Are there any Tax Credits out there for you?

Middle-class taxpayers often ask the question - is there any tax benefit out there for me ... ever? Well, the White House has created a Tax Savings Tool on its website as a way to make sure you are getting all the tax benefits you are entitled to.  The tool not only asks you questions to see if you qualify for a credit, such as "Did you make improvements to your home last year that make it more energy efficient?" but it also explains how the credit works so that you might be able to take advantage of it next year.

The tool describes itself as:

Did you know that there are more than a dozen Recovery Act tax cuts working families can take advantage of this tax season? For some taxpayers, this could mean thousands of dollars in tax savings.

This tool is intended to be educational. Taxpayers should not rely on it for determinations about their eligibility for tax benefits, but should consult the relevant IRS forms and instructions or a qualified tax professional. The tool provides links to relevant and other government resources to help taxpayers learn more about the benefits for which they may be eligible.

I learned this from Greg Herman-Giddens at North Carolina Estate Planning Blog.


Randolph NJ Schools at a Crossroad - What do we value?

Randolph NJ Schools are at a cross roads. Gov. Christie has cut an additional $3.7 million in funding for the 2010-2011 school year. This is on top of a shortfall of $2.27 from our operating budget from this year.

The Board of Education has outlined our bleak options in a press release.

While none of the options are desirable, we all need to be informed residents to determine how our town will move forward. We need to make decisions about today and our future.

Here is how our "options" break down:

1 - The residents fund the shortfall - A one time additioanal special tax increase of approximately $113 per average household in addition to the increase of $253 per household already suggested to deal with the $2.27mil shortfall (average assessed value is around $338k I think)  - or a total of $366 per average house instead of $253 per average house OR

2 - Slashing the education our schools provide through either:

a - Cutting 57 teachers (in addition to the 22 already slated to be eliminated to make up the $2.7 shortfall already incorporated into the 2010-2011 budget) - meaning a total teaching staff reduction of 79 teachers  OR

b - Cutting ALL of the following:

  • All sports, clubs and extra-curricular activities in all schools (elementary through high) AND
  • Busing for families who live within 2 miles or the school (meaning kids are walking to school in Millbrook with no sidewalks) AND
  • All kindergarten classes AND
  • All AP classes at the high school AND
  • All elective courses at the middle and high schools beyond the core state curriculum

An additional option is offsetting some of the cuts costs by a wage freeze for all education system staff.  Whatever your thoughts on that, the reality is that our school budget vote is next month and the teacher contract won't be done by then, so it is irrelevant to the immediate issue.  I put this in the category of good news if it happened, but not something to be counted on now.  Right now, we have some hard choices.

Nobody wants tax increases - but I put forth to you that if we residents don't come together to increase the funding to maintain our schools by agreeing to a one-time tax levy, our community will be lost as residents flee for better schools and nobody will buy our houses for a school district with no kindergarten, no AP, no busing and no sports.

We can all agree the education system is broken, but the answer can't be to punish our children who only get one shot at education in life - without the solid quality foundation we have been able to provide, our children's potential will be stunted.

Would I suggest different allocations in cuts if it were my decision? Absolutely - I see areas of waste and misallocation of resources.  Am I wiling to punish all of our children as a result? No.

I am a member of this community and know that if we can work together to maintain and grow, then all of us will benefit.  I would prefer a tax increase that is incremental spread out of over a year to having to pay for private school, private transportation and suffering more reductions in the value of my house.

We vote April 20th from 2-9 at the local firehouses.


Image: graur razvan ionut /

Collaborative Divorce - When Couples can Agree to Disagree

My colleague Don Vanarelli has a great post about what to consider when entering into a collaborative divorce.  I think of a collaborative divorce as when reasonable people have determined for whatever reason that the marriage is no longer working, and they are willing to work together to create a win-win situation for themselves in light of the changed facts.   Other advisors that will be involved include matrimonial attorney on both sides to represent each party (even though it is collaborative it needs to be fair), a financial planner to do the tire-kicking of if the split of the pie will support both parties lifestyles, and a perhaps a counselor to act in a mediator role.

My colleague Jody D'Agostini introduced me to the concept of collaborative divorce through her experience with it from the financial planning side.  She has a great interview with Fox 5 News about how this approach can save money and protect the family from devastating emotions.

For those considering a divorce, a collaborative divorce approach may work for you - or it may not. Before moving forward with anything you need to get your own independent legal advice about your situation.  This is  particular sensitive with seniors as if Medicaid deems that you have "given away" too much in the divorce, they may treat it a transfer that creates a penalty period.

65% of Americans Don't Have a Will - Staggering as 100% will die someday

Why don't people create a Will?  Reasons I have heard range from I don't have enough money to worry about it, I trust xyz person to take care of it, it is too complicated or expensive, to people who sincerely believe that if they make a Will they may die.  

Apparently, all these reasons and more are very strong as reports that 65% of Americans do not have a Will. The article, brought to my attention by Michael Rinne, outlines some of the reasons people give for not making a Will.

I understand all the reasons why for many people making a Will is not a priority.  There are oodles of things not a priority in my life.

However, for parents of minor children, the only place to name Guardians for your children upon your death in is your Will.  Whatever reason you have for not thinking you need a Will, it is superseded by your need as a parent to provide for who will care for your children in the event of your death.  

To make it easy, go to and have a Will prepared on-line if seeking professional services is not a priority at this time.  I have blogged before on the pros and cons of computerized Wills, and an article on the subject is being talked about on Twitter today, but in the case of naming care for minor children, something is definitely better than nothing.

What are your thoughts on why 65% of Americans don't have a Will?

Charitable Remainder Trust - Give your tax dollars to charity instead

Jensen Law Offices has a great post summarizing the mechanics and usefulness of a Charitable Remainder Trust or CRT.  A CRT is one of those great tax techniques where you get to have your cake and eat it too.  

A CRT is a split gift between a charity and your family.  For example - you leave a portfolio in a trust where your children get 7% a year for their lives, and when the child dies, the charity gets the balance of the portfolio.  Your estate is entitled to a tax deduction (since NJ still has an estate tax, this is relevant in 2010 as well as 2011 and beyond when the federal estate tax reappears).  Your children get an income stream for live, and the charity has the reminder upon their deaths.

Note that when you have a taxable estate charitable giving at its most basic is taking dollars that your family would not have gotten anyway (because they had to go to taxes) and directing them to charity. With a CRT you are compounding this by getting the tax benefits and giving the family a stream of dollars.


Image: Salvatore Vuono /