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NEWS ITEMS
THE ECONOMY - HOW IT LOOKS TO YOU
Money is in short supply. A recent survey shows that nearly 75% of Americans made sacrifices last year to make ends meet, and a third worry that their jobs are in danger. The following survey results from 502 Americans being interviewed by Insight Express from March 14 through March 18,2008:
1. What is your largest financial concerns? 6. Are you concerned that you might
The price of fuel. 39% Not very concerned 36%
Saving for retirement. 16 Not at all concerned 30
The cost of health insurance.14 Somewhat concerned 25
Mortgage payments. 13 Very concerned 9
Sending kids to college. 4 7. Which of the following profes-
2. Have you had to make sacrifices over sionals most deserve a pay raise?
the last year to make ends meet? Teachers 41%
Yes 74% Military personnel 32
No 26 Nurses 9
3. What have you had to sacrifice? Social workers 4
Vacation plans 68% Clergy 2
Dining out 67 8. Which of the following statements
Home improvements 52 best describes your dream job?
Going to the movies 50 Makes a difference in people's
Designer clothes 34 lives 37%
Jewelry 32 Pays really, really well 31
4. Do you save money each pay Fun 25
period, or are you living paycheck Easy 6
to paycheck? Glamorous 1
I have nothing left for savings after 9. Do you agree or disagree that the
meeting my expenses. 43% economy should be the Presiden-
I save a small amount. 37 tial candidates' top concern?
I save a Significant amount. 14 Agree 93%
I spend more than I make. 6 Disagree 7
5. If you receive a tax rebate this 10. Within the past year, has your
year, what are you most likely to household's financial situation
do with the money? improved, gotten worse or stayed
Pay off debt 41% the same?
Save it 19 Stayed the same 40%
Spend it on ordinary expenses 17 Gotten worse 40
Treat myself 7 Improved 20
TAX CHECK PLAN SHOWS EFFECT OF ECONOMY
One in three people say they will use this years tax refund to pay bills as that nice annual check from Uncle Sam becomes less of a luxury for many people.
Thirty-five percent said they plan to use the money to pay utility, credit card, housing or other bills, an Associated Press AOL Money & Finance poll has shown.
That is up from 27 percent who said so a year ago, in a fresh example of how the ailing economy is affecting many families.
About a third said they are saving or investing the money, down slightly from last year. Nearly a quarter said they are using their refund to pay debt from credit cards and other loans, essentially the same as the one in five who said so last spring.
PAYING THE CORPORATE TAX
Most Americans filed their tax returns on April 15th and they may have thought they were paying off the tax obligation for just their household. However they were also footing the bill for American companies. "Most major corporations have a tax department not just to comply with the tax code but also as a profit center; says Charles Cray of the Center for Corporate Policy, a nonprofit watchdog group.
A 2004 U.S. Government Accountability Office (GAO) study found that 61 % of American corporations, including 39% of large companies, paid no corporate income taxes between 1996 and 2000. Last year, corporations shouldered just 14.4% of the total U.S. tax burden, compared with about 50% in 1940.
While companies are getting off easy, thanks to loopholes, ordinary wage earners are getting stuck with the tab. The tax burden on individuals is expected to climb from $1.l6 trillion in 2007 to $1.21 trillion this year, according to the Congressional Budget Office, while corporate tax receipts are expected to decline from $370 billion to $364 billion. By 2013, the CBO estimates,
TABLES TURNED IN TAX CASE
" Nothing in this world is certain but death and taxes:'
That famous quote by Benjamin Franklin resonates loudly with John M. Mathewson.
For more than 10 years, Mathewson, 82, who ran an illegal offshore tax shelter used by hundreds of Americans, helped the u.s. government recover more than $3 billion. His help prompted officials from all three branches of government to label him one of the most important cooperators in tax revenue history.
He is now in a legal battle with the Internal Revenue Service over $11.3 million in unpaid taxes dating to the 1970s and 1980s. The IRS said the amount has ballooned with interest and penalties to more than $31 million.
Mathewson argues that, after he was sentenced for tax evasion and money laundering in 1999, he was told by the feds that they were not worried by his tax debt and they would not pursue it, as long as he continued to cooperate. The IRS says Mathewson has no proof that conversation ever happened.
The IRS is going after him administratively, based on a civil judgment it obtained against him in 1993. in 2006, the IRS filed a lien on his home and notified his employer, an oil and gas drilling company.
Separately, IRS agents have been investigating Mathewson for two years, spurred partly by an informant who is
involved in a legal partnership dispute with Mathewson's employer.
Mathewson sued the IRS in 2005 after he tried to get his tax records and after the IRS responded that it could not find his old tax returns and that others had been destroyed. The suit asks the U.S. District Court to issue an order saying he had a deal.
His attorneys argue that the government has double-crossed a man who paid his debt to society. He served five years of probation for his guilty plea and kept his side of the bargain.
Since his sentencing, Mathewson has filed tax returns every year and applied any refunds to his current year tax not taken to pay back taxes. However the IRS claims that the IRS cannot forgive taxes against anybody and that Mathewson has yet to
provide the name of any agent who told him his debt would be wiped off the books.
Upon his initial arrest, Mathewson fully cooperated with the IRS and turned over a list detailing information of more than 1,000 customers Mathewson had assisting in setting up offshore accounts in the Cayman Islands. He provided a treasure trove of tapes documenting the transactions; however neither IRS experts nor computer whizzes in the private sector could decrypt them. Mathewson provided the needed assistance.
He also provided background information that helped in unrelated prosecutions and in across the country and before Congress.
He sat in jail the first night with FBI agents who arrested him and by the next morning, the government had learned more about offshore banking they could have learned in years of conventional investigation.
Paul O'Neill, former Secretary of the Treasury Department, which includes the IRS, said in 2001 that the IRS developed dozens of tax-evasion cases with Mathewson's help. With Mathewson's information, the IRS was able to persuade judges to force U.S. credit card companies to open their client lists so the IRS could see who was hiding assets.
"These cases were made possible because of Mr. Mathewson's extraordinary cooperation; O'Neill told reporters in May 200l. "Without it this large-scale illegal tax evasion would have gone unpunished. When the entirety of Mathewson's cooperation is utilized, the benefits to both the criminal and civil law enforcement authorities of the United States will be immeasurable:
Despite his help, the IRS says Mathewson should not get a pass.
IRS PLAGUED BY SECURITY BREACHES
Gaping holes in computer security at the Internal Revenue Service could expose taxpayers' personal information to a hacker, a disgruntled agency employee or a private contractor, warned a watchdog's report that found IRS controls "weak:
The report released by the Treasury Inspector General for Tax Administration said the IRS is plagued by security breaches that compromise security in an age of rampant identity theft.
"We are very concerned that authorization and authentication controls are weak on devices as sensitive as routers and switches; read the report. "A disgruntled employee, contractor or hacker could reconfigure routers or switches to disrupt computer operations and steal taxpayer information in a number of ways:'
While investigators did not pinpoint any specific the report suggested that the compromised security could allow someone to gain access to sensitive information without detection. Prior studies said such problems existed for years.
The review found the IRS authorized 374 accounts for employees and contractors that could be used to perform system administration duties. But of those, 141 either had expired authorization or had never been properly authorized.
IRS officials said they have already taken action, including locking employee use accounts after 45 days of inactivity and removing accounts after 90 days without use. It also said it would eliminate unauthorized or unnecessary shared accounts.
But to some taxpayer advocates the report was the most recent installment in episodic critiques. "It's only the latest indictment in a string of IRS information technical problems; said Peter Sepp, vice president for communication at the National Taxpayers Union in Washington. "Not only has this agency stumbled in implementing modern data processing, but it has opened its records to security issues for a number of years:
DEATH OR TAXES?
Death and taxes are both inevitable, but trying to deal with estate taxes keeps getting trickier.
If you own a farm or ranch and want to leave most of it to your heirs, plan to die in 2010.
As absurd as that may sound, it is the only year that the so-called "death tax" is scheduled to be fully repealed. After 2010, your estate could be hit with a whopper tax bill.
On June 7, 2001, President Bush signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001, which included the "Estate Tax repeal: It marked a compromise, under which Congress created a 10-year-phase-out that gradually allows more of your estate's value to be deducted each year until 2010, and then the estate tax will be fully repealed.
The hitch is the tax will only be repealed for that one year. After that, the level jumps back to rates established in 2007 and will allow only $1 million in assets to be exempted. In other words, unless Congress acts between now and 2011, the tax law completely reverts in 2011 to what it was prior to the enactment of the Estate Tax repeal in 2001.
For years, farm and ranch groups have been working to permanently repeal any death tax.
With budget deficits looming, most lawmakers are reluctant to give up or offset the revenue that is currently generated from this type of tax.
For farmers, complicating estate planning efforts, prices for corn, soybean and wheat prices soared to record levels earlier this year, and farmland prices also pushed to unprecedented heights.
Landowners, who built an estate plan a few years ago, might find that their assets have doubled or even tripled in value today, making some of these tax exemptions unrealistic. Given all of these changes and the uncertainty surrounding the tax laws, it is becoming necessary to revisit your attorney and estate planner every year.
In the 110th Congress, there have been several efforts to address estate tax reform, but they have not gained any significant momentum.
As part of the Senate budget resolution, a measure offered by Senator Max Baucus could pave the way for future actions that will lessen the burden of Death Tax on ranching families. The Baucus amendment does not actually alter current tax law, but sets aside funds for the Senate Finance Committee to address some form of estate tax relief within the next five years.
Columnist Sara Wyant, President of Agri Pluse Communications.
TEMPORARY CAPITAL GAINS TAX BREAK CAN HELP SOME
From 2008 to 2010, taxpayers in the 10 and 15 percent tax brackets will pay zero percent in capital gains taxes. This means individuals in those tax brackets (the lowest two brackets) will be able to sell stocks, bonds, real estate and other assets without paying any capital gains taxes. With some proper tax planning, this can be useful for low-income taxpayers.
This capital gains tax cut can primarily benefit the following people:
Adult children who support low income parents or seniors helping out adult children who fall into the 10 or 15 percent tax brackets. Instead of giving cash, you can give stocks and bonds instead. You can give away $12,000 a year (2008 limitation) tax free, and if the parents or adult children sell the stocks and bonds between 2008 and 2010 they will not pay a capital gains tax on the proceeds.
Retirees with investments in taxable accounts. Tax-deferred retirement savings plans are not affected by capital gains. But if you are a retiree with stocks or mutual funds in a taxable account, you can sell without incurring a capital gains tax. If you are planning on retiring this year, you may want to sell taxable investments and delay Social Security payments or distributions from a tax-deferred plan.
There are some potential downsides to selling off investments, so you need to be sure it is the right step for you. The proceeds from the sale of the investments will be added to your income, which can have some unintended consequences. For example, it could push you into a higher tax bracket, thereby losing some of the benefit of the zero-percent tax rate. It could also affect eligibility for Medicaid or cause previously non-taxed Social Security benefits to be taxed.
TAX BREAK FOR SURVIVING SPOUSES SELLING HOMES
Some widows and widowers thinking of selling their home may benefit from a new law enacted in December 2007.
The new law effectively gives them more time to sell and still be eligible for the maximum home-sale tax break available for married couples who file jointly. The change is effective on sales or exchanges beginning in 2008. Congress passed the new law to provide relief for surviving spouses.
Here is the background and the information on the new law:
If you are married and file your federal income tax return jointly with your spouse, you typically can sell your main residence and exclude as much as $500,000 of the gain from gross income. If you are single, the limit is $250,000.
To qualify for the maximum exclusion, you must have owned the home and lived in it as your primary residence for at least two of the five years prior to the sale.
Under the old law, a surviving spouse would have been eligible to claim the maximum $500,000 exclusion only if he or she filed a joint tax return for the year of death and sold the home during the same year.
The new law includes an important change: A surviving spouse who has not remarried typically may be eligible to claim the full $500,000 exclusion from the gain on the sale of a principal residence owned with the deceased spouse if the sale occurs not later than two years after the date of death of the spouse. That assumes the requirements of the $500,000 exclusion were met immediately before the spouse's death.
Mortgage Forgiveness Debt Relief Act of 2007.
RULES FOR GIVING
Tax laws have changed in recent years with regard to charitable donations. Humorist Dave Barry once quipped that our tax laws constantly change "as our elected representatives seek new ways to ensure that whatever tax advice we receive is incorrect:
He could have easily been talking about the rules for charitable giving.
With that in mind, here are a few significant tax changes in recent years as well as some general charitable-giving advice from accountants, enrolled agents and other tax advisers.
Cash Gifts -Good record keeping has always been important, but there is a new twist to keep in mind. Donors are not allowed to deduct cash gifts, no matter how small unless they have the proper receipt. That means a "bank record; such as a canceled check, a bank copy of a canceled check, or a bank statement with the name of the charity, the date and amount, the IRS says. Or you can get a written communication from the charity itself with that information.
IRA Gifts - Charities say they received a large volume of gifts from older taxpayers in 2006 and 2007, thanks to a special tax break. Under that law, taxpayers who were 70 1/2 or older could transfer as much as $100,000 a year directly from an IRA to charity without having to pay income taxes on that money. The transfer counted toward the taxpayer's required minimum distribution for the year.
The law expired at the end of 2007. While it is expected that Congress will resurrect the law and make it retroactive to the start of 2008, there is no guarantee. It makes sense to wait and see whether Congress renews this provision before making any such IRA transfers.
Household items -Cleaning out closets can be a great way to cut down on clutter and get valuable tax deductions. But the rules can be tricky. For example, you generally cannot take a deduction for used clothing and many other household items unless the items are in "good used condition or better; the IRS says. What is that supposed to mean? The Treasury Department is working on guidance to explain it.
Donors should keep detailed records such as photos or even video camera evidence.
Used Cars - For many years, taxpayers donated their old cars to charity and deducted the estimated fair market value. Congress changed the law after hearing reports of highly inflated deductions. Under the new law, which became effective in 2005, taxpayers generally have been limited to deducting only the sale price of the vehicle when the charity sold it.
There are several important exceptions to this general rule.
Other Record - Keeping Rules - The rules can vary depending on such factors as what you are donating and its estimated value. Be especially careful if you make a gift to a charity and get something of value in return, such as dinner or tickets to a concert, theater or sporting event.
You are supposed to get a written statement from the charity if your payment is more than $75 and is partly for goods or services. Also, you are not allowed to deduct a contribution of $250 or more unless you have an acknowledgment from the charity or certain payroll-deduction records. The acknowledgement must include key details, such as how much you donated, whether the charity gave you something in return, a description of hat you donated, and a "good faith estimate'" of the value of those goods or services.
While many charities are aware of these rules, some are not, and you may have to request the proper receipt. Do not wait until you are audited to get the receipt. Get it before you file your return for the year you made the gift.
When reviewing rules for charitable contributions see IRS Publications 17, 526 and 561, available at www.irs.gov.
HOW THE GOVERNMENT SPENDS YOUR TAXES
Americans signed and filed their taxes on April 15th Like many tax filers we all wonder where does our money go when the government gets its hands on it?
It is not a Simple question. For those who have trouble balancing their checkbooks imagine trying to keep track of where $4.1
trillion goes. That is what was spent on our behalf at all levels of federal, state and local governments in 2007.
Even with armies of accountants and auditors, it is hard to know with certainty exactly where your taxes ended up. For starters, you pay taxes based on a calendar year; the government spends it based on a fiscal year that begins October 1st. Even if the calendars matched up, the journey your tax dollars embark on depends a lot on things like how much you make, how you spend it and where you live.
Still, while administration tax cuts and the rise of the Alternative Minimum Tax have shifted the burden of who pays what, the size of the average tax bite on all of us has not changed much.
"The burden of government overall has remained relatively flat since 1970," said Gerald Prante, a senior economist with the Tax Foundation.
On average, about two-thirds of your taxes went to Uncle Sam last year and the rest went to your state, county or other local government, according to the Commerce Department's Bureau of Economic Analysis.
Where did your money go after you sent it off to Tax Heaven? One way to find out is to look at the government's bills. If the government sat down at the kitchen table to try to see where its paycheck went, here, very roughly, is where it went in 2007.
To make the math a little easier, let us assume the government made $52,000 a year or $1,000 a week which is about the median household income in the U.S. Keep in mind that $1,000 a week does not include taxes. But you are the government and you do not pay taxes.
The biggest government bill last year was for a category called "income security" ($220 of that $1,000 weekly paycheck), which includes Social Security ($115), along with other social services like welfare ($46), disability payments ($35) and unemployment insurance ($7). The next biggest chunk went to pay for health care ($203), which includes Medicaid and Medicare.
Keeping our country and your neighborhood safe cost almost $200 a week, including national defense ($132), along with spending on "public order and safety" ($65), which included police ($27), prisons ($18), courts ($12) and fighting fires ($8).
Education took the next biggest slice ($158) most of which went to pay for elementary and secondary schools ($117). Much of the rest helped pay for college ($28). About $2 a week of our $1,000 a week paycheck went to pay for public libraries.
5 WACKIEST TAX WRITE-OFFS
1. It went up in smoke!
This return preparer must have thought he was hallucinating when one of his clients, a criminal defense attorney, referred a marijuana dealer he was defending to him. The dealer was facing prison time for drug dealing and did not want to be nailed for tax fraud as well.
Because he was involved in an illegal business, he could not take any deductions, period. The tax code is written with the philosophy that if you are engaged in something illegal, you have to recognize all of the income and none of the deductions are recognized, even the cost of the product.
None of his clients gave the marijuana dealer a Form 1099 and the taxpayer just gave the preparer a number and paid taxes on it. There was no factual basis for the number, because the taxpayer dealt solely in cash.
2. No receipts from above!
Putting a few bills into the church offering plate got one taxpayer of a CPA in a bind when the IRS asked for canceled checks or receipts to support his charitable deductions. Explaining why he had no such receipts, the taxpayer said he Simply throws in cash "as the spirit moves me:'
The CPA said the IRS agent paused to consider the taxpayer's response, and then offered this advice: "I understand how the spirit can move you. So my advice to you is to always take your checkbook to church with you. When you feel the spirit coming on, just take out your checkbook and fill in any amount you think is right, whatever the spirit may dictate. It makes no difference how much you give, just as long as you have a copy of the canceled check. This way both the spirit and the IRS will be pleased:
3. Silence is golden ... and deductible.
While on the subject of charitable deductions, a CPA in Fort Worth, Texas, recalls one prominent client who found a creative solution to a chronically noisy next door neighbor: He bought the house from the fellow, ripped it out of the ground and donated it to a local women's shelter. He then claimed the value of the home as a charitable deduction.
The deduction was limited to a percentage of his income, but his income was such that it was not a problem. The IRS adjusted the value somewhat, but it did allow the deduction.
Everything is bigger in Texas, even the charitable deductions.
4. He took Manhattan, the Bronx and Staten Island, too!
When accounting software was in its infancy, a rookie CPA in New Jersey prepared a return for an individual with one small glitch: The software mistook the filer's address "New York, NY" for the name of a dependent. The mistake went unnoticed by the preparer and the client until one day they received a phone call from the IRS. The agent apologized that the deduction was being disqualified, even though, as the agent politely agreed, it might indeed be justified.
5. But you can write off the pimp hat!
When does an entertainment expense exceed IRS criteria? A New Jersey CPA found out the funny way when a businessman client wanted to deduct the cost of a call girl he hired to entertain some clients. When the CPA told the businessman he would have to present said contractor with a Form 1099 to support this business expense, the client declined to do so and dropped the whole idea.
STEALING YOUR REBATE AND YOUR ID
As millions of Americans await the stimulus package, the IRS is anticipating an increase in con jobs.
To a con artist, almost any news event offers an opportunity for profit. But this time the thieves have outdone themselves, pegging scams to the new economic stimulus package even before President Bush signed the legislation last February.
Under the law, the IRS will send payments to 130 million households, including more than 20 million low-income older americans and 250,000 disabled veterans. The checks will go out automatically starting in May to those who have filed a Form 1040 or 1040A tax return for 2007.
Already scammers are contacting targets by phone, saying they represent the IRS, and explaining that they can direct-deposit rebates right away if the victim coughs up a bank account number on the spot. The truth, of course, is that the perpetrator will use that number not to deposit funds but to steal them or to steal the victim's identity to commit an array of financial swindles.
"We have no way of knowing how widespread this scam is: says Michelle Lamishaw, IRS spokeswoman. But as millions of Americans await the cash payments, Lamishaw says the IRS is anticipating an increase in con jobs by phone and e-mail.
In response the agency wants to make it clear to taxpayers that "the IRS will not be calling them and will not be e-mailing them about the economic stimulus package:' Lamishaw says. "That is just not our mode of operation. And we certainly do not call or e-mail people and ask for personally identifiable information:
Katharine Greider, author AARP
HOUSE VOTES TO END USE OF PRIVATE TAX COLLECTORS
The United States House of Representatives has voted 238 to 179 to kill an Internal Revenue Service program that relies on private debt collectors to pursue taxpayers for back taxes.
Congressmen voted to scuttle the two year-old effort, which has the IRS on track to lose more than $37 million as it pays contractors to do what the government's own tax experts say IRS agents could do more efficiently. Despite aggressive collection tactics, the contractors have brought in only $49 million in revenue, little more than half of what it has cost the IRS to implement the program.
"This program violates the public trust and must end; Rep. John Lewis, a chief sponsor of the bill, said in a statement.
Similar legislation has passed the House before. The real battle will be in the Senate, where one of the programs staunchest defenders, Charles Grassley, is on the Senate Finance Committee which must approve the bill.
Grassley's state, Iowa, is home to one of the two private debt collectors still used by the IRS. He has said that over time, the program can help narrow the $345 billion "tax gap" the gulf between what taxpayers owe and what the IRS collects.
Detractors claim the IRS would be more effective than private companies. Senator Grassley has written a letter to Senator Byron Dorgan, who has introduced a bill to stop the program, stating "The IRS has no interest and no will to pursue these debts:
HOT TIPS: AVOID THE IRS HOT SEAT
More Americans than ever before are being audited, as the Internal Revenue Service is working hard to collect every single dollar it can.
The total number of individual returns audited last year increased 7% from 2006, shooting to 1.38 million from 1.29 million.
Tax audits, in which returns are scrutinized to ensure accuracy, are an attempt to account for the shortfall in government income from taxes. The IRS recently estimated the gap between what taxpayers owe and what the government actually collects to be roughly $312 billion to $353 billion per year.
The IRS keeps its formula for auditing, also known as the Discriminate Information Function System, under lock and key.
While you may not know exactly what prompts the IRS to pull a return out of the stack, a few factors can increase the likelihood that the tax man will take a second look.
A high income ups your odds of catching unwanted attention, and the deeper your pockets get, the more attractive you become in the eyes of the auditor.
In 2007, the IRS audited 29.2% more individuals making over $200,000 than it did in 2006. And for those lucky few, one out of every 11 individuals with incomes of $1 million or more faced an audit last year.
The more money you earn, the higher the chance that you have some mistake in your reported income, and the more valuable that potential miscalculation is to the IRS.
Steep expenses are another factor that will send a return under the magnifying glass of an auditor. If anything seems excessive, the IRS will take a closer look.
A carelessly finished return, either incomplete or hard to read, is an invitation to the tax man. An organized return prepared on the computer eliminates the possibility that a number is illegible and tax preparation software reminds you to fill in each box and checks for errors.
Messy returns are more likely to contain errors and holes. Even a simple oversight means that an auditor has to examine the return in order to correct the mistake. If someone is handing in a return done by hand, it is a red flag.
Donating to charity is admirable, but be sure that you are careful when you declare your donations as deductions. It is really unusual for people to give more than 10% of their income. 10% is an extremely large number. The average is really about 2%.
Self-employment business deductions are another consistently dangerous area on the tax form. So while you may work in your pajamas, think twice before you declare your newest silk set a business necessity.
Home office expenses are automatic red flags for the IRS. It appears as if you are covering personal expenses with illegitimate home office deductions and auditors may try to challenge your business practice.
Having very detailed logs and organized receipts can help keep the auditors away.
WHAT IS HAPPENING TO MONEY
Recently released by the Commerce Department, a report shows that Americans are saving less with Americans saving at the lowest rate since the Great Depression. Personal savings stands at a national level of a negative $6.2 million as of January 2008. About 40% of Americans say they are saving nothing for retirement. One reason: Over the past year, inflation rose 4.3% while salaries rose only 3.4%. One in four Americans told the Employee Benefit Research Institute that they have no savings at all.
The report further confirmed that retirement is coming later and later for many Americans. The percentage of Americans 55 or older working full-time increased from 54.2% in 1993 to 64.4% in 2005. Nearly one in four people between 65 and 74 was still in the labor force in 2006, compared with just one in five in 2000. The study indicates that 17% of workers have suffered a reduction of retirement benefits offered by their employers in the last two years. Of these, only one-third say they are saving more for their retirement as a result.
One of the largest areas of debt growth is student debt. Tuition costs have climbed 60% since 2000, and the average graduating senior now owes more than $20,000 according to the National Center for Education Statistics. This is twice as much as graduates owed a decade ago. Nearly a quarter of recent grads owe in excess of $25,000. While student debt rose 8% from 2005 to 2006, starting salaries rose only 4%.
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