Credit Card Deliquencies Drop

Fewer consumers are paying their credit card bills late, and balances across the nation are shrinking.

The national credit card delinquency rate decreased in the first quarter and credit card debt declined for the fourth consecutive quarter, according to trend data from TransUnion. The ratio of borrowers that were at least 90 days behind with their credit card payments slid to 1.1 percent, a 8.3 percent drop from the previous quarter.

"Based on revised economic assumptions, which are now more optimistic than before, TransUnion believes that the 90-day credit card delinquency rate, apart from seasonal ups and downs, will likely continue to decrease in 2010, possibly dropping below 1 percent by year end," Ezra Becker, director of consulting and strategy in TransUnion's financial services business unit, stated in a press release.

Average total credit card debt owed per borrower fell 4.95 percent from the previous quarter to $5,165, and 10.57 percent year over year.

Only two states saw an increase in credit card delinquencies -- Arkansas and Alaska -- and overall, Nevada, Florida and Arizona had the highest delinquency rate. North Dakota, South Dakota and Alaska had the lowest incidence of delinquencies.

Zero states showed an uptick in average credit card debt. Alaska had the highest state average at $7,135, and Tennessee and Alabama followed closely behind. At the other end of the spectrum, Iowa owed the least on credit cards, at $3,872, and North Dakota and South Dakota followed with the next lowest state averages.

Can sales tax on a new car be deducted?

Previously, sales tax on the purchase of a car was only deductible as an itemized deduction on Schedule A. If you did not itemize, you could not claim the sales tax deduction.

With the tax law changes in 2009, you can still itemize the sales tax deduction for a new or used vehicle (including a boat or plane) purchased anytime during 2009 (provided you don't deduct your state and local income taxes). As in the past, there is no specific AGI, or adjusted gross income, or purchase price limit when you only deduct sales taxes.

New in 2009: If you do elect to deduct your state and local income taxes, you can still itemize a sales tax deduction for a new (i.e., unused) motor vehicle(s) (but not a boat or plane) purchased after Feb. 16, 2009, on line 7 of 2009 Schedule A. Purchase price and AGI limits discussed in the next paragraph apply when deducting both income and motor vehicle sales taxes. The instructions for Schedule A are quite confusing when discussing the sales tax deduction on vehicles and may lead many people to not claim the sales tax on a vehicle purchase.

Also new in 2009: If you do not itemize, you can increase your standard deduction for sales tax paid on a new motor vehicle purchased after Feb. 16, 2009. If your AGI is less than $125,000 (or $250,000 if filing jointly) you can claim the entire sales tax up to a per vehicle purchase price of $49,500.

Taxpayers with an adjusted gross income between $125,000 and $135,000 ($250,000 and $260,000 in the case of a married couple filing jointly), will have a proportionate reduction of the sales tax paid. Taxpayers with earned income lower than the sales tax paid also may be limited on their sales tax deduction.

The IRS has developed Schedule L for 2009 tax returns claiming an increased standard deduction from the new motor vehicle sales tax deduction or from the real estate tax deduction for nonitemizers or both. The alternative minimum tax has been conformed so that the sales tax deducted on a motor vehicle purchase by an itemizer is not treated as a preference item.

HOW DO YOU AVOID CAR REPOSSESSION?

REMOVING LIENS TAKES MORE THAN BANKRUPTCY!