Mortgage Debt Forgiveness Act expires

In 2007 Congress created the Mortgage Debt Forgiveness Act to offer a tax break for those who had a mortgage forgiven or cancelled sue to a foreclosure or short sale.

This Act was set to expire on December 31, 2012, but has been extended for one more year and will now expire on December 31, 2013.

Here’s some quick facts from the IRS:

Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.

You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence.

If you qualify, claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the tax year in which the qualified debt was forgiven.

If your debt is reduced or eliminated you normally will receive a year-end statement, Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

Source: accessed August 1, 2013

For more information visit the IRS website:

Carol Topp, CPA

How to Teach Kids About Managing Money (When You’re Not Doing So Great Yourself)

Here my interview with Hannah Keeley on How to Teach Kids About Managing Money (When You’re Not Doing So Great Yourself)

Listen to internet radio with Hannah Keeley on Blog Talk Radio

So you don’t consider yourself a financial role model. Take heart, you can still teach your kids financial principles. This workshop offers tips on how to teach your kids the money basics as part of your busy lifestyle. Hannah Keely and Carol Topp also discuss what topics to teach at each age from preschoolers to college age.

View handout here

What’s in Obama’s latest stimulus plan

By Annalyn Censky and Charles Riley @CNNMoney September 8, 2011: 9:39 PM ET

What's in Obama's stimulus planPresident Obama called for Congress to again extend help for the jobless. “At this time of prolonged hardship, you should pass it again — right away.”

NEW YORK (CNNMoney) — President Obama unveiled a stimulus plan Thursday night that he says will boost hiring and provide a jolt to the stalled economy if it becomes law.

A mix of $253 billion in tax cuts and $194 billion in new spending, the total bill for the plan is $447 billion. Given staunch Republican opposition to most new spending, the measure has almost no chance of passing the House in its current form.

But select parts of the bill could become law, and provide a measure of support for an economy at risk of falling into another recession.

“There is no problem that is more urgent,” said Pamela Loprest, director of the Income and Benefits Policy Center at the Urban Institute. “Economically, the plan hits different places. There are different parts of the economy Obama is trying to jolt.”

So what exactly does the president want Congress to do?


Payroll tax cuts: Employees normally pay 6.2% on their first $106,800 of wages into Social Security, but they are now paying only 4.2%. That tax break is set to expire at the end of the year, and Obama would like to expand and extend it. He would cut it in half to 3.1%.

Obama also wants to cut the payroll tax businesses pay in half — to 3.1% — on the first $5 million in wages.

And if a business hires a new worker or gives an existing worker a raise, all payroll taxes will be waived.

Total cost: $240 billion, or more than half the total package.

Other tax measures: Obama would offer $8 billion in tax credits for companies that hire workers who have been unemployed for six months or more and $5 billion in tax incentives for companies to invest in equipment and plants.


Infrastructure bank: Democrats, and Obama in particular, love talking about investments in infrastructure. One top priority: a national “infrastructure bank.”

Here’s how it would work: After an initial round of funding — Obama called for $10 billion — the bank would offer loans to give private-sector projects a jolt of money. Eventually, interest paid on the loans would make the bank self sufficient.

On Thursday, Obama said funds would be distributed based on “how badly a construction project is needed and how much good it would do for the economy.”

Immediate surface transportation: Nodding to an idea supported by both the AFL-CIO and the U.S. Chamber of Commerce, Obama proposed $50 billion in immediate funding for highways, transit, rail and aviation.

Modernizing schools/vacant property: The president wants to spend $25 billion to modernize at least 35,000 public schools. In addition, $5 billion would go to improving community colleges.

A separate measure — dubbed “Project Rebuild” — would put $15 billion toward fixing up vacant and foreclosed homes and businesses.

Extend unemployment benefits: Nearly 43% of the unemployed have been so for more than six months — a drag on the economy that Obama wants to soften by extending unemployment benefits once again.

Lawmakers first lengthened unemployment benefits to the current 99 weeks in 2009, and then reauthorized the measure five times since. The White House estimates another extension would cost $49 billion.

“Democrats and Republicans in this chamber have supported unemployment insurance plenty of times in the past. At this time of prolonged hardship, you should pass it again — right away,” Obama said.

Help for long-term unemployed: The president wants a new tax credit of up to $4,000 for businesses that hire workers who have been out of a job for over six months.

Subsidized jobs training: Following the lead of a job training program in Georgia, Obama wants to offer the unemployed a chance to work temporarily as a way to build their skills while they search for a permanent job.

In the existing Georgia Works program, participants don’t get paid, but they do get to keep their jobless benefits and receive a stipend of up to $240 for transportation and other expenses.

Teaching and first responder jobs: Obama is asking for $35 billion to be pumped into local communities to keep teachers and first responders on the job, while also allowing for some new hiring. Of that, $30 billion would go to educators, and the rest to first responders.

Summer jobs: Obama wants to give hundreds of thousands of youth “the hope and dignity of a summer job next year.” The unemployment rate for youth ages 16 to 24 rose to a record high this summer.


Housing help: He also vowed to work with Fannie Mae and Freddie Mac to help homeowners refinance their mortgages at historically low interest rates around 4%. (Check Obama’s housing scorecard).

How he’d pay for his plan: Obama vowed his plan would be fully paid for and asked the new debt super committee, already charged with proposing between $1.2 trillion and $1.5 trillion in debt reduction over a decade, to add the cost of American Jobs Act to its goal.

So presumably if the panel did that, its new target would move closer to $2 trillion.

The president said he would submit his debt-cutting plan to the super committee on Sept. 19. He characterized it as “ambitious – a plan that will not only cover the cost of this jobs bill, but stabilize our debt in the long run.”

His recommendations will include additional spending cuts that would phase in gradually, “modest adjustments” to Medicare and Medicaid, and a tax reform plan ‘that asks the wealthiest Americans and biggest corporations to pay their fair share.”

–CNNMoney senior writer Jeanne Sahadi contributed to this report. To top of page

First Published: September 8, 2011: 9:21 PM ET

Surprise! College Costs Even More Than You Thought

photo credit: Reuters

By Carole Moore
Published August 16, 2011

Read more:

You’ve calculated your college savings, loans and grant money, and have crunched the numbers to develop a workable budget. Now, how much was set aside for the occasional pizza?

“If a college student eats one pizza a week (off-campus), he’ll have spent $2,000 on pizza by the time he graduates from a four-year program,” says Mark Kantrowitz, publisher of, a resource for student financial aid.

That two grand probably wasn’t accounted for when you were calculating your typical college costs. Most families plan their college expenses based on figures provided by the colleges and universities themselves, which are very loose estimates on a degree’s cost and essentials such as transportation and textbooks.

Is college still worth the investment?

“The College Board reports that in 2010-2011, students could expect to spend an average of $1,137 on textbooks and supplies. A new financial accounting textbook can cost $150 to $200,” says Carole Walters of Flat World Knowledge, a publisher of free and open textbooks.

Graham Haskin, who graduated from Emerson College in Boston, says he was dismayed by the cost of textbooks, but the really big college expense came from using public transportation. “I took the T (subway) everywhere. The cost of the monthly pass or the cost of the per-trip rate was a surprise,” Haskin says.

The website for the University of North Carolina at Wilmington estimates student transportation costs at $1,452 per year, whether a student lives on campus or commutes. Since some students commute to their campuses from as far away as 50 miles, it’s good to keep in mind that individual college expenses will vary.

So That’s Where Your Money Goes

Because not everyone can be like Rodney Dangerfield’s rags-to-riches character, Thornton Melon, in “Back to School,” students have to rely on traditional financial planning methods. This involves anticipating rising college costs. However, few can forecast the rates at which today’s gas and grocery prices rise.

According to a College Board study, basic public college tuition alone has increased, “from 2000-01 to 2010-11 rang(ing) from 79% in the Middle States region to 161% in the West before adjusting for inflation.” Add in unplanned college expenses, and many who think they’re prepared are in for wallet shock.

“The dorm and dining hall provide the basics, but students will need everything from laundry money to shaving cream and probably cell service,” says Greg Karp, author of several books on personal finance. Students agree and, although some college costs are predictable, others sneak up on them.

Luke Mayberry, a drummer and music major at East Carolina University, in Greenville, N.C., says carrying a major like his costs extra bucks. “I was definitely surprised by how much money I was spending on sheet music and mallets/drumsticks outside of the required materials list I’d been given during the summer.”

Mayberry says he spent about $500 extra on equipment and sheet music at the beginning of his first semester. And music majors aren’t the only ones: Art and graphic design majors, for example, must often purchase expensive software as well as materials.

Kantrowitz adds that in some states, such as Florida, universities tack on an additional charge once a major is declared. “Those fees aren’t necessarily planned for,” he says.

A Few (Expensive) Things to Consider

After budgeting for the dorm or apartment, shelling out for a meal plan, paying tuition, activity and insurance fees, experts say you should plan for an additional $300 to $400 out of pocket each month to cover day-to-day extras. Here are some of the culprits most likely to drain your bank account.

Parking: Most universities charge to park on campus, even for dorm-based students. Expect to pay upward of $500 for two semesters of parking privileges at most major universities; less at community colleges and rural schools. And watch those parking tickets: An illegal five-minute parking job can end up costing anywhere from $2 (a no-parking zone at Brandeis University) to $75 (a handicapped parking ticket at Vassar College) in fines.

Sororities and fraternities: If your student pledges, then he or she (or you) will be on the hook for upward of $2,000 in fees and other Greek-associated expenses over the course of a college career. The University of Southern Mississippi at Hattiesburg estimates the average total new member cost for the first two semesters at $1,050.

Hidden apartment costs: Opting out of the dorm can be expensive in ways you might not realize. Most campus-style apartment complexes require 12-month leases, so you or your child will be paying for the summer months, even if he or she isn’t enrolled in school. If you sublet, benefit from Haskin’s unfortunate experience: He sublet his share of a home without a contract. When the renter didn’t pay and trashed the place, “I had no recourse. If you’re subletting, get a contract,” he says.

Laundry: Mom won’t be doing it anymore. If your kid has to pay to wash clothes, the costs of detergent and dryer sheets, as well as several bucks a load to use a community washer and dryer, will add up. Don’t laugh — doing two loads a week at approximately $3 per load (not including the price of detergent) could run college expenses up by more than $200 a year. It will cost even more if a student leaves his or her clothes unattended and someone walks away with them — an unfortunate but not uncommon occurrence.

Computer malfunctions: As soon as the warranty on your student’s laptop tanks, so will it — or at least it seems that way. If available, buying a computer through the college can be a potential route to take. While it can cost a bit more, the college often offers free or reduced tech support, which can help cut college costs and reduce long-distance parental anxiety. Laptop rental may also be an option, so check in with the university to find out if this is an option.

Unless your student is comfortable handling personal finances, resist the temptation to plunk a semester’s spending money on a debit card and trust it will last. Kantrowitz says that it’s best to start releasing your hold on your child’s funds gradually. Otherwise, you may find the money you earmarked for a bus pass has paid for a new iPod. And that’s one unexpected college expense that you can head off at the pass.

How to Teach Your Kids About Money radio interview

I’m being interviewed on The Sociable Homeschooler today (Friday July 22, 2011) at 9 am EST on teaching our kids about money and starting a micro business.

Listen in at

How to Teach Your Kids About Money

Link to Micro Business for

Hope you enjoy the show!

Carol Topp, CPA

Tax cheats: Single, young men

The typical American tax cheat is male, single and under the age of 45.

Tax Cheats: Single, Young and Male reports that:

They think they are “overall better people”, but they’d take money from a child, keep the wrong change given to them by a cashier, ask a friend to pretend to be a former boss for a reference check and lie about their income to qualify for government aid.

Many of them also said they would wear an outfit once and return it, file false insurance claims, keep money they see someone drop on the floor, or lie about finding something inappropriate in their food just to get a free meal.

Carol Topp, CPA

Carol speaks to unemployed professionals

I’m a member of the Ohio Society of CPA’s Speakers Bureau and I recently spoke to a group of unemployed professionals at the Cincinnati Great Oaks Return to Work Center.

I talked about budgeting, debt, taxes, starting a business and whatever the audience wanted to discuss.

Here’s what came to me as feedback:

Hi Carol,

You are awesome!!!

Thanks you VERY much for your help. Thanks for coming to speak to the job seekers at the Great Oaks Return to Work Center Thursday.Your time and effort to put together a wonderful, useful, informative, and relevant presentation is GREATLY appreciated.

Carol, your interactive presentation was a HUGE hit. You got people really engaged and involved. You were well prepared to handle any thing that came your way and kept everyone focused on all of the topics that we all wanted to hear. You provided a LOT of useful and relevant information for people in career transition. You were “spot on” and totally understood your audience’s perspective. Huge thanks to you!!

You were the right person for us and we are so glad you were willing to help. You really made this happen for us and I cannot thank you enough.

Your presentation provided good advice for people to prepare filing 2010 returns and to prepare themselves to keep better records for 2011. All of the attendees walked away armed with information to bring more control into their lives in these economic times of uncertainty.

I hope you will accept another invitation to speak after tax time.

Thanks so much for your help.
Dana Brean>

I was so flattered to receive this note and very glad to hear what I shared was helpful.

If you would like to invite me to speak to your Cincinnati-area community group about personal finance, taxes or starting a business, please visit my speaker page and contact me.

Carol Topp, CPA