and paper cuts are much less common these days in the bill-paying process, you are still ultimately responsible for your finances, your bills and your credit rating. Monitor closely, take advantage of the online tools available from your bank and your creditors to help you keep track of your finances and remember to dust off that checkbook once in a while! Regardless of the method you choose for paying bills, it is highly recommended that you keep a current register of all checks and debits, making a deduction for each item immediately (as soon as you have issued or authorized an item for payment), including any associated fees. This will allow you to have an accurate, up-to-the-minute checking account balance from which to work. This will also help prevent incidences of insufficient funds and their associated fees. Accurate and timely account records never go out of style!

Categories
Taxes

Tax: Are You Paying Too Much?

Be it returns, plans or self-assessments; managing tax affairs can often seem complex and daunting. Yet with millions of people unsure if they are paying too much tax, it is important that we are well-acquainted with the facts.

As the familiar buzz of payday excitement arrives at the end of the month, we are all looking forward to our bank accounts refilling. But how many of us have endured that heart-sinking feeling as we scan through our payslip to see how much has been eaten away by tax?

Obviously, we cannot deny the benefits that we receive by paying tax but with as many as 10 million people due a tax rebate, it is important that we ascertain whether you are paying the correct amount.

Underpayments and overpayments

Recent press coverage has been abundant with stories of overpayments and underpayments of tax. This has led to many ‘winning back’ hefty excess payments in lump sums. However it is just as important to determine if you have been paying insufficient tax sooner rather than later as you will be obliged to meet the difference.

There can be a number of reasons why you may have paid too much from the obvious ones such as emergency tax to less easily determined reasons such as unclaimed allowances.

Often there is no one to blame for tax confusions. Employees may assume that their employers are tax experts or there may be unavoidable delays or confusions with the processing of documents. However it is the employee’s responsibility to check their tax deductions and take action if they feel that it is inaccurate.

This is not just an issue for employees, many businesses (especially the smaller ones) are also paying excess amounts of tax. Investigating whether your business has been affected could save you thousands.

How do I check if I am paying the wrong tax?

With the HMRC receiving nearly 20 million calls a month, it is no surprise that trying to get hold of them can often be a lengthy process. Because of these high volumes, investigations in your tax payments can often take months to complete.

The good news is that there are other methods which can quickly and efficiently help us to distinguish whether you are owed tax. Speaking to a Chartered Accountant allows you the opportunity to discuss your tax queries and seek expert advice on your tax payments. They will be able to offer guidance and they could help you to claim back any surplus tax efficiently.

Categories
Taxes

Tax Codes – Understanding Them In Order To Avoid Paying The Wrong Taxes

When you part with your hard-earned savings to pay your taxes, are you convinced that you are paying the right amounts? Or do you suspect that you may be paying more than what you should? Understanding your tax code and knowing what it means give you a sigh of relief that you are indeed paying what is due the government.

What is a tax code?

The computation of income tax may seem complicated if you do not have a clear understanding of your assigned code. Your code is composed of numbers and letters issued by the HM Revenue and Customs (HMRC) to your employer. It is used to determine the right amount of income tax that your employer will deduct from your salary each month. Some tax codes would look like these: 434L, 323P, 456V, K345, DO, NT, BR, and OT.

What do the numbers mean?

The numbers represent your tax allowance or the total amount allowed to be deducted from your total income for the year. Your tax allowance is derived by using the following formula:

Tax allowance = Number X 10 + 9

To illustrate, a code of 434L means that you are entitled to a tax allowance of 4,349 that can be deducted from your income for the year to arrive at your taxable income. Thus, if you have earned 30,000 for the year, your income that is subject to tax would be 25,651.

What do the letters mean?

The letters indicate certain conditions why you have to pay certain amounts that are different from what others are paying. Let’s take a look at some of the letters and what they mean:

L – This is the most common code that refers to basic personal allowances.

P – This applies to people with ages between 65 and 74 who are eligible for full personal allowances.

Y – This is for people who are more than 75 years old and eligible for full personal allowances.

K – This means that the amount of allowances is less than the amount of deductions.

T – This indicates that there are things that need to be reviewed by the appropriate Inspector of Taxes.

BR – This stands for basic rate and this means that your total income will be subject to the basic tax rate for the current year but you will not be entitled to personal allowances.

NT – This is used when no amount is to be deducted from your income or pension.

D0 – This indicates that you have to pay at a higher rate like 40% because of a second job or pension.

D1 – This means that you have to pay at a higher rate like 50% for multiple income or pension.

Virtually every citizen in the UK is eligible for a personal allowance, which entitles them to a corresponding tax free income. Earnings above the tax free income are subject to the basic tax rate up to a certain limit while higher earnings are subject to higher taxes according to the income brackets set by the HMRC. Thus, knowing how your tax code as determined by HMRC is important to be able to know if the government is imposing the right amount of assessment on you.

Categories
Taxes

High Paying AdSense Keywords Exposed

When you are dealing with AdSense, one must always remember to check for the right keywords and niche to maximize your profits.

If you are dealing with the wrong keywords, then you are going to earn a lot less in your AdSense check. The amount of clicks that you get from your effort and traffic will not differ much, what really makes a difference are keywords that actually pay well.

Below we explore some of these keywords and explain why they’re so valuable and why you should give it a try with the listed keywords below.

List of high paying AdSense keywords in 2012

donate car to charity California ($130.25)

donate car for tax credit ($126.65)

donate cars in ma ($125.58)

donate your car Sacramento ($118.20)

how to donate a car in California ($111.21)

donate your car for kids ($106.01)

car insurance quotes Colorado ($100.93)

Nunavut culture ($99.52)

Dayton freight lines ($99.39)

harddrive data recovery services ($98.59)

donate a car in Maryland ($98.51)

motor replacements ($98.43)

cheap domain registration hosting ($98.39)

donating a car in Maryland ($98.20)

donate cars Illinois ($98.13)

criminal defense attorneys Florida ($98.07)

best criminal lawyer in Arizona ($97.93)

car insurance quotes Utah ($97.92)

life insurance co Lincoln ($97.07)

Holland Michigan college ($95.74)

online motor insurance quotes ($95.73)

online colledges ($95.65)

paperport promotional code ($95.13)

onlineclasses ($95.06)

world trade center footage ($95.02)

massage school Dallas Texas ($94.90)

psychic for free ($94.61)

donate old cars to charity ($94.55)

low credit line credit cards ($94.49)

Dallas mesothelioma attorneys ($94.33)

car insurance quotes MN ($94.29)

donate your car for money ($94.01)

cheap auto insurance in VA ($93.84)

met auto ($93.70)

forensics online course ($93.51)

home phone internet bundle ($93.32)

donating used cars to charity ($93.17)

phd in counseling education ($92.99)

neuson ($92.89)

car insurance quotes pa ($92.88)

royalty free images stock ($92.76)

car insurance in South Dakota ($92.72)

email bulk service ($92.55)

webex costs ($92.38)

cheap car insurance for ladies ($92.23)

cheap car insurance in virginia ($92.03)

register free domains ($92.03)

better conferencing calls ($91.44)

futuristic architecture ($91.44)

mortgage adviser ($91.29)

This is by no means a complete list of keywords, but it should serve to help us understand these keywords better.

The highest paying keyword on the list now is “donate car to charity California ($130.25)”.

However, this keyword is a localized keyword and is based on California. All the localized keywords will mean one thing to AdSense advertisers, and that is limited traffic. Hence in order to start an entire AdSense themed site for a keyword that is targeted at one single area alone could be a risk. You will not know if it is paying off or not.

If it does pay off, then you will realize that it is indeed a golden keyword where each click from your site visitor will gross you for $130.25! That’s a lot of money. If your site can rank high on the search engines and get around 100 visits a day with just a 10% click you’ll earn over $1000 dollars.

It’s very lucrative yes but in reality, you are actually going to have to work very hard for a high-value keyword such as this to rank high on the search engines. Not only that, you will find it quite difficult to get enough traffic from California alone. Hence you will need a very strong traffic strategy for this kind of keyword.

Scrolling further down the list you will find a keyword that says ‘hard drive data recovery services ($98.59)’. This keyword is golden because it is not a localized keyword. You can be sure to be able to get a lot of traffic because the keyword can come from any state of the country and thus the amount of searchers for these keywords is surely going to be very high.

And if you take a look at the price per click, $98.59 is not bad at all. There you should always go for this kind of keywords in your campaign. Note that the competition on these keywords will surely be very high, and that you will have to work extra hard to make it pay off. The thing is, once it pays off, you will definitely be able to make a great amount of money, and all your efforts will be worthwhile.

If you take a quick glance at the list above you will find that many of these keywords are localized words and thus making the game that much harder to win at. A good strategy is to choose multiple keywords and try to rank high for all the terms but this would require a lot of work, and usually this strategy is used by larger affiliates who have a workforce to get all the work done for them.

There are a lot more of these high-paying keywords, and they could vary each year. Therefore, a good advice for newcomer AdSense marketers is to keep a look out for high-paying keywords and try your best to focus on one or two of the keywords first. When you are able to nail just one of these keywords down and start earning, you’ll be in for a huge treat indeed.

Categories
Taxes

3 Simple Steps To Paying Your Property Taxes On Time

After buying or building your dream home in Houston Texas, and enjoying the peaceful yet exciting community experience that it offers, there are other annual matters of equal importance that you need to take care of. And that is paying for your property taxes.

If you haven’t settled it already, then you should make arrangements right after you read this article.

Property taxes are of two basic kinds: Real property (for land and improvements on land) and personal property (for movable man-made objects like vehicles). The percentage or amount of tax charged upon a property depends on its value, as well as the state or province in which it is located.

Your tax bills are normally sent around October, giving you ample time to pay your property taxes before January 31st of the following year. This year, the deadline remains the same which is on January 31 2012. Penalties will be added on to what you have to pay after February 1st.

If you haven’t settled yours yet, quickly follow these three simple steps:

1. Do the math.

Before you start scrambling for paperwork, you must first know the appraised value of your property as well as the tax rate in your county. If you have received the tax bill that was sent out last October, you may want to review that for the figures. You can also check with your realtor (for the appraised value of your property), or your local appraisal authority. No need to worry about getting the figures wrong though, as information on values and tax rates can be found online. For those living in the Harris County area, just go to this link http://www.hcad.org/records/Real.asp?search=name to search your property records and pull up property tax rate computations. For those in the Fort Bend area, visit this link https://actweb.acttax.com/act_webdev/fbc/index.jsp.

2. Deal with the paperwork.

Now that the numbers are in order, it’s time to fill out the year’s property tax forms. You should have received it in the mail, but if you haven’t yet, these are available at your local tax office. If you’re not sure on how to properly fill out the information required, you can use the tax billing that was mailed to you, or consult your local tax assessor/collector.

3. File and make payments ASAP.

Stress and hassles from property taxes can be avoided with early preparation and filing. If you’ve been busy on the last quarter of the year, start the year right by settling your property taxes early January. While you can still make payments after the January 31st deadline, remember that this would incur you penalty charges.

Paying online through credit or debit cards as well as over-the-phone payments are a couple of ways which you can utilize to easily settle your property dues. Simply visit Fort Bend County and Harris County website for more details.

Categories
Taxes

Want to Stop Paying Income Tax in Canada? Become a Tax Exile

If you’ve been wondering how to stop paying income tax in Canada the easiest way is to become a tax exile by leaving the country. That’s not your only option, though and The Tax Collectors Bible explains what those are.

As for leaving the country, this might seem to be an easy task but unfortunately it’s not the case. The Canada Revenue Agency has a list of conditions (in the NR 73 form) that you must meet before you’re no longer subject to income tax.

This form should be approached with extreme caution. The reason why is this: In the Statement of Residency section is the question: “Are you subject to income tax in your new country of residence on your world income?”

This is where things get murky. Some time ago I was visiting the site of Alex Doulis, author of the runaway Canadian bestseller “Take Your Money and Run,” which tells the reader to get out of the Canadian income tax system.

On his website, Alex relates the story of a client who moved to Dubai, which has no income tax. When the client filled out the NR 73 form he received the following response from the CRA: “Since you’re not subject to income tax in that country, we consider you to be a factual resident while you’re away.”

This is totally insane. The CRA considers this guy to be a resident of Canada for tax purposes and they expect him to pay taxes in Canada even though he severed all his ties. Not only that, he’s not eligible to receive any Canadian services.

I immediately called Alex and asked: “Alex, this is entrapment, isn’t it?” “Yes,” he replied.

If you go to Alex’s web site you can read the whole sordid tale for yourself. The bottom-line is simple, don’t fill out the form. And if the CRA sends you the form, don’t fill it out. Never put anything in writing; it will only come back to haunt you with the CRA.

As it is, if you spend more than 182 in two years outside of the country you’re deemed to be a non-resident and you no longer have to pay income tax.

If your stay outside the country isn’t permanent. You could run into all sorts of trouble when you return and file your first income tax return.

Before you go on the road, check with an accounting professional. Beyond that, read The Taxpayers Bible. Without a doubt it’s the most complete source on Canada’s income tax system that I’ve ever seen. At 463 pages, it’s a storehouse of incredibly valuable information. I highly recommend it.

I also recommend two other books, both by Alex Doulis. The first is called: “Tacking the Tax Man” and it shows you how to protect yourself from audits and investigations. If you’ve ever been audited you’ll know it’s an unpleasant experience. This book informs you of your rights and how to conduct yourself around the CRA. The second book is: “My Blue Haven,” which is about the offshore and protecting your assets from the CRA.

Disclaimer: I’m not an income tax professional. If you have any doubts about what your read here, consult with a professional.

Categories
Taxes

Are You Paying Too Much Council Tax? How To Check And Claim A Refund!

PPI claims management firms have found a new money making spinner through identifying homes which are in the wrong council tax band and offering to make a claim on their behalf. These firms identify potential clients by looking to see if any homes on the same street pay more than their neighbors do. They then cold call the identified properties and offer to make a claim for a full refund for all the years of over-payment, as well as get them a reduction on future council tax bills. This service is usually around 30% of any money claimed.

One lady was recently contacted by one of these claims management firms and discovered that she and her neighbor were both in a higher tax band than the other properties on their street and could qualify for a full refund. She decided to hire the claims firm and as a result got an £ 800 refund! She paid the firm £ 300 as payment for processing her claim and now pays £ 10 less council tax each month. Her neighbor however decided to investigate how she could claim the money herself and discovered the process was in fact not too complicated. She also managed to get a full refund but retained 100% of the money she claimed!

How does it all work?

Every home in the United Kingdom is assigned to a specific valuation band, known as council tax which is managed by the Valuation Office Agency. The cheapest bands are assigned an 'A' grading rising incrementally with the most expensive homes being assigned to the 'I' band.

For homes based in Scotland and England the valuation band is designated by what the property was worth in 1991, not what the property is valued in today's market. However if you reside in Wales your tax band is assigned using the market value price of 2003.

So, if you suspect you may be in the wrong tax band and as a result are paying too much council tax, simply see what your neighbors are paying. If you find there is a difference in price but a similarity in property then it could well be you are in for a refund.

Visit 'voa.gov.uk' to see what band your neighbors have been assigned, if indeed there is a difference contact an agent at the Valuation Office Agency and ask them to investigate your claim. You will have to fill in paperwork, but you are capable of doing this yourself, you do not need a claims management company, meaning you get to keep 100% not just 70%.

You will usually have to wait up to 30 days for your claim to be investigated, but if the Valuation Office Agency agrees that an error has been made then your band will be changed. The service is free, not only could you get a nice lump sum but you'll also save on your future council tax bills.

Categories
Student Loans

Paying for College: Student Loans or Credit Cards?

Research conducted by student loan company Sallie Mae shows that in 2010, about 5 percent of college students paid an average of more than $2,000 in tuition and other educational expenses using a credit card to avoid taking out student loans. The same study showed that 6 percent of parents used credit cards to pay an average of nearly $5,000 in educational expenses for their college children.

Is using credit cards a smart way to avoid college loan debt? Financial advisors are in near-universal agreement that the answer is no, but that isn’t stopping thousands of families from using credit cards in place of parent and student loans.

Some families might think that all debt is equal; others might think that they won’t qualify for college loans. So what advantages exactly do education loans offer over credit cards?

1) Availability

Particularly in the last few years, as credit card companies have tightened their credit requirements in a retraction of the lax lending that led to the foreclosure crisis, credit cards have become harder to qualify for, available mostly only to consumers with strong credit. Many consumers with weaker credit have had their credit lines reduced or eliminated altogether.

Federal college loans, on the other hand, are available with minimal to no credit requirements. Government-funded Perkins loans and Stafford loans are issued to students in their own name without a credit check and with no income, employment, or co-signer required.

Federal parent loans, known as PLUS loans, have no income requirements and require only that you be free of major adverse credit items – a recent bankruptcy or foreclosure, defaulted federal education loans, and delinquencies of 90 days or more.

In other words, don’t turn to credit cards simply because you think you won’t qualify for school loans. Chances are, these days, you’re more likely to qualify for a federal college loan than for a credit card.

2) Fixed Interest Rates

While most credit cards carry variable interest rates, federal student and parent loans are fixed-rate loans. With a fixed interest rate, you have the security of knowing that your student loan rate and monthly payments won’t go up even when general interest rates do.

Many credit cards will also penalize you for late or missed payments by raising your interest rate. Federal school loans keep the same rate regardless of your payment history.

3) Deferred Repayment

Repayment on both federal student loans and federal parent loans can be postponed until six months after the student leaves school (nine months for Perkins undergraduate loans).

With credit cards, however, the bill is due right away, and the interest rate on a credit card balance is generally much higher than the interest rate charged on federal school loans.

If you’re experiencing financial hardship, federal loans also offer additional payment deferment and forbearance options that can allow you to postpone making payments until you’re back on your feet.

Even most private student loans – non-federal education loans offered by banks, credit unions, and other private lenders – offer you the option to defer making payments until after graduation.

Keep in mind, however, that even while your payments are deferred, the interest on these private student loans, as well as on federal parent loans and on unsubsidized federal student loans, will continue to accrue.

If the prospect makes you nervous of having deferred college loan debt that’s slowly growing from accumulating interest charges, talk to your lender about in-school prepayment options that can allow you to pay off at least the interest each month on your school loans so your balances don’t get any larger while you’re still in school.

4) Income-Based Repayment Options

Once you do begin repaying your college loans, federal loans offer extended and income-based repayment options.

Extended repayment plans give you more time to repay, reducing the amount you have to pay each month. An income-based repayment plan scales down your monthly payments to a certain allowable percentage of your income so that your student loan payments aren’t eating up more of your budget than you can live on.

Credit cards don’t offer this kind of repayment flexibility, regardless of your employment, income, or financial situation. Your credit card will require a minimum monthly payment, and if you don’t have the resources to pay it, your credit card company can begin collection activities to try to recover the money you owe them.

5) Tax Benefits

Any interest you pay on your parent or student loan debt may be tax-deductible. (You’ll need to file a 1040A or 1040 instead of a 1040EZ in order to take the student loan interest deduction.)

In contrast, the interest on credit card purchases, even when a credit card is used for otherwise deductible educational expenses, can’t be deducted.

To verify your eligibility for any tax benefits on your college loans, consult with a tax advisor or refer to Publication 970 of the IRS, “Tax Benefits for Education,” available on the IRS website.

6) Student Loan Forgiveness Programs

Whereas the only way to escape your current credit card debt is to have it written off in a bankruptcy, several loan forgiveness programs exist that provide partial or total student loan debt relief for eligible borrowers.

Typically, these loan forgiveness programs will pay off some or all of your undergraduate and graduate school loan debt in exchange for a commitment from you to work for a certain number of years in a high-demand or underserved area.

The federal government sponsors the Public Loan Forgiveness Program, which will write off any remaining federal education loan debt you have after you’ve worked for 10 years in a public-service job.

Other federal, state, and private loan forgiveness programs will pay off federal and private student loans for a variety of professionals – veterinarians, nurses, rural doctors, and public attorneys, among others.

Ask your employer and do a Web search for student loan forgiveness programs in your area of specialty.

Categories
Wealth Building

Paying Inheritance Tax in the UK

The current UK inheritance tax is a debatable subject among the taxpayers. Most of us think that a person who paid all the taxes on the earnings in his or her lifetime than the government has no right to levy the tax on that money for a second time once the person has died. This is the reason that this type of tax is also known as "Double Tax" since the possession is taxed two times. Because of this double tax, there are many people who disapprove it and are submitting a petition against the inheritance tax so that the government may drop this tax. If someone is in a position of obtaining any inheritance, then that person must know that, what inheritance tax is and how it is paid.

The inheritor must verify whether the tax on the inheritance is liable under the Inheritance (Provision for Family and Dependants) Act 1975 and Inheritance Tax Act 1984. Inheritor is not required to pay the tax on such inheritance, which is left by the late spouse. Every person can pass on £ 325,000 before their heirs pay inheritance tax, which is 40% on anything above that amount. This is called the inheritance tax 'nil-rate band'. If you're married, you can inherit any unused allowance from your spouse or partner. That means that married couples and civil partners can pass on £ 650,000.

If the inheritor is liable, then know how much tax will be levied. Beneficiaries are required to pay the tax on their inheritance share. Estate will owe tax at 40% on anything above the £ 325,000 inheritance tax threshold when a person die (or 36% if someone leave at least 10% to a charity). Dealing with it is one of the biggest thing you can do, as some simple actions can save you £ 100,000s.

How you can save paying huge amount of Inheritance Tax

Following is a simple and easy to understand guide to avoid inheritance tax:

First, choose the assets you want to be kept in trust. Mostly, Settlers decide to keep a small amount in the beginning and with time they continue to add more assets. However, you can also do a large contribution in the beginning as death can come any moment.

You must name your trustees. Trustees are those who decide the distribution of trust assets to the beneficiaries. In many jurisdictions, it is permitted to become trustee yourself but you will have to choose an independent trustee, one who is not from your extended and immediate family. If you fail to do so, the trust might be rejected by the court.

To avoid Inheritance tax you must hire trust solicitor who is well-experienced and can draft your deed of trust. This deed must state the name of the starting assets in trust, trustees, and beneficiaries. You must also clarify the roles and power of trustees; describe the rules for financial management, verify the decision making power of the trustees and verify the laws for the investment of the trusted assets. In the end, the deed must be notarised and signed to form the trust.

Start selling your own assets to the trust of your family over a period of years and slowly forgive your debts from the trust by using the notarised and signed papers.

Give something to friends or family members. A friend or a family member who is not your spouse or civil partner, so that you no longer get any benefit from it. It won't be taken into account when calculating the Inheritance Tax liability when you die.

Categories
Mortgage

Things You Must Know About Paying Off Your Mortgage

Every homeowners dream is to be able to pay off their mortgage and live in a free and clear home. Many homeowners do not even think about paying off their home loans and think it is almost next to impossible for anyone to have a home without a mortgage. However, there are folks who do have goals and strive very hard to reach that goal of paying off their mortgage. Those homeowners who accomplish the hard task of having their mortgage paid off do deserve the bragging rights and it is an impressive goal and accomplishment. The very few and proud homeowners who do pay off their mortgage loans need to make sure that after making the final mortgage payment of their home, that the lien on the property has been released off the title to the property by their mortgage lender so in the event if they need to sell their property at any given time, there are not going to be any red tape. All FHA Loan programs require escrows for property taxes and homeowner’s insurance so once the mortgage loan has been paid off, the escrow requirements for your property taxes and insurance will be the sole responsibility of the homeowner.

Things You Must Know About Paying Off Your Mortgage Prior to Final Payoff

As you are nearing the finish line of paying off your mortgage, there are several things you must know about paying off your mortgage prior to your final mortgage payment due. One of the things you must do is to ask for a final payoff figure from your mortgage lender about 45 to 60 days before you last and final payment of your mortgage. Homeowners need to understand that mortgage borrowers pay their mortgage loan payments in arrears and because they are paying in arrears, homeowners may actually owe more mortgage balance then they think they owe. For example, if a homeowner has a mortgage payment that is due this month and they pay their payment now for this month, this month’s payment is covering the previous month’s principal and interest payment. The interest clock is always ticking, day or night. Interest is added on every minute of every day. If you are one of those homeowners that have been paying extra housing payments than the minimum monthly due, you will be surprised when it comes out that you owe substantially less than what you have thought you owe on it.

How Do You Pay Off Your Mortgage?

Homeowners with mortgages have a mortgage loan servicer who service their mortgage loan. The loan servicer’s responsibility and scope of their work is to make sure that the borrower’s accounting records, including escrows, are accurate and monthly statements gets sent out on time and record the payments made by borrowers are logged in correctly. When a homeowner asks for a payoff on a mortgage loan, the mortgage loan servicer is the agent processing the payoff statement to the homeowner or to the mortgage lender who is requesting a payoff on behalf of the borrower. Upon a payoff request by the borrower, the loan servicer needs to prepare the correct payoff figures and make sure that the payoff letter gets sent out to the borrower or borrower’s power of attorney within seven days of the payoff request. The loan servicer will state the date that the loan payoff will be good until and if that date passes, there will be additional daily mortgage interest that will accrue. There are fees and costs in paying off a mortgage. Besides the final principal and interest payment, borrowers will need to pay recording fees to the county recorder’s office for releasing the mortgage lien for the title of the property. The mortgage lender may also have additional fees and costs such as processing fees, wire transfer fees, unpaid fees, as well as late fees if applicable

Release of Escrows When You Pay Off Your Mortgage

There are other tasks required by the mortgage loan servicer when you pay off your mortgage. Most borrowers will have an escrow account with their loan servicing company. When you pay off your mortgage, the escrow account also needs to be closed out. One of the roles of the mortgage loan servicer is to escrow your property taxes and homeowner’s insurance and pay them when it was due. Since the loan servicer will no longer be servicing your mortgage loan, they will need to close out your escrow account and refund you any remaining funds that is held in your escrow account within 20 days of your loan payoff and need to zero out and close your escrow account. Make sure that you get confirmation of the closing out of your escrow account and check in with your homeowner’s insurance company and the county’s property tax division to make sure that they have the proper address where to mail you future insurance bills and property tax bills that is due. Get the proper due dates so you are not late and are not assessed a late payment fee or have the risk of your home being uninsured. Automatic online payment setups is a good way of making sure that your bills will get paid timely but make sure that you have sufficient funds in your bank accounts.

When Do You Get Free and Clear Title to Your Home

Many homeowners think that just because the loan servicer shows a statement with a zero balance on your mortgage that you own your home free and clear. This is not the case. You will only have free and clear title to your home when the county recorder’s office records the release request. This can take from a few days to several weeks. You officially own your home free and clear when you physically get a copy of the release that shows the recorded date as well as the identification doc number from the county recorder’s office. There are several ways that you can get possession of this release. You can request it to be mailed to you or you may have an option to pick it up at the county’s recorder’s office.

When you contact your homeowner’s insurance company to tell them that you have paid off your mortgage, make sure you tell the insurance company that the loan servicer is no longer the additional insured and have them remove their name off your homeowner’s insurance policy. Your homeowner’s insurance company may ask for a copy of the recorded release request as well as a copy of your deed.