Keep all tax returns forever. Ignore what anyone else tells you. There have been too many times that the IRS or the state has made demands on tax returns filed 8 or 10 years ago, saying they were never filed. If you have a copy, you can insist it was filed.

If you send money in with those tax returns, keep a copy of the canceled check in the file with the returns. If you got a refund, make a copy of that, too. If the IRS grabbed your refund, you wont have any check copies, but you’ll have a letter saying it grabbed the refund from a given year. One of these three items will prove that your return was filed.

Keep copies of all asset purchases for the life of the asset plus 10 years or for the life of the loan on the asset plus 10 years. If it’s real estate, keep the paperwork until you sell it, plus 10 years.

Basically, keep everything for at least 10 years after its useful life or tax return filing date is past.

You realize, of course, there is this rule in the universe: As long as you keep it, you won’t need it. The minute you throw it out, everyone will need it.

Until two years ago, I kept all my client records, from way back in the 1970s. Finally, I got bold and decided to give the records to the clients whose addresses I still had – and to shred the files of people I couldn’t reach. I only shredded the files that were at least five years old, plus my own personal records.

One hour after I finished shredding, a client who’d filed bankruptcy a couple of years earlier, owing me money, called. He wanted the paperwork on the money he owed me so he could pay it off. (He had never listed my debt in the bankruptcy.) Well, I didn’t have the papers, so I couldn’t prove what he owed me. If it had been anyone else, I could have waved good-bye to that money. Luckily with Adam, he just shrugged and sent me what he thought he owed me.

READ MORE:
Filing Taxes: Take the Office-In-Home Tax Deduction
Organize Your Paperwork Before Filing Taxes
Filing Taxes: Smart Things to Do with Your Tax Refund
Make a Game Out of Filing Taxes

Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.

Why you might seek a financial planner

You may choose to hire a financial planner because you are seeking one or more of the following:

• Investment advice
• Budgeting help
• Help with paying off debt
• Savings assistance
• Retirement account management
• Advice about your mortgage or real estate investments
• Tax preparation
• Personal insurance guidance

The most common time to consult with a financial planner is when you are in the middle of your career, whether you are single and looking to start up an investment portfolio or you are settled with a family and need a wide range of financial advice.

While a financial advisor can help you build wealth throughout your working years, this kind of money professional is just as important to consult when you reach retirement age. Retiring usually comes with a set income, and you will likely need someone to help you manage your funds so that you don’t have to go back to work. An advisor will also help you determine when you should withdraw from your investments, as well as how much.

How can a financial planner help you?

A financial planner isn’t just there to help you with plotting your investment strategy; he or she can also assist you in determining how to pay off debt to make it easier to invest and to save your money for the future. Before getting too involved with a retirement investment strategy, a financial planner will make sure that you have a good budget and enough savings to begin investing.

Investing tip: Don’t overlook a financial planner’s services

One reason why many people skip out on professional financial advice is because they feel they can’t afford it. Retirees are especially wary of spending more money than they need to because they are on fixed incomes. However, financial advisors are worth the cost when you consider the amount of money you can save in the long term. Don’t be afraid to ask for help. You don’t have to wait until you have a lot of money to invest or are approaching retirement—it can be beneficial to consult with a financial planner at any life stage.

In the end, the best investing tip I can give for finding a financial planner is this: Shop around for quotes—and choose wisely.

READ MORE:
Expert Retirement Advice: Bud Hebeler
Retirement Planning: Most Affordable Places To Retire
Investing Advice For Selling Your Gold
Investing in Company Stock: Pros and Cons
Beginning Financial Building Blocks

Jeff Rose is a certified financial planner and author of the blogs Good Financial Cents and Soldier of Finance.  Learn more about his Roth IRA Movement that has inspired over 140 personal finance to educate young adults on the importance of saving. 

Here’s a refresher on a credit score’s components:

1. Payment history. Do you make your payments on time or are you late? If you’re late, how late are those payments? Are you paying in full or only making minimum payments? The answers to these questions will be reflected in your credit score.
2. Amounts owed and available credit balances. Creditors look at how much installment and revolving debt you owe. They also want to know what percentage of your available credit balance you are using.
3. Length of credit history. How long have your credit accounts been open? Which accounts have been closed and why? These answers will also be factored into your credit score.
4. New credit accounts. Opening several new accounts can affect the length of your credit history and your available balances, and doing so may negatively impact your credit score.
5. Types of credit. Creditors like to see a variety of types of credit, including installment loans (such as auto loans), revolving loans (such as a mortgage or home equity loan), and open credit accounts (such as credit cards).

The credit scores of older consumers vs. younger consumers

As you keep these components in mind, it will become apparent that older people are more likely to have a longer credit history upon which to build a score. If you’re younger, it doesn’t mean you will have a low score, but you might have less information on which to base your score.

• Older consumers, especially retirees, have an established credit history—the what, how long, and how much of a credit score. These are consumers who may have paid off mortgages and car loans, and they probably are able to handle some credit card debt. Their budget and spending habits may not include a mortgage or car loans.
• Younger consumers are just starting their financial life. They’re taking out their first loans and establishing their first credit accounts. They have a shorter payment history. Younger consumers, as a group, tend to have lower credit scores because they have less information available for calculation. They’re trying to build a credit history, but lower incomes sometimes cap payment abilities. That can translate into late payments and a harder time handling debt.  Younger consumers are also more likely to be victims of fraud. They may not know how to protect against identity theft and how to guard their personal information. These consumer fraud issues can be hard to overcome for someone just entering into the financial world.

The bottom line is that age is not directly calculated into your credit score, but it can play a factor in some of your score’s components. The best thing anyone, young or old, can do for a credit score is to be responsible with taking out credit and to make all payments on time.

Today’s tighter standards have resulted in a greater percentage of loan denials and higher FICO scores. In 2010, for example, the nation’s 10 largest mortgage lenders denied 26.8 percent of loan applications, an increase from 23.5 percent in 2009, according to an analysis by The Wall Street Journal.

The leading reason a lender will deny your loan is because it has concerns that you can repay the loan. You’ll need to prove your ability to pay the loan before you receive any money from the bank by doing the following:

• Prove you have steady employment or a reliable income stream. A new job or self-employment raises red flags.
• Pay down your debt and don’t accrue new debt. A high debt–to-income ratio is a warning sign to lenders.
• Show you have enough cash saved up for the down payment, closing costs, and cash reserves in case of an emergency.
• Allow your lender to verify the source of the funds for your down payment.
• Make sure your credit reports show no recent late payments or “charge-offs” to creditors who have not been paid according to the terms of their financing agreements.
• Check your credit score; having a higher credit score is crucial.

Average FICO credit scores for loans approved by Freddie Mac and Fannie Mae today run in the 760s compared to 620 to 640 during the housing boom. Ellie Mae, a company whose software processes 20 percent of all U.S. mortgages, reports the average FICO score among denied applications has risen to 750 from 741 since August 2011. Even the FHA is requiring a minimum FICO score of 580 to qualify for a loan with a 3.5 percent down payment.

Some, notably the National Association of Realtors and the National Association of Home Builders, claim that these tough new hurdles are impeding the housing recovery by making it extremely difficult for qualified borrowers to get mortgages. A white paper issued by the Federal Reserve in January agreed, noting that mortgage lending has significantly declined among potential first-time homebuyers—an important source of incremental housing demand.

In February, Federal Reserve Chairman Ben Bernanke called for increased lending to creditworthy homebuyers and more loan modifications and mortgage refinancing to help revitalize the housing industry and economy. The NAR reported Bernanke said in a speech to home builders that tightened borrowing was necessary to protect banks, investors and borrowers during the housing crisis, but now the pendulum may have swung too far.

Is this pressure sending a signal to lenders that their tight lending policies may be doing more harm than good? As the spring home-buying season gets underway in earnest, can homebuyers look forward to more moderate lending practices and underwriting policies? Unfortunately, the answer so far seems to be no.

According to the Center for Disease Control, car accidents are the number one cause of death among American teens. There are simply too many distractions for inexperienced teenage drivers to process what could be life or death decisions. Scientists from the National Institutes of Health (NIH) have found that vital areas of the teenage brain don’t fully develop and mature until age 25. Plus, research by the NIH’s National Institute of Mental Health suggests that emotional immaturity, not inexperience, is the primary reason teenage drivers are responsible for far more car accidents than any other age demographic.

Your insurance policy will probably reflect the higher risk for teenage drivers, but let’s take a look at what you need to have in an auto insurance policy to help protect the teenage drivers in your life.

What do you need to do for a teen with a learner’s permit?

The first step to becoming a licensed driver is to qualify for a learner’s permit. Some states require teens to pass a permit test, and others have different requirements, but in most cases once teenage drivers have a learner’s permit, they can drive a car with another licensed operator in passenger seat. Allowing teenage drivers to practice driving with a trusted adult is one of the most important parts of educating them on safe defensive driving techniques.

At this time, it is the parent’s responsibility to notify the insurance company that there is a teenage driver in the household. There usually isn’t anything written in the policy to prevent coverage if you don’t disclose the new driver, but it’s in your best interest when a young driver has access to and is operating the vehicle.

Extra charges and insurance discounts

Be careful—there can be exorbitant surcharges to add a driver to your existing automobile policy. Insurance companies can justify these charges because of all the research that has been done regarding accidents and injuries involving teenage drivers. Teenage drivers carry the highest amount of risk, and so if you have a teenage driver in your family, I always recommend carrying the highest limits of liability possible under your automobile policy.

However, if your teenage driver shows a history of safe driving, know that his or her insurance policy premiums will drop over time. You can also ask your insurance agent about good student discounts or other insurance discounts available to teenage drivers that can further lower the premium.

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Follow Linda on Twitter.

However, there are some people who don’t even open mail from the IRS. They are so afraid that the letters sit there, gathering dust, sometimes for years. What’s the end result? Bad things—bank accounts cleared out, wage levies, or even the IRS emptying out your home.

I said “don’t panic”—yet, I’m also saying that terrible things can happen? Bad things generally happen only to people who don’t open their mail. Not you. When you receive a letter from any taxing agency, open it immediately. Correspondence from tax agencies is time-sensitive. Responding within the time frame specified in the letter gives you options. For this reason, if you’re a frequent traveler, have a friend, family member, or employee monitor your mail while you’re gone and open any letter that may arrive from such an agency.

Understand the letter from the IRS

If you don’t understand the letter you have received, have someone help you. If you’re already working with a tax professional, fax (or scan and transmit) a copy to him or her, immediately, and ask for an interpretation.

On your own? The IRS website provides a list of the codes that may appear in the top-right corner of your letter. These codes will help to explain the letter’s purpose. Click on the appropriate code on the IRS site for instructions on what to do next.

You’d rather call the IRS? Go ahead and call the phone number on the notice. (Tip: Call in the middle of the week, either early in the morning or in the early afternoon.)

When you reach someone on the phone, ask for that person’s name (ask him or her to spell it) and employee badge number. Write down the date and time of the conversation. Be prepared to identify yourself with your name, Social Security Number, date of birth, and info from the relevant tax return, so have that all handy.

Be polite. Don’t be angry. The person with whom you are speaking didn’t cause the problem, but he or she might be able to solve it. If not, perhaps that person can tell you who can. If you speak to someone who is rude or hostile, request a supervisor. If the person hangs up on you, well, you got a name and employee number at the beginning, right? File a complaint with the TIGTA (Treasury Inspector General for Tax Administration). And call again—you’ll get someone else who just might help you!

Solve the problem

Most issues are easy to solve. For example, the letter may report a math error. In that case, there’s nothing to do.

If the letter says you omitted something from the return, carefully review the information the IRS has provided. If the IRS is right, pay the bill. But do not sign the letter agreeing to anything because the IRS is often wrong. The information may be somewhere on your tax return, but the computer couldn’t find it. Or the 1099 may be a duplicate or in error. In any of these cases, write a brief, clear explanation of the error. Provide copies of proof, if available, and ask the IRS to cancel the proposed assessment.

If you get a levy notice, you’ve waited too long and ignored too many notices. However, even this can be fixed. At this point, though, you may need professional help. You can find an Enrolled Agent through the National Association of Enrolled Agents website. You can also find a CPA via your state society’s website or the CPA directory.

READ MORE:
Filing Taxes: Take the Office-In-Home Tax Deduction
Organize Your Paperwork Before Filing Taxes
Filing Taxes: Smart Things to Do with Your Tax Refund
Make a Game Out of Filing Taxes

Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.

Investing before marriage

The earlier you start investing in your retirement, the better off you will be financially when the time comes. Because many people concentrate on their careers before getting married, it’s reasonable to expect your future spouse to already have retirement accounts set in place before you exchange vows with him or her. It doesn’t make sense to wait to start saving until after getting married unless that is your only option.

When you get married, you’ll need to decide whether or not you should combine your retirement accounts. Depending on the kind of accounts you each have, the two of you also have the option of keeping your individual savings in place and opening a new account together. This helps to further increase your savings while maintaining your comfort level.

Work statuses

In some cases, one spouse is the sole breadwinner while the other is the homemaker. Although the homemaker helps to save the family money on costs related to childcare and cleaning, this doesn’t mean that he or she is not able to also have a retirement account.

If you are the sole provider for your family, you should strongly consider adding your spouse to your retirement account. This will allow you to maximize the tax savings on your account, and the two of you will be covered when the time comes to withdraw the funds.

Possible risks of combining retirement accounts

There are always risks when you combine money, which is one of the reasons why people hesitate to have joint retirement accounts. If you ever get divorced, your spouse may be entitled to some of the funds, even if you contributed most of the money.
This is a serious subject to talk over with your spouse. You may even consider getting a prenuptial agreement to err on the side of caution.

The bottom line of retirement planning

When it comes to the question of whether or not you should combine retirement accounts with your spouse, there is no right or wrong answer. If you two are already investing in the future, then you are already engaging in the most important factor in setting up retirement funds. The decision to open a joint retirement account is ultimately up to you.

It is also important to keep in mind that you can decide to combine accounts at a later date. To some couples, joint retirement investments are as big of a commitment as getting married. No pressure should be involved when it comes time to decide to combine accounts. If for some reason either one of you is not comfortable with the idea of a joint account, then keep your investments separate. Just be certain that the two of you keep investing so that you can live comfortably together through your golden years.

READ MORE:
Expert Retirement Advice: Bud Hebeler
Retirement Planning: Most Affordable Places To Retire
Investing Advice For Selling Your Gold
Investing in Company Stock: Pros and Cons
Beginning Financial Building Blocks

Jeff Rose is a certified financial planner and author of the blogs Good Financial Cents and Soldier of Finance.  Learn more about his Roth IRA Movement that has inspired over 140 personal finance to educate young adults on the importance of saving. 

Teaching basic money management concepts

Kids are visual learners, and it helps if they have something tangible to use when learning about money. Before my son actually began receiving an allowance, we had a system that allowed him to earn coupons that could be redeemed for TV time. Each DVD was labeled with a number indicating how many coupons each episode or movie required (single short episodes of a TV show cost only one coupon, while the longest movies cost four). He quickly learned that he could watch his favorite movie if he saved up his coupons for two or three days.

Basic systems like this translate quickly into an understanding of money handling. When we introduced an allowance, my son made the connection between coupons and money. However, he still needed to learn the value of money and how it was earned. I wanted him to earn money, but at the same time, I also wanted him to learn that some things are worth doing—even without pay.

Our compromise is to pay a small allowance that is not tied to chores (which he does because he’s part of the family) and to allow him opportunities to earn more money if he wants. As a result, he works hard to do well at 4-H projects to earn prize money, and he thinks of enterprises to undertake in order to earn more money. Allowing him to work for some of his money teaches him that it has value.

On top of this, I also teach my son basic money management concepts such as:

• Long-term saving
• Short-term saving
• Charitable giving
• Prioritizing

We use different jars and envelopes to teach these concepts so that he can see where his money is going. We also encourage him to rank the things he wants (sometimes using pictures he draws or cuts out of ads) so that he learns about priorities. He spends his money on the most important things first, and he forgoes the less important items.

Working with older children

As our son grows, we know that more lessons will need to be taught. If you begin when your kids are younger, it will be easier to teach more complex concepts later. One way to encourage pre-teens and teens to learn the value of money is to have them work for it. Jobs ranging from neighborhood babysitting and yard work to after-school employment at a local business can help kids learn the importance of work and provide them with money to manage.

It’s also possible to teach children concepts such as interest. Consider allowing your kids to borrow money from you if they ask for something they can’t afford. Explain that they will have to pay you back with interest—and that they can’t buy something else until the obligation is discharged. We tried this on my son, who didn’t want to save up money for a purchase. At first, he thought it was a great deal—until his money had to go to repaying us for the next three weeks and he saw that he had to pay extra back in interest.

You can also use the reverse to teach a lesson. Borrow money from your child and then repay it with interest. Show him or her that it is better to earn interest than to pay it. This can segue (for older children) into lessons on investing. There are a number of games online that can help pre-teens and teenagers learn about and practice concepts related to investing. These can help your child learn how to use money to make money.

Some additional ways to teach children money management skills include helping them open bank accounts, letting them make small mistakes with their money, and encouraging them to see that they can earn money on their own.

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Miranda Marquit is a freelance writer and professional blogger specializing in personal finance, family finance and business topics. She writes for several online and offline publications. Miranda is the co-author of Community 101: How to Grow an Online Community, and the writer behind PlantingMoneySeeds.com.

According to the Homeownership Preservation Foundation (HPF), an independent national nonprofit that helps homeowners avoid foreclosure, mortgage foreclosure scams are up nearly 60 percent this year. This surge coincides with the federal government’s newly launched programs.

“Regretfully, every new government initiative spawns a slew of foreclosure avoidance scams, often from the same cast of characters doing business under various names to avoid easy detection and identification,” warned Colleen Hernandez, CEO of HPF, in a press release.

“Most of these scams involve individuals supposedly offering mortgage foreclosure avoidance assistance that trained HPF counselors provide at no cost. Sadly, with most scams, no meaningful services are ever provided,” Hernandez said.

So how do you know when you’re dealing with the real thing? I recently provided a list of loan scam red flags, and now I’m also providing a list of the government programs, and their official sites, below. It is important to note that homeowners can get access to all of these programs directly, without paying a third party for the information.

Making Home Affordable (MHA) programs

HARP: The Home Affordable Refinance Program is designed for underwater mortgage homeowners who are current on their payments but who wish to refinance based on the current value of their home. Fannie Mae or Freddie Mac must own the mortgage, and the current loan-to-value (LTV) ratio must be more than 80 percent.

Find out if Fannie Mae owns your loan.

Find out if Freddie Mac owns your loan.

HAMP: The Home Affordable Modification Program is available to employed homeowners who are struggling to make their mortgage payments. To be eligible, you must have a mortgage payment that is more than 31 percent of your monthly gross (pre-tax) income, and you must be delinquent or in danger of falling behind on mortgage payments.

UP: If you are unemployed, the Home Affordable Unemployment Program may be able to reduce your mortgage payments to 31 percent of your income or suspend them entirely for 12 months.

PRA: MHA’s Principal Reduction Alternative is designed to help homeowners who are upside down on their loans. To be eligible, Fannie Mae or Freddie Mac cannot own your loan, and your home must be worth significantly less than what you’re paying on it.

To see the full list of programs and requirements, visit the Making Home Affordable official site.

Independent Foreclosure Review

The Independent Foreclosure Review was commissioned by the Office of the Comptroller of the Currency (OCC). The program allows homeowners who were foreclosed on to request a review of the process. To be eligible, the foreclosure action must have taken place on the primary residence between January 1, 2009, and December 31, 2010, and a participating lender must have serviced the loan.

Homeowners can complete or download the review form directly on the Independent Foreclosure Review site. If a third party is asking you for money to assist you in the process, it’s probably a scam.

To see the full list of requirements and list of participating lenders, visit the Independent Foreclosure Review official site.

Help With My Bank

Having trouble dealing with your bank? You don’t have to pay someone else to get things done—you can get them moving yourself. Through HelpWithMyBank.gov, the OCC gives you resources to file a complaint against your national bank online and to get answers about everything from mortgages to bank record-keeping.

If you’d prefer to have a third-party advocate to your bank on your behalf, check out HUD.gov for a list of HUD-approved counselors in your area.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.

Not all insurance plans cover these treatments, and coverage can depend on the state, the carrier, and the specific plan design. However, you can work with your healthcare provider and your insurance agent to find the best health insurance policy to fit your needs.

Visit Equifax.com for a copy of your Equifax credit report today. 

Coverage for mental health and substance abuse treatment

Most state laws require a certain amount of coverage for mental illness and substance abuse treatment, but there are discrepancies in the level of benefits provided when compared to the benefits offered for the treatment of a physical illness.

Insurance plans usually limit the number of visits within a given time frame, and co-payments and deductibles may apply to those visits. Inpatient and outpatient care for mental illness and substance abuse treatment are usually covered in some manner. Check your summary of coverage and benefits for the exact number of days of care covered and what, if any, co-pays you’ll need to contribute.

Coverage for physical therapy and short-term rehabilitation

If you find yourself in need of physical therapy or short-term rehabilitation, check your plan to determine how many days are covered for either inpatient or outpatient care. Be aware that these limits are often subject to your lifetime and are not per year. You’ll also want to check the admission charges and co-pay fees for which you will be responsible.

Coverage in and out of network

For all medical care, including mental health treatment and physical therapy, make sure to see if your providers are considered to be in or out of network. For a plan with out-of-network benefits, all treatment will be subject to your deductible and co-insurance for out-of-network physicians and facilities. But if your plan does not offer out-of-network benefits, then you will not have coverage unless you seek care from a participating provider or facility.

As always, talk to your insurance agent if you have any questions about your plan, and check in before you pursue treatment to make sure you’ll receive the coverage that you need.

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Your Medical History Can Affect Your Health Insurance Premium

Follow Linda on Twitter.