My New Blog

With billions of dollars infused into the banking industry and promises to rescue millions facing foreclosure, some are beginning to wonder if the government has been serious about helping struggling homeowners. One of the early efforts, the Hope for Homeowners program, announced in the fall of 2008, has been recognized as a complete disaster, resulting in only 51 modifications. And, the latest news is even worse; 50 of those modifications are now being investigated by the FBI for potential fraud.

Newer efforts such as the ambitious sounding, Making Home Affordable program, a commitment of $75 billion for loan modification, will fall far short of its promised goal. Why is it that the government, with all its power and with billions of dollars (our money) can’t develop a workable and efficient system that can truly aid those facing foreclosure? The answer lies in both the approach and the intent. Homes have lost so much value in the past two years, that the government’s efforts are insufficient to have a meaningful impact. The amount of money required would be far greater than they have available. In fact, they have no money available, for they’ve been forced to borrow the trillions already spent.

I don’t expect to see dramatic and long-term benefits from any of the programs announced to date. Unfortunately, some homeowners seeking relief simply do not qualify for help. For many, declining credit ratings or reductions in income, combined with the loss of their home’s value, rules out the possibility of modification. And, a good portion of those who do receive a modification will be unable to maintain the payments on a new mortgage because of their precarious financial situation. Many have already fallen behind on their modified loans at a default rate that in some areas has run as high as 60%.

While the government would like for us to believe that they are concerned and making efforts to solve the foreclosure problem, they’re aware of the facts. And a significant fact is: Government can’t save 9 million homeowners from foreclosure or anywhere near that number, and they never expected to do so. Just like their other promises to restore the economy, stopping the foreclosure juggernaut sounds good, but it’s not something they are seriously committed to doing.

New job, same field
First, your hunt for new work must be in the same field in which you're currently or were formerly employed. Uncle Sam won't help out if you decide to totally switch career gears.

Second, you can't decide to chill out for a while and then expect the Internal Revenue Service to help when you decide it's time to get back on the career track. Deductions aren't allowed for employment-search costs when there is a "substantial break" between your last job and when you begin looking for a new one.

Finally, recent graduates are out of luck. The costs you incur in getting your first job aren't deductible, because the tax law only allows you to write off expenses incurred in searching for another position in your present occupation.

But if you're on the lookout for a new position, start saving those job-search receipts.

What you can write off

• Employment and outplacement agency fees. • Resume services. • Printing and mailing costs of search letters. • Want-ad placement fees. • Telephone calls. • Travel expenses, including out-of-town job-hunting trips.

Even self-employment efforts could count at tax-filing time. The costs associated with investigating or attempting to start your own business, as long as it's in the same field as your current profession, may be tax deductible.

Itemizing limits
Careful tracking of these expenses is critical because they are classified as miscellaneous itemized deductions. You itemize them on line 21 of Schedule A.

But you can't automatically subtract your job-hunting costs from your income -- just those that, when added to all your miscellaneous deductions, come to more than 2 percent of your adjusted gross income.

So hang onto those job-hunt vouchers. They can help push that miscellaneous amount to the allowable level, even if you don't get new work.

By Kay Bell