02/27/2008

Rebates Are Coming!

The Economic Stimulus Act of 2008 was signed into law by President Bush on February 13, 2008. The primary purpose of the Act is to provide economic stimulus through rebates to individuals and temporary incentives for business investment.

The Act provides a tax rebate to lower- and middle-income working families as follows:

• Eligible individuals will receive an amount equal to the lesser of their net income tax liability or $600 ($1,200 if married filing jointly).
• Additional rebates of $300 will be paid for each child.
• A minimum tax rebate of $300 ($600 for married taxpayers filing joint returns) will be paid to taxpayers with earned income of at least $3,000. Social Security retirement benefits, as well as compensation and pension benefits paid to disabled veterans are included for the purposes of determining income eligibility.

Here’s a summary for eligible single filers: You get no rebate if you made less than $3,000 in 2007; you get $300 if you made more than $3,000 but paid no taxes; you get $600 if you made more than $3,000 and paid taxes; you also get $300 per child. The rebate amount phases out at 5% of adjusted gross income above $75,000, ending at $87,000.

Here’s a summary for eligible joint filers: You get no rebate if you made less than $3,000 in 2007; you get $600 if you made more than $3,000 but paid no taxes; you get $1,200 if you made more than $3,000 and paid taxes; you also get $300 per child. The rebate amount phases out at 5% of adjusted gross income above $150,000, ending at $174,000.

To be eligible, you must file a 2007 tax return. Rebates are prohibited to taxpayers without valid identification numbers and no rebates will be paid after 12/31/08.

Business incentives include write offs of up to $250,000 of capital expenditures incurred in 2008. The maximum investment phase-out threshold for such expensing is increased to $800,000. The amount of the adjusted basis of depreciable property that may be claimed as a deductible expense in 2008 is increased to 50%. (Time to buy some equipment!)

Finally, the jumbo loan amount for Fannie Mae, Freddie Mac, and FHA to buy individual home loans has been increased to $729,750.

Whether it’s reducing debt, making a purchase or saving for the future, your friendly home town banker can help you spend your rebate money wisely.

02/14/2008

Getting Older - Housing Options

As you get older, your housing needs may change. You may want to retire to a vacation spot or move closer to family. Regardless, when the time comes to evaluate your housing situation, you'll have numerous options available.

Can you care for your home by yourself? If not, that doesn't mean it's time to move. Maybe a relative can help with chores and shopping. Maybe a housekeeper can clean your house and help you with personal care. You may want to stay in your home because you have wonderful memories there. Or moving may just be the change that you need to get a new perspective on life.

If you are moving in with children, will you have adequate privacy? Be able to move around easily? Have you considered the emotional consequences? Will you expect them to take you shopping? Will you be expected to help with household chores? Will they expect you to contribute money toward household expenses?

Assisted-living facilities offer apartments, housekeeping, meals, social activities, and transportation. The primary focus of assisted-living facilities is social, not medical, but some do provide limited medical care. Assisted-living facilities can be state-licensed or unlicensed, and they primarily serve senior citizens who need more help than those who live in independent living communities.

Before entering an assisted-living facility, scrutinize the contract and tour the facility. Will it provide you with enough privacy? Personal care? Medical attention? Reading the fine print may save you a lot of hardship later if any conflict over services or care arises. Check the financial strength of the company, especially if you're making a long-term commitment. A wide range of care is available at varying prices. Medicare will not cover your expenses, unless they are health-care related and the facility is licensed to provide medical care.

Nursing homes are licensed facilities that offer 24-hour access to medical care. They provide care at three levels: skilled nursing, intermediate, and custodial care. People in nursing homes generally cannot live by themselves or without a great deal of assistance. Privacy in nursing homes is limited. Depending on the facility, nursing homes may be similar to a hospital environment or may have a more residential feel. Most people don't remain in a nursing home indefinitely. If your health improves, you may be able to return home. Nursing homes are expensive. If you have time to plan, consider purchasing long-term care insurance to pay for your nursing home care.

02/07/2008

Helpful Tax Filing Tips

Selecting a filing status is one of the first decisions you'll make when you fill out your federal income tax return. Your filing status is important because it determines the tax rate applied to your taxable income, the amount of your standard deduction, and the types of deductions and credits available. By choosing the right filing status, you can minimize your taxes. The five filing statuses are: single; married filing jointly; married filing separately; head of household; and qualifying widow(er) with dependent child.

Your filing status is determined as of the last day of the tax year (December 31). To use the single status, you must be unmarried or separated from your spouse by either divorce or a written separate maintenance decree on December 31.

To use married filing jointly, on December 31 you must be: Married and living together as husband and wife; married and living apart, but not legally separated in writing; or legally separated under a temporary decree of divorce. When filing jointly, you and your spouse combine your income, exemptions, deductions, and credits. Filing jointly generally offers the most tax savings for married couples.

You can choose to file separately even if you're married on December 31. Here, you'd report only your own income and claim only your own deductions and credits. Note that if you and your spouse file separately and your spouse itemizes deductions, you'll have to do the same. Also note that you won't qualify for certain credits (such as the child and dependent care tax credit) and can't take certain deductions if you file separately.

To qualify for head of household filing status, you should be unmarried on December 31; maintain a household for your child or qualified dependent relative; the household must be your home and the main home of a qualifying relative for 6 months; you provide over half the support of the household; you must be a U.S. citizen or resident alien for the entire tax year.

To use the qualifying widow(er) with dependent child filing status, you must satisfy all of the following conditions: Your spouse died either last tax year or the one before; you qualified to file a joint return the year he/she died; you have not remarried before December 31; you have a qualifying dependent child; you provide over half the support of a home for yourself and your qualifying child.

Consult your hometown banker for a referral to a professional tax advisor.

Back to President's Articles

02/27/2008

Rebates Are Coming!

The Economic Stimulus Act of 2008 was signed into law by President Bush on February 13, 2008. The primary purpose of the Act is to provide economic stimulus through rebates to individuals and temporary incentives for business investment.

The Act provides a tax rebate to lower- and middle-income working families as follows:

• Eligible individuals will receive an amount equal to the lesser of their net income tax liability or $600 ($1,200 if married filing jointly).
• Additional rebates of $300 will be paid for each child.
• A minimum tax rebate of $300 ($600 for married taxpayers filing joint returns) will be paid to taxpayers with earned income of at least $3,000. Social Security retirement benefits, as well as compensation and pension benefits paid to disabled veterans are included for the purposes of determining income eligibility.

Here’s a summary for eligible single filers: You get no rebate if you made less than $3,000 in 2007; you get $300 if you made more than $3,000 but paid no taxes; you get $600 if you made more than $3,000 and paid taxes; you also get $300 per child. The rebate amount phases out at 5% of adjusted gross income above $75,000, ending at $87,000.

Here’s a summary for eligible joint filers: You get no rebate if you made less than $3,000 in 2007; you get $600 if you made more than $3,000 but paid no taxes; you get $1,200 if you made more than $3,000 and paid taxes; you also get $300 per child. The rebate amount phases out at 5% of adjusted gross income above $150,000, ending at $174,000.

To be eligible, you must file a 2007 tax return. Rebates are prohibited to taxpayers without valid identification numbers and no rebates will be paid after 12/31/08.

Business incentives include write offs of up to $250,000 of capital expenditures incurred in 2008. The maximum investment phase-out threshold for such expensing is increased to $800,000. The amount of the adjusted basis of depreciable property that may be claimed as a deductible expense in 2008 is increased to 50%. (Time to buy some equipment!)

Finally, the jumbo loan amount for Fannie Mae, Freddie Mac, and FHA to buy individual home loans has been increased to $729,750.

Whether it’s reducing debt, making a purchase or saving for the future, your friendly home town banker can help you spend your rebate money wisely.

02/14/2008

Getting Older - Housing Options

As you get older, your housing needs may change. You may want to retire to a vacation spot or move closer to family. Regardless, when the time comes to evaluate your housing situation, you'll have numerous options available.

Can you care for your home by yourself? If not, that doesn't mean it's time to move. Maybe a relative can help with chores and shopping. Maybe a housekeeper can clean your house and help you with personal care. You may want to stay in your home because you have wonderful memories there. Or moving may just be the change that you need to get a new perspective on life.

If you are moving in with children, will you have adequate privacy? Be able to move around easily? Have you considered the emotional consequences? Will you expect them to take you shopping? Will you be expected to help with household chores? Will they expect you to contribute money toward household expenses?

Assisted-living facilities offer apartments, housekeeping, meals, social activities, and transportation. The primary focus of assisted-living facilities is social, not medical, but some do provide limited medical care. Assisted-living facilities can be state-licensed or unlicensed, and they primarily serve senior citizens who need more help than those who live in independent living communities.

Before entering an assisted-living facility, scrutinize the contract and tour the facility. Will it provide you with enough privacy? Personal care? Medical attention? Reading the fine print may save you a lot of hardship later if any conflict over services or care arises. Check the financial strength of the company, especially if you're making a long-term commitment. A wide range of care is available at varying prices. Medicare will not cover your expenses, unless they are health-care related and the facility is licensed to provide medical care.

Nursing homes are licensed facilities that offer 24-hour access to medical care. They provide care at three levels: skilled nursing, intermediate, and custodial care. People in nursing homes generally cannot live by themselves or without a great deal of assistance. Privacy in nursing homes is limited. Depending on the facility, nursing homes may be similar to a hospital environment or may have a more residential feel. Most people don't remain in a nursing home indefinitely. If your health improves, you may be able to return home. Nursing homes are expensive. If you have time to plan, consider purchasing long-term care insurance to pay for your nursing home care.

02/07/2008

Helpful Tax Filing Tips

Selecting a filing status is one of the first decisions you'll make when you fill out your federal income tax return. Your filing status is important because it determines the tax rate applied to your taxable income, the amount of your standard deduction, and the types of deductions and credits available. By choosing the right filing status, you can minimize your taxes. The five filing statuses are: single; married filing jointly; married filing separately; head of household; and qualifying widow(er) with dependent child.

Your filing status is determined as of the last day of the tax year (December 31). To use the single status, you must be unmarried or separated from your spouse by either divorce or a written separate maintenance decree on December 31.

To use married filing jointly, on December 31 you must be: Married and living together as husband and wife; married and living apart, but not legally separated in writing; or legally separated under a temporary decree of divorce. When filing jointly, you and your spouse combine your income, exemptions, deductions, and credits. Filing jointly generally offers the most tax savings for married couples.

You can choose to file separately even if you're married on December 31. Here, you'd report only your own income and claim only your own deductions and credits. Note that if you and your spouse file separately and your spouse itemizes deductions, you'll have to do the same. Also note that you won't qualify for certain credits (such as the child and dependent care tax credit) and can't take certain deductions if you file separately.

To qualify for head of household filing status, you should be unmarried on December 31; maintain a household for your child or qualified dependent relative; the household must be your home and the main home of a qualifying relative for 6 months; you provide over half the support of the household; you must be a U.S. citizen or resident alien for the entire tax year.

To use the qualifying widow(er) with dependent child filing status, you must satisfy all of the following conditions: Your spouse died either last tax year or the one before; you qualified to file a joint return the year he/she died; you have not remarried before December 31; you have a qualifying dependent child; you provide over half the support of a home for yourself and your qualifying child.

Consult your hometown banker for a referral to a professional tax advisor.

Back to President's Articles