About Vanderburgh County, IN

EVANSVILLE - In addition to Tri-State residents donating more than $100,000, area businesses are giving however they can to Haiti earthquake relief efforts.

"There have been a number of businesses that have stepped up," said Greg Waite of the American Red Cross for Southwestern Indiana.

Within days of the earthquake, Mead Johnson Nutrition shipped $100,000 worth of baby formula to Haiti. The company, whose corporate offices are in Evansville, also has operations in the Dominican Republic.

"Having a neighboring business was so beneficial because we were able to act so quickly," said Susan Wedeking, a spokeswoman for Mead Johnson. "We will provide additional assistance as we can. Each disaster is different, but oftentimes we are able to provide help."

The company is also one of several in the area that is matching their employees' donations to relief efforts.

Other companies doing so include Vectren, Duke Energy, Toyota and several banks.

AmeriQual, which specializes in the production of shelf-stable food products that don't require cooking, is ramping up production to replace all of its reserves it had in stock to help during a disaster.

Tim Brauer, the company's president, said it has distributed close to a million meals and another million to the American Red Cross.

"That's a lot of meals moving around that are hopefully getting to the people who need them," he said. "We maintain in the range of a million to 2 million meals in storage just for events like this."

Designed to assist in disasters, the American Red Cross has been a leading organization with relief efforts in Haiti.

The national organization's focus has been on three areas:

n Sending food to those in need, including 3 million pre-packaged meals and funding for World Food Program efforts that will enable them to feed up to 1 million people for a month.

- Providing clean drinking water.

- Distributing shelter items, such as blankets, tarps, sleeping mats and tents to homeless families.

Locally, Waite said, the Tri-State has donated more than $100,000 to the agency to help with relief efforts.

"That's from people who've walked in through a chapter door or made a donation online," he said. "(The community) has been amazing, and they're asking, 'What else can we do?'"

Waite said a key part is making sure the community is up to date on efforts in Haiti, "so when they see those images, they're reassured" about where their donation is going.

Source: http://www.courierpress.com/news/2010/jan/31/tri-state-businesses-provide-relief/

The city of Evansville enters 2010 looking to continue to manage the recession. Mayor Jonathan Weinzapfel says the area's unemployment rate has consistently remained under the state average, currently by a full two points. He says companies like Mead Johnson and Berry Plastics have been adding jobs and that several construction projects are underway, led by the new $125 million downtown arena.

Weinzapfel says the city also made the decision to bring management of local water and sewer utilities back to local government, which is expected to save an estimated $14 million over the next five years.

Source: Inside INdiana Business http://www.insideindianabusiness.com/newsitem.asp?ID=39894

January is a great time to reflect on last year as well as plan for this year. 2009 was the year that residential real estate stopped its temporary decline in sales. Although our market saw fewer sales in the first six months of 2009 compared to 2008 (1879 vs. 2098) the second half of 2009 showed significant improvement. Units sold in the second half of 2009 improved 20.8% compared to the first half of the year and were up 7.6% compared to the second half of 2008. Our local market showed 4149 closed residential transactions representing almost $500 million in sales.

Another encouraging statistic is the supply of houses currently for sale. In mid December, there were fewer than 3000 houses listed for sale. In August and September of 2007, there were over 3700 homes on the market. Even more importantly, the "months supply" (listed homes divided by number of monthly sales) declined over the course of 2009. Over the first six months of 2009, months supply averaged 10.19 with a peak of 15.1 months supply last January. The second half of the year averaged 8.3 months supply, a significant improvement. These numbers put us in a much better position for home sales than we were in a year ago and that is exactly what I believe will happen. The extended and expanded Home Buyer Tax Credit will definitely help sales start this year much better than last year.

I know I mentioned this credit last month but I can't emphasize enough how important it is to start now if you are considering buying or selling this year. For sellers, your house has to be listed to expose it to this Spring's buyers. For buyers, it is not unusual to spend some time looking for a home before signing a purchase agreement and buyers need to allow enough time to arrange financing and complete the closing. As always the best place to look for homes is at FCTUCKEREMGE.COM "The Easiest Search On The Web". I have some exciting things to share about my company in next month's Market Watch and in the meantime call me with any of your real estate questions.

Homeowners who are eligible to deduct the PMI premiums paid on a mortgage can shave hundreds of dollars off their income tax bills.

If you put down less than 20% on a house, expect to be required to purchase private mortgage insurance, which protects the lender in the event you default on the home loan. That's a good deal for the lender, considering you're the one paying the PMI premiums.

But PMI is also a good deal for aspiring homeowners. Many people, especially first-time buyers, can't come up with big downpayments. PMI encourages lenders to give them mortgages anyway.

Don't pay PMI a day longer than you must, however. Canceling the insurance as soon as you're entitled can save you thousands of dollars. For eligible homeowners, deducting the premiums come tax time can save hundreds more.

Getting the PMI tax deduction

Starting with loans issued or refinanced in 2007, and continuing through 2010, you can deduct each year's premiums paid on PMI for your principal residence and for a non-rental second home. The tax break was originally good for 2007 only, but the government extended it for three years. Unless it's extended again, you won't be able to take the deduction beyond 2010.

The deduction begins to phase out once your adjusted gross income reaches $100,000 ($50,000 for married filing separately) and disappears entirely at an AGI of $109,000 ($54,500 for married filing separately). In general, you can only deduct the premiums paid for the current tax year. If you pre-paid premiums for future years, that portion must be allocated to those future years. Rules can vary for mortgage insurance provided by the Federal Housing Administration, Department of Veterans Affairs, and Rural Housing Service, so consult a tax adviser.

To claim the PMI deduction, you must itemize you return. Enter qualified PMI premiums on Line 13 of Schedule A. The IRS instructions for Schedule A include a worksheet for homeowners subject to the income phase-out. Basically, you'll lose 10% of the deduction for each $1,000 over the $100,000 AGI limit you are.

How much can you save?

According to the Mortgage Insurance Companies of America, an industry trade group, PMI premiums on a median priced home ($198,100 in 2008) run between $50 and $100 per month. Justine DeVito Tenney, a CPA and financial planner with Weiser LLP in Lake Success, N.Y., says a good rule of thumb is $50 a month for every $100,000 of financing. The amount of the downpayment, type of loan, and lender requirements can all affect the actual cost.

United Guaranty, a PMI provider, offers an online calculator that estimates premiums based on various assumptions. Put 5% down on a $200,000 house, for example, and you'll pay monthly PMI premiums of about $150. Increase your downpayment to 10%, and you'll pay less than $100 a month.

How does all of this affect your tax bill? Let's say a married couple filing jointly with an AGI of $100,000 bought a house on Jan. 1, 2009, for $200,000. They put down 5%. By the end of 2009 they paid $1,800 in PMI premiums ($150 times 12 months). By reducing their $100,000 AGI by $1,800, they lower their tax liability by $438.

Automatic cancellation of PMI

While the tax deduction is nice, at least while it lasts, getting rid of PMI altogether is even nicer. The Mortgage Insurance Companies of America estimates that 90% of homeowners are done paying PMI premiums within five years of buying their homes.

If you bought your home after 1999 and are still paying PMI, you probably fall under the Homeowners Protection Act (HPA) of 1998. Your lender is required to automatically cancel your insurance once you've paid down your mortgage to a 78% (0.78) loan-to-value ratio, or LTV. Put another way, once you have 22% equity. Many lenders will treat pre-HPA loans in a similar fashion. Call to confirm.

To figure your LTV, divide the outstanding loan amount by the original price of your home. If you have a $190,000 mortgage on a house you purchased for $200,000, the LTV is 95%. You'd need to get the mortgage balance down to $156,000-78% of the original value-to qualify for automatic cancellation of PMI.

Requests for cancellation

You don't have to wait for automatic cancellation. When your LTV hits 80%, you can petition your lender to end PMI. The process can take several weeks. Your lender isn't required to oblige your request, but you'll bolster your case if you have a good payment history.

Start by calling your lender, not the PMI provider. You'll probably need to make a formal request in writing and pay out of pocket for an appraisal. While it's conducted primarily for the benefit of the lender to confirm that your property hasn't declined from its original value, a high appraisal can work to your advantage. As your property value increases, whether due to a general uptick in real estate prices or specific home improvements, your LTV decreases.

Tenney, the New York CPA, points out that even if you don't meet the 78% or 80% milestones, you can get PMI canceled when you hit the mortgage midpoint. On a 30-year fixed-rate mortgage, that would occur after 15 years of payments. This can come into play for certain high-risk loans that call for a longer PMI period.

Piggyback loans dodge PMI

Looking for a PMI loophole? Try so-called piggyback loans, also known as 80/10/10 or 80/15/5 loans. Basically, the home lender finances 80% and immediately gives you a second loan for another 10% to 15%. You put down 5% to 10%. No PMI is required.

This alternative has traditionally been available for homebuyers with minimal capital but excellent credit. In tight lending environments, however, this arrangement is harder to come by. And even when piggyback loans are available, the extra interest you usually pay on the second mortgage may actually cost more than PMI premiums.

This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.

Richard J. Koreto is a freelance writer. He has been editor of several professional financial magazines and is the author of "Run It Like a Business," a practice management book for financial planners. He and his wife own a pre-Civil War house in Rockland County, N.Y

Source: http://www.houselogic.com/articles/deduct-private-mortgage-insurance/

The IRS started accepting e-filed tax returns on Jan. 15, marking the official start of tax season. The IRS' popular Free File program also started accepting returns on Friday. However, as usual, W-2 and 1099 forms are generally not due to taxpayers before Feb. 1, so many taxpayers will not be prepared to file before then.

With the start of tax season, the IRS also announced the release of a new form that eligible taxpayers must use to claim the first-time homebuyer credit. Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, must be filed with the taxpayer's individual tax return and is used to report the purchase of a home that makes the taxpayer eligible for the credit. In addition to Form 5405, eligible taxpayers must also include with their 2009 returns a copy of the settlement statement, executed retail sales contract (for mobile home purchases) or the certificate of occupancy (for newly constructed residences). The IRS reminded taxpayers in a news release that those who are claiming the first-time homebuyer credit cannot e-file because they must attach a proof of purchase to their returns.

E-Filing and Free File The IRS reports that last tax season 66% of all returns were e-filed (some 95 million returns). The IRS says that for this season it is working on faster acknowledgment of whether a return has been accepted or rejected.

The Free File program allows taxpayers to prepare and file returns electronically for free, through a partnership between the IRS and a group of tax software vendors. Last season, the IRS introduced a new aspect to the Free File program-online fillable forms, which almost any individual taxpayer can use. (Traditional Free File is available only to taxpayers below a $57,000 income limit.) The IRS is urging eligible taxpayers to use the Free File program.

According to the IRS, benefits of e-filing or using Free File include a fast refund, reduced error rate and quick acknowledgment. By using e-file and direct deposit, taxpayers can get a refund in as few as 10 days. The error rate for an e-filed return is 1%, compared with 20% for a paper return. Unlike paper filers, e-filing taxpayers receive an acknowledgment that the IRS has received and accepted or rejected their returns.

Source: http://www.journalofaccountancy.com/Web/20102499.htm