SHOULD YOU ASK THE COST OF A GIFT?

Imagine this scenario. Your wealthy Uncle John is something of an art collector, buying paintings and sculptures from promising young artists. When he retires, he moves into a small condo in a retirement community and has to downsize his art collection.

GRANDPARENTS CAN HELP WITH COLLEGE COSTS

Are you a grandparent who wants to help pay for a grandchild's college education? You'll find several ways to do this, each with its own limitations and tax consequences.

IRS POSTS "TAXPAYER BILL OF RIGHTS"

The IRS has just issued a "Taxpayer Bill of Rights" that you should be aware of. 

The Rights are divided into ten main categories. According to this "cornerstone" document you have The Right:  

*  to be informed

*  to quality service

*  to pay no more than the correct amount of tax

*  to challenge the IRS's position and be heard

*  to appeal an IRS decision in an independent forum

*  to finality

*  to privacy

*  to confidentiality

*  to retain representation

*  to a fair and just tax system

INVENTORY YOUR DOCUMENTS

Maintain a current list of all your important papers. Where are insurance policies located? Who is your current insurance agent? Where are your original wills? Who is your attorney and accountant? Keeping your inventory of documents and advisors current can be a real help to anyone who needs to assist you should you become incapacitated or die.

SUMMERTIME TAX TIP

If you itemize tax deductions on your income tax return, you can deduct the mortgage interest and property taxes paid for your vacation home. A boat or RV can qualify as a vacation home if it has sleeping quarters, cooking facilities, and a bathroom. If a vacation home also serves as a part-time rental, you can control your tax deductions by changing the number of days you use it yourself.

FUND AN IRA WITH YOUR CHILD'S SUMMER JOB

If your child has a job this summer, encourage him or her to set up an IRA. The amount that can be contributed is $5,500 or the child's earnings, whichever is less. If you wish, you can even provide the cash for the IRA and let your child spend his or her earnings. Roth IRAs are generally a smarter choice for children than traditional IRAs.

COLLEGE OR RETIREMENT?

What's more important – saving for your children's education or your retirement? A typical retirement will generally last longer and cost more than your child's education. If you cannot adequately fund both, maximize your retirement savings first. There are far more options for financing a college education than for funding one's retirement.