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Mar 23


Bob, Vice President, Lending

As homeowners, we know the tax benefits of home ownership, but did you know that your home can save you money on your car loan? That’s right, the American Dream may be better than you thought.


Using our auto equity loan option, California homeowners can get all the tax advantages of a mortgage loan with the rate and terms of our auto loan. Basically, you can write-off the interest you pay on your auto loan.


Using our auto equity option, your loan is secured by your residence which may allow your finance charges to be up to 100% tax deductible. We simply place what is called a “courtesy lien” on your home, which can be removed at any time. Your tax advisor can help you determine your eligibility and explain IRS reporting requirements.


Here’s an example of the potential savings:

The estimated tax savings in the above example can effectively reduce the auto loan rate from 2.99% APR to 2.06% APR.


The auto equity loan is an excellent program often overlooked by even our most savvy members. It’s fast and easy to start saving money today.


With a phone call and a few minutes, we can convert your loan without a lot of paperwork. Call our Loan By Phone Center at (888) 858-6878.


Please consult your tax advisor for program details. Example assumes a combined Federal and State income tax rate of 32%. Representative example: Pay $15.19 per $1,000 borrowed for 72 months at 2.99% APR with up to 100% financing. Rates subject to change. Visit our Rates page for current offers. There is a $200 fee to establish an auto equity loan.

Mar 15


by Vicki, Controller & AVP, Finance

After the relief of completing your tax filing, you should think about records retention. What do you do with your returns and your documentation?

The answer, of course, is to keep your tax records in a safe, accessible place. Here are some additional tips to make sure you have the records you may need in the future.

To keep it simple and to be safe, keep everything for six years.

According to the Federal Tax Code, you are required to keep copies of your tax return and all supporting documents as long as they may be needed for the administration of any provision in the law. Typically, that means for as long as the IRS has the right to assess additional taxes on your past returns, or you have the right to amend your return to claim a credit or refund (“the period of limitations”).

The IRS can go back for a three-year period. However, that time frame jumps to six years if you didn’t report income that you should have, and that unreported income is more than 25% of the gross income shown on your return.

If your tax return is fraudulent, or you fail to file a required return, there is no limit as to when the IRS can require you to provide the information.

Your important keep list:

    Income records, including W-2 forms, 1099 forms and bank statements.

    Deduction records, including invoices, receipts, cancelled checks and deductible interest paid on loans, including 1098 forms.

    Investment records, including brokerage statements, mutual fund statements, 1099 and 2439 forms and year-end IRA account summaries and deposit receipts.

    Home records, including original purchase price of your home. You may need this to account for gain, loss or closing costs. You may also want to hold onto proof of home improvements that may add value to your home.


Hopefully, efficiently retaining these records will be unnecessary, but if you need them, it will save you time, stress and even money.

So, file your taxes, keep your records and relax.

Feb 2


Article by Vicki, AVP & Controller, Finance

If you’re among the Americans that receive a tax refund each year, make a tax season resolution to make your money work harder for you!


The ideal tax situation is a breakeven proposition – you don’t owe money and you don’t receive a refund. That’s how you know that you have the correct number of deductions coming out of your paycheck on payday. I know it can feel like a bonus to get a chunk of money each year, but you’re essentially letting the government borrow your money interest free.


Consider this; CNNMoney.comsays that the average tax refund in the United States for 2009 was $3,003. That means that by adjusting tax withholding, the average American receiving a refund could have put $250 more each month in their pocket.


Here are a few ways to make $250 work for you:


1. Pay down debt. $250 could make a large dent in your credit balances. Paying an extra $250 a month on a $15,000 car loan could shorten your term by two and a half years and save you nearly $800 in interest. (Assuming a 3.99% APR and a 60-month term.)


Making a larger than required payment each month could also work for credit card or mortgage balances. Your extra payment would go directly to principal to pay down the balance and save additional money in future finance charges.


2. Save. Savings goals like retirement or college can be reached with small amounts of money over time. If you saved $250 a month, in 10 years (earning an average of 4%), you’d have almost $38,000. That same amount over 40 years will be almost $300,000, due to the power of compound interest.


3. Spend. I’m not advocating spending your $250 on your shoe habit, but it’s up to you.  For many families, $250 will keep them out of debt throughout the year. It’s like receiving a raise. Think of the extras that $250 could get you. Piano lessons? Groceries? Yes, even shoes!
Your Payroll department can help you adjust the tax deductions coming out of your paycheck and may be able to tell you how it will affect your paycheck.


So, if you’re receiving a tax refund this year, run the math for your own situation to help find the best way to make your money work harder for you in 2011. Good luck!

Feb 24


Jenna P., Vice President, Operations

Jenna P., Vice President, Operations

Beginning January 2010, the Adjusted Gross Income (AGI) limit and filing status requirements to convert a Traditional IRA to a Roth IRA have been eliminated. Prior to 2010, consumers with an AGI above $100,000 did not have this option.  Now you do.  By converting this year, you can defer and break up the tax burden, paying half in 2011 and the other half in 2012.
So, what’s the difference?
Roth IRA funds can be withdrawn tax free at age 59½ or older if the funds have been in the account for at least 5 years. With a Traditional IRA, however, there are required minimum distributions starting at age 70½ and amounts withdrawn are taxable at the time of distribution.
Taxable Event.
Conversion from a Traditional to a Roth IRA is a taxable event. Contributions and earnings that have not already been taxed, will be taxed at your regular income tax rate. If you decide to convert this year and defer taxes to the following year(s), you should consider if your tax rate may be higher in 2011 and 2012.  You may not want to convert if you don’t have the money available to pay the taxes now.  If you pay the taxes with money from the Traditional IRA, you may lessen the value of the conversion.
Visit the IRS website for complete details. Pacific Service CU is not a qualified tax expert and does not provide tax advice.  We encourage you to contact your tax advisor for details and to see if the 2010 Roth conversion options can benefit you.

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