Unemployment insurance income is rarely adequate to cover basic living expenses and fixed costs, and unemployed individuals generally tap into assets with the highest tax consequences, even though other options are available
1. Avoiding withholding
Plenty of people opt to collect unemployment income without having federal withholding deducted. Yes, it's tempting to receive the full check. But how are you going to pay the taxes on the unemployment income in April? You won't have the money.
Have the withholding taken out, or have the discipline to set aside at least 15% of the money in a savings account you don't touch.
If you get sick while you're on unemployment, remember to switch your benefits to disability benefits. Those checks are usually higher -- and the income is not taxable.
If your prospects for getting a job look really bleak for the year ahead, consider this interesting suggestion from Doug Thorburn, a Northridge, Calif.-based enrolled agent: See if the tax benefits of being claimed as someone else's dependent are substantial. If they are, consider halting your unemployment benefits before your total income for the year reaches $3,500. This definitely takes some planning.
2. 401(k) withdrawals
It's almost instinctive: The first thing you do when you're out of work and need money is tap into your 401(k) plan. Why is this a bad idea? Three reasons:
One, often people draw the money thinking it qualifies for exceptions to the penalties, but the exceptions often only relate to draws from IRAs, not 401(k)s.
Two, it's very expensive money, costing as much as 50% of the amount drawn. There's the penalty of 10% from the IRS and whatever your state penalty is (not all states have penalties). Then there's the tax: 25% plus state tax. In addition, the draw increases your tax bracket and may increase your income so you lose other deductions or credits. And, you permanently deplete your retirement savings.
Three, and worst of all, when it comes time to pay the tax, you won't have the money. You will start a pattern of tax debt overshadowing your life and finances for the next two to 10 years.
What is a viable alternative? There are two options.
One, if there is a lot of money in the account, you can roll the money into an IRA and set up withdrawals allowing you to take substantially equal periodic payments (monthly or annually) over your life expectancy. You will pay taxes on the money -- consider this a replacement for your wages - but you will avoid IRS and state early withdrawal penalties
Two, start a business. With so many people unemployed right along with you, odds are that you will not get a job quickly, certainly not one earning what you used to earn. So you may well start a business.
If you start a business designed to generate a real stream of income, you can establish a solo 401(k) plan for yourself. Meet with an expert to ensure you meet all the guidelines. If your spouse works in your business, you can establish an account for him or her as well. Then, roll over the funds from your old 401(k) to your new solo 401(k) accounts.
Now you can borrow up to 50% from each account, up to $50,000 per person. You pay no taxes at all (perhaps under $500 in total fees). You must repay that money - to yourself; so you will be forced to replenish your retirement account.
3. IRA withdrawals
That's usually the next step for unemployed folks. Don't just take the money as you need it, without any planning. Think through your financial needs and withdraw the money properly. There are several ways for unemployed folks to pull money from IRAs without facing those harsh early withdrawal penalties. Taxes will still apply.
As part of your planning, assess your health. If you have been just hanging on thinking you had no choice but to work, it's time to start thinking about getting your health evaluated to see if you should still be working. Some special benefits that might result? You could switch your unemployment benefits to disability benefits, which are not taxable. Or, you might qualify for Social Security disability payments, which would allow you to draw Social Security funds early.
Another possible plan: Withdraw money to cover your health insurance premiums while you're unemployed.
Or, this may be a good opportunity to go back to school and get retrained for another career or profession. Funds paid directly to a qualified educational institution will avoid the penalty. In addition, you may qualify for the lifetime learning credit or the education expense deductions.
Another possible plan: Buying a home. You may draw up to $10,000 for the down payment of a first home (if neither you nor your spouse owned a home within the last two years). With the real-estate market so depressed, now may be a good time to buy a new home. And, not only can you get the down payment money penalty-free, if you close escrow before June 30, 2009 you may qualify for the first-time homebuyers credit of up to $7,500. That may be enough to help you get through the year.
Heck, if you can't find any other means of gainful employment, you could live in the house for two years, fix it up and sell it or rent it out - and collect the stream of income.
4. Dumping your home
Another pitfall is walking away from a home that is worth substantially less than the loan balance. You may find yourself facing taxes on phantom income -- cancellation of debt. The rules are complicated, depending on the nature of the loan contract, and your state of residence. There may be ways around the extra taxes, using IRS' insolvency rules or by filing bankruptcy before disposing of the home.
As you may have noticed, each pitfall has ways around it - if only you stop and plan before desperately grabbing money. Sure, you need the money, time is short and you're feeling pressured. But before doing anything rash, count to 10, take a deep breath, and get some advice. Who knows, your adviser may even come up with a job, or a great idea for a business that may change your life.
Monday, February 2, 2009
Tax Credits Not To Miss!
Taxpayers whose wages were slashed in 2008 -- or worse, who were laid off -- may be eligible for tax credits that weren't within their reach in previous years. In addition, first-time home buyers and parents of children under age 17 may also be able to save a little money on their tax bill thanks to some new credits and thresholds.
Here are four credits that can help boost your refund.
Recovery Rebate Credit
Feel like you got shortchanged last year when the government doled out its Economic Stimulus Act rebate checks? Well, if you didn't qualify for the rebate before or didn't receive the full amount ($600 per taxpayer and $1,200 if married and filing jointly) because your income was too high (or too low), you may now be able to collect.
The rebate checks that were sent out last year were based on information on your 1040 for 2007. This second chance to collect will be based on your 2008 1040. So if your income took a hit last year, it may be worth a shot. You can also qualify for this credit if you had a child in 2008, among other reasons.
First-Time Homeowner Credit
For those who bought a home last year or want to in the months ahead, Uncle Sam has a little present for you. This tax credit, essentially a temporary, no-interest loan, is being offered to those who bought -- or will buy -- a home between April 9, 2008, and June 30, 2009, and who didn't own a home during the three years preceding the purchase.
The maximum amount of the credit equals either 10% of the home’s price or $7,500 ($3,750 if you are married, but filing separately), whichever is less. One hitch: Homeowners will have to repay the credit over 15 years by either owing more in taxes or receiving a smaller refund. So, if you claim the credit on your 2008 tax return, you’ll have to start repaying it when you file your taxes for 2009. (The 2009 tax return will include an extra line for this credit.)
Child Tax Credit
Many parents will be eligible to receive a tax credit of up to $1,000 per child this year as long as that child was under the age of 17 at the end of 2008. (This credit is in addition to the regular $3,500 exemption that you can claim for each dependent.)
The child tax credit begins phasing out for filers whose modified adjusted gross income is above $110,000 if they are married and filing jointly, above $75,000 for single filers, or more than $55,000 for married filing separately. In addition, the child (who can also be the filer’s sibling, stepchild, grandchild, niece or nephew) must have not provided more than half of his or her own support and, in most cases, must have lived with the filer for more than half of 2008.
The one catch: The amount you receive from the child tax credit is partly based on your income so you may not receive the full amount -- or possibly anything. If you don't qualify for any or all of the $1,000 child tax credit you're still in luck. Try applying for the additional child tax credit, which also offers up to $1,000 per qualifying child. (Taxpayers who qualify for parts of both credits can only receive a maximum of $1,000 per eligible child.) Typically, this credit is reserved for low-income taxpayers, but a recent change in the way the IRS computes eligibility for this credit, will allow more middle-income taxpayers to qualify this year, says Eric Smith, a spokesman for the IRS.
Earned Income Tax Credit
This credit is typically geared toward low-income taxpayers, but given the rise in the unemployment rate and wage cuts, more people are likely to qualify for it this year, says Evans. (According to the IRS, one in six taxpayers currently can claim this credit.)
To qualify, families with two or more children must have made less than $41,646 in 2008, and those with one child must have earned less than $36,995. Also, individuals without children who make less than $15,880 are eligible.
The maximum credit for each of these groups is $4,824, $2,917 and $438, respectively.
Taxpayers who qualify to claim this credit on their federal income tax return may also be eligible for a similar credit on their state or local income tax return. Twenty-two states, including New York, Maryland and Iowa, offer residents an earned income tax credit.
Here are four credits that can help boost your refund.
Recovery Rebate Credit
Feel like you got shortchanged last year when the government doled out its Economic Stimulus Act rebate checks? Well, if you didn't qualify for the rebate before or didn't receive the full amount ($600 per taxpayer and $1,200 if married and filing jointly) because your income was too high (or too low), you may now be able to collect.
The rebate checks that were sent out last year were based on information on your 1040 for 2007. This second chance to collect will be based on your 2008 1040. So if your income took a hit last year, it may be worth a shot. You can also qualify for this credit if you had a child in 2008, among other reasons.
First-Time Homeowner Credit
For those who bought a home last year or want to in the months ahead, Uncle Sam has a little present for you. This tax credit, essentially a temporary, no-interest loan, is being offered to those who bought -- or will buy -- a home between April 9, 2008, and June 30, 2009, and who didn't own a home during the three years preceding the purchase.
The maximum amount of the credit equals either 10% of the home’s price or $7,500 ($3,750 if you are married, but filing separately), whichever is less. One hitch: Homeowners will have to repay the credit over 15 years by either owing more in taxes or receiving a smaller refund. So, if you claim the credit on your 2008 tax return, you’ll have to start repaying it when you file your taxes for 2009. (The 2009 tax return will include an extra line for this credit.)
Child Tax Credit
Many parents will be eligible to receive a tax credit of up to $1,000 per child this year as long as that child was under the age of 17 at the end of 2008. (This credit is in addition to the regular $3,500 exemption that you can claim for each dependent.)
The child tax credit begins phasing out for filers whose modified adjusted gross income is above $110,000 if they are married and filing jointly, above $75,000 for single filers, or more than $55,000 for married filing separately. In addition, the child (who can also be the filer’s sibling, stepchild, grandchild, niece or nephew) must have not provided more than half of his or her own support and, in most cases, must have lived with the filer for more than half of 2008.
The one catch: The amount you receive from the child tax credit is partly based on your income so you may not receive the full amount -- or possibly anything. If you don't qualify for any or all of the $1,000 child tax credit you're still in luck. Try applying for the additional child tax credit, which also offers up to $1,000 per qualifying child. (Taxpayers who qualify for parts of both credits can only receive a maximum of $1,000 per eligible child.) Typically, this credit is reserved for low-income taxpayers, but a recent change in the way the IRS computes eligibility for this credit, will allow more middle-income taxpayers to qualify this year, says Eric Smith, a spokesman for the IRS.
Earned Income Tax Credit
This credit is typically geared toward low-income taxpayers, but given the rise in the unemployment rate and wage cuts, more people are likely to qualify for it this year, says Evans. (According to the IRS, one in six taxpayers currently can claim this credit.)
To qualify, families with two or more children must have made less than $41,646 in 2008, and those with one child must have earned less than $36,995. Also, individuals without children who make less than $15,880 are eligible.
The maximum credit for each of these groups is $4,824, $2,917 and $438, respectively.
Taxpayers who qualify to claim this credit on their federal income tax return may also be eligible for a similar credit on their state or local income tax return. Twenty-two states, including New York, Maryland and Iowa, offer residents an earned income tax credit.
Wednesday, January 28, 2009
Pen Pals For Soldiers
Below are current military addresses of both men and women who are interested in receiving mail from a PEN PAL. Your cards, letters and postcards mean a lot to our SOLDIERS serving overseas. The single most requested items from our SOLDIERS are cards, letters and postcards.
It’s easy to write to the troops.
Write your letter or postcard as you would to a friend, family member.
If you would like a like a response back, include your address at the bottom of your letter or postcard.
Place your letter in and envelope and address it with the SOLDIERS name exactly as written (below). Include your return address on the outside of the envelope.
Place a postage stamp on your letter or postcard and place it in the mail.
Note:
It generally takes 4-8 weeks from the time you mail your letter or postcard until you get a response back. Write as many SOLDIERS as you like.
We live in the land of the free, because of the brave…..
Brian Meinert
MNC-I / PMO / K-9
APO AE 09342
Army Iraq - Military Working Dog Handler
Deployed til 4/2/09
6 males - 1 female - 7 dogs
Cpl David C. Olszak
K-9 Kennel Master
Unit 44505
FPO AP 96426-4505
Marine Iraq - Military Working Dog Handler
Deployed til 4/30/09
20 males - 6 dogs
Cpl Jakub Holmes
2D MP BN K-9 DET
UNIT 73795
FPO AE 09509-3795
Marine Iraq - Military Working Dog Handler
Deployed til 4/15/09
8 males - 8 dogs
Andrew M. Limes
447 AEG/ESFS/K9
APO AE 09321
Air Force K 9 Iraq Military Dog handler
Deployed til 4/15/09
8 males
SSgt Erik Ellingson
HHT 1-32 CAV / K9 101ABN (AASLT)
LSA Anaconda
APO AE 09391
Airman Iraq Military Dog Handler
Deployed til 1/31/09
2 males - 2 dogs
SrA Wayne W. Stickels
Law and Order Det (k9)
APO AE 09366
Air Force Kuwait Military Dog Handler
Deployed til 2/20/09
2 males
Sgt Matthew J. Favinger
Camp Korean Village MP/K9
FPO AE 09371
Marine Iraq Military Dog Handler
Deployed til 4/9/09
6 males
SSgt John J. Grice
379 ESFS/K-9
APO AE 09309 Airman Iraq Military Dog Handler
Deployed til 2/1/09
10 males - 1 female - several dogs
LCpl Brett Yamashita
Camp Korean Village
MP/K9
APO AE 09371
Marine Iraq Military Dog Handler
Deployed til 4/1/09
5 males
SSgt Eric S. Magnuson
Law & Order DET (K-9)
APO AE 09366
Airman Iraq Military Dog Handler
Deployed til 2/15/09
5 males - 2 females
Clayton W. Glover
TF Guardian ATTN: K-9
APO AE 09354
Army Afghanistan Kennel Master
Deployed til 8/14/09
17 males - 5 females
Sgt Thomas Williams
1/2 WPNS CO EOD
UNIT 73035
FPO AE 09509-3045
Marine Iraq Military Dog Handler
Deployed til 3/15/09
10 males - 1 dog "Eve"
Johnny W. Kyte
TF GUARDIAN
ATTN: K9
APO AE 09354
Army Afghanistan Military Dog Handler
Deployed til 2/15/09
11 males - 1 females
Army - Iraq
Deployed til 9/15/09
FEMALE SOLDIERS
CPT Ramona Toussaint
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Lori August
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Linda Welsh
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Tryon
C CO 27th BSB
1st Cavalry Division
APO AE 09331
2LT White
C CO 27th BSB
1st Cavalry Division
APO AE 09331
2LT Kwan
C CO 27th BSB
1st Cavalry Division
APO AE 09331
2LT Stump
C CO 27th BSB
1st Cavalry Division
APO AE 09331
MAJ Alexanian
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Darst
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Shaw
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Olivares
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SFC Rainford
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SSG Saint
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Savoy
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Anderson
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SFC Kym B. Ricketts
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPL Kermetris Hill
C CO 27th BSB
1st Cavalry Division
APO AE 09331
MALE SOLDIERS
SFC Stephens
C CO 27th BSB
1st Cavalry Division
APO AE 09331
PFC Torres
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SGT Nanai
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SGT Hunter
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Harrison
C CO 27th BSB
1st Cavalry Division
APO AE 09331
PV2 Worthington
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Hunter
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Curry
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Johnson
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Bhatta
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Roberts
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Bender
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SSG Smallwood
C CO 27th BSB
1st Cavalry Division
APO AE 09331
It’s easy to write to the troops.
Write your letter or postcard as you would to a friend, family member.
If you would like a like a response back, include your address at the bottom of your letter or postcard.
Place your letter in and envelope and address it with the SOLDIERS name exactly as written (below). Include your return address on the outside of the envelope.
Place a postage stamp on your letter or postcard and place it in the mail.
Note:
It generally takes 4-8 weeks from the time you mail your letter or postcard until you get a response back. Write as many SOLDIERS as you like.
We live in the land of the free, because of the brave…..
Brian Meinert
MNC-I / PMO / K-9
APO AE 09342
Army Iraq - Military Working Dog Handler
Deployed til 4/2/09
6 males - 1 female - 7 dogs
Cpl David C. Olszak
K-9 Kennel Master
Unit 44505
FPO AP 96426-4505
Marine Iraq - Military Working Dog Handler
Deployed til 4/30/09
20 males - 6 dogs
Cpl Jakub Holmes
2D MP BN K-9 DET
UNIT 73795
FPO AE 09509-3795
Marine Iraq - Military Working Dog Handler
Deployed til 4/15/09
8 males - 8 dogs
Andrew M. Limes
447 AEG/ESFS/K9
APO AE 09321
Air Force K 9 Iraq Military Dog handler
Deployed til 4/15/09
8 males
SSgt Erik Ellingson
HHT 1-32 CAV / K9 101ABN (AASLT)
LSA Anaconda
APO AE 09391
Airman Iraq Military Dog Handler
Deployed til 1/31/09
2 males - 2 dogs
SrA Wayne W. Stickels
Law and Order Det (k9)
APO AE 09366
Air Force Kuwait Military Dog Handler
Deployed til 2/20/09
2 males
Sgt Matthew J. Favinger
Camp Korean Village MP/K9
FPO AE 09371
Marine Iraq Military Dog Handler
Deployed til 4/9/09
6 males
SSgt John J. Grice
379 ESFS/K-9
APO AE 09309 Airman Iraq Military Dog Handler
Deployed til 2/1/09
10 males - 1 female - several dogs
LCpl Brett Yamashita
Camp Korean Village
MP/K9
APO AE 09371
Marine Iraq Military Dog Handler
Deployed til 4/1/09
5 males
SSgt Eric S. Magnuson
Law & Order DET (K-9)
APO AE 09366
Airman Iraq Military Dog Handler
Deployed til 2/15/09
5 males - 2 females
Clayton W. Glover
TF Guardian ATTN: K-9
APO AE 09354
Army Afghanistan Kennel Master
Deployed til 8/14/09
17 males - 5 females
Sgt Thomas Williams
1/2 WPNS CO EOD
UNIT 73035
FPO AE 09509-3045
Marine Iraq Military Dog Handler
Deployed til 3/15/09
10 males - 1 dog "Eve"
Johnny W. Kyte
TF GUARDIAN
ATTN: K9
APO AE 09354
Army Afghanistan Military Dog Handler
Deployed til 2/15/09
11 males - 1 females
Army - Iraq
Deployed til 9/15/09
FEMALE SOLDIERS
CPT Ramona Toussaint
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Lori August
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Linda Welsh
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Tryon
C CO 27th BSB
1st Cavalry Division
APO AE 09331
2LT White
C CO 27th BSB
1st Cavalry Division
APO AE 09331
2LT Kwan
C CO 27th BSB
1st Cavalry Division
APO AE 09331
2LT Stump
C CO 27th BSB
1st Cavalry Division
APO AE 09331
MAJ Alexanian
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Darst
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Shaw
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Olivares
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SFC Rainford
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SSG Saint
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Savoy
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Anderson
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SFC Kym B. Ricketts
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPL Kermetris Hill
C CO 27th BSB
1st Cavalry Division
APO AE 09331
MALE SOLDIERS
SFC Stephens
C CO 27th BSB
1st Cavalry Division
APO AE 09331
PFC Torres
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SGT Nanai
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SGT Hunter
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Harrison
C CO 27th BSB
1st Cavalry Division
APO AE 09331
PV2 Worthington
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Hunter
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SPC Curry
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Johnson
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Bhatta
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Roberts
C CO 27th BSB
1st Cavalry Division
APO AE 09331
CPT Bender
C CO 27th BSB
1st Cavalry Division
APO AE 09331
SSG Smallwood
C CO 27th BSB
1st Cavalry Division
APO AE 09331
Tuesday, January 27, 2009
Tax Tip #2
If you want your taxes done for free here is some good tips on how to file state and federal for free from the comfort of your home on the internet.
1. Go to http://www.turbotax.com (click on free edition)and have your federal taxes done for free which you can print or efile also for free. Make sure to have Adobe if you want to have your files saved and access them. This way you can have all the information you will be asked when doing your state taxes
2. If you want your state taxes done for free here is a site to go to: (Turbo tax is great but they charge to do deluxe versions of federal or just to have your state prepared) http://www.irs.gov/efile/article/0,,id=97915,00.html Once you go to this site click on the link that says: states participating in Federal/State efile
3. Go into this site and find your state (if applicable) and file your state taxes for free with efile- and yes you can print and mail them as well make sure you have Adobe Reader for that one too.
Good luck and for the love of tax filing have them prepared easily and for FREE!!!
1. Go to http://www.turbotax.com (click on free edition)and have your federal taxes done for free which you can print or efile also for free. Make sure to have Adobe if you want to have your files saved and access them. This way you can have all the information you will be asked when doing your state taxes
2. If you want your state taxes done for free here is a site to go to: (Turbo tax is great but they charge to do deluxe versions of federal or just to have your state prepared) http://www.irs.gov/efile/article/0,,id=97915,00.html Once you go to this site click on the link that says: states participating in Federal/State efile
3. Go into this site and find your state (if applicable) and file your state taxes for free with efile- and yes you can print and mail them as well make sure you have Adobe Reader for that one too.
Good luck and for the love of tax filing have them prepared easily and for FREE!!!
Taxable Gains
More amazing tax tips I found and hope can be beneficial to you during this trying year...
Starting Jan. 1, the basic federal estate-tax exemption jumped to $3.5 million from $2 million in 2008. This large increase is expected to result in a major decline in the number of estates subject to the tax for 2009. It also will mean significant tax savings for many larger estates that are affected, says Sidney Kess, a New York lawyer and accountant.
Among other notable changes: The maximum amount that savers can contribute to a 401(k) plan increased. Many high-income taxpayers will benefit from changes affecting personal exemptions and certain deductions. And many Americans who live and work in other countries will be able to exclude more of their pay from U.S. tax collectors.
But not all the automatic 2009 changes will spell relief. For one thing, many people who suffer personal casualty and theft losses in 2009 won't be able to deduct as much. And about 11 million workers will pay higher Social Security taxes this year.
Standard Deductions
The basic standard deduction for joint filers for the 2009 tax year will be $11,400, up from $10,900 for 2008.
For singles, the amount for 2009 will be $5,700, up from $5,450.
The amounts are higher for those age 65 or older, for the blind, for those who paid real-estate taxes and for those with losses from federally declared disasters.
Much larger changes are expected soon from Washington in response to the economic crisis. President-elect Obama and congressional leaders are working on a wide-ranging plan that includes large cuts for both individuals and businesses.
While it's not yet known what will become law or when the changes will take effect, Congress will likely pass relief from the alternative minimum tax, or AMT. Unless lawmakers do something, tens of millions of Americans will have to pay higher taxes for 2009.
Here are some of the major changes that automatically became law on Jan. 1. While these won't affect tax returns for 2008, they may help taxpayers with 2009 planning.
Estate and gift taxes. The increase in the basic estate-tax exemption amount to $3.5 million stems from a 2001 law. (Transfers from one spouse to the other typically remain tax-free.) "Many estate plans and wills will have to be modified to take into account this increased exemption amount," Mr. Kess says.
The top federal estate-tax rate for 2009 remains unchanged at 45%. In 2010, the estate tax is supposed to disappear entirely for that one year only -- but that isn't likely to happen. During the campaign, then-Sen. Obama proposed retaining the $3.5 million exclusion amount and the 45% top rate in coming years.
The annual gift-tax exclusion rose to $13,000, up $1,000 from 2008. This means you can give as much as $13,000 this year to anyone you wish, or to as many people as you want, without having to worry about taxes or even having to file any forms with the Internal Revenue Service. It's a simple way to help others and reduce the size of your taxable estate. You can give even more than that by paying directly for someone else's tuition or medical expenses. Just be sure to pay the institution directly.
The lifetime gift-tax exclusion amount remains unchanged at $1 million.
Starting Jan. 1, the basic federal estate-tax exemption jumped to $3.5 million from $2 million in 2008. This large increase is expected to result in a major decline in the number of estates subject to the tax for 2009. It also will mean significant tax savings for many larger estates that are affected, says Sidney Kess, a New York lawyer and accountant.
Among other notable changes: The maximum amount that savers can contribute to a 401(k) plan increased. Many high-income taxpayers will benefit from changes affecting personal exemptions and certain deductions. And many Americans who live and work in other countries will be able to exclude more of their pay from U.S. tax collectors.
But not all the automatic 2009 changes will spell relief. For one thing, many people who suffer personal casualty and theft losses in 2009 won't be able to deduct as much. And about 11 million workers will pay higher Social Security taxes this year.
Standard Deductions
The basic standard deduction for joint filers for the 2009 tax year will be $11,400, up from $10,900 for 2008.
For singles, the amount for 2009 will be $5,700, up from $5,450.
The amounts are higher for those age 65 or older, for the blind, for those who paid real-estate taxes and for those with losses from federally declared disasters.
Much larger changes are expected soon from Washington in response to the economic crisis. President-elect Obama and congressional leaders are working on a wide-ranging plan that includes large cuts for both individuals and businesses.
While it's not yet known what will become law or when the changes will take effect, Congress will likely pass relief from the alternative minimum tax, or AMT. Unless lawmakers do something, tens of millions of Americans will have to pay higher taxes for 2009.
Here are some of the major changes that automatically became law on Jan. 1. While these won't affect tax returns for 2008, they may help taxpayers with 2009 planning.
Estate and gift taxes. The increase in the basic estate-tax exemption amount to $3.5 million stems from a 2001 law. (Transfers from one spouse to the other typically remain tax-free.) "Many estate plans and wills will have to be modified to take into account this increased exemption amount," Mr. Kess says.
The top federal estate-tax rate for 2009 remains unchanged at 45%. In 2010, the estate tax is supposed to disappear entirely for that one year only -- but that isn't likely to happen. During the campaign, then-Sen. Obama proposed retaining the $3.5 million exclusion amount and the 45% top rate in coming years.
The annual gift-tax exclusion rose to $13,000, up $1,000 from 2008. This means you can give as much as $13,000 this year to anyone you wish, or to as many people as you want, without having to worry about taxes or even having to file any forms with the Internal Revenue Service. It's a simple way to help others and reduce the size of your taxable estate. You can give even more than that by paying directly for someone else's tuition or medical expenses. Just be sure to pay the institution directly.
The lifetime gift-tax exclusion amount remains unchanged at $1 million.
The Great Rebate
Can you apply for a stimulus rebate check when filing your 2008 tax return if your 2008 income was lower than your 2007 income?
Yes it is true. People who didn't qualify for the full rebate check last year have a second chance to get the money when they file their 2008 tax return.
Those rebate checks that most people received last spring and summer were actually a tax credit for 2008, which would normally reduce your 2008 tax bill. But to get the money into people's hands quickly to stimulate the economy, Congress had the IRS make a prepayment of the credit. That meant the rebate was figured based on information from your 2007 return.
Most single filers received a $600 rebate, and married couples received $1,200, plus $300 for every dependent younger than 17. The rebate amount started to phase out if your 2007 adjusted gross income was more than $75,000 for single filers, or more than $150,000 for married couples filing jointly. For people who earned more than that, the rebate was reduced by $50 for every $1,000 you earned above the income limit. It phased out entirely at $87,000 for single filers without children and $174,000 for joint filers without children.
If you earned too much to qualify based on your 2007 income, but earned less than those limits in 2008, then you'll be able to claim the rebate when you file your 2008 taxes.
You may also qualify for some rebate money this year if you had a child in 2008, or if you were originally ineligible for a rebate because you could be claimed as a dependent on another person's tax return in 2007 but cannot be claimed as a dependent in 2008.
If you didn't originally qualify for the rebate but do this time around, then the amount will be a credit on your 2008 tax return and will be included in your refund (not sent as a separate check). You can figure out the credit when you file your form 1040 for 2008 -- the instructions for form 1040 include the calculation, or your tax-filing software will figure the credit for you.
The IRS also has some new resources to make it easy to figure out if you'll be getting the rebate. See the IRS's Recovery Rebate Credit Information Center and Questions and Answers About the Recovery Rebate Credit at the IRS's Web site.
People who had a good year don't need to worry: If you earned more in 2008 than you did in 2007, you don't have to pay back the rebate.
Yes it is true. People who didn't qualify for the full rebate check last year have a second chance to get the money when they file their 2008 tax return.
Those rebate checks that most people received last spring and summer were actually a tax credit for 2008, which would normally reduce your 2008 tax bill. But to get the money into people's hands quickly to stimulate the economy, Congress had the IRS make a prepayment of the credit. That meant the rebate was figured based on information from your 2007 return.
Most single filers received a $600 rebate, and married couples received $1,200, plus $300 for every dependent younger than 17. The rebate amount started to phase out if your 2007 adjusted gross income was more than $75,000 for single filers, or more than $150,000 for married couples filing jointly. For people who earned more than that, the rebate was reduced by $50 for every $1,000 you earned above the income limit. It phased out entirely at $87,000 for single filers without children and $174,000 for joint filers without children.
If you earned too much to qualify based on your 2007 income, but earned less than those limits in 2008, then you'll be able to claim the rebate when you file your 2008 taxes.
You may also qualify for some rebate money this year if you had a child in 2008, or if you were originally ineligible for a rebate because you could be claimed as a dependent on another person's tax return in 2007 but cannot be claimed as a dependent in 2008.
If you didn't originally qualify for the rebate but do this time around, then the amount will be a credit on your 2008 tax return and will be included in your refund (not sent as a separate check). You can figure out the credit when you file your form 1040 for 2008 -- the instructions for form 1040 include the calculation, or your tax-filing software will figure the credit for you.
The IRS also has some new resources to make it easy to figure out if you'll be getting the rebate. See the IRS's Recovery Rebate Credit Information Center and Questions and Answers About the Recovery Rebate Credit at the IRS's Web site.
People who had a good year don't need to worry: If you earned more in 2008 than you did in 2007, you don't have to pay back the rebate.
Tax Tips #1
I found some helpful tax tips for you - put them to good use if you can!
Here are answers to some queries about taxes in a time of financial turmoil, as well as some additional tax-savvy moves to consider, including what to do if you have near-worthless stocks or bonds, or are planning major charitable donations but are short on cash.
Writing off your losers. Investors are allowed to offset capital gains and losses, with no limit. If your losses exceed your gains, you can deduct as much as $3,000 of net losses ($1,500 if married and filing separately) each year. Additional losses get carried over into future years.
Or whether there are any plans in Congress to increase the current net capital-loss limit.
During the presidential campaign, Sen. John McCain proposed raising the net capital-loss limit to $15,000 a year. Then-Sen. Barack Obama didn't comment -- and still hasn't. So what are the odds Congress will change the law this year? "Pretty slim," says Clint Stretch, managing principal for tax policy at Deloitte Tax LLP. "Congress will have a hard time agreeing on any tax items before year end."
Separately, suppose you are considering selling stocks or bonds you bought years ago that are now trading for well below what you paid for them. Don't donate those losers to charity. Instead, consider selling them, using the losses to save taxes -- and then donate the proceeds to charity.
What do to with worthless stocks. What if you had the misfortune to invest in a company whose stock now is worthless or nearly worthless?
If a stock you bought for a taxable account became completely worthless during 2008, report it on Schedule D of Form 1040. Write "worthless" in columns (c) and (d), and enter the amount of your loss in parentheses in column (f). If you don't claim a loss for a worthless security on your original return for the actual year in which it became worthless, file what's known as an amended return for the year it became worthless. Use Form 1040X, available on the IRS Web site. You must file it within seven years from the date your original return for that year had to be filed, or two years from the date you paid the tax, whichever is later, the IRS says.
If the stock isn't completely worthless, consider asking your broker to buy those shares from you for a nominal amount, such as $1, so that you can clearly document your loss. Among those that will do so for clients is Vanguard Brokerage Services, says Rebecca Cohen, a Vanguard Group spokeswoman.
Changes in minimum-distribution requirements. During the presidential campaign, Mr. Obama called for major changes in the rules requiring millions of people 70½ or older to withdraw certain amounts of money from their retirement accounts. Several readers, including James M. Gleason of Rancho Palos Verdes, Calif., want to know if there's still any chance of action this year.
The short answer is yes. Although time is running short, it's still possible that Congress, the Treasury Department or both will take action. Many proposals are under consideration, including reducing how much taxpayers have to withdraw this year. Don't count on anything happening. But investors who haven't already made their full distributions for 2008 should consider delaying a little longer, just in case Washington delivers a last-minute Christmas package.
Speculation about possible changes rose last month when a Treasury official confirmed the department was studying the subject. A spokesman confirms the department is aware of the issue and is still looking into it.
But relief may not arrive until next year. Several leading senators recently proposed legislation that would place a one-year moratorium on required minimum distributions from retirement accounts, such as IRAs and 401(k)s, for 2009, a Senate Finance Committee staffer says. Among the sponsors are Senate Finance Committee Chairman Max Baucus (D., Mont.), Sen. Chuck Grassley (R., Iowa, the committee's ranking Republican member) and Sen. Ted Kennedy (D., Mass.). The legislation would "allow savings to stay put and avoid a tax hit when the market is down," a committee statement said.
Making a gift from your IRA. Meanwhile, some older taxpayers may benefit by taking advantage of a recently enacted law that extended the life of a popular provision that had expired. The law allows individuals age 70½ and older to make direct transfers of as much as $100,000 a year from an IRA to qualified charities without having to count those distributions as taxable income. What's more, the transfer counts toward the taxpayer's required minimum distribution. This provision has been extended through 2009.
"Not all charities are eligible," the IRS said in a statement issued Tuesday. "For example, donor-advised funds and supporting organizations are not eligible recipients."
Charging your charitable contributions. If you want to make a big gift to your favorite charity to nail down a deduction for your 2008 return, but don't have the cash to do it now, consider charging your gift to a credit card. As long as you charge your gift this year, you can deduct it for this year. "Contributions are deductible in the year made," the IRS said. "Thus, donations charged to a credit card before the end of the year count for 2008. This is true even if the credit card bill isn't paid until next year. Also, checks count for 2008 as long as they are mailed this year."
Here are answers to some queries about taxes in a time of financial turmoil, as well as some additional tax-savvy moves to consider, including what to do if you have near-worthless stocks or bonds, or are planning major charitable donations but are short on cash.
Writing off your losers. Investors are allowed to offset capital gains and losses, with no limit. If your losses exceed your gains, you can deduct as much as $3,000 of net losses ($1,500 if married and filing separately) each year. Additional losses get carried over into future years.
Or whether there are any plans in Congress to increase the current net capital-loss limit.
During the presidential campaign, Sen. John McCain proposed raising the net capital-loss limit to $15,000 a year. Then-Sen. Barack Obama didn't comment -- and still hasn't. So what are the odds Congress will change the law this year? "Pretty slim," says Clint Stretch, managing principal for tax policy at Deloitte Tax LLP. "Congress will have a hard time agreeing on any tax items before year end."
Separately, suppose you are considering selling stocks or bonds you bought years ago that are now trading for well below what you paid for them. Don't donate those losers to charity. Instead, consider selling them, using the losses to save taxes -- and then donate the proceeds to charity.
What do to with worthless stocks. What if you had the misfortune to invest in a company whose stock now is worthless or nearly worthless?
If a stock you bought for a taxable account became completely worthless during 2008, report it on Schedule D of Form 1040. Write "worthless" in columns (c) and (d), and enter the amount of your loss in parentheses in column (f). If you don't claim a loss for a worthless security on your original return for the actual year in which it became worthless, file what's known as an amended return for the year it became worthless. Use Form 1040X, available on the IRS Web site. You must file it within seven years from the date your original return for that year had to be filed, or two years from the date you paid the tax, whichever is later, the IRS says.
If the stock isn't completely worthless, consider asking your broker to buy those shares from you for a nominal amount, such as $1, so that you can clearly document your loss. Among those that will do so for clients is Vanguard Brokerage Services, says Rebecca Cohen, a Vanguard Group spokeswoman.
Changes in minimum-distribution requirements. During the presidential campaign, Mr. Obama called for major changes in the rules requiring millions of people 70½ or older to withdraw certain amounts of money from their retirement accounts. Several readers, including James M. Gleason of Rancho Palos Verdes, Calif., want to know if there's still any chance of action this year.
The short answer is yes. Although time is running short, it's still possible that Congress, the Treasury Department or both will take action. Many proposals are under consideration, including reducing how much taxpayers have to withdraw this year. Don't count on anything happening. But investors who haven't already made their full distributions for 2008 should consider delaying a little longer, just in case Washington delivers a last-minute Christmas package.
Speculation about possible changes rose last month when a Treasury official confirmed the department was studying the subject. A spokesman confirms the department is aware of the issue and is still looking into it.
But relief may not arrive until next year. Several leading senators recently proposed legislation that would place a one-year moratorium on required minimum distributions from retirement accounts, such as IRAs and 401(k)s, for 2009, a Senate Finance Committee staffer says. Among the sponsors are Senate Finance Committee Chairman Max Baucus (D., Mont.), Sen. Chuck Grassley (R., Iowa, the committee's ranking Republican member) and Sen. Ted Kennedy (D., Mass.). The legislation would "allow savings to stay put and avoid a tax hit when the market is down," a committee statement said.
Making a gift from your IRA. Meanwhile, some older taxpayers may benefit by taking advantage of a recently enacted law that extended the life of a popular provision that had expired. The law allows individuals age 70½ and older to make direct transfers of as much as $100,000 a year from an IRA to qualified charities without having to count those distributions as taxable income. What's more, the transfer counts toward the taxpayer's required minimum distribution. This provision has been extended through 2009.
"Not all charities are eligible," the IRS said in a statement issued Tuesday. "For example, donor-advised funds and supporting organizations are not eligible recipients."
Charging your charitable contributions. If you want to make a big gift to your favorite charity to nail down a deduction for your 2008 return, but don't have the cash to do it now, consider charging your gift to a credit card. As long as you charge your gift this year, you can deduct it for this year. "Contributions are deductible in the year made," the IRS said. "Thus, donations charged to a credit card before the end of the year count for 2008. This is true even if the credit card bill isn't paid until next year. Also, checks count for 2008 as long as they are mailed this year."
Monday, January 5, 2009
Choosing Colors
Not sure what colors to plant? Remember that pink and blue colored flowers give the viewer a soothing effect, while red and orange colored flowers are hot and exciting. When using a lot of brightly colored flowers, use silvery foliage plants such as artemisia between areas of color. Artemisia is also an excellent edging for colorful container plants.
Sunday, November 30, 2008
Envelope Creations
Make envelopes out of your old maps. Not only will this create a colorful envelope, but you will be amazed at how long people will study it to try to figure out what the map displays! Here's how to make the envelope:
Open an envelope at the seams to use as a pattern.
Copy on the WRONG side lightly and draw the envelope.
Your card can dictate the size as you get more proficient.
Glue at the folds with school glue.
Open an envelope at the seams to use as a pattern.
Copy on the WRONG side lightly and draw the envelope.
Your card can dictate the size as you get more proficient.
Glue at the folds with school glue.
Beware Of The Repairs
When choosing a shop for a vehicle that is not under warranty, first talk to friends and family to see if they recommend a place to take your car.
Also see if the facility as been certified by the National Institute for Automotive Service Excellence (ASE). The certification means that some or all of the mechanics at the shop have met basic standard of knowledge in specific technical areas. For example, some areas may be brake work, collision repair, engine repair, painting and alignment.
Even better, find out if the shop is in the ASE Blue Seal of Excellence program. The initiative recognizes shops that have 75% of their mechanics ASE certified and have a mechanic certified in each area of service that they offer.
Often shops display the Blue Seal plaque in the customer waiting area. If you don't see it, don't be afraid to ask if the facility is Blue Seal certified. You can also visit the ASE Web site.
Also see if the facility as been certified by the National Institute for Automotive Service Excellence (ASE). The certification means that some or all of the mechanics at the shop have met basic standard of knowledge in specific technical areas. For example, some areas may be brake work, collision repair, engine repair, painting and alignment.
Even better, find out if the shop is in the ASE Blue Seal of Excellence program. The initiative recognizes shops that have 75% of their mechanics ASE certified and have a mechanic certified in each area of service that they offer.
Often shops display the Blue Seal plaque in the customer waiting area. If you don't see it, don't be afraid to ask if the facility is Blue Seal certified. You can also visit the ASE Web site.
Friday, November 28, 2008
Salad Greens For Dinner
Mixed salad greens and Mesclun mixes are attractive and fun to grow, and they make a great container garden, indoors in a sunny window or outdoors.
Here’s a fun idea: Have the kids plant their own salad garden. They will enjoy cutting their own salad for dinner (little ones will need supervision) and as they cut, the greens will regrow.
Here’s a fun idea: Have the kids plant their own salad garden. They will enjoy cutting their own salad for dinner (little ones will need supervision) and as they cut, the greens will regrow.
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