CLARK BEHIND THE HEADLINES

I talk about us all being part of a team: Team Clark. We'll get tips from listeners to my radio show, and I'll say to the listener, "You are now a member of our team." Well, just such a thing happened recently, and this story is all over the news now.

HLN's Money Expert Clark Howard

A listener called and she was talking about how when the feds redid withholding at people's work early this year, the consequences of that are going to be really awful for a lot of people when they file income tax after the first of the year.

It was called the Making Work Pay tax credit. The problem is that the feds apparently messed up the tables, didn’t take some things into account and were too generous. And there is now a guess from the IRS - are you ready for this number? - 15 million Americans may have to pay back some of that tax credit. That's going to be ugly.

Who are the likeliest, according to the IRS? If you moonlight at a second job, if you're married and both spouses work, or if you’re an early retiree who receives Social Security and works part time, your withholding could be all messed up and you may owe taxes that you ordinarily wouldn’t.

So you only have a few pay periods left this year if you fit any of those circumstances. If you can afford it in your budget, boost your withholding, which you can do very easily through a little form on the IRS website. Do that and you will eliminate some of the surprise that you would have when you do your returns next year.

As an alternative, what I would recommend you do is start a savings account now, and pop some money in it each week or each month or each pay period until April 15, so if you do end up with a significant tax bill due, you would have already budgeted for it and started saving for it. If you end up not owing money, look at the great thing that's occurred: you’ve saved money! And you know how much I like for you to do that.

HELP ME CLARK!

ROSEMARIE:

We are scheduled for a cruise to Antarctica and the company is suggesting that we get insurance, $528 per person, for emergency events: lost luggage, illness, etc. We are 65 years old and have no health conditions. What do you think?

CLARK:

HLN's Money Expert Clark Howard

If you're going to go on a cruise and your inability to show up at the port would mean you forfeit all your money - which is almost always what it does mean - you should buy trip insurance.

But don't buy it from the cruise line. You want to buy it from an insurance company. And the best website to shop the policies is insuremytrip.com.

Now, the coverages will vary and the exclusions will be different one company to another, so take the time to sit down and compare the exclusions that various companies have and, in turn, the coverages.

The typical price, though, for trip cancellation or trip interruption insurance is 6% of the cost of the trip.

From HLN's Money Expert Clark Howard

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from the Lites family.

CLARK BEHIND THE HEADLINES
From HLN's Money Expert Clark Howard

If you've listened to me for any period of time, you know how hostile I am to gift card giving. Because gift cards come with so many disadvantages and so few advantages.

HLN's Money Expert Clark Howard

In fact, I'm not sure there's any advantage at all unless it's one of the deals where you get more in value than what you pay, which is true for a lot of restaurant gift cards and that sort of thing, where you might pay $80 and get $100 worth of food, or pay $100 and get $125 worth of food. That's worth the risk.

The Federal Reserve has issued new rules on gift cards that make them a little less rotten. And they have done away with a lot of the fees.

First year of a gift card, people can't charge you fees on them anymore. And when there are fees, they have to be disclosed in bright lights, basically.

And even what fees can be charged after a year are limited. Now, after five years - this is a real help for the retail industry - the money will go to the retailer if somebody hasn't redeemed in five years.

But the best rule of thumb if somebody does give you a gift card is, go use it pronto, right away. You use it immediately, you don't have to worry about forgetting about it and it gathering dust somewhere.

Now here's the funny thing: the Federal Reserve is suddenly issuing all these regulations that are supposedly pro-consumer. But at the same time, the Fed is such a captive of the industries it's supposed to oversee that it delayed the effective date of the new gift card rules long enough that somebody could become pregnant today and deliver a baby before the new rules go into effect.

They go into effect in late August of next year. What a joke that it would take that long. I think if they said 60 days or something like that, that would be fine. But to wait long enough for another school year to go by, or for someone to give birth - how silly is that?

HELP ME CLARK!
From HLN's Money Expert Clark Howard

DWIGHT:

Is it better to get a loan from your bank for a certified used car or try and get financed through the dealer?

CLARK:
Absolutely 100% of the time you go to your bank to get pre-approved for a car loan for a used or new car.

Now if the car dealer will then meet or beat the interest rate offered by your bank, fine to do it with the dealer.

But almost always if you don't shop in advance for that loan you're gonna get chopped off at the knees.

Money Coach with HLN's Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!

We’re looking for individuals or families who are willing to be profiled on HLN .

Those chosen will get money advice and information from Clark Howard.
This week’s question comes from Dan and Heather Sostrom of Gainesville, Florida.

Clark:
Wow you’ve got a lot of mouths to feed in that household, now another one on the way. Three children that you’re going to have to raise and pay for college for.

But the thing is, do you know what? You paid for your own college you said that set you back. But the truth is there are so many ways to pay for college, but you know what? There’s only one way to pay for your own retirement.

So you love your children, you want the best for the them but key thing, your primary focus and goal should be to beef up your savings for retirement. You need to contribute more each and every month to that and then if there’s money left over, put it toward your kids’ college in a prepaid plan or the 529 plan.

This conflict I’ve just talked about, I hear this over and over and over again. And when I talk with older couples whose kids are now grown and then I ask 'What did you save for retirement?' They kind of can’t look at me because they’ve taken all the money and put it toward their kids’ college.

Remember what I just said. Your primary goal with your long term savings is not your kids’ college. There’s work, there’s loans, there’s grants, there’s scholarships but for retirement you’ve got one thing and that’s you.

Clark Behind The Headlines

We haven't had it yet on my radio show: no one has called in from an airplane. Even though mid-flight phone calls are now legal in several countries, it is something I would dread see in the good old U.S of A. And it seems many flight attendants here agree with me! Their union has called for permanent ban on in-flight cell phone calls.

HLN's Money Expert Clark Howard

There was a recent story in USA Today about how some people have found away around the cell phone ban by using the Web-based program “Skype” to make calls while they're in the air. Now there's nothing specifically that says “Skyping” is illegal, but that doesn’t make it right.

Think of how loud people talk when they're on their cell phones. You can’t even think around them! Factor in the ambient noise of an aircraft, crying babies and perhaps a bad connection… and people will be SHOUTING over each other!!!

Don’t get me wrong, I’m not a technophobe. The Web surfing while flying thing has been great. Most of the flights I take now have WiFi on board. I love being able to IM somebody from the air. I've tweeted from an airplane to our Clark Howard twitterers – but I think I’m drawing the line there.

I want to hear what you think. Do you think that all types of phone calls should be banned on flights? I know my vote.

HELP ME CLARK!

TERRI:

I recently discovered my stepson has never filed income taxes. He just turned 22 and worked when he was in high school. I'm trying to help him straighten this out, but I don't know where to start. He made approximately $45,000 in 2008 and I don't have all the W2s for the previous years. Any advice?

CLARK:

HLN's Money Expert Clark Howard

In recent years where he's been making a substantial amount of money, he needs to file a return and the IRS will actually help you with that.

I know that sounds crazy, but if you contact the IRS at the taxpayer advocate office and you tell them, "Hey, I didn't file I know I should have, I need your help in filing returns for the last three years,” you file returns, and if you don't owe money because of the amount that was already withheld then there's no harm, no foul.

If you owe money, you will pay the taxes you owe plus interest and penalties. But the amount you'll be charged if you come forward is more favorable than if they find you later.

For earlier years while he was a teenager, odds are that he didn't owe any money so there's no real problem not having filed, if there were years that there was no tax liability.

Money Coach with HLN’s Money Expert Clark Howard

Having trouble managing money? Do your money goals seem impossible? Clark Howard wants to help you!
We’re looking for individuals or families who are willing to be profiled on HLN. Those chosen will get money advice and information from Clark Howard.

This week’s question comes from Tasha Alexander of Columbus, Georgia.