Today’s Money 911: College Student Roth IRA & Short Sale Income Tax

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Today’s Money 911: College Student Roth IRA

Money questions come up often in life, and it’s hard to know where to turn. But Today’s Money 911 team is up to the challenge of answering any money questions, from investing for students to short sale income, mortgages with exes, and how to finance a small business. First up, is it too early for a  College Student Roth IRA investment?

Becca from Auburn, Maine, is a college student getting help from her parents. She asked via Skype whether it’s too early for her to start investing.

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College Student Roth IRA: Today's Money 911

If you have the income, it's never too early to invest for retirement as a College Student Roth IRA. Today's Money 911 tackled viewer finance questions.

“Open a Roth IRA, because you’ve got income, so you can actually match your income up to a $5,000 contribution each year, and put that money away for retirement,” said Jean Chatzky, Today’s Money Editor and author of Money Rules: The Simple Path To Lifelong Security. “And the nice thing about a Roth, which you can invest any way you want it, is that if you need the money…you can always get at it.”

Today’s Money 911: Short Sale Income

James from Farwell, Michigan, had a question about his brother’s short sale of a home: “Is the difference between what he owes and what the bank accepts considered taxable income?”

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CNBC’s Sharon Epperson said this is a common situation these days, but the answer is you do have to report this income.

“The good news is, until December 31 2012, it is generally federal tax free,” she said. “After that, it’s going to change, and then you will have to pay your ordinary income tax rate on that money that’s forgiven. …You definitely want to get this done by December 31, so your brother-in-law needs to hurry up.”

Short sale laws are always changing, so you want to look into your federal and state tax guidelines for the most current information.

Today’s Money 911: Ex-Boyfriend’s Mortgage

A couple’s anonymous email question asked what to do about their attempts to finance a new home. The wife invested in property with her ex-boyfriend that is complicating their ability to get a mortgage for their new home. They want to know how transfer the previous investment out of the wife’s name.

“It’s never a good idea to take on a liability on someone else’s behalf,” Farnoosh Torabi of Yahoo’s Financially Fit said. “You can’t just change names on a mortgage. She has to sell the house and pay off the mortgage. …He is not legally obligated to pay off this mortgage.”

However, if the ex-boyfriend is on the title and can produce 12 months of cancelled checks showing he is paying off the mortgage, that could influence a mortgage lender to favorably consider the married couple’s lending application.

Today’s Money 911: Count Me In Women’s Small Business Financing

Nancy from Breese, Illinois, was recently laid off after 25 years and can’t seem to find another job. She is looking for government grants to open her own bakery business, but doesn’t know how to find legitimate online resources for women starting businesses.

Jean Chatsky recommended the websites for the Small Business Admimistration, and Count Me In, a micro-financing site for women starting businesses. She also encouraged Nancy to get a job in a bakery before going into the business, to ensure that it’s a field you really want to enter professionally.

The panel also suggested selling baked goods at a farmer’s market or on a small scale to gauge interest in the meantime.

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