After we filed our 2010 tax return, we realized that we missed claiming the American Opportunity Credit for paying our son’s college tuition last year. Our joint income is less than $160,000, so we qualify. Is it too late to claim the tax credit? -- A.L., Pittsburgh
No, it’s not too late to claim the credit, which can knock $2,500 off your income tax bill. Generally, you have up to three years after the date you filed your original federal tax return to amend it, but the sooner you file, the sooner you’ll get a refund.
Download Form 1040X (available at www.irs.gov), enter the year of the return you are amending, fill in the new numbers, and attach any tax forms that are affected by the change.
Reducing your federal tax bill could also lower your state income tax bill. File your amended federal return first, get a copy of the transcript of your account from the IRS (confirming you amended your federal return), and then file an amended return with your state, along with a copy of your federal Form 1040X.
Federal help for flood victims
I live in Mississippi, and my house was flooded during the storms in May. I didn’t have flood insurance. Are there any programs to help me pay for home repairs? -- G.W., via e-mail
If you live in a federally declared disaster area, you may qualify for financial assistance from the Federal Emergency Management Agency for your uninsured losses. Check www.fema.gov to see whether your county is listed. If so, you can apply for assistance online at www.disasterassistance.gov. You may be able to get help paying for repairs or for replacement or temporary housing.
Residents in federally declared disaster areas can also apply for low-interest loans from the Small Business Administration to help pay for uninsured damages. Despite the name, SBA disaster loans are not limited to businesses. Homeowners can borrow up to $200,000 to replace or repair damaged property and up to $40,000 to replace or repair personal property, furniture and other items damaged by the disaster. The government considers your credit record and ability to repay the loan, but it tends to be more lenient than commercial lenders. For more information, go to
For more information about buying flood coverage for the future, see www.floodsmart.gov. There’s a 30-day waiting period before flood coverage kicks in.
Exemption for 401(k) payouts
I turned 70½ this year, but I am still working. Do I have to take required minimum distributions from my IRA and 401(k) plan? -- J.P., Belton, Tex.
You have to take required minimum distributions from your traditional IRAs after you reach age 70½ regardless of your work status. But you can delay tapping your 401(k) or similar employer-based retirement plan until after you stop working.
You have until April 1 of the year after you turn 70½ to make your first IRA withdrawal, but you must take your second required withdrawal by December 31 of that same year. You must take distributions from your IRA by December 31 each year after that. You must take annual payouts from your 401(k) after you stop working.
Mortgages for second homes
My wife and I moved from Florida a few months ago. We were unable to sell our house there -- and we owe more on the mortgage than the house is worth -- but we have a renter. Is it possible to get a mortgage on a new house up here? Does it help if we have a signed lease from our tenants? -- G.M., Germantown, Md.
You could qualify for another mortgage if your regular income is high enough. Unfortunately, having a signed lease from your tenants doesn’t help if you are underwater on your mortgage. “Unless the borrower has 30% equity in the rental residence, the rental income they receive cannot be used when qualifying for a new loan,” says Chris Bennett, a mortgage consultant in Huntersville, N.C. Federal Housing Administration loans are a little more lenient. FHA requires at least 25% equity in your previous home to be able to count rental income. But even if you meet the equity requirements, to account for possible vacancies you are generally allowed to count only 75% of monthly rental income, says Bob Walters, of QuickenLoans.
The underwriting guidelines are strict for this type of scenario, says Bennett. Your total debt-to-income ratio generally must be lower than 45% and sometimes even less, which means that your mortgage payments (on both homes), credit card payments, car loan payments and other debt payments must be lower than 45% of your gross monthly income.
You will also have to meet a cash reserve requirement of six months’ worth of mortgage payments for both houses, says Bennett. However, portions of retirement accounts can count toward this reserve requirement.
Bear market for baseball cards
My mom gave me her baseball cards from the 1970s. Are they worth anything? What makes a card valuable? -- W.C.L., Washington, D.C.
We are in a bear market for baseball cards -- the market peaked in the 1980s. “Mass manufacturing and proliferation of card manufacturers decimated the industry,” says Michael Osacky, of Baseballintheattic.com, in Chicago.
The most valuable cards were produced in 1975 or earlier, and the older the better. “The 1950s cards are very popular and valuable because that is when Mickey Mantle, Willie Mays, Hank Aaron and several other Hall of Fame players started in the major leagues,” says Osacky. In general, a player’s rookie card is the most valuable.
To fetch top dollar, cards need to be authenticated, which helps weed out fakes and provides a grade that lets buyers assess a card’s condition. You can get baseball cards graded at Professional Sports Authenticators, Beckett or SGC, where you can also find links to recent auction prices.
If you want to sell your cards, there are specialized auction houses for sports memorabilia, but they usually take a 20% cut. And eBay is more of a buyer’s market than a seller’s market right now, says Osacky.