Fee-Only Financial Planning - Evergreen Financial Planning Blog

Year End Tax Planning: Who should try to reduce AGI for 2010?

2010-10-13T06:30:00.000-07:00

From Thomson Reuters RIA Newsstand:

Year-end tax planning: Who should try to reduce AGI for 2010?

Practice Alert—

At this time there is a great deal of uncertainty over which income tax rates will apply for 2011. Unless Congress acts, under the EGTRRA sunset rules, virtually everyone will be subject to higher tax rates starting next year, but few expect that this “doomsday scenario” will become reality. Congress may leave the current income tax rate structure unchanged for everyone for 2011, or it may increase tax rates for “higher income individuals.” This uncertain state of affairs leaves many in a quandary about year-end income tax planning moves. This Practice Alert article, continuing a series on year-end planning moves, considers when it would be wise to consider reducing AGI for 2010, for example, by deferring income till next year.

Who should try to reduce AGI for 2010? Numerous tax breaks (tax credits, deductions, and other tax benefits) are reduced or eliminated if a taxpayer's adjusted gross income (AGI), or modified AGI (MAGI), exceeds specified thresholds. As year-end nears, taxpayers who do not anticipatebeing subject to higher rates next year should consider reducing their 2010 AGI by deferring taxable income into 2011, or by accelerating deductions, if doing so will keep their income level for the current tax year below the relevant phase-out thresholds (or will mitigate the effect of the phaseouts). On the other hand, for taxpayers who do anticipate being subject to higher rates next year the best bet might be to take the opposite tack: accelerate as much income as possible from 2011 into 2010, to take advantage of today's rate structure, even if some tax breaks are reduced because of the effect of increased AGI on phase-out thresholds. (Comparative calculations would of course have to be made to see just how much the advantage of lower rates might be offset by the loss of tax breaks.)

The following are the key tax breaks whose availability is limited by AGI (or modified AGI). Some of these tax breaks may themselves be made less available in 2011 as a result of the sunset provisions.

(1) An individual can make a nondeductible Roth IRA contribution of up to $5,000 for 2010 and 2011 (up to $6,000 if he is age 50 or older), reduced by any amount contributed to a traditional IRA. For taxpayers filing joint returns, the otherwise allowable contributions to a Roth IRA phase out ratably for 2010 for MAGI between $167,000 and $177,000 (for 2011, for MAGI between $169,000 and $179,000). For single taxpayers and heads of household it phases out ratably for MAGI between $105,000 and $120,000 for 2010 ($107,000 and $122,000 for 2011). For married taxpayers filing separate returns, for 2010 as well as 2011, the otherwise allowable contribution phases out ratably for MAGI between $0 and $10,000.

(2) For 2010, the AGI phaseout for making deductible contributions to traditional IRAs by taxpayers who are active participants in an employer-sponsored retirement plan begins at $89,000 of MAGI for joint return filers and the deduction is phased out completely at $109,000 of MAGI (for 2011, the phaseout begins at $90,000 and ends at $110,000). For 2010 and 2011, for single taxpayers or heads of household, the phaseout begins at $56,000 of MAGI and is complete at $66,000. For married taxpayers filing separate returns, the otherwise allowable contribution phases out for MAGI between $0 and $10,000 for both 2010 and 2011.

(3) If an individual isn't an active plan participant but his spouse is, the nonparticipant spouse isn't subject to the traditional IRA deduction phaseout range, but can make the full deductible contribution to a traditional IRA in 2010 as long as the couple's combined MAGI doesn't exceed $167,000. The deduction is phased out ratably where the combined MAGI is between $167,000 and $177,000. For 2011, the phaseout begins at $169,000 and ends at $179,000

(4) For 2010, taxpayers are allowed a $1,000 child tax credit for each qualifying child under age 17. The amount of the credit allowable is reduced by $50 for each $1,000 (or part of a $1,000) of MAGI above $110,000 for joint filers, $75,000 for single filers, and $55,000 for marrieds filing separately.

RIA observation: Pegging the phaseout in $50 increments means that for some taxpayers a $1 increase in AGI (from an increment of $1,000 over the threshold to $1,001 over) can trigger a $50 increase in tax liability (through a corresponding reduction in the credit).

RIA observation: It will be especially beneficial to defer income to the next year to maximize the amount of the credit available this year if the child will be 17 next year and thus no longer eligible for the credit. Additionally, under an EGTRRA sunset provision that will kick in after 2010 unless Congress acts, the $1,000 limit will fall to $500 and more restrictive rules will apply to the child credit.

(5) For 2010, qualifying taxpayers may claim an American Opportunity Tax Credit of up to $2,500 per student. Also for 2010, there's a Lifetime Learning Credit of up to $2,000 per qualifying taxpayer. The credits are for higher education expenses at accredited post-secondary educational institutions paid by taxpayers for themselves, their spouses and their dependents. For 2010, the American Opportunity Tax Credit is reduced ratably at MAGI between $160,000 to $180,000 on joint returns, and between $80,000 and $90,000 on other returns. For 2010, the Lifetime Learning credit phases out ratably for taxpayers with MAGI of $100,000 to $120,000 on joint returns, and between $50,000 to $60,000 on other returns.

RIA observation: Under a non-EGTRRA change, the American Opportunity Tax Credit won't apply after 2010, unless Congress changes the rules. Instead, for 2011, eligible taxpayers may claim a Hope credit of up to $1,800 and a Lifetime Learning Credit of up to $2,000. For 2011, both of these education credits will phase out ratably for taxpayers with MAGI of $51,000 to $61,000 ($102,000 to $122,000 for joint filers).

(6) Individuals may take an above-the-line deduction for up to $2,500 of interest on qualified education loans, but, for 2010, the amount otherwise deductible is reduced ratably at MAGI between $120,000 and $150,000 on joint returns, and between $60,000 and $75,000 on other returns. Married taxpayers must file jointly to qualify for the deduction.

RIA observation: Under the EGTRRA sunset rules, this above-the-line deduction will be around in 2011, but the deduction will phase out over lower MAGI ranges, and some of the qualification rules will be tougher as well.

(7) Taxpayers may contribute up to $2,000 annually to a tax-exempt Coverdell Education Savings Account (CESA) for an individual under age 18 (and special needs beneficiaries of any age). For 2010, contributors who are individuals, the maximum contribution is reduced ratably for MAGI between $190,000 and $220,000 for joint filers, and between $95,000 and $110,000 for others.

RIA observation: Under the EGTRRA sunset rules, the annual per-beneficiary contribution limit drops to $500, there's a lower phaseout range for marrieds filing jointly, and more restrictive definitional rules apply.

RIA recommendation: An individual who cannot contribute to a CESA because of the AGI limits (or whose contribution would be limited because of those limits) should consider contributing to a qualified tuition plan (529 plan) instead. There are no AGI limits on contributions to 529 plans. However, distributions of earnings from a 529 plan are tax free only if used to pay for higher education (college and above) expenses while distributions of earnings from a CESA are tax-free if used to pay for elementary and secondary school expenses as well as higher education expenses.

(8) For 2010, the tax-free break for interest on U.S. savings bonds redeemed to pay qualified higher education expenses phases out for joint filers when MAGI exceeds $105,100 and is phased out completely at $135,100; for single taxpayers and heads of household the phaseout begins when MAGI exceeds $70,100 and is complete at $85,100.

(9) The adoption assistance/adoption credit. These breaks begin to phase out for 2010 when MAGI exceeds $182,520 and are gone at $222,520 of MAGI (for 2011, $185,210 to $225,210 for 2011). The total expenses that may be taken as a credit for all tax years for the adoption of a child by the taxpayer is limited to $13,170 for 2010 ($13,360 for 2011). The per-child exclusion for employer-provided adoption assistance also is limited to $13,170 for 2010 ($13,360 for 2011).

(10) A limited amount of nonpassive income can be offset by passive losses from an active participation rental real estate activity. The $25,000 ceiling on this tax break is phased out for adjusted gross income (subject to some special modifications) in excess of $100,000 and completely phased out at AGI of $150,000.

(11) For qualifying purchases of principal residences in the U.S. before Oct. 1, 2010, eligible first-time homebuyers may claim a refundable tax credit equal to the lesser of 10% of the purchase price of a principal residence or $8,000. This credit phases out for individual taxpayers with modified adjusted gross income (MAGI) between $125,000 and $145,000 ($225,000 and $245,000 for joint filers) for the year of purchase.

Other AGI-related tax items: There are other items of income, deduction, credit, and exclusion that are affected by levels of AGI or MAGI. Key items affected are: miscellaneous itemized deductions; Social Security benefits taxation; medical expense deduction; and nonbusiness casualty loss deductions.

RIA observation: For 2010, neither itemized deductions nor personal exemptions are phased out at higher levels of AGI. However, under the EGTRRA sunsets, for 2011, most itemized deductions of higher-income taxpayers will be reduced by 3% of AGI above an inflation-adjusted figure (but the reduction can't exceed 80%), and a higher-income taxpayer's personal exemptions are phased out when AGI exceeds an inflation-adjusted threshold. If the sunset provisions go into effect, this could be a reason for affected taxpayers to accelerate income to 2010 from 2011.

Other taxpayers who should consider deferring income. Income deferral from 2010 to 2011 also may aid taxpayers in the following situations:

· Retirement, unemployment, or a business slowdown will result in the taxpayer dropping into a lower tax bracket next year.

· Next year a child will escape the kiddie tax and be in a lower bracket than his parents.

· Taxpayer expects to go from single to head-of-household status in 2011. Thus, more of the taxpayer's income will be taxed at a lower rate in 2011 than in 2010.

Source: Federal Tax Updates on Checkpoint Newsstand tab 10/13/2010

Be Prepared If Disaster Strikes

2010-09-09T05:58:00.000-07:00

Are you ready if disaster strikes?

Friends of mine recently lost almost everything they owned in a house fire. Although they were covered by insurance and will have the house rebuilt, they are spending endless hours documenting losses and replacing lost records. With the recent hurricane warnings, wild fires and floods it is good to have your Financial House In Order.

How can you be prepared?

Keep a list of important documents and their location.
Keep copies of documents and back up electronic files.
Keep a list of important contacts and phone numbers
Videotape your home to document contents

What documents are important?

Estate Planning Documents: Wills, Trusts, Advance Healthcare Directives or Living Will, Power of Attorney for Healthcare, Power of Attorney for Property, DNRs, etc.
Insurance Documents: Life Insurance Policies, Accident and Health Insurance Policies, Auto and Property Insurance Policies, etc.
Financial Documentation: Tax Returns and supporting documentation, Loan Documents including mortgages, education loans and any other personal loans, Real Estate Deeds, Titles, Investments including Retirement Accounts, Pensions, Savings Bonds, Bank Accounts, Stock Certificates, Brokerage Accounts, Mutual Funds, Stock Options, etc.
Other Important Documents: Birth Certificates, Marriage Certificates, Social Security Cards, Divorce Decrees, Death Certificates, Military Discharge Papers, Passports, Family Records, Medical Records, Safe Deposit Box info, etc.

What contacts are important?

Family members and friends, Medical - Doctors and Dentists, Financial Advisor, Tax Preparer, Insurance Companies/Agents, Attorneys, Executors

Other Resources to be prepared for disaster:

IRS: http://www.irs.gov/businesses/small/article/0,,id=180547,00.html?portlet=7

FEMA: http://www.fema.gov/pdf/library/pfd.pdf

Harvard Health: http://www.health.harvard.edu/downloads/preparing_for_disaster.pdf

Ready America: http://www.ready.gov/america/getakit/

NAPFA Consumer Webinar Oct 1st

2010-09-08T06:20:00.000-07:00

NAPFA will present the next in it's series of Free Consumer Webinars: Financial Management of an Aging Parent on Friday, October 1st.

Instructor Cheryl Sherrard, AAMS, ATP, CFP^®

^{NAPFA-Registered Financial Advisor}

Many Americans are faced with the reality that they will be responsible for managing the financial needs of aging parents. From paying for housing and health care costs to addressing estate planning needs, ensuring that Mom and Dad are taken care of can take a considerable amount of time. This session will address what you can do today to begin planning for their needs tomorrow.

Sign up for "Financial Management of an Aging Parent" on the NAPFA website at http://www.napfa.org/calendar/calendar/event.asp?EVENT_ID=1051&

Seven lessons learned from my father's death Robert Powell - MarketWatch

2010-08-20T07:55:00.000-07:00

Seven lessons learned from my father's death Robert Powell - MarketWatch

Everyone should read this!

Without a Financial Plan, Women's Long-Term Outlook at Risk

2010-08-20T05:57:00.000-07:00

The Great Recession has changed our lives in many ways. One positive result is that it has helped women to become more educated about their finances. A recent study shows that 95% of women are involved in making financial decisions yet most do not have a financial plan in place and many look for help in the wrong places. Good resources to find a Fee-Only Advisor who will be a fiduciary are NAPFA or the Garrett Planning Network.

Read more in Ruthie Ackerman's July 28th article:

http://www.financial-planning.com/news/women-financial-prudential-2668099-1.html?ET=financialplanning:e1792:2120299a:&st=email&utm_source=editorial&utm_medium=email&utm_campaign=FP_Retirement_Planning_081910

Retirement Account Rollover Chart

2010-03-16T05:28:00.000-07:00

Wondering what retirement accounts you are allowed to roll into another type of retirement account? The following chart has been published by the IRS:

IRS Rollover Chart

Find an AARP Tax-Aide Site Near You!

2010-03-10T11:21:00.000-08:00

From February 1 through April 15th each year, the AARP Tax-Aide program offers free one-on-one counselling, as well as assistance on the telephone and internet to help individuals prepare basic tax forms, including the 1040, 1040A, 1040EZ and other standard schedules. For a site near you go to: https://locator.aarp.org/vmis/sites/tax_aide_locator.jsp

Did You Receive Economic Recovery Last Year?

2010-03-09T08:13:00.000-08:00

The IRS has developed the “Did I Receive an Economic Recovery Payment?” look up tool which gives taxpayers an easy way to determine if they received the one-time ERP payment and which agency made the payment.

Beginning today March 8, 2010, taxpayers can call 866-234-2942 to access the phone application. The Web application will be available in late March on IRS.gov.

Taxpayers who had earned income in 2009 or are government retirees and received an Economic Recovery Payment need to report whether or not they received an ERP and the amount when they prepare their Schedule M, Making Work Pay and Government Retiree Credits.

The onetime $250 ERP was paid to individuals in the following categories:

Retirees, disabled individuals and Supplemental Security Income (SSI) recipients receiving benefits from the Social Security Administration,
Disabled veterans receiving benefits from the U.S. Department of Veterans Affairs, and
Railroad Retirement beneficiaries.

Using the IRS look up tool taxpayers will have to enter three pieces of information to determine if they received an ERP:

SSN
Date of birth
Zip code from the last filed return

A separate telephone call or Web inquiry must be made for each taxpayer, even if filing a joint tax return.

How Is Your Financial Advisor Paid?

2010-03-09T06:04:00.000-08:00

I have chosen to work as a Fee-Only FInancial Planner because I feel it is the most objective way to give financial advice. I have taken the Fiduciary Oath. Evergreen Financial Planning provides financial and tax advice on an hourly-as-needed based.

Commissioned Professionals: If you aren't sure how your Financial Advisor is getting paid, chances are thy are earning commissions. Your broker or insurance professional earns a commission whenever they sell you a stock, mutual fund, annuity or one of the many products that trigger a sales charge. Sounds like a conflict of interest to me!

Fee-Based Advisors: Fee-based professionals also receive monetary reward for the products they sell. With fee-based accounts, brokers can charge customers a flat fee or a percentage of the value of the account. Sounds like a conflict of interest to me!

Fee-Only Advisors: A Fee-Only Financial Planner does not sell securities or insurance. There is not the conflict of interest which exists with the other types of "advisors" because recommendations for investments are not made based on the size of the commission. The fee-only advisor works for you.

AUM: Some advisors charge a fee for Assets Under Management. They are compensated by charging a percentage of the market value of the assets they manage on behalf of their clients

What is a Fiduciary?

The five core principles of the authentic fiduciary standard say it well. They are:

Put the client's best interest first;
Act with prudence; that is, with the skill, care, diligence and good judgment of a professional;
Do not mislead clients; provide conspicuous, full and fair disclosure of all important facts;
Avoid conflicts of interest; and
Fully disclose and fairly manage, in the client's favor, unavoidable conflicts.

Garrett Planning Network Endorsed by Motley Fool

2010-03-07T07:29:00.000-08:00

I’m writing to let you know about an exciting new development in my business. The Motley Fool has exclusively endorsed and is promoting the services of financial advisors affiliated with the Garrett Planning Network, the international organization of fee-only financial advisors with which I am proud to be associated.

The Motley Fool has long admired Garrett’s approach to fee-only financial advice. And we are fans of The Fool’s approach to everything they do to educate, empower and amuse the public and their members about investing. Garrett, The Motley Fool and I share a commitment to make trustworthy financial advice accessible to everyone.

The Motley Fool is one of the most admired financial brands in the world. Each month, 4 million unique visitors visit its website at Fool.com. At the core of The Fool’s business model are hundreds of thousands of premium members—many enjoying subscriptions to multiple investment newsletters. Clearly, the company is fulfilling its quest to broaden access to winning financial advice, and I am delighted to have access to all of these resources through our partnership with The Motley Fool. (If you’re not familiar with The Motley Fool, please find some additional information below.)

While there’s no doubt that The Motley Fool’s advisory services are answering a great need among individual investors, the company came to recognize that many of its members yearn for more hands-on help managing life’s complex financial decisions—especially in light of the recent rollercoaster stock market. The Fool decided it was time to look at expanding into the direct financial advice category.

Rather than building a financial advisor network from scratch, The Fool kicked off a search for a well-established, like-minded outfit with similar values with which to partner. I am delighted that they found a new match in an old friend—the Garrett Planning Network! As we know well, when it comes to financial planning, Garrett advisors offer the same kind of trustworthy, transparent, and community-driven advice that The Fool has built its business on. The Garrett-Motley Fool relationship has the makings of a great partnership.

Thanks for reading, and thanks for your support. Please don’t hesitate to contact me with your questions.

Sincerely,

Teri Tornroos

About The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king—without getting their heads lopped off. For more information please visit http://www.fool.com/.

About the Garrett Planning Network

The Garrett Planning Network is an international organization of like-minded fee-only financial advisors whose mission is to help make competent, objective financial advice accessible to all people. For more information please visit http://garrettplanningnetwork.com/

Will it matter where you retire?

2010-03-07T07:19:00.000-08:00

Did you realize that states treat social security or pension income differently?

Check out this site by Kiplinger for a list of the states that are much more tax friendly for retirees:
http://www.kiplinger.com/tools/retiree_map/index.html?map=12#anchor

2009 Tax Preparation Checklist

2010-02-05T07:32:00.000-08:00

Need help gathering your tax documents? Check out our list to make sure you don't miss anything!

http://www.evergreenfinancialplanning.org/Evergreen_Financial_Planning/Client_Forms_files/Test%20Preparation%20Checklist.pdf

Year End Tax Tips

2009-12-10T13:18:00.000-08:00

Get Organized -
If you haven't done it already, start a file for your tax documents. As you receive W-2s, 1099s , 1099bs and 1098s, you will have a place to file them. Do you have kids in college or in child care? Do you have medical bills? Have you kept your receipts for charitable donations? If the donations were non-cash do you have a detailed list attached to your receipt? Are you keeping track of mileage for charitable work or miles driven to medical appointments? For a complete list of items see Tax Preparation Checklist on the Client Forms page of our website www.EvergreenPlanning.org.

Adjustments to state withholding -
If you expect to owe state income taxes when you file your return next year, ask your employer to increase withholding of state and local taxes. This can be done by filing Form G-4, Georgia Employee's Withholding Allowance Certificate.
If you are self-employed or retired and are making quarterly estimated tax payments, be sure to pay the State fourth quarter estimated tax payments before year-end to pull the deduction of those taxes into 2009.

Adjustments to federal withholding -
If you face a penalty for underpayment of federal estimated tax, you may be able to eliminate or reduce it by increasing your withholding. In this connection, it should be stressed that the Making Work Pay Credit, which was enacted earlier this year, automatically lowered tax withholding rates for employees. However, you should especially review your withholding to ensure that enough tax is withheld if you hold multiple jobs, you and your spouse both work, or you can be claimed as dependent by another person.
If not enough tax or too much tax is being withheld, you should give your employer a new Form W-4, IRS Employee's Withholding Allowance Certificate.
If you are receiving a pension, withholding can also be adjusted by sending Form W4-P, Withholding Certificate for Pension or Annuity Payments, to your pension payer.

Fee-Only Financial Planning Blog: Year End Tax Tips

2009-12-10T13:15:00.000-08:00

Fee-Only Financial Planning Blog: Year End Tax Tips

Year End Tax Tips for Employees

2009-11-13T09:15:00.000-08:00

Employees have some special considerations to take into account that retirees and other nonworking individuals don't face. To help our clients who are employees take advantage of these special tax saving opportunities, we have put together a list of items to consider. Please review the list and contact us if you need additional information on one or more of the items.

Health flexible spending accounts -
Many employees take advantage of the annual opportunity to save taxes by placing funds in their employer's health flexible spending account (health FSA). You save taxes because you use pre-tax dollars to pay for medical expenses that might not be deductible.
If you have set aside funds in your employer's health FSA, check your balance so that you have sufficient time to incur additional reimbursable expenditures to prevent loss of any unused amount under the use-it-lose-it feature of these plans. Don't forget you can get tax-free reimbursements for aspirin, antacids and other over-the-counter items. Your plan should have a listing of qualifying items and any documentation from a medical provider that may be needed to get a reimbursement for any such items.
Examining your year-to-date expenditures now will also help you to determine how much to set aside for next year. Don't forget to reflect any changed circumstances in making your calculation.

Dependent care FSAs -
Some employers also allow employees to set aside funds in dependent care FSAs. They allow employees to use pre-tax dollars to pay for dependent care. In particular cases, participating in a dependent care FSA can yield greater tax savings than foregoing participation and claiming a dependent care credit. Taxpayers who are eligible to participate in a dependent care FSA and are (a) in a high tax bracket and/or (b) have only one dependent and more than $3,000 of employment-related expenses, should use the FSA to pay for child care expenses. For these taxpayers, the FSA almost always provides greater federal tax savings than does the credit.
However, like health FSAs, dependent care FSAs are subject to the use-it-or lose it rule. Thus, now is a good time to review expenditures to date and to project amounts to be set aside for next year.

401(k) contributions -
Review and make appropriate adjustments to your contributions to you employer's 401(k) retirement plan for the remainder of this year. Figure your contribution rate for next year as well.

Year End Tax Tips

2009-11-12T13:24:00.000-08:00

Beware fraudulent email from FDIC

2009-10-28T10:54:00.000-07:00

Subject: E-mail Claiming to Be From the FDIC ("check your Bank Deposit Insurance Coverage")

At the request of the U.S. Treasury, we are distributing the following information. Please distribute this information throughout your organizations and communication channels. Thank you.

The FDIC issued Special Alert (SA-183-2009 ) today regarding a fraudulent e-mail claiming to be from the FDIC. We have received hundreds of reports of this e-mail. We are told by researchers that it is being very widely distributed. See:

http://garwarner.blogspot.com/2009/10/fake-fdic-spam-campaign-spreads-ze

us.html for samples.

*****************

If you receive an email that claims to be from the FDIC or asks you to “check your Bank Deposit Insurance Coverage” - delete it and do not respond to it.

Free NAPFA Webinar Nov 6

2009-10-28T10:24:00.000-07:00

NAPFA's Consumer Webinar Series, a year-long initiative for NAPFA-Registered Financial Advisors to provide information on a wide range of issues, is gaining steam. There are recordings of the first three sessions archived on the NAPFA website, so anyone can listen to the audio synchronized with the PowerPoint slides.

Each month a new session will be conducted live online. Consumers can attend the live session after registering for free, or listen/view the archived programs.

November 6, 2009
1:00 pm - 2:00 pm ET
"Protecting What You Have"
Instructor Roseann Bove, CFP, CLU
NAPFA-Registered Financial Advisor

Your health, family, and home are important and need to be kept safe. Roseann will provide information on how you can portect the things you have through life, health and medical insurance.

Free SSA Webinar for Wounded Warriers Nov 4

2009-10-28T10:22:00.000-07:00

The Social Security Administration is offering a free webinar "Social Security for Wounded Warriors" on November 4. During the webinar, you can learn more about benefit programs and the expedited processing of disability claims available to our nation's Wounded Warriors. The expedited process is used for military service members who become disabled while on active military service on or after October 1, 2001, regardless of where the disability occurs.

The Social Security Administration welcome service members, their families and friends, and those that advocate on their behalf to participate in this seminar for the web as they discuss:
Who is eligible?
When to apply?
How to apply?
The webinar will be hosted via www.socialsecurity.gov on November 4, 2009, at 2:00 p.m. EST.

To RSVP, visit: http://www.socialsecurity.gov/survey/woundedwarriorsrsvp.htm. You will have the option of submitting questions in advance of the webinar with your RSVP.

Federal Tax Credits for Energy Efficiency

2009-10-05T07:59:00.000-07:00

Tax Credits for Consumers:

Home Improvements

Tax credits are now available for home improvements:

must be "placed in service" from January 1, 2009 through December 31, 2010
must be for taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes qualify)
$1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
must have a Manufacturer Certification Statement to qualify
for record keeping, save your receipts and the Manufacturer Certification Statement
improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.More.

SUMMARY OF TAX CREDITS FOR HOMEOWNERS
Product Category	Product Type	Tax Credit Specification	Tax Credit	Notes
Insulation	Insulation	Meets 2009 IECC & Amendments	30% of cost, up to $1,500¹	FAQ on Insulation. Check to see if you have Home Performance with ENERGY STAR in your areas. Adding insulation to your home is covered.
Windows & Doors	Windows, Doors, and Skylights	Before June 1, 2009: Must meet ENERGY STAR criteria After June 1, 2009: U factor <= 0.30 SHGC <= 0.30	30% of cost, up to $1,500¹	Not all ENERGY STAR labeled windows, doors, and skylightsqualify for tax credit. More information
Windows & Doors	Storm Windows & Storm Doors	In combination with the exterior window over which it is installed: has a U-factor and SHGC of 0.30 or below Meets the IECC	30% of cost, up to $1,500¹	FAQ on Storm Doors and Storm Windows.
Roofing	Metal Roofs, Asphalt Roofs	All ENERGY STAR qualified metal and reflective asphalt shingles	30% of cost, up to $1,500¹	FAQ on Roofs.
HVAC	Central A/C	Split Systems: SEER >= 16, EER >=13 Package systems: SEER >= 14, EER >= 12	30% of cost, up to $1,500¹	FAQ on Central ACs. FAQ on Air Source Heat Pumps. Note — not all ENERGY STAR products will qualify for the tax credit.
	Air Source Heat Pumps	Split Systems: HSPF >= 8.5, EER >= 12.5, SEER >= 15 Package systems: HSPF >= 8, EER >= 12, SEER >= 14	30% of cost, up to $1,500¹
	Natural Gas or Propane Furnace	AFUE >= 95	30% of cost, up to $1,500¹	FAQ on Furnaces and Boilers. Note — not all ENERGY STAR products will qualify for the tax credit.
	Oil Furnace	AFUE >= 90	30% of cost, up to $1,500¹
	Gas, Propane, or Oil Hot Water Boiler	AFUE >= 90	30% of cost, up to $1,500¹
	Advanced Main Air Circulating Fan	No more than 2% of furnace total energy use.	30% of cost, up to $1,500¹	FAQ: What if the fan qualifies, but the furnace does not?
Water Heaters	Gas, Oil, Propane Water Heater	Energy Factor >= 0.82 or a thermal efficiency of at least 90%.	30% of cost, up to $1,500¹	FAQ on Water Heaters.
Water Heaters	Electric Heat Pump Water Heater	Same criteria as ENERGY STAR: Energy Factor >= 2.0	30% of cost, up to $1,500¹	FAQ on Water Heaters.
Biomass Stove	Biomass Stove	Stove which burns biomass fuel to heat a home or heat water. Thermal efficiency rating of at least 75% as measured using a lower heating value.	30% of cost, up to $1,500¹	FAQ on Biomass Stoves.
Geo-Thermal Heat Pump	Geo-Thermal Heat Pump	Same criteria as ENERGY STAR: Closed Loop: EER >= 14.1, COP >= 3.3 Open Loop: EER >= 16.2, COP >= 3.6 Direct Expansion: EER >= 15, COP >= 3.5	30% of the cost	All ENERGY STAR geo-thermal heat pumps qualify for the tax credit. What about water-to-water geothermal heat pumps? Must be “placed into service” before December 31, 2016.
Solar Energy Systems	Solar Water Heating	At least half of the energy generated by the “qualifying property” must come from the sun. Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. The system must be certified by the Solar Rating and Certification Corporation (SRCC).	30% of cost	All ENERGY STAR solar water heaters qualify for the tax credit. Must be placed in service before December 31, 2016.
Solar Energy Systems	Photovoltaic Systems	Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement.	30% of cost	Must be placed in service before December 31, 2016.
Small Wind Energy Systems	Residential Small Wind Turbines	Has nameplate capacity of not more than 100 kilowatts.	30% of cost	Must be placed in service before December 31, 2016.
Fuel Cells	Residential Fuel Cell and microturbine system	Efficiency of at least 30% and must have a capacity of at least 0.5 kW.	30% of the cost, up to $500 per .5 kW of power capacity	Must be placed in service before December 31, 2016.
Cars	Hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles		Based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models	There is a 60,000 vehicle limit per manufacturer before a phase-out period begins. Toyota and Honda have already been phased out. Credit is still available for Ford, GM and Nissan. For more information visit:Fueleconomy.gov Use IRS Form 8910 for hybrid vehicles purchased for personal use. Use IRS Form 3800 for hybrid vehicles purchased for business purposes.
Cars	Plug-in hybrid electric vehicles		$2,500–$7,500	The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits). Effective January 1, 2009.

¹Subject to a $1,500 maximum per homeowner for all improvements combined.

Efficient Cars

Starting January 1, 2009, there is a new tax credit for Plug-in hybrid electric vehicles, starting at $2,500 and capped at $7,500 for cars and trucks (the credit is based on the capacity of the battery system). The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits).

Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010. See the IRS Website for updated information .

IRS Guidance:

For More Information:

For Help with your Tax Planning call Teri at 678-763-1372 or visit www.EvergreenPlanning.org

Free NAPFA Webinar this Friday

2009-09-29T11:37:00.000-07:00

Don't miss the Free NAPFA webinar this Friday, October 2 at 1 pm - What is Financial Planning?

NAPFA has started giving free online Webinars for consumers. They are held online the first Friday of each month from 1:00-2:00 pm ET. The Consumer Webinar Series is for everyone – no matter how in tune you are with personal financial issues. Some topics are basic in order to give you an overview of a specific topic while others are slightly more advanced to dig a little deeper into a topic.

For more information and to see upcoming seminars go to: http://www.napfa.org/consumer/UpcomingSessions.asp

2010 Census Cautions

2009-09-23T12:15:00.000-07:00

2010 Census Cautions
By Susan Johnson - August 3, 2009 12:07 pm

Be cautious about giving information to Census workers with the U.S. Census process. The Better Business Bureau (BBB) advises people to be cooperative, but cautious, so as not to become a victim of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data. The big question is - how do you tell the difference between a U.S. Census worker and a con artist? BBB offers the following advice:

** If a U.S Census worker knocks on your door, they will have a:

badge

handheld device

Census Bureau canvas bag

confidentiality notice

Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don't know into your home.

** Census workers are currently only knocking on doors to verify address information. Do not give your Social Security number, credit card or banking information to anyone, even if they claim they need it for the U.S. Census. While the Census Bureau might ask for basic financial information, such as a salary range, it will not ask for Social Security, bank account, or credit card numbers, nor will employees Solicit donations.

Eventually, Census workers may contact you by telephone, mail, or in person at home. However, they will not contact you by Email, so be on the lookout for Email scams impersonating the Census.

Never click on a link or open any attachments in an Email that are supposedly from the U.S. Census Bureau.

Home Buyer Tax Credit May Be Extended

2009-09-18T12:54:00.000-07:00

Homebuyer Tax Credit May Not Be Going Away So Soon

By Michael Cohn, WebCPA.com

September 17, 2009

The First-Time Homebuyer Tax Credit has itself been credited with helping spur many of the home sales in recent months, and that’s prompting some lawmakers to call for extending and expanding it.

Passed as part of the stimulus package in February, the tax credit, which covers up to 10 percent of the cost of a first home, or up to $8,000, is due to expire in the coming months. People who meet the eligibility requirements must complete the purchase before December 1.

That’s the way it was supposed to be when the Recovery Act was signed into law. However, the National Association of Realtors wants to expand the tax credit to $15,000, and it wants to allow all buyers to be able to qualify, not just those who have been out of the market for three years, according to The New York Times. The $15,000 figure is actually the amount that the credit’s initial sponsor in Congress, Sen. Johnny Isakson, R-Ga., a former real estate agent, had wanted. Now Isakson is introducing a bill that would provide up to a $15,000 tax credit to any buyer who stays in their newly purchased home for a minimum of two years, according to the Times.

Given the downturn in the housing market over the past year, the tax credit has emerged as one of the few bright spots, but it is projected to cost the government $15 billion, more than double the amount originally budgeted. The NAR plan would cost the Treasury $50 billion to $100 billion.

Asked about whether the Obama administration would consider extending the credit, White House spokesman Robert Gibbs said the administration’s economic team was evaluating the impact on new home sales and would make a recommendation to the president, according to the Associated Press.

The tax credit has been expensive, but it has arguably been successful in helping the ailing real estate and construction industries survive in recent months. However, like other supposedly temporary tax credits, the First-Time Homebuyer Tax Credit may end up being called the Perennial Homebuyer Tax Credit.

Six Recovery Tax Incentives for Individuals

2009-09-11T17:07:00.000-07:00

The American Recovery and Reinvestment Act provides tax incentives for first-time homebuyers, people purchasing new cars, those interested in making their homes more energy efficient, and parents and students paying for college.

Here are six things the IRS wants you to know about ARRA tax incentives for individuals:

First-Time Homebuyer Credit Taxpayers who haven’t owned a principal residence during the past three years prior to the purchase date of a home before Dec. 1 of this year may be eligible to receive a credit of up to $8,000 on an original or amended 2008 tax return. They can also wait and claim the credit on their 2009 return.
New Vehicle Purchase Incentive Qualifying taxpayers can deduct the state and local sales and excise taxes paid on the purchase of new cars, light trucks, motor homes and motorcycles. The deduction per vehicle is limited to the tax on up to $49,500 of the purchase price of each qualifying vehicle and phases out for taxpayers at higher income levels.
Making Work Pay and Withholding The Making Work Pay Credit lowered employees’ tax withholding rates this year and has already put more money into the pockets of wage earners. Self-employed individuals will have an opportunity to claim this credit when they file their 2009 return. Taxpayers who fall into any of the following groups should review their tax withholding rates to ensure enough tax is currently being withheld: multiple job holders, families in which both spouses work, workers who can be claimed as dependents by other taxpayers, workers without a valid social security number, some social security recipients who work and pensioners. Failure to adjust your withholding in these situations could result in potentially smaller refunds or in limited instances may cause you to owe tax rather than receive a refund next year.
Tax Credit for First Four Years of College The American Opportunity Credit can help parents and students pay part of the cost of the first four years of college. The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Eligible taxpayers may qualify for the maximum annual credit of $2,500 per student.
Certain Computer Technology Purchases Allowed for 529 Plans ARRA adds computer technology to the list of college expenses that can be paid for by a qualified tuition program, commonly referred to as a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services.
Energy-Efficient Home Improvements The credit for nonbusiness energy-efficient improvements is increased for homeowners who make qualified improvements to existing homes. Qualifying improvements include the addition of insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

For more information on this and other key tax provisions of the Recovery Act, visit the official IRS Website at IRS.gov/Recovery.

or http://www.EvergreenPlanning.org

NAPFA Launches Consumer Education Series

2009-09-11T15:46:00.000-07:00

NAPFA Launches Consumer Education Series to Help

Americans Better Understand Personal Financial Issues:

Web-based education program to touch on topics ranging from

basic money issues to complex estate and investment topics

Arlington Heights, IL (July 8, 2009) – The National Association of Personal Financial Advisors (NAPFA), the country’s leading professional association of Fee-Only financial advisors, has been a vocal advocate for consumer protection in the financial industry. Now NAPFA is gearing up to further educate people on a variety of topics in an effort to help Americans become educated consumers of financial planning advice and products.

The Consumer Webinar Series is a year-long initiative beginning August 7, 2009 that will provide an opportunity for anyone in the country to learn about a wide range of financial issues from NAPFA-Registered Financial Advisors. Each month a new session will be conducted live online. Consumers can attend the live session after registering for free, or listen to an audio file after the program. The instructors NAPFA has recruited for the various sessions are among the industry’s leaders in truly comprehensive financial planning and includes members of NAPFA’s National Board of Directors, past NAPFA national chairs, educators, and authors.

“Each session is intentionally designed to help attendees better understand a specific issue and why it is of particular importance to them,” said NAPFA National Chair Diahann W. Lassus, CFP^®, CPA/PFS. “We want attendees to take something away from the sessions that helps them tackle these issues at home. As an industry we have done a poor job of helping consumers increase their financial knowledge. This program, along with the successes of the Your Money Bus Tour, is NAPFA’s way of doing its part.”

The series will include 12, one-hour sessions delivered via the internet. The individual sessions will be conducted from 1 to 2 pm Eastern time and will include:

August 7, 2009 – Money 101: Knowing the Basics

September 4, 2009 – Kids & Money

October 2, 2009 – What is Financial Planning?

November 6, 2009 – Protecting What You Have

December 4, 2009 – Investments: The Basics

January 8, 2010 – Investments: Advanced Concepts

February 5, 2010 – Managing Your 401(k)

March 5, 2010 – Leaving a Legacy

April 2, 2010 – Women and Money

May 6, 2010 – Financial Planning and Small Business Owners

June 4, 2010 – Your Retirement

July 1, 2010 – Financial Windfalls

Registration for the 2009 sessions is open now. Learn more about the Consumer Webinar Series by visiting http://www.napfa.org/consumer/ConsumerWebinarSeries.asp. In addition to registering for the sessions, consumers can learn more about the topics and the NAPFA-Registered Financial Advisors who will be instructing the sessions.

“We hope people will take advantage of this opportunity to better themselves and their families. Only through education will consumers be better capable of addressing their own financial situations,” added Lassus.

Members of the media who would like to learn more about the Consumer Webinar Series can contact Benjamin Lewis of Perception, Inc. at 301-963-7555 or Benjamin.lewis@perceptiononline.com.

About NAPFA

Since 1983, The National Association of Personal Financial Advisors (NAPFA) has provided Fee-Only financial planners across the country with some of the strictest guidelines possible for professional competency, comprehensive financial planning, and Fee-Only compensation. With more than 2,100 members across the country, NAPFA has become the leading professional association in the United States dedicated to the advancement of Fee-Only financial planning.

For more information on NAPFA, please visit www.napfa.org.

S&P UNVEILS NEW MUTUAL FUNDS RATING SYSTEM

2009-09-11T08:52:00.001-07:00

September 11, 2009

S&P UNVEILS NEW MUTUAL FUNDS RATING SYSTEM

Standard & Poor’s on Monday will roll out an updated rating system to analyze mutual funds that it says will rely less on the rearview mirror approach on more on the here-and-now.

The new product, which will be available to financial advisors and their clients through S&P’s MarketScope Advisor platform, will rank more than 20,000 mutual funds based on a bottoms-up analysis of a fund’s underlying holdings using existing S&P equity research tools.

“We think investors should look at the underlying securities in the portfolio to determine if it’s undervalued and of high quality," says Todd Rosenbluth, director at S&P’s equity research services. “They should also look at other factors such as volatility, expense ratio and turnover.”

Past performance will also be a factor, but it won’t be a chief determinant of how a fund is ranked. S&P’s new rating system will rank funds on a scale of one (lowest) to five (highest). Funds will be ranked by decile within their asset category.

Rosenbluth says S&P will assign ratings for funds with track records of as little as six months, rather than use a minimum three-year performance history that he says is the industry standard.

“We think we can analyze a fund once we have sufficient information about the portfolio,” he says.

Fund rankings and price data will be refreshed weekly, as of the close of trading the prior Friday.

20 Ways to Celebrate Financial Planning Week

2009-09-11T08:00:00.000-07:00

Financial Planning Week is Oct 5-11 - Spread the word!

FPA offers these suggestions to celebrate Financial Planning Week:

Balance your checkbook
Make a monetary contribution to your favorite charity
Start a savings account for a child, vacation or a gift for yourself
Help teach your children how to save and spend wisely
Get your estate in order: Create or revise your will and other estate-planning documents
Call your financial planner and share your appreciation for their service
Pay off a credit card
Get a head start on college — investigate college planning options
Establish an emergency fund
Evaluate your employee benefits and begin planning for open enrollment
Develop your holiday spending budget
Plan for year-end tax strategies
Purchase a session with a financial planner for a relative, friend or colleague
Give a relative, friend or colleague a subscription to a personal finance magazine
Invite a financial planner to speak at your workplace
Review your insurance coverage
Write down your financial goals and revisit them periodically
Start using personal finance software to help you better understand your money
Look up three financial terms that have baffled you and resolve to understand them
Talk to a relative about their plans for long-term care

for more information go to

http://www.fpaforfinancialplanning.org/WhatisFinancialPlanning/FinancialPlanningWeek

http://www.evergreenplanning.org

The Fundamentals Never Change

2009-09-09T10:49:00.001-07:00

The Fundamentals Never Change

Posted using ShareThis

The best of times to become first-time homeowners—how the tax law (and parents) can help

2009-08-20T11:28:00.000-07:00

Practice Alert
Despite improvement in some areas, it's still the worst of times for many homesellers, particularly those who bought near the peak of the market. Thanks to dramatic drops in selling prices, it's also the best of times for those looking to become homebuyers, particularly those who can turn to well-off parents or grandparents for financial assistance. This Practice Alert surveys why it's a good time, taxwise, to buy a home, and a good time, taxwise, to help make homeownership a reality for children or grandchildren.
First-time homebuyer credit. Individuals who become first-time homebuyers in 2009 are entitled to a refundable tax credit if they make their move before Dec. 1, 2009. The refundable tax credit (claimed on Form 5405) is equal to the lesser of 10% of the purchase price of a principal residence or $8,000. (Code Sec. 36)
A taxpayer is a first-time homebuyer if he (or spouse, if married) had no present ownership interest in a principal residence in the U.S. during the 3-year period before the purchase of the home to which the credit applies. (Code Sec. 36(c)(1)) IRS guidance states that a taxpayer who owns a property formerly used as their residence that's been rented out for the past three years may qualify for the credit.
Any home purchase (including, presumably, coops and condos) qualifies but only if (1) the property isn't acquired from a person related to the buyer (under detailed rules in Code Sec. 36(c)(5)); and (2) the basis of the property in the hands of the buyer is not determined by reference to the adjusted basis of the property in the hands of the person from whom it was acquired, or under Code Sec. 1014(a) (property acquired from a decedent). (Code Sec. 36(c)(3)) A home under construction by a taxpayer is treated as purchased by him on the date he first occupies it. (Code Sec. 36(c)(3)(B))
No credit is allowed if: (a) the taxpayer disposes of the home (or it ceases to be a principal residence) before the close of a tax year for which a credit otherwise would be allowable; (b) the taxpayer is a nonresident alien; (c) the taxpayer's financing is from the proceeds of tax-exempt mortgage revenue bonds; or (d) the D.C. homebuyer credit is allowable for the tax year the residence is bought. (Code Sec. 36(d))
The homebuyer credit phases out for taxpayers with modified adjusted gross income (MAGI) between $75,000 and $95,000 ($150,000-$170,000 for joint filers) for the year of purchase. MAGI is AGI for the tax year increased by any amount excluded under Code Sec. 911 (foreign earned income and foreign housing exclusions), Code Sec. 931 (income derived from American Samoa) or Code Sec. 933 (income from Puerto Rico). (Code Sec. 36(b)(2))
If the credit is claimed on a principal residence purchased in 2009, the credit is recaptured if the home ceases to be the taxpayer's principal residence within 36 months from the date of purchase. (Code Sec. 36(f)(4)(D)(ii))
Eligible first-time homebuyers who purchase a principal residence after Dec. 31, 2008, and before Dec. 1, 2009, may elect on an amended return to treat the purchase as made on Dec. 31, 2008. (Code Sec. 36(g))
RIA observation: The election effectively allows eligible first-time homebuyers who make a timely purchase in 2009 to put the $8,000 credit in their pockets quickly, instead of having to wait until they file their 2009 returns.
RIA observation: To help buyers that need downpayment and closing cost assistance when buying a home eligible for the first time homebuyer tax credit, a number of state housing finance agencies are offering special short-term second loans to qualified buyers. These loans carry little or no interest and may be repaid with the homebuyer tax credit refund. For details, and which states are participating, go to http://www.ncsha.org/section.cfm/3/34/2920 .
Other tax benefits produced by first time homeownership. Often, first time homeowners also will become a first time itemizers due to the deductions for interest and property taxes, enabling them to deduct expenses (e.g., medical, charitable, miscellaneous itemized deductions) they couldn't claim before.
RIA observation: Buying a first-time home late in the year may only yield a small amount of taxes and mortgage interest paid for 2009 (unless the buyer pays a substantial amount for “points”), and, as a result, the purchaser may wind up claiming the standard deduction in 2009 before he becomes an itemizer in 2010. The home purchase can help in this situation, too. For 2009, taxpayers who claim the standard deduction instead of itemizing deductions may under Code Sec. 63(c)(7) claim an additional standard deduction for State and local property taxes paid. The deduction can't exceed the lesser of State and local property taxes actually paid or $500 ($1,000 for joint return filers). Taxes taken into account in arriving at adjusted gross income under Code Sec. 62(a) (i.e., taxes deducted as trade or business expenses in computing the taxpayer's adjusted gross income) aren't taken into account in computing the additional standard deduction for property tax.
Tax benefits in helping kids become homeowners. Those able to help their children or grandchildren become first-time homeowners can do so in a number of tax-wise ways:
Make cash gifts. The annual per-donee gift tax exclusion ($13,000 for 2009), makes it possible for parents to give children major assistance with the downpayment for a home purchase. Each parent can give $13,000 to the child, for a total of $26,000, and if the child is married, each parent can do the same with the son- or daughter-in-law, for a total gift-tax-free amount of $52,000 (grandparents also can chip in).
RIA observation: Gifts excludible under the annual exclusion are advantageous from an estate tax point of view. Though not subject to gift tax, they are excludible from the donor's gross estate and therefore also escape estate tax and/or generation skipping transfer (GST) tax. And because excludible gifts aren't included in “adjusted taxable gifts” (a decedent's post-'76 taxable gifts within the meaning of Code Sec. 2503, namely total gifts less certain deductions and exclusions, other than gifts includible in the decedent's gross estate), they aren't added to the donor's taxable estate for purposes of computing the estate tax and so they don't push the taxable estate into higher brackets as taxable gifts do.
Make gifts of appreciated assets. Instead of making a cash gift to help with the downpayment, a parent or grandparent may consider gifting appreciated stock, mutual-fund shares, and other securities that have been held for more than one year to their children if the latter are lower-bracket taxpayers. The children can then sell the securities. This turns a gain that would be taxed at 15% if the parents sold the securities into a tax-free gain.
Reason: The holding period for property acquired by gift includes the donor's holding period if the property has the same basis for gain or loss in whole or in part in the hands of the donee as it would have in the donor's hands. (Code Sec. 1223(2); Reg. § 1.1223-1(b)) And under Code Sec. 1(h), a zero tax rate applies to most long-term capital gain (as well as dividend) income that would otherwise be taxed at the regular 15% rate and/or the regular 10% rate.
To avoid transfer tax consequences, the value of the gift of appreciated securities shouldn't exceed the annual exclusion.
Make a low-interest loan. A parent can consider giving a child a loan (instead of, or in addition to, a gift of cash or securities) to make first-time homeownership possible.
The loan can cause complex imputed interest problems under Code Sec. 7872 if it's a “below market interest” loan. If a below-market (or interest-free) loan is a “gift loan” (that is, a below-market loan where the forgoing of interest is in the nature of a gift) that exceeds $10,000, it's treated as: (1) a loan to the borrower/donee in exchange for an interest-paying note, and (2) a gift to the borrower of the funds to pay the interest. The amount of the gift equals: the forgone interest—excess of interest payable at the applicable federal rate (AFR) over actual interest payable—if the loan is a demand loan (i.e., one payable on demand); or the excess of the amount loaned over the present value (using a discount rate equal to the AFR) of all payments required under the terms of the loan, if the gift loan is a term loan. (Code Sec. 7872)
However, a parent can avoid all of these problems—and still give the child a major break—by charging the child interest at the appropriate AFR, which is very, very low these days. For example, for loans made in September, the short-term AFR (term loans with a term not exceeding three years) is .84%, the mid-term AFR (term loans over three years but not over nine years) is 2.83%, and the long-term AFR (term loans over nine years) is 4.29% (all rates for a monthly period of compounding). (See AFR Rates for September 2009 in yesterday's Newsstand e-mail.)
Source: Federal Tax Updates on Checkpoint Newsstand tab 8/20/09

Five Core Fiduciary Principles Interest SEC Commissioners

2009-08-11T17:58:00.000-07:00

Details of core fiduciary principles and differences

between fiduciary and ‘arm’s length’ standards discussed

Washington, DC – August 3, 2009 – The Committee for the Fiduciary Standard,

a group of investment industry leaders, took their fiduciary message to Washington on

July 29th. The Committee met with SEC Commissioners, a Treasury official and

Congressional staff.

“We felt strong interest from everyone we met. Although no specific

commitments were made, our takeaway was that all participants understand and believe

in the application of the five core fiduciary principles to any and all who provide (or

purport to provide) investment advice,” says Harold Evensky, a member of the

Committee and president of Evensky & Katz, a registered investment adviser.

The Committee met with SEC Commissioners Elisse B. Walter and Luis A.

Aguilar. During the course of their discussions, the Committee addressed how the five

core principles would apply in various circumstances where advice is given to an

investor. The Committee also pointed out sharp differences between the fiduciary and

arm’s length standards. In addition, the Committee briefed an official from the Treasury

Department and Congressional staff.

“We saw Washington at its very best. The keen sense of the vital role of the

fiduciary standard, and the historic opportunity to ‘do what’s right for investors’ were

palpable in our meetings,” says Knut A. Rostad, Chair of the Committee and the

Regulatory and Compliance Officer at Rembert Pendleton Jackson, a registered

investment adviser.

The five core principles of the fiduciary standard are:

• Put the client’s best interests first;

• Act with prudence; that is, with the skill, care, diligence and good

judgment of a professional;

• Do not mislead clients; provide conspicuous, full and fair disclosure of

all important facts;

• Avoid conflicts of interest; and

• Fully disclose and fairly manage, in the client’s favor, unavoidable

conflicts.

The Committee announced its formation in June for the purpose of working to

ensure that any new legislation or rulemaking “meets the authentic fiduciary standard,

as presently established in law.” The Committee has:

• Called on Congress to adopt the authentic fiduciary standard in Wall Street

reforms and asked that Congress ensure that investors’ best interests are made the

number-one priority in new legislation

• Introduced the five core principles of the authentic fiduciary standard

• Urged investors, professionals and all interested market participants to ‘vote’ in

support of the five core fiduciary principles by signing the Committee’s online

petition

• Been invited by staff members of the House of Representatives Committee on

Education and Labor to provide assistance on HR 2989, a Bill intended to

introduce fiduciary and fee disclosure requirements for those who give advice to

retirement plan participants.

The Committee’s members are recognized leaders in the investment and financial

advisor profession:

• Blaine Aikin, fi360

• Clark M. Blackman II, Alpha Wealth Strategies, LLC

• Gene Diederich, Moneta Group

• Harold Evensky, Evensky & Katz

• Sheryl Garrett, Garrett Planning Network

• Roger C. Gibson, Gibson Capital, LLC

• Matthew D. Hutcheson, Independent Pension Fiduciary

• Gregory W. Kasten, Unified Trust Company

• Kate McBride, Wealth Manager

• Fred Reish, Reish, Luftman, Reicher & Cohen

• Ronald W. Roge, R. W. Roge & Company

• Knut A. Rostad, Rembert Pendleton Jackson

Fee-Only: Financial Advice That Is Not Part of a Sales Process

2009-07-14T06:31:00.000-07:00

It may seem unnatural to pay upfront for investment advice; however, if you are comparing our services with those of another adviser, you might consider the following:

We are generally able to deliver substantial value in not only saving our clients money, but also delivering advice that’s suited to your needs and not tied to any sales agenda. Our value derives from independence, objectivity, and fiduciary responsibility. Very few planners in the world offer a range like this.

Quality and Value

• Objective Advice - The only money we receive is directly from you, our client. Commission paid advisors are compensated based on whether you buy the product they recommend - this represents a significant conflict of interest. Our advice is not rendered as part of a sales process. There are no hooks or hidden agendas.

• Independent Advice - The investment universe we have available to choose from is not limited by any company paying us to recommend their product or type of service. The plan we create for you is not conditioned in any way on you implementing your solution through us. We never receive third-party compensation from suppliers or vendors.

• Fiduciary – As a member of the FPA, NAPFA, Garrett Planning Network and the CFP Board, I am required to always place your best interest above that of my own. As a Fee-Only advisor, you are the only one paying me, which aligns our interests and removes conflicts of interest.

• Cost Effective – How much are you paying to invest your money? You'll pay more for my plan up-front, but the difference in implementation and ongoing costs is significant when using appropriate no-load funds with low expense ratios, and with lower turnover and capital gains distributions. You will also be free from that point on from the higher ongoing costs of ownership of a limited range of investment products offered by commission paid advisors.

http://www.EvergreenPlanning.org

NAPFA Applauds President Obama for Proposing a Fiduciary Standard

2009-06-19T08:47:00.000-07:00

President's regulatory reform proposals met with guarded optimism by Fee-Only financial advisor association

Arlington Heights, IL (June 18, 2009) - The National Association of Personal Financial Advisors (NAPFA), the country's leading professional association of Fee-Only, fiduciary financial advisors, is pleased to release the following statement from NAPFA National Chair Diahann W. Lassus, CFP®, CPA/PFS regarding President Obama's 21st Century Regulatory Reform proposals.

"For 26 years NAPFA has been promoting the need for financial advisors of all varieties to adhere to a strict fiduciary standard of conduct. The industry has done consumers a great disservice over the years by blurring the lines that distinguish truly independent advisors who operate only with the client's interests at heart and those advisors adhering to a lower standard of conduct. President Obama's call for a fiduciary standard for all financial intermediaries who provide investment advice is a wake-up call for an industry that has fallen asleep at the wheel."

Ms. Lassus adds, "With the President pointing the regulatory reform debate clearly in the direction of a fiduciary standard now comes the time to determine how regulation of the industry will change. NAPFA encourages members of Congress to avoid the trap of looking to bodies that have been focused on guiding the brokerage side of the industry. We believe only a body such as the SEC, which has roots in a fiduciary standard in regulating Registered Investment Advisors, is qualified to enforce this higher standard."

To arrange an interview with Ms. Lassus, please contact Benjamin Lewis of Perception, Inc. at 301-963-7555 or Benjamin.lewis@perceptiononline.com.

About NAPFA

For more information on NAPFA, please visit www.napfa.org.

5 Fiduciary Principles

2009-06-17T12:05:00.000-07:00

Your financial advisor is fiduciary if they:

- Put the client's best interest first

- Act with due care and utmost good faith

- Do not mislead clients; provide clear and conspicuous, full and fair disclosure of all material facts

- Avoid conflicts of interest

- Disclose and fairly manage any remaining material conflicts in the client's favor

What is a Fiduciary and Why Should You Care?

2009-06-17T11:57:00.000-07:00

Questions to ask yourself. . .

- How important is it that your financial advisor have a fiduciary responsibility to put your interests first?

- Is the "advice" I'm receiving incidental to the purchase or sale of a security?

- Are you looking for financial advice or just a recommendation on what investment to buy right now?

New and Improved Web Site

2009-06-17T11:54:00.000-07:00

Evergreen Financial Planning has a new and improved Web Site. Easier to navigate and more user friendly. Check it out at http://www.EvergreenPlanning.org

Recycling can reduce toxins

2009-05-01T11:18:00.000-07:00

from Consumer Reports - GreenerChoices.org

It’s no secret that recycling can save resources and reduce the need for landfill space. But it can also be an important way to reduce toxins in the environment. By recycling the products on the list below, you can help keep the chemicals they contain out of our landfills, water, and air and make them available for new products.

WHAT TO RECYCLE & WHERE

ANTIFREEZE: Chemicals commonly used to make antifreeze include ethylene glycol or its less toxic relative, propylene glycol. Regardless of which active ingredient is used, waste antifreeze also contains heavy metals, including lead, cadmium, and chromium. Dumping antifreeze can cause serious water quality problems and be harmful to people and animals, according to the U.S. Environmental Protection Agency.

Where to recycle: Many state laws regulate the proper disposal of antifreeze. Check Earth911 or call the group toll-free at 1-800-CLEANUP for recycling and disposal options in your area.

BATTERIES: The heavy metals and other chemicals batteries contain can contaminate the environment if they’re not disposed of properly. Here are three common types and where to recycle them:

• ALKALINES: While the zinc and manganese in these batteries are generally considered safe during normal use and disposal, the battery’s corrosive electrolyte solution, potassium hydroxide, is a hazardous chemical that can cause severe burns if it comes into contact with skin or eyes.

Where to recycle: In some places, including the European Union and the State of California, alkalines must be recycled or taken to a household hazardous waste disposal facility. Check Earth911 or call the group toll-free at 1-800-CLEANUP for recycling and disposal options in your area.

• CAR BATTERIES: Lead is found in car batteries, along with acid. Both substances are considered extremely toxic.

Where to recycle: Most states have laws requiring batteries to be recycled. To see the battery recycling details for your state, visit Battery Council International. Some installers may take used batteries even if they didn’t sell you a new one.

• RECHARGEABLES: Rechargeable batteries contain heavy metals, such as cadmium in nickel-cadmium (NiCd) batteries, which by law are supposed to be labeled with the phrase “Battery must be recycled or disposed of properly.”

Where to recycle: The industry-sponsored Rechargeable Battery Recycling Corporation has established a national recycling program in partnership with electronics retailers, including Home Depot, Staples and Target. For recycling options in your area, check the Rechargeable Battery Recycling Corporation.

COMPACT FLUORESCENT LIGHTBULBS: CFLs typically contain about 5 milligrams or less of mercury, a neurotoxin that can be released into the environment if the bulbs are landfilled.

Where to recycle: Bring spent, unbroken CFLs to a retailer that recycles them for free, such as Home Depot or Ikea. Ace Hardware also collects the bulbs at select locations. You can also search for recyclers on the U.S. Environmental Protection Agency's lightbulb recycling site, or check whether you have a local household hazardous waste collection site that recycles them. Find out what to do if a bulb breaks.

ELECTRONICS: Keeping electronics products out of landfills is important, since some contain toxic materials, including lead, cadmium, and mercury that can leak into the soil and ground water. TVs with cathode ray tubes (CRTs), for example, contain four to eight pounds of lead on average.

Where to recycle: For tips on how and where to responsibly recycle, visit our Electronics Recycling & Reuse Center which covers computers, cell phones, TVs, and other electronics.

MOTOR OIL: Used oil contains many toxic ingredients that are generated during engine combustion. Toxics include metals and polycyclic aromatic hydrocarbons (PAHs), which are carcinogenic and cause harm if discarded into landfills or in the environment.

Where to recycle: State laws require motor oil to be discarded properly, and most state, county, or community recycling centers will collect used motor oil. Many states also require or encourage service stations, motor oil retailers, quick lube centers, or auto dealerships to do likewise. Check Earth911 or call the group toll-free at 1-800-CLEANUP for recycling and disposal options in your area.

Note that oil filters contain toxic ingredients found in used oil. If you are changing your own oil filter, see if your local recycling facility, gas station, auto parts store, quick lube shop or auto dealer will take your used oil filter. You can also check Earth911 or call the group toll-free at 1-800-CLEANUP for recycling and disposal options in your area. If you cannot locate any, drain the filter thoroughly, dispose of the used oil properly (see above), wrap the filter in newspaper, seal it in plastic, and then throw it away.

PAINT: Lead may be in paint made before 1978, and mercury may be in paint made before 1991. In general, oil-based paint is considered more hazardous than water-based paint because the solvents and resins used to make it are toxic and flammable.

Where to recycle: Water-based, or latex, paint can be recycled into new paint or it can even be used to create nonpaint products such as cement. Oil-based, or alkyd, paint is usually used for fuel blending—meaning it’s burned to create energy at a power plant. Check Earth911 or call the group toll-free at 1-800-CLEANUP for recycling and disposal options in your area, or find out whether you have a local household hazardous waste collection site that collects paint.

For more information on household products that contain toxins, visit the U.S. Environmental Protection Agency’s site on Household Hazardous Waste or use our Toxics search.

USPS offers recycling by mail

How to safely—and eco-consciously—dispose of used meds

What to do with leftover paint

What you need to know about the New Sales Tax Deduction for Vehicle Purchases

2009-04-20T07:00:00.000-07:00

From the IRS

Taxpayers who buy a new car or several other types of motor vehicles this year may be entitled to a special tax deduction when they file their 2009 federal tax returns next year. The tax break is part of the American Recovery and Reinvestment Act of 2009.

Here are seven things you should know about this new deduction:

State and local sales taxes paid on up to $49,500 of the purchase price of qualifying vehicles are deductible.
Qualified motor vehicles generally include new (not used) cars, light trucks, motor homes and motorcycles.
Purchases must occur after Feb. 16, 2009, and before Jan. 1, 2010.
This is an above-the-line deduction and can be taken regardless of whether or not you itemize other deductions on your tax return.
Taxpayers will claim this deduction when filing their 2009 federal income tax return next year.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
The deduction may not be taken on 2008 tax returns.
Consumers who are considering buying a new car may find that this tax incentive means there has never have been a better time to buy.

Five Tips To Avoid Tax Time Stress

2009-03-22T05:43:00.000-07:00

For help with your Tax Return Preparation or Tax Planning, call Teri at 678-763-1372

IRS Tax Tip 2009-50

Are you looking for ways to avoid the last-minute rush for doing your taxes? Here are some stress-relieving tips to help you.

1. Don't Procrastinate - Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

2. Visit the IRS Online - In 2008, there were more than 330 million visits to IRS.gov. Anyone with internet access can find tax law information and answers to frequently asked tax. questions.

3. File your Return Electronically - Nearly 90 million taxpayers filed their returns electronically in 2008. Aside fro the ease of filing, IRS e-file is the fastest and most accurate way to file a tax return. If you are due a refund, the waiting time for e-filers is half that of paper filers.

4. Don't Panic if You Can't Pay - If you cannot pay the full amount of taxes you owe by the April deadline, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest. You also should contact the IRS to discuss your payment options at 1-800-929-1040. The agency may be able to provide some relief such as a short-term extension to pay, an installment agreement or an offer in compromise. More than 75% of taxpayers eligible for an Installment Agreement can apply using the Web-based Online Payment Agreement application available on IRS.gov. To find out more about this simple and convenient process type "online Payment Agreement" in the search box on the IRS.gov homepage.

5. Request an Extension of Time to File - But Pay on Time - You can get an automatic six month extension to file to October 15, 2009. However, this extension of time to file does not give ou more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90% of your total tax by that date. See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Tax Return for a variety of easy ways to apply for an extension. Form 4868 is available at IRS.gov or by calling 1-800-TAX-FORM (800-829-3676). Taxpayers needing a Form 4868 should act soon to be sure they have the item in time to meet the April deadline.

RMD suspended for 2009

2009-03-19T05:23:00.000-07:00

The new Worker, Retiree and Employer Recovery Act of 2008 was passed and signed into law by President Bush in December 2008. The law provides a break for elderly taxpayers who normally have to take their RMD (required minimum distribution) from their IRAs and other qualified plans each year. These RMDs have been suspended for 2009.

This does not apply to RMDs that have been postponed from 2008. If you missed fulfilling the 2008 RMD, you are not exempt. You must still complete the RMD withdrawal plus and resulting penalties to the IRS. Also, if you turned 70 1/2 in 2008, you have until April 1, 2009 to fulfill your 2008 RMD. For your first distribution, you may wait to take that distribution until April 1st of the year after you turn 70 1/2.

Additional Standard Deduction for Real Estate Taxes

2009-03-15T08:48:00.000-07:00

Do you pay state or local real estate taxes but don't qualify to itemize your deductions?

For Tax Years 2008 and 2009, if you pay state or local real estate taxes, you may take an addition to the standard deduction.

What you need to know about the additional standard deduction for real estate taxes:

1. The additional deduction is equal to the amount of of real estate taxes

paid up to $5oo for single filers or $1000 for joint filers.

2. You must have paid the taxes during your tax year and the taxes must

have been imposed on you.

3. The taxes must be based on the assessed value of the property. Taxes

imposed for improvements to property, such as assessments for

sidewalks, usually cannot be deducted.

4. Real Estate taxes paid on business or foreign property do not qualify.

5. You must file Form 1040 or 1040A to claim the additional deduction.

Form 1040 - check box on line 39c

Form 1040A - check box on line 23c

Time to Rebalance

2009-03-15T07:41:00.000-07:00

With all the recent activity in the market, investors are uncertain what they should do. Is it time to pull out of the market? When is the time to get back in?

I would like to take this time to reassure you and remind you that long term strategies are your best option. The purpose of a long term strategy, keeping your individual goals in mind, is to diversify against risk and to hedge your portfolio against inflation. If you have a well balanced portfolio and rebalance periodically as needed you accomplish these goals.

If you haven't rebalanced your portfolio, now is the time to do it. The market is low and there are a lot of great deals out there. No one can time the market, but don't wait until the market has recovered to buy!