Wednesday, February 16, 2011

Tax Deductions

Tax Deductions With Some of the Biggest Payouts
Andrea Coombes

A $5,000 or $6,000 deduction for IRA contributions, a $4,000 deduction for college tuition and fees, a $1,000 child tax credit — these are hefty tax breaks for which a taxpayer may understandably yearn. But they’re small beans when compared with the tens of thousands of dollars in savings some reap through deductions and credits.

How about taking a $50,000 deduction for state and local taxes paid, a $37,000 deduction for medical expenses, a $28,000 deduction for mortgage interest, or a $21,000 deduction for charitable contributions?


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Those are the average amounts claimed for each of those deductions in 2008 by taxpayers with adjusted gross income higher than $250,000, the group with the highest average claim for each of those deductions that year, said Mark Luscombe, principal tax analyst with CCH Inc., a Riverwoods, Ill.-based tax publisher and unit of Wolters Kluwer. (The average dollar amounts are rounded, and count only those taxpayers who claimed that particular deduction.)

Some tax breaks “basically don’t have any limit,” Luscombe said. For example, to take the medical-expense deduction your expenses must exceed 7.5% of your adjusted gross income.

“That puts a floor on it, but as far as a top number, the more medical expenses you have, the higher the deduction,” Luscombe said. (Some deductions discussed here are restricted or disallowed under the alternative minimum tax.)

For taxpayers with adjusted gross income of $30,000 to $50,000 in 2008, the average deduction for state and local taxes was about $3,800; for medical expenses, $6,000; mortgage interest, $9,000; charitable contributions, $2,200, according to CCH.

For taxpayers with AGI of $50,000 to $100,000, the average deduction for state and local taxes was about $6,000; medical expenses, $7,000; mortgage interest, $10,600; charitable contributions, $2,700.

The mortgage-interest deduction is limited by the value of your home — generally speaking, you can claim it for interest paid on mortgage indebtedness up to $1 million, plus another $100,000 of home-equity debt. See this IRS page for more on the mortgage-interest deduction.

Meanwhile, some credits don’t have an upper limit, Luscombe said. The residential energy-efficient property credit for installing solar, wind or geothermal systems is worth 30% of the amount spent — whatever that amount is.

But don’t confuse that credit with the one for home energy-efficient upgrades, such as new windows and doors. That credit was worth up to $1,500 in 2010 but lawmakers reduced it for 2011, in the Tax Relief Act passed in December.

Other credits have a top limit, but it’s hefty: The adoption tax credit is worth up to $13,170 in 2010, up from $12,150, and it’s now refundable. Read more about the adoption credit on IRS.gov.

Almost Half of Taxpayers Don’t Owe Federal Income Tax

Taxpayers may enjoy the bounty, but these deductions and credits — plus other tax breaks that never show up on our returns, including those we get through 401(k), Roth IRA and 529 plans — all add up to a lot of money the U.S. government is not collecting.

While the definition of what should be counted as a so-called “tax expenditure” varies, “by any measure, the revenue losses from tax expenditures are large,” according to a Tax Policy Center report, co-authored by Eric Toder.

“Adding up all the tax expenditure estimates in the 2010 federal budget, we calculate a sum of about $1.1 trillion in fiscal year 2012, or about 6.7% of projected gross domestic product.” Read the report.

That’s a lot of tax breaks.

“Our tax system is such that for 2010 we estimate 45% of American households will pay no income tax, because of the combination of credits and deductions and so forth,” said Roberton Williams, a senior fellow at the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution in Washington.

And that includes high-income people, he said. For instance, recent IRS statistics showed that about 2,000 people with income of $1 million or more don’t pay income tax, Williams said. “A part of it is that money is earned overseas and is subject to foreign taxes; a part of it is they have a lot of money in tax-exempt bonds so they don’t pay tax on that income,” he said.

“For one reason or another these very, very wealthy people have set up their financial situation in such a way that they avoid U.S. federal income taxes entirely.”

Keep in mind that some of the largest tax expenditures don’t show up on your tax return. For instance, the value of employer-provided health insurance isn’t counted as income for most taxpayers.

Few Deductions Available to Some Taxpayers

Still, for his clients — most of whom are high-net-worth retirees who’ve paid off their home mortgage — deductions can be hard to tap, said Rial Moulton, a certified financial planner and certified public accountant in Spokane, Wash.

For a married couple filing jointly, the standard deduction in 2010 is $11,400, and it’s $5,700 for a single filer. “To think about itemizing, you have to have [deductions that total] more than that,” Moulton said. “For most people in our area, if you have your house paid off, it’s hard to get above that number unless you have significant health-care costs.”

Meanwhile, for taxpayers at a lower income level, one of the most valuable deductions is the earned income tax credit, worth as much as $5,666 for those with three qualifying children in 2010. For a family with three children to be eligible, AGI can’t exceed $43,352 for head-of-household filers and $48,362 for married-filing-jointly filers. Read this IRS page for more information.

There’s also a saver’s credit, worth up to $2,000 for married-filing-jointly couples and up to $1,000 for single filers, but that maximum credit phases out as income rises. And the maximum adjusted-gross-income limit to get any of the credit is $55,500 for married-filing-jointly filers and $27,750 for single filers. See this IRS page for more information.

Natural remedies

Natural remedies for the 15 most common aches, pains, and health complaints.
By Sarah Irani, EcoSalon

Is the economy beating you up? It’s time to get creative. Next time you have an ache or pain, forget about a costly trip to the drugstore and test-drive some of your grandmother’s remedies instead. It’ll save money and be gentler on your body and the environment. Recessionistas (and gents), welcome to the DIY medicine cabinet.

1. Stop Bleeding

You’d think it would burn, but a sprinkle of cayenne pepper on a cut will quickly stop the bleeding and actually relieve the pain.

2. Toothache

There’s nothing so bad as the shooting pain of a toothache. You don’t want to ignore a tooth problem, because an infection that close to your brain can be extremely dangerous if it spreads. But in order to reduce swelling and pain while you wait for a dentist appointment, try putting a few drops of clove oil on your tooth and gums, and bite down on a smashed piece of garlic (which has excellent antibacterial properties). This has always worked for me.

3. Rashes and Allergies

Prescription and OTC antihistamines can cause some serious side effects. Before you head for the strong stuff, try green tea, which contains compounds with antihistamine properties. You’ll need to drink 2-3 cups a day to get the full effect.

4. Athlete’s Foot

It’s a foot fungus, and it stinks. Air those piggies, then soak them in salty water, wash them with garlic juice, or soak them with diluted white or apple cider vinegar. All of these things will help kill the fungus.

But you have to be persistent, consistent, and diligent: No matter what treatment you use, do it a few times a day and stick with it until at least a week after you think the symptoms are gone! Fungus excels at hiding out and coming back when you least expect it.

5. Acne and Sensitive Skin

First, you really have to look at your lifestyle, because imbalances in your health can show up in your skin. But in the meantime, wash your face with oatmeal. It’s a gentle exfoliant and draws out oil and impurities.

6. Ear Infections

Ear infections can become quite serious and cause permanent damage, so please see a doctor if your ear ache has become severe.

But if you feel like your infection is mild and at the beginning stages, put a few drops of garlic oil or white vinegar into your ear canal and lay down on the opposite side to let those drops do their work. Garlic and vinegar create an environment that won’t support the bacteria causing the infection. Repeat a few times a day until the symptoms disappear. (If your symptoms last longer than a few days, you should definitely see a doctor!)

7. Sore Muscles and Bruises

After a hard afternoon of rowing with a friend, I resigned myself to a few days of burning muscles and soreness. But my friend saved the day with a tube of arnica cream. He rubbed it on my shoulders and voila, instant relief and absolutely no aches the next day. The humble arnica flower makes an incredible cream that no medicine cabinet should be without. Use it immediately to speed up the healing of bruises, sprains, sore muscles, and other general aches.

8. Flatulence

Some foods, like beans and raw veggies, are more likely to cause gas, but if you find flatulence to be too common of an occurrence, try taking a digestive enzyme with your meals. You can find these at any health food store.

In the meantime, make use of digestive spices such as ginger, anise, peppermint, coriander, and dill. You can make tea with these ingredients or incorporate them into your food.

9. Dandruff

Have you looked at the ingredients in dandruff shampoo? It seems like they contain almost everything in the Toxic Ingredients You Must Avoid list. Better to try something natural first before resorting to chemicals. Many people swear by rubbing aloe vera gel onto the scalp (leave it on for 20 minutes than rinse it out). This will certainly help with dry, itchy scalp.

Another remedy is a rinse with apple cider vinegar. Try these remedies a few times before deciding if they work for you. Even dandruff shampoo requires regular use to see results, so give the natural stuff a chance!

10. Headache and Migraine

Try rubbing peppermint or lavender oil on your temples and the base of your neck; sniffing these oils may also help.

Rub a fresh cut lemon or lime on your forehead. Feverfew is a good herbal remedy for headaches.

Have a little caffeine by way of green tea, and don’t forget to use an ice pack for 20 minutes to dull the throbbing.

11. Indigestion and Heartburn

It almost goes without saying – but consider why you’re getting heartburn in the first place. Did you overeat? Too much grease or spicy food? Eating late at night? Scout out the cause and try to stop this before it happens. Then, put down the antacids.

The belching, bloat, and heartburn caused by indigestion come about because you don’t have enough stomach acid to do the job right. A spoonful or two of apple cider vinegar will help break down the excess food that is causing you trouble and bring your stomach back to balance.

12. Constipation

First, drink more water and eat more fruit and salads. You’re backed up for a reason and taking lots of laxatives is not the answer. Meanwhile, drinking a few teaspoons of olive oil mixed with a bit of orange or (diluted) lemon juice can help things get moving.

Another surefire remedy is 1/4 teaspoon of epsom salts drunk in 1/2 a glass of water. Sometimes calorie restriction or avoidance of healthy fats (such as the good fats found in fish, nuts, and avocados) can worsen constipation.

And though it’s counterintuitive, some people relieve their constipation by actually cutting back on grain consumption! True, grains contain fiber, but some people don’t digest grains very well. Other causes of constipation include stress, depression, inactivity, and nutritional deficiencies. If your constipation is chronic, it may be a sign of a more serious problem, so please seek medical advice and adjust your lifestyle.

13. Sore Throat

Sore, scratchy throats are usually a sign of a cold or flu coming on, so you don’t want to ignore this symptom, but you can relieve the pain by gargling with warm salt water a few times a day and then drinking a soothing honey-lemon tea.

14. Burns

So you bumped up against the stove again? Ouch. Rinse first with cold water, but then immediately apply aloe vera gel to the burn.

For those of us who don’t have aloe in the house, slice a potato and rub its cool, soothing juices all over the burn.

And honey, with its antibacterial properties, is also good topical ointment. If you can catch the burn immediately, mustard is also reportedly a great salve.

15. Nausea

The classic cure for nausea or carsickness is ginger tea or candied ginger. You can chew on the stuff raw, if you like, but it’s so spicy and strong it might just make you feel worse.

Sniffing real peppermint or lavender oil can also help.

Give some of these remedies a try – and share your own tried-and-true treatments, too.

EcoSalon is the leading conscious culture and fashion website for women. Our motto: Have a heart.

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•Simple, Natural Solutions to Eight Common Beauty Dilemmas
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Tuesday, February 8, 2011

15 Toughest Interview Questions and Answers.

15 Toughest Interview Questions (and Answers!)
by Tania Khadder

For many people, job interviews are the most stressful part of the job-search process. And it's true that an interview is often a make-or-break moment: If you flub the interview in a big way, you probably won't make the cut--no matter how good your resum is, or how excellent your qualifications are.

You can combat nerves and increase your chances of success by practicing your answers to difficult interview questions. Here are some of the toughest, with suggested answers:

1. Why do you want to work in this industry?

Bad answer:
"I love to shop. Even as a kid, I spent hours flipping through catalogs."

Tip:
Don't just say you like it. Anyone can do that. Focus instead on your history with that particular industry, and if you can, tell a success story.

Good answer:
"I've always loved shopping, but my interest in retail marketing really started when I worked at a neighborhood boutique. I knew that our clothes were amazing, but that we weren't marketing them properly. So I worked with management to come up with a marketing strategy that increased our sales by 25 percent in a year. It was great to be able to contribute positively to an industry I feel so passionate about, and to help promote a product I really believed in."

2. Tell us about yourself.

Bad answer:
"I graduated four years ago from the University of Michigan, with a bachelor's in biology--but I decided that wasn't the right path for me. So I switched gears and got my first job, working in sales for a startup. Then I went on to work in marketing for a law firm. After that, I took a few months off to travel. Finally, I came back and worked in marketing again. And now, here I am, looking for a more challenging marketing role."

Tip:
Instead of giving a chronological work history, focus on your strengths and how they pertain to the role. If possible, illustrate with examples.

Good answer:
"I'm really energetic, and I'm a great communicator. Working in sales for two years helped me build confidence and taught me the importance of customer loyalty. I've also got a track record of success. In my last role, I launched a company newsletter, which helped us build on our existing relationships and create new ones. Because of this, we ended up seeing a revenue increase of 10 percent over two years. I'm also very interested in how companies can use web tools to better market themselves, and would be committed to building on your existing platform."

3. What do you think of your previous boss?

Bad answer:
"He was completely incompetent, and a nightmare to work with, which is why I've moved on."

Tip:
Remember that if you get the job, many of the people interviewing you will someday be your previous bosses. The last thing they want is to hire someone they know will badmouth them. Instead of trashing your former employer, stay positive, and focus on what you learned from him (no matter how awful he really was).

Good answer:
"My last boss taught me the importance of time management, didn't pull any punches, and was extremely deadline-driven. His no-nonsense attitude pushed me to work harder, and to meet deadlines I never even thought were possible."

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4. Why are you leaving your current role?

Bad answer:
"I can't stand my boss, or the work I'm doing."

Tip:
Again, stay away from badmouthing your job or employer. Focus on the positive.

Good answer:
"I've learned a lot from my current role, but now I'm looking for a new challenge, to broaden my horizons, and to gain a new skill set--all of which I see the potential for in this job."

5. Where do you see yourself in five years?

Bad answer:
"Relaxing on a beach in Maui," or "Doing your job."

Tip:
There's really no right answer to this question, but the interviewer wants to know that you're ambitious, career-oriented, and committed to a future with the company. So instead of sharing your dream for early retirement, or trying to be funny, give an answer that illustrates your drive and commitment.

Good answer:
"In five years I'd like to have an even better understanding of this industry. Also, I really love working with people. Ultimately, I'd like to be in some type of managerial role at this company, where I can use my people skills and industry knowledge to benefit the people working for me, and the company as a whole."

6. What's your greatest weakness?

Bad answer:
"I work too hard," or for the comedian, "Blonds."

Tip:
This question is a great opportunity to put a positive spin on something negative, but you don't want your answer to be a cliche--joking or not. Instead, try to use a real example of a weakness you have learned to overcome.

Good answer:
"I've never been very comfortable with public speaking--which, as you know, can be a hindrance in the workplace. Realizing this was a problem, I asked my previous employer if I could enroll in a speech workshop. I took the class, and was able to overcome my lifelong fear. Since then, I've given several presentations to audiences of over 100 high-level executives--I still don't love it, but no one else can tell!"

7. What salary are you looking for?

Bad answer:
"In my last job I earned $35,000--so now I'm looking for $40,000."

Tip:
"If you can avoid it, don't give an exact number. The first person to name a price in a salary negotiation loses. Instead, reiterate your commitment to the job itself. If you have to, give a broad range based on research you've conducted on that particular role, in your particular city."

Good answer:
"I'm more interested in the role itself than the pay. That said, I'd expect to be paid the appropriate range for this role, based on my five years of experience. I also think a fair salary would bear in mind the high cost of living here in New York City."

8. Why should I hire you?

Bad answer:
"I'm the best candidate for the role."

Tip:
A good answer will reiterate your qualifications, and will highlight what makes you unique.

Good answer:
"I've been an executive assistant for the past ten years--my boss has said time and time again that without me, the organization would fall apart. I've also taken the time to educate myself on some of the software I regularly use (but didn't really understand the ins and outs of). I'm an Excel whiz now, which means I can work faster, and take over some of what my boss would traditionally have had to do herself. What's good enough for most people is never really good enough for me."

9. What is your greatest failure, and what did you learn from it?

Bad answer:
"I never finished law school--and everything that's happened since has taught me that giving up, just because the going gets tough, is a huge mistake."

Tip:
You don't want to highlight a true major regret--especially one that exposes an overall dissatisfaction with your life. Instead, focus on a smaller (but still significant) mishap, and how it has made you a better professional.

Good answer:
"When I was in college, I took an art class to supplement my curriculum. I didn't take it very seriously, and assumed that, compared to my engineering classes, it would be a walk in the park. My failing grades at midterm showed me otherwise. I'd even jeopardized my scholarship status. I knew I had to get my act together. I spent the rest of the semester making up for it, ended up getting a decent grade in the class. I learned that no matter what I'm doing, I should strive to do it to the best of my ability. Otherwise, it's not worth doing at all."

10. How do you explain your gap in employment?

Bad answer:
"I was so tired of working, and I needed a break," or "I just can't find a job."

Tip:
Employment gaps are always tough to explain. You don't want to come across as lazy or unhireable. Find a way to make your extended unemployment seem like a choice you made, based on the right reasons.

Good answer:
"My work is important to me, so I won't be satisfied with any old job. Instead of rushing to accept the first thing that comes my way, I'm taking my time and being selective to make sure my next role is the right one."

11 through 15. Read the final five "Toughest Interview Questions."

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