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YOUR BOTTOM LINE

The Final Big Push on Health Care Reform; Time for Spring Cleaning; Most Overlooked Tax Deductions; Protecting Your Privacy: How to Not Become an Identity Theft Victim

Aired March 20, 2010 - 09:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


STEPHANIE ELAM, CNN HOST: Good morning. I'm Stephanie Elam and this is YOUR BOTTOM LINE.

Spring has finally sprung and that means it's high time for some spring cleaning. We'll save you money and time with weekend projects. And with less than a month until tax day, we'll make sure you're not missing out on any of those most overlooked tax deductions. Plus protecting your privacy, how to make sure you're not the latest victim of identity theft. The show that saves you money starts right now.

All right, let's begin this morning with the final big push on health care reform and who doesn't remember how a bill becomes a law? You know, from "Schoolhouse Rock." I love that. For a little refresher course on the inner workings of Capitol Hill, we'll turn to our national political correspondent, Jessica Yellin, part of the best political team on television.

Hi, Jessica.

JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: Hey, Stephanie. So we're going to break this down for you. First we have the Senate version of the health care bill. Now, he's just a bill trying to become a law, remember "Schoolhouse Rock?"

OK, this is still awaiting action by the Democrats in the House. Now, some of these Democrats in the House really don't like what's in that Senate version of the bill and they're worried that if they vote for it they're going to pay a big price on Election Day.

So Democrats in the House will vote on a series of changes or fixes to the bill under this now suddenly famous process called reconciliation. House leaders are considering a sort of two-for-one deal to get health care reform passed. That two-for-one deal is called a self-executing rule. It would simply deem the Senate bill passed once those fixes are approved by the House -- Stephanie.

ELAM: OK, so not that that's not confusing enough. How does this help the Democrats?

YELLIN: OK, breaking it down again. Under this plan, House Democrats would never actually have to take a direct vote on the Senate bill. So again, they'll never have to vote on the bill that they don't like. They're just voting on the changes, those changes again is called the rule. Now, House leaders hope this will give concerned members some political cover because they're never directly voting on the thing they don't like.

But as you've probably guessed, some Republicans are just not buying it, they say the whole thing is shady and it's just not the way major legislation should be passed. We should point out though, both Republicans and Democrats have used this procedure before -- Stephanie.

ELAM: All right, so that's a whole lot to digest for everybody, but Jessica, thank you so much for tackling that for us.

So what will this mean for your bottom line? Andrew Rubin is the vice president of Medical Center Clinical Affairs and Affiliates at the NYU Langone Medical Center.

All right so, all of this obviously is a lot of politics, Andrew, but when you really drill down on this, is this a good bill for just consumers out there?

ANDREW RUBIN, LANGONE MEDICAL CTR: Listen, it's been all about the politics, but there's a lot of good stuff in this bill that will actually work and solve a lot of the health care problems for this country. There are individual pieces that everybody's going to find distasteful, but if you look at the bill in its entirety there's a lot of good stuff in there for a lot of Americans.

ELAM: OK, when we say that it could pass, If this were to pass how immediate could Americans start seeing the benefits from it.

RUBIN: Right away. So, a lot of the bill's provisions don't kick in until 2014, but there's a lot of immediate steps that are going to happen right away to solve some of these acute problems that are taking place right now. For example, there's $5 billion in the bill for high risk pools for individuals who have pre-existing conditions and can't get health insurance right now, so there's money there for them.

And then there's one of my favorite clauses which allows children to stay on their parent's policies until they're 26 years old. So there's a lot in there.

ELAM: Yeah, let's go through these because I think the pre- existing conditions, obviously, that's a huge one and then the dependent coverage is good, but what this doughnut hole that they keep talking about and how it applies to seniors. Tell me about that.

RUBIN: The doughnut hole is confusing legislation that was enacted many years ago, several years ago under President Bush, but essentially what it does is it allows for seniors to get prescription drug coverage and the insurance pays for the first portion and then they go into the thing called the doughnut hole where they don't have any coverage anymore and then they come out of the doughnut hole and they have coverage again.

So individuals actually have to pay, seniors have to pay a portion for their drug costs. In this bill, right away, there's some money available for seniors to actually have some of that cost covered.

ELAM: All right, what about these lifetime and annual caps? There's changes there as well.

RUBIN: Very controversial in current health care insurance law right now, so a lot of people buy insurance think they have unlimited coverage if they get sick. Many policies have annual limits or lifetime illness and if you get catastrophic illness, as we all know, health care is expensive, and you may end up spending a lot of money and hitting your cap very quickly, so this bill immediately removes annual caps and lifetime caps.

ELAM: And you can't plan for something like that because you just know when it's going to happen to you.

RUBIN: Exactly right.

ELAM: What about small businesses because it will apply to them, as well.

RUBIN: The goal is to get as many people insured as possible. Small businesses have a hard time getting insurance to their employees, it's expensive for them, so often it means the difference between hiring someone or not hiring someone so there's tax credits available for small businesses to in fact cover the cost of part of the health care insurance.

ELAM: OK, so we covered some of the good. Before you go, what are just some of the cons with this bill?

RUBIN: I think the biggest con and what most people, cons of this bill, not con, that Americans are worried about is how will we take cost out of the system? There are provisions in the bill to start removing cost, but listen, any time you touch cost it's a hot potato, people get very nervous of it. So, until there is a little bit more of this bill enacted, people are going to be very nervous about it.

ELAM: All right, Andrew Rubin, thank you, as always, for breaking it down for us, we really appreciate it.

All right, every week on this show we're helping you to save money on your taxes, so get your pen and paper. Next, how not to overlook the tax deductions. Stay with us.

(COMMERCIAL BREAK)

ELAM: All right. We made you a promise that as the April 15 deadline fast approaches we'd be all over your taxes and helping you save money. This morning we've got the most overlooked tax deductions and for help with that we turn to our good friend Janet Bodnar, editor of candidate "Kiplinger's Personal Finance" in Washington.

Janet, thanks so much for joining us again.

JANET BODNAR, KIPLINGER'S PERSONAL FINANCE: Oh, my pleasure Stephanie.

ELAM: All right, let's talk a bit about some of the things that people always overlook. You say that 46 million people itemize on their 1040s, but so many of them are missing out on so many of these good deductions that they could be taking which is painful to hear. Let's start off with talking about those charitable donations. What can people do there?

BODNAR: Well, people are aware of the big charitable donations that they can deduct, but they may not be aware that they can also deduct money for smaller donations. For example if you make food casseroles for a soup kitchens, ingredients are deductible. If you drive a car to charitable activities, you can take a deduction for mileage on that. If you use a stamps as part of a -- to do a mailing for a fund-raiser activity for your child's school, that could be deductible, as well. So, don't forget the small stuff.

ELAM: All right, and you also say that when it comes to your taxes, credits are actually better than those deductions. So tell us about the Making Work Pay Credit. Tell us about that one.

BODNAR: Well, people have been enjoying that since last spring. It's actually a reduced withholding that people have been enjoying in their paychecks, but in order to make that credit permanent, in order to get the permanent benefit of that credit you've got to claim it on your 2009 tax return.

That means, guess what? You have to file a separate form, Schedule M, it's called, and there is a maximum on the amount of the credit that you can get credit for. It's $400 for an individual and $800 for a couple filing jointly and there are some income phaseouts as well, so you have to be aware of those numbers, but if you're entitled, take it.

ELAM: Right exactly, I think a lot of people are afraid of extra leg work and that's why they don't do it. We all know about the $8,000 credit if you bought a home last year, but let's talk about those home improvements. Some of these you could actally help you out tax season.

BODNAR: And you know, these have been around for a while and they're much more generous for 2009 and 2010. You can deduct up to 30 percent of the cost of making energy-efficient home improvements up to a maximum, again, of $1,500 over the two years, but it's much more generous than it was before and it encompasses things like new doors, outside doors, windows, which is a big home improvement for a lot of people, furnaces, air-conditioning units, things like that, that counts. And so I think really people should look into that.

ELAM: All right, and then if you bought a new vehicle, the sales tax associated with that, that's a good one.

BODNAR: Yes issue it is, because if you bought, in most of last year, ever since February or 2009, if you bought a car, a truck, a motorcycle or and RV, you can deduct the sales tax on that up to a maximum purchase price for the vehicle of $49,500. Now, the interesting thing is you get this deduction whether you itemize deductioners on not.

Even if you get a standard deduction, you get a souped up, if you will, souped up deduction for the purpose of sales tax deduction in this case. So, it's worth looking into. Again, though, there are some income limitations and phaseouts so you need to be aware of those.

ELAM: Aware of those. All right, well there's too many for us to go through, but you have 19 on the list in total. What's your Web site so we can tell people.

BODNAR: Oh, yes, please, it's www.kiplinger.com. We've 19 of them, please go online, take every single one that you're entitled to.

ELAM: Definitely. Janet Bodnar, thanks as always for joining us.

BODNAR: All right, it's all about saving you money and that's why we're here every Saturday morning. Up next, spring cleaning, it equals big savings.

(COMMERCIAL BREAK)

ELAM: Finally, today is the first day of spring. So let's break out those brooms, the mops and the buckets, it's time for some spring cleaning and here is what needs to be done at the top of your list to save you, of course, time and money is our friend Ed Del Grande, host of HGTVPro.com.

Ed, thanks so much for joining us.

ED DEL GRANDE, HGTVPRO.COM: Oh Stephanie, it's great to be back.

ELAM: All right, let's talk about some of these thing here. You're saying one of the first things you should do is probably what most people want to do, anyway, is let that fresh air in. Tell us what they should do.

DEL GRANDE: Well yeah, it's not an old tale. It's good to air out your house in the spring. And I have some tips, not only is opening upon your windows, but also turn on all of your exhaust fans, like the bathroom fans and any fans over the stoves and that will really help you get that air moving through the house and run them for about a day, but pick a good, dry day.

ELAM: That probably would be a good idea. Now, at the time that we're all ready to get outside, we're, like, get outside, get outside, the little critters are thinking get inside. This is a time to take care of that, right?

DEL GRANDE: Yeah, and I know in my own case I get carpenter ants this time of year, they just come running in the house. And when it comes to ants, the best thing that I found is not to use the poison that kills them instantly, but to put out the bait traps. See, a bait trap works by letting the ants come, ingest the poison, then take it back to the nest and kill it - kill the nest. So you don't really want to just kill them right away. Let them get back to the stuff back to the nest, get the right stuff and kill that colony.

ELAM: Get them all with that. All right, and then you're also saying it's time on get ready for those April showers although for those of us in the northeast we feel it's already been April, we've gotten hit with so much rain, but to make sure that you're prepared, you talk about the sump pumps and making they're ready, right?

DEL GRANDE: Right, now every house has sump or should have sump, which is the pit in the basement that collects the water and then there's a pump inside called the sump pump. Go down, test that out before the big rains come and make sure that everything is working properly and it's also a good idea to have a battery backup on that sump pump or better yet, a standby generator to help keep that pump running during a power failure.

ELAM: Yeah, I have a question about that. Because you say generators are something you should have up and ready, but aren't they costly? Isn't that expensive for most people to get for their homes?

DEL GRANDE: Well, there's two types, there's the first ones that are the portable ones, they're the ones you see where you have to put gasoline in, but an up and coming trend is a standby generator, that's a permanent piece of equipment installed in the house, well not inside the house, part of it's in the house with the electrical system, but the engine part is outside and in a power surge or a power storm, automatically kicks itself on and it will provide your house with the power you need.

So, in the future people are going to have their own personal power plants and that will keep everything up and running.

ELAM: Yeah, and that'll make people feel a lot more, maybe even warm in the cold months when that happens.

Now, what about the whole driveway and walkway issue. I know if it's anything like the northeast with all the snow we've had. I call it slalom driving, trying to avoid all the potholes on the street. But you're saying this is a good time to go ahead and fix those.

DEL GRANDE: Well, now is the good time because pretty soon the pollen, the seeds are going to come in and remember they're all going land in those little cracks and crevices and if you wait too long to repave your driveways and walkways weeds are going to come up and once the roots take hold you're going to have a lot more trouble than just cracks in your driveway.

ELAM: Oh Ed, I'm sure there's a whole bunch of people out there now who are thinking it's time to jump out of bed and start working on all those chores. Thanks so much for joining us again.

DEL GRANDE: Thank you very much.

ELAM: Love and marriage, they go hand in hand. Love and marriage and money, not always so much. Why a prenup allows you to speak now or forever hold your peace.

(COMMERCIAL BREAK)

ELAM: Prenups are a hot topic these days and with the divorce rate around 50 percent, one-third of respondents in a recent poll now say they would ask their significant other for a prenuptial agreement.

So should you sign on the dotted line before you say "I do." We got a couple of people to help us out. Lynnette Khalfani-Cox is a personal finance author and in Los Angeles we've got Joe Langlois, he's a celebrity attorney who specializes in family law.

Thank you both for being here with me today. Let's talk about this first, Lynette, because I really, really think a lot of people think prenups are just for the rich. You're saying that's not the case.

LYNNETTE KHALFANI-COX, PERSONAL FINANCE AUTHOR: No, absolutely untrue. It's a big myth it's only for the rich, the fabulously wealthy. Frankly, the fact of the matter is that a lot of people could benefit from using prenuptial agreements. The problem is that when people get married say in their 20s or 30s, they think I don't have much. They're not long-term thinkers. They're not thinking when I'm 40, 50 but if a divorce happens...

ELAM: But, how do you protect an asset you don't have? How do you protect something you don't even know what you're going to have?

KHALFANI-COX: Well, you start to put in procedures to say if we divorce or if something goes wrong, who would keep what? What percentage might be split? Are there certain things do you have right now, maybe an inheritance or things you value that you just want to keep separate.

ELAM: All right, so, Joe, tell me about this, because I think a lot of people would try to work this out on their own, but do you really need to get lawyers involved here?

JOSEPH LANGLOIS, FAMILY LAW ATTORNEY: Yes. It's a highly specialized area. You need good advice. A good portion of my practice in divorce is dedicated to the litigation of prenuptial agreements that were not properly done.

ELAM: Oh, that's scary. OK, that tells you a lot.

So then when, Lynnette, should you bring up this conversation with your significant other?

KHALFANI-COX: Right, I think it's obviously after you get engaged. Don't just do it while you're in the dating phase, like, give me the prenup right about now .

ELAM: That might scare them away.

KHALFANI-COX: Yeah. And but you know what, the tendency is for a lot of people, especially women, is to not talk about it initially. Perhaps the person who's the lower income earner or the person with the least amount of assets feels like I don't want to be perceived as a gold digger and I don't want to send the wrong impression. But after you've certainly gotten engaged, talking about a prenup should be part of your overall money conversations.

ELAM: And then Joe, when you are having this conversation, you do get there, how long does it actually take to complete a prenuptial agreement?

LANGLOIS: It probably takes about 30 days to get it done if you're well-organized.

ELMA: OK, so that's actually not that bad, but you do need to give it a little time and you should probably do it before your wedding actually happens.

Now Lynnette, when you say that prenuptial agreements are more important now than ever, why do you say that?

KHALFANI-COX: Well, a lot of people are marrying later in life. There's a lot of people who are already divorced, obviously, as you mentioned the divorce rate about 50 percent. So, people are coming into second marriages with a lot more assets to protect, perhaps homes, 401(k)s, maybe there's things for their kids from a previous marriage that they want to make sure that it doesn't go the wrong way.

ELAM: OK, so here is the biggest question I think a lot of people have. And Joe, this is probably something you have seen, the post-nuptial agreement. I can't imagine anyone bringing that up. Like, hey, honey, you know I love you, but sign here. You say those happen a lot now, though, right?

LANGLOIS: Right. Many people wake up one day in a marriage going sour and want to kick themselves because they didn't insist on a premarital agreement agreement. That's when I get a call. What about a post-nuptial agreement?

KHALFANI-COX: You know, I think you obviously have to put this in the context of your overall relationship and the money question, as I said. Will we have joint or separate accounts? How will we pay off any debts we have, et cetera? I want to piggyback, thought, about that idea of the postnup, because he said it takes about 30 days to get it done. People might be planning for the wedding and doing other things.

Even right after you get married, you can still do it. It doesn't mean oh it's five years later and the marriage is going south, now let's do a prenup. You might have been a recent bride or maybe you just recently started the whole wedding process and maybe you can't get it completed in time, there's nothing to say you can't get a post-up in 30 days after you get married.

ELAM: It's still an option.

KHALFANI-COX: While the love is still there.

ELAM: While you're feeling all like rosy and warm and everything. Joe Langlois, thank you for joining us from L.A, and Lynnette Khanfani-Cox, thanks for being here.

KHALFANI-COX: Sure.

LANGLOIS: You're welcome.

ELAM: Year-over-year identity theft related crimes are up and that brings us to today's "Free for All." How to protect your privacy without spending a dime.

(COMMERCIAL BREAK)

ELAM: Time for our "Free for All," and it's all about protecting your privacy. The more wired we all get, the more opportunities there are for someone to steal your identity. Steven Domenikos is the CEO of Identity Truth in Boston. He joins me now.

Steven, thanks so much for being here.

STEVEN DOMENIKOS, IDENTITY TRUTH: Good morning, Stephanie. Thank you very much.

ELAM: All right, so tell you, you say the one place we all tend to go to, most of us have social networking sites, pages that we go to all the time, but you're saying that's the No. 1 place where we can get our I.D.s stolen. Explain.

DOMENIKOS: Absolutely. As millions of people share information on social networking sites like FaceBook, MySpace, et cetera, there is a world of information that is being exchanged daily. People provide their name, social security numbers, addresses, dates of births, and all of this provides countless opportunities for identity thiefs to harvest this information and create fake identies at the detriment of the original individual.

ELAM: People put their social security numbers on their social networking sites?

DOMENIKOS: They have been actually incidents that that has happened and clearly that they say something that people should not do that it's a very dangerous thing to do.

ELAM: All right, so you also say that losing our cell phone or PDA could be the least of our concerns if you put too much information on that device, right?

DOMENIKOS: Yes. As Smart Phones become smarter and we have all kinds of personal devices with us, obviously most of us store a lot of very interesting data, personal and private data on our phones such as addresses, but most importantly our passwords to our e-mail, pin numbers, et cetera.

If we lose these devices it is very easy for a thief to extract this information from the SIM and obviously profit at the detriment of the owner of the device. Our research shows, Stephanie, that over the last year, twice as much as personal devices have been stolen giving countless opportunities to identity thiefs. ELAM: So, yeah, we definitely need to be diligent about that. Also for women when they get married, they need to make a definitive decision on whether they will take their husband's name or not do it. Why is that?

DOMENIKOS: Well, having both names creates opportunity for error and confusion. It's very difficult to track, use one or the other or hyphenate both, but clearly identity thieves use any opportunity they can to leverage confusion and profit from it.

ELAM: Yeah, that's a reason why I didn't change my name, because I didn't want to have any identity theft issues. The last thing I want to ask you about...

DOMENIKOS: Pretty good idea.

ELAM: Yeah, right. And the last thing I want to ask you about is the whole idea of shredding. And I don't think enough people pay attention to this. Your student in college, if he has a credit card application or if you get applications in the mail, you're saying make sure you shred them, right?

DOMENIKOS: Absolutely. It's very important to keep some basic things in mind. Shred your receipt, especially when credit card receipts come from a foreign country. Still they have the number of credit cards imprinted on them. So, it's very important to trash these documents, shred them properly. Keep vigilant at all times and make sure your personal and private information is not exposed unnecessarily.

ELAM: Yeah, that's good information. Steven Domenikos, thanks so much for joining us today.

All right, we'll see you right back here next week for YOUR BOTTOM LINE, the show that saves you money, same time, 9:30 a.m. Eastern and don't miss Christine Romans and CNN chief business correspondent Ali Velshi on "YOUR MONEY" today at 1:00 p.m. Eastern and tomorrow at 3:00 p.m., right here on CNN.

Time now for a check of your top stories in the CNN "NEWSROOM." Have a great weekend.