Decide Where Your Arizona Tax Dollars are Spent

by Andrew Mark, CPA

While no one likes paying taxes, it can be more palatable when you can designate where the money goes. Arizona offers a number of dollar-for-dollar credits you can take on your income-tax return. It doesn’t matter if you owe money or get a refund; but you must have Arizona taxes to offset the credits. If you’re married and think your tax bill to Arizona will be $2,200 for the year, for example, here’s a way to designate how all of it will be spent.

  1. Public schools. You can donate up to $400 ($200 for singles) to any public or charter school in Arizona for after-school activities. These must be received by the end of the year.
  2. Private school tuition organizations. Give up to $1,000 ($500 single) to a tuition organization that awards scholarships for children in Arizona private schools. Donations can be made up to April 15 of the next year.
  3. Working poor. Donate up to $400 ($200 single) to any Arizona-registered charity that helps the poor (organization must be approved by the Department of Revenue). You must also itemize your deductions on your Arizona form to claim this credit and the charity must receive your money by December 31.
  4. Military family relief. You can contribute $400 ($200 single) to benefit Arizona service members and their families. The assistance goes to those who are deployed or to the families of those injured or killed. The credit is capped at $1 million annually so it’s important to get this money in as early as possible. Any money received after $1 million is reached (usually sometime in December) is returned.

As with all tax advice you should seek confirmation from your own advisor that this will work for you.

By |November 9th, 2011|Charitable Giving, Taxes, Uncategorized|

Evaluating Personal Liability and Insurance Needs

What would happen if your dog bit someone jogging past your home? Or if your cinderblock fence collapsed onto the neighbor‘s vintage car? Or if your teenage child caused a serious car accident? Would your homeowners and auto insurance policies include sufficient personal liability protection if someone decided to sue you?

Evaluating Personal Liability and Insurance Needs

Most people are confident their homeowners and car insurance provides sufficient coverage for accidents. Yet, they’re unsure whether it adequately guards against potential lawsuits. In the rare event that you are ever sued, you could be required to pay a legal judgment from not only your current assets but also your future earnings. Even if you win the case, legal defense fees can add up quickly.

The typical homeowners and auto policies include personal liability coverage up to a certain limit. When you purchase the policies, you are able to customize many aspects of the coverage to suit your needs. A separate personal liability policy (called an umbrella policy) provides liability coverage beyond what your home and car insurance covers. The price of an umbrella policy varies by risk, but it is typically inexpensive (about a couple hundred dollars per year for a $1 million policy) because the coverage only kicks in after you’ve exhausted the liability benefits from your other policies.

One way to figure out how much personal liability insurance you need is to ask yourself how much you have to lose if you are sued. Add up the value of your home, your belongings, your financial assets and potential legal costs. Also take into account your current annual income and potential future earnings. You want to be sure a lawsuit won’t cause significant financial strain or wipe you out completely.

You may want to consult your insurance professional about modifying the personal liability limit of your existing homeowners policy and adding an umbrella policy to your insurance mix.

By |May 21st, 2011|Financial Planning, Insurance, Uncategorized|