Bailout Includes IRA Charitable Giving
November 30, 2008
The Wall Street Journal
By ANNE TERGESEN
If you’re age 70½ or older and are charitably inclined, the bailout package that President Bush signed into law in October contains some good news: Uncle Sam is temporarily resurrecting a tax break available to those who make donations from their individual retirement accounts to charity.
We mentioned this break in brief several weeks ago and — based on readers’ questions — decided to discuss it this week in greater detail. What follows is a look at the requirements involved, as well as a warning: Be careful how you transfer the money.
To be eligible, you have to be at least 70½ when you make the donation. You and your spouse can each give up to $100,000 from your respective accounts this year and next. The money can also come from two other types of retirement accounts — a SEP or a SIMPLE IRA — with the condition that you are no longer contributing to those particular accounts, says Ed Slott, an IRA consultant in Rockville Centre, N.Y. Employer-sponsored plans, such as 401(k)s, aren’t eligible.
You must give the donation to a public charity; a private foundation, supporting organization or donor-advised fund won’t work, says Blanche Lark Christerson, a managing director at Deutsche Bank Private Wealth Management in New York.
The charity has to acknowledge the gift, and you can’t receive anything in return — not so much as a chicken dinner, says Ms. Christerson. Moreover — and this is critical — the check must be payable to the charity. If you withdraw money first, you’ll get stuck paying income tax on the entire amount.
Under the law, any money you donate to charity from your IRA will count toward the annual withdrawals you’re required to take from these accounts after reaching age 70½. (Be aware, though, that if you already took your withdrawal this year, you’re out of luck. You can’t retroactively claim the tax break, even if you gave some or all of this money to charity.)
If you are able to take advantage of this tax break, you won’t get the tax deduction for your gift that you would normally be entitled to. But you are almost sure to come out ahead. To see why, consider what would happen if you were to donate $1,000 to your alma mater.
If when filling out your tax returns you don’t itemize deductions, you’d normally get no tax deduction for the gift. But under the new law, you would receive a nice tax break. That’s because under the new law, the charitable donations you make from an IRA don’t count toward your taxable income. As a result, a $1,000 gift would reduce your income by $1,000. That would save someone in the 25% tax bracket $250.
If you itemize your deductions, you’ll also come out ahead. That’s because taxpayers whose adjusted gross incomes exceed certain thresholds lose some of their deductions and personal exemption amounts. By not adding $1,000 to your income, this gift might help you keep your income below these levels.
“Without this provision, your required minimum distribution may trigger all these other stealth taxes,” Mr. Slott says.
A few states, including New Jersey, don’t allow residents to take deductions for charitable gifts on their state income-tax returns. Residents of these states would still have to pay state income tax on donations from an IRA, says Michael Steiner, a wealth manager at RegentAtlantic in Morristown, N.J. Residents of these states should realize they “won’t get the full tax break,” Mr. Steiner says.
Write to Anne Tergesen at anne.tergesen@wsj.com
Prepare for a Gruesome Retirement
November 30, 2008
The Motley Fool
November 30, 2008
But judging from startling statistics, you’re in danger of a retirement that’s quite the opposite. Picture gnawing on Salisbury steak microwave dinners, taking a bus down to the Git ‘n’ Go for a bag of chips, and bringing your grandchildren to the Salvation Army so you can shop for “new” clothes — all while living in a relative’s moldy basement.
Time for some tough love, Fools.
The facts
According to the 2008 Retirement Confidence Survey (RCS), many Americans will have gruesome retirements. In a separate survey, 31% of us said we’d rather scrub a bathroom than plan for retirement.
Rest assured: If you’ve been putting off planning for your retirement, you’re not alone. (I can’t speak for the scrubbing thing.)
Retirement Calculators
November 29, 2008
When I was in the treestand yesterday waiting on a big buck to come along my way, I was wondering how many bucks (the green kind) I was going to need when I retire. Then I got to thinking about the plan and how to get to the goal of an easy outdoor life during retirement. In order to live the easy life one needs money to pay the bills while one lays around or in my plan, hunts and fishes every day possible.
Try it out and see how easy it is. There are several different calculators and tools and they will be a great benifit to you when you are laying out your plan. You cant have a plan if you dont know what you goals are! Outlining a plan can be pretty easy if you have a few tools like the CNNMoney.com calculators. Start with how you want to retire and how much you will need a month to live on. Its a great and easy site to have in your arsenal and you prepare for retirement. No matter how far away it is.
November 11, 2008
OK I will admitt it now, I did the Million Dollar Portfolio Challenge last year and Im going to do it again this time. I think I did pretty good last time so I want to see if I can do any better since I have a better understanding of the market. At least better then the last time I tried the challenge.
I will also note that I did not do what alot of people do and set up multiple accounts and buy a million dollars worth of one stock. I went through and found a bunch of stocks that I thought would be going up and bought a few thousand dollars worth of each one. I did pretty good and infact I was shocked that I did as well as I did. So Im going try again but this time I’ll come up with a couple of strategies and we can follow along here on the Treestand Investor blog. I hope we can have some fun and track the progress of the challenge as it goes.
In case you dont know about the Million Dollar Portfolio Challenge you need to check out CNBC.com now cause the game starts Monday I think Nov 17.
Join with me and we can chat about it maybe even help each other out. Thats why we are here………. right?
Alternative Minimum Tax 101
November 10, 2008
The alternative minimum tax (or AMT) is an extra tax some people have to pay on top of the regular income tax. The original idea behind this tax was to prevent people with very high incomes from using special tax benefits to pay little or no tax. The AMT has increased its reach, however, and now applies to some people who don’t have very high income or who don’t claim lots of special tax benefits. Proposals to repeal or reform the AMT have languished in Congress for years, but effective action does not appear to be on the horizon. Until Congress acts, almost anyone is a potential target for this tax.
The name comes from the way the tax works. The AMT provides an alternative set of rules for calculating your income tax. In theory these rules determine minimum amount of tax that someone with your income should be required to pay. If you’re already paying at least that much because of the “regular” income tax, you don’t have to pay AMT. But if your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.
To Learn more about AMT click hear:
Rule #1 Dont loose money!
October 31, 2008
Sounds easy enough. But I didnt find out what the rule was untill I started reading Phil Town’s book “Rule #1, The Simple Strategy for Successful Investing in only 15 minutes a Week!”
Im not finished with the book yet but I can tell you this. Its very easy to understand his thought process. Phil Town has broken down his strategy in a way that normal people, like us hunters can understand.
Phil has a few things in common with us hunters. First off before becoming a successful Investor, he was a river guide. He loves being outdoors like us. Another trait he has or actually had, was he was letting his mutual fund manager worry about his retirement nest egg.
In his book he shows us how he turned $1,000 into $1 million in only five years then proceeded to make many millions more!
So Im half way through the book and tomorrow I’ll be reading a few more chapters while sitting in my treestand. All though, I may not have to much time to read. The rut in coming into full swing this week (I think cause the signs are there) and I hope the action is hot this weekend.
So I’ll be doing my home work in the treestand. Later,
Basic Questions About Capital Gains and Losses
October 31, 2008
Answers for people who are new to capital gains and losses.
We all start with zero knowledge and go on from there. Here are some basic questions people sometimes ask about capital gains, along with answers.
Q: My stocks went up but I didn’t sell yet. How much gain should I report?
A: None! As a general rule you don’t report capital gain or loss until you sell. There are exceptions, such as when you receive capital gain distributions from a mutual fund.
Q: I bought stock for $1,000 and sold for $1,200. My gain was only $200 but my broker reported $1,200 to the IRS. Help!
A: Brokers don’t report the amount of gain. They report the amount you received on the sale. It’s up to you to report the sale properly on your return, indicating the correct amount of gain or loss.
Q: Does a capital gain increase my income?
A: There’s a vague notion out there that capital gains aren’t income because they’re taxed at their own special rates. Folks are hoping, perhaps, that capital gains won’t count when they determine whether they can deduct an IRA contribution, or how much of their social security benefit is taxable, or how much of their exemptions are phased out, among other things. Unfortunately, capital gains are income. A special calculation provides the lower capital gains rate, but doesn’t remove capital gains from your overall income (or adjusted gross income).
Q: Does a capital loss reduce my income?
A: As a general rule, you can deduct capital losses up to the full amount of your capital gain plus $3,000. If your capital losses exceed your capital gains by more than $3,000, the excess is carried forward to the next year.
Q: I’m in the 15% bracket. Why do I have to pay 28% on some of my capital gain?
A: You don’t. If you have a 28% capital gain, you pay your regular rate or 28%, whichever is lower. The same is true for a 25% gain.
Q: I’m concerned that a capital gain will push my other income into a higher tax bracket. Doesn’t this mean the real cost of a capital gain is higher than it appears?
A: No, capital gain is “stacked” on top of your other income, so it won’t push the other income up into a higher tax bracket. As we pointed out earlier, a capital gain increases your income, and that could cause you to lose a benefit somewhere. For example, your exemptions or itemized deductions might be reduced when you have a capital gain. So there can be some indirect tax costs when you have a capital gain. But your other income stays in the same bracket when you have a capital gain.
Q: My mutual fund reported that I sold shares even though I didn’t take any money out! Why?
A: If you move money from one fund to another within the same family of funds, you’re selling one fund and buying the other. If the first fund went up before you made the move, you have to report a gain and pay tax on it. Consider the tax consequences before moving money to a different fund, even within the same family of funds!
Q: I had capital gains in my IRA. How much tax is owed, and who has to pay it?
A: Until you take the money out, the answer is no tax. But when this money comes out of your IRA, you’ll have to report it as ordinary income — not capital gain. Of course, if you have a Roth IRA and meet all requirements you’ll pay no tax at all.
Q: I have some stocks that went up, and I’m ready to sell. I want to transfer them to my son and have him sell them because he’s in a lower tax bracket. Does this work?
A: Not if you’re planning on getting the money back from your son. If you make a legitimate gift, and don’t get anything back, then the gain will be taxed on your son’s return. Even then, the tax might not apply at a lower rate because of the “kiddie tax.” And you need to be aware of potential gift tax consequences, too.
Q: I have some stocks that went down, and I’m not ready to sell because I think it’s going back up. Can I sell it for the loss and then buy it back right away?
A: You won’t be able to deduct the loss if you buy back right away, because of the Wash Sale Rule. You need to wait at least 31 days before buying the same stock again if you want to claim a loss.
20 Investments every Investor should know
October 26, 2008
I found this great article on Investopedia
Most people will find that their investment objectives change throughout their lives. Capital appreciation may be more important for the young investor, but once she enters her golden years, that same investor may place a greater emphasis on gaining income. Whatever your objective, knowing what investment options are out there is key.
Furthermore, as most successful investors will tell you, diversification is king. A diversified portfolio not only reduces unwanted risk, but also contributes to a winning portfolio. And having a well-diversified portfolio doesn’t necessarily mean just buying more than one stock; branching out into other areas of investment could be a viable alternative. Click below on the link and learn about 20 investments that Investopedia feels every investor should know.
http://www.investopedia.com/university/20_investments/
Who’s Bailing Who?
October 22, 2008
In case yall dont read Alan’s Blog or newsletters heres a little part of todays edition.
The lamestream media told you:
The $700 billion bailout is good, bad, ugly, pretty, pretty ugly, will help, will hurt, is designed for the fat cats, will protect the average American, is run by insiders, is a normal management move, if we don’t do this the sky will fall, if they do this the nation’s financial system will be nationalized by czars and money dictators and turn the nation socialist. — ABC, CBS, NBC, CNN, FOX, virtually all newspapers and radio broadcasts.
The Uninvited Ombudsman notes however that:
Not a single report the Uninvited Ombudsman could find provided the number of the bailout bill, which would be needed for a person to look up the proposed bill and see what it actually says.
Failure to provide the number strongly indicates the reporters and pundits, as is standard practice, have not looked at the bill themselves before making wild claims that can’t be backed up and don’t match each other.
Politicians speaking on the “news” have apparently not read the bill (HR 1424), because it was not even posted on thomas.gov where it would normally appear when they voted for it (originally HR 3997, when it was three pages but still had the $700 billion in it). But…
Politicians haven’t written it either. Bureaucrats and “staff” in cubicles in the vast dungeons of government buildings sat and typed, anonymously deciding for themselves how to write the (formerly three pages) and now hundreds of pages that became law. As a writer, I can assure you that one small turn of phrase creates a slush fund or quashes it.
It has been impossible so far to identify, much less interview, the people who actually wrote whatever it is this bill says. They are more protected from view than prisoners in Guantanamo — no one in the outside world knows their names, locations, ranks, pay grade, home addresses, level of education, agendas, voting records or anything that would shed light on who they are and what they’re up to.
The “news” media, in its wisdom, only reported on the bill as either — a horse race between the parties and houses of Congress, or, as a “he said she said” stew of competing contradictory dreamscapes whose link to reality is unknown — and obviously wrong for at least half the partisan pundits with their pie holes open.
Real reporting would include the actual content of the bill or who is actually choosing its words, and the verbiage would be vetted by certifiable experts instead of “pundits” and pretty faces.
Whether reporters and editors fail to do this out of ignorance, incompetence, laziness, alliance to the power brokers, misguided morals, personal agendas or plain stupidity is unknown, though some observers say it is all of the above. News consumers generally agree the current methods harm the nation.
A quick glance at the table of contents for HR 2414 reveals entries for college tuition, mine rescue team training, Indian employment, motor sports racing tracks, film and TV productions, mental health parity, disaster relief, Exxon Valdez litigation, and tax exemption for wooden arrows used by children. Don’t believe me? Trust your own eyes:
http://thomas.loc.gov/cgi-bin/query/D?c110:6:./temp/~c11004f7Di
Books Every Investor Should Read
October 20, 2008
Books Every Investor Should Read
Successful investment strategies are based on your education or knowledge about that particular strategy. Trophy deer hunters have a good foundation on how to hunt deer, but how they hunt the big monster bucks, is based on homework and current conditions. Logic and common sense tells us that both investing and hunting can land us big bucks (pun intended) if we do our homework and build a solid foundation. Lucky for us we have availible the tools to help us acheive our goals and dreams of big bucks.
Long before we head off and into the great outdoors after those trophy bucks, we invest many hours of our lives into our hunting tradtion. Investing, much like trophy deer hunting is based on a strong, rock solid foundation. Today we have many ways to build our investing foundation. The biggest part of an education today involves computers and the internet. As the Treestand Investor, I like to read books in the stand when activities in the woods are slow. The other day I found these books that are listed below, that are the top ten books every investor should read. While I have not read any of them as of yet, they have been added to my must have list. If you have read any of them, let us know what you think and if they helped you or not, with your investing education. And also if you have read any other books on investing, please let us know what they are, who they are by, and why we should or should not read them.
I found this list in an Investors Business Daily paper back in July .
The top Ten Books Every Investor Should Read
- The Intelligent Investor (1949) by Benjamin Gram
- Common Stocks & Uncommon Profits (1958) by Philip Fisher
- Stocks for the Long Run (1994) Jerry Siegle
- Learn to Earn (1995) One Up on Wall Street (1989) Beating the Street (1994) all by Peter Lynch
- A Random Walk Down Wall Street (1973) by Burton G Makiel
- The Essays of Warren Buffet: Lessons for Corporate America (2001) by Warren Buffet and Lawrence Cunningham
- How to Make Money In Stocks (2003 3rd Edt.) by William J Oneil
- Rich Dad Poor Dad (1997) by Robert T Kiyosaki
- Common Sense on Mutal Funds (1999) by John Bogle
- Irrational Exuberance (2000) by Robert J Shiller
