Ask Liz Weston

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Liz Weston

Q&A: Credit use and your scores

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Dear Liz: When my credit utilization decreased to 24%, my credit score rose from 675 to 690. My utilization has since decreased to 17% but my score remains 690. Approximately what does my credit utilization have to be to see a credit score over 700?

Answer: Keep in mind that you have many credit scores, not just one, and the formulas used to create these scores can vary considerably. But in general, the less you use your available credit, the better. People with the highest credit scores tend to use less than 10% of their credit limits.

Q&A: Transfer-on-death deed

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Dear Liz: Having been through the probate process several times in California and Nevada, I can say it stinks. It’s expensive and occurs at a time when family is most stressed and saddened after having lost a loved one. Although estate planning and revocable trusts seem to be all the rage, I’d like to recommend another path: transfer-on-death deeds for real estate. They are available online via the county. It avoids a complicated probate, is far simpler than a living trust and still gives the family the benefit of a stepped-up tax basis on the property.

Answer: Probate isn’t always a nightmare. Some states have adopted reforms that make the process less expensive and protracted. Even in states with notoriously slow and expensive probate, such as California, there are typically rules that allow small estates to bypass most of the red tape.

Because of the rising value of real estate, however, simply owning a home can be enough to trigger probate even when the deceased has few or no other assets. Thus, many states now offer the option of transfer-on-death deeds for real estate, and they can be a good solution for people who don’t own much other than a home.

This week’s money news

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This week’s top story: 4 questions to ask before you buy a home or invest in 2023. In other news: How to make holiday returns with buy now, pay later, how to prepare for a winter storm, and 5 tasks for your year-end credit card checklist.

4 Questions to Ask Before You Buy a Home or Invest in 2023
Ask yourself the right questions first to guide your 2023 money goals.

How to Make Holiday Returns With Buy Now, Pay Later
Buy now, pay later returns can be tricky. Maximize your chances of making a successful BNPL return by following these steps.

How to Prepare for a Winter Storm
When a winter storm strikes, preparation means more than a trip to the store. Here’s how to storm-proof your finances.

5 Tasks for Your Year-End Credit Card Checklist
It’s a perfect time to make sure you’re maximizing your card benefits — and to review your spending habits in case you could do better with a different card.

Q&A: Recourse when the IRS goofs

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Dear Liz: Is there a “court of last resort” when dealing with the IRS and the Treasury Department? I tried to buy an I bond using my tax refund. My tax preparer checked the appropriate box on the 1040 and submitted the form 8888. No bond was sent to me and I have been sent back and forth between the Treasury and the IRS multiple times. Finally the IRS admitted it did not notify the Treasury like it should have to generate the bond and it did apologize.

The Treasury says it can’t issue the bond without the notification from the IRS, and the IRS claims there is nothing it can do to fix the problem now. Is there any recourse whereby I can get my bond? I followed all of the rules, the 1040 was correct and to tell you the truth, I am unhappy that there does not seem to be a way of righting a wrong not of my making.

Answer: Start by contacting the Taxpayer Advocate Service, which was created in part to help resolve problems like this. You’ll find it at taxpayeradvocate.irs.gov.

Also consider reaching out to your congressional representatives, who have constituent services that may be able to help.

Q&A: Why your Medicare premium might jump unexpectedly and what you can do about it

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Dear Liz: I find myself in a very bad tax/Social Security/Medicare loop that I am sure many other seniors are in as well. First, I sold my house and had to pay $50,000 in federal taxes. Now, I have to pay $900 a month for Medicare because I showed a high income for the year I sold the house. The “profit” went to settle my divorce, pay the tax bill and make a down payment on my next house. There’s no extra money.

But as a result of my Medicare premiums going up, I will either have to find a job — which is hard for seniors — or withdraw more from my retirement funds so I can pay my mortgage. Higher withdrawals will mean a higher income, higher taxes and higher Medicare premiums. This cycle will never end!

Answer: What you’re paying is called an income-related monthly adjustment amount or IRMAA. These adjustments, which are based on your income two years previously, can significantly raise premiums for Medicare’s Part B, which covers doctors’ visits, and Part D, which covers prescriptions.

The normal monthly Part B premium in 2022 was $170.10, for example, but IRMAA can boost that premium up to $578.30 for the highest-income recipients. IRMAA added $12.40 to $77.90 to monthly Part D premiums in 2022.

If your premiums are $900 as a single person, you’re likely also paying for a supplemental or Medigap plan that covers deductibles and co-pays. You may also be paying a premium penalty if you started Medicare late.

There is a potential way out, however. Social Security, which is the agency that handles Medicare premiums, will reconsider an adjustment if you’ve experienced certain “life changing events” that lead to an income decrease.

Divorce and annulment are among the life changes the agency will consider. Others include the death of a spouse, marriage, you or a spouse stopping work or reducing hours, the loss of a pension, involuntary loss of income-producing property due to a natural disaster, disease, fraud or other circumstances; or receipt of settlement payment from a current or former employer due to the employer’s closure or bankruptcy.

Social Security should have sent you a notice alerting you to the change in your premiums before it went into effect. That document included instructions about how to request a review. You also can call the agency’s toll free number at (800) 772-1213.

How to complain and get results

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If you feel you have more to complain about these days, you may be right.

The products we use are increasingly complex, which often means they have more ways to malfunction. Companies are still struggling to hire and retain workers, so the customer service representatives who are supposed to help you may not know how. And that’s if you can even get through to a human being after navigating websites, automated chatbots and phone systems that seem designed to thwart you at every turn.

“You’re searching for where to call. Once you get through, you’re going to yell ‘agent!’ in the phone 12 times, and then they send you to the wrong place,” says Scott M. Broetzmann, chief executive of research firm Customer Care Measurement & Consulting in Alexandria, Virginia.

On average, customers made 2.9 contacts with a company while attempting to resolve problems, according to the firm’s 2020 National Customer Rage Study, which polled 1,026 consumers about problems with products or services in the past 12 months. A whopping 58% of respondents who complained got nothing — zero, zilch — as a result of their efforts. So perhaps it’s not surprising that 65% of those who had a problem experienced consumer rage. In my latest for the Associated Press, learn how to complain and get results.