Question: We intend to adopt a child in 2010. Does it affect our income tax return?
Answer:
Yes. Thousands of dollars of expenses incurred in connection with adopting a child can be recouped via a tax credit, so it pays to keep careful records. In 2010, the credit can be as high as $12,170. If you adopt a child with special needs, you get the maximum credit even if you spend less.
Feel free to contact me if you or someone you know has this type of situation. Tax laws can be tricky; thus, the above answer cannot be applied to all circumstances because the slightest variation could cause a different outcome.
1. Innovative Company Develops Digital Personal Assistant SRI International is hoping to bring the concept of virtual personal assistants closer to reality. Recently, the institute has set its sights on the mobile phone and Web market, especially on creating applications that perform personal functions. SRI’s newest venture: a Web-based personalized news feed, Chattertrap, that monitors what people are reading to learn what they like, and then serves up articles and links that suit their interests. Another recent project is a mobile application, Siri, that allows people to perform Web searches by voice on a cell phone, and was acquired by Apple. Source: NYTimes
2. Blinded Eyes Restored to Sight by Stem Cells Stem cells have restored sight to 82 people with eyes blinded by chemical or heat burns, restoring vision to a level up to 0.9 on a visual acuity scale (1 represents perfect vision), reports Graziella Pellegrini at the University of Modena in Italy. Source: NewScientist
“Your Financial Choices” airs on WDIY Wednesday evenings, from 6-7 p.m. The show is hosted by Valley National’s Laurie Siebert CPA, CFP®. This week, Host Laurie Siebert, CPA, CFP® will discuss “Financial Choices – Electric Choices” with Gene Alessandrini, senior vice president of marketing for PPL EnergyPlus and George Lewis, Senior Manager Communications. We will discuss what it means to have electric choice and other related topics. Laurie will take your calls on this subject and other financial planning topics at 610-758-8810. WDIY is broadcast on FM 88.1 for reception in most of the Lehigh Valley; and, it is broadcast on FM 93.9 in the Easton/Phillipsburg area; and, it is broadcast on FM 93.7 in the Fogelsville/Macungie area – or listen to it online from anywhere on the internet. For more information, including how to listen to the show online, check the show’s website www.yourfinancialchoices.com and visit www.wdiy.org.
Pennsylvania has taken advantage of its huge buying power to bring to its Wine & Spirits stores some great wine selections at attractive prices. Its “Chairman Selections” are terrific values at least 40% below nationally quoted prices. But selecting the best buys to suit your taste can be a daunting task. As a solution, I can refer to you a great wine consultant – free.
There are so many wines varieties to choose from. Within each variety there are substantial variations. And, then there is the price issue – higher prices do not always mean better wine. Pennsylvania has designated a “wine consultant” in many of its larger Wine & Spirits stores. The wine consultant is there to help guide you through the hundreds of selections to make the right choice based upon YOUR taste, preferences, food pairings, AND cost. My favorite wine consultant is Brock Bartholomew at the Promenade Shops (Saucon Valley) Wine & Spirits store. His number is (610) 871-4305. He is knowledgeable and pleasant to deal with. And, he listens to what you want – at no extra charge. As far as I know, the wine consultants are not paid any commissions or overrides on the wine sold so he is unbiased on his recommendation. Click here for an article in the Morning Call about wine consultants, in general, and Brock specifically:
THE GLOOM LIFTED FROM THE STOCK market last week as the Dow Jones Industrial Average rebounded above the 10,000 mark amid a rip-roaring rally. Some positive earnings news and slight improvement on the jobs front gave investors the encouragement needed to bring the sharp two-week correction to an end.
The Dow added 511.55 points, or 5.28%, to end the week at 10,198. NASDAQ rose “only” 5% to 2196, for a 104.66 point gain.
Much of the market’s enthusiasm came in the wake of positive earnings comments from the likes of State Street (STT) and Samsung Electronics [5930.Korea]. It could well mean second- quarter earnings—reporting season kicks off this week—could meet analysts’ rosy forecasts. The Street is calling for a 27% jump in quarterly profits.
Despite the stock market’s gyrations, earnings expectations haven’t changed much in recent months, according to John Butters, director of U.S. earnings research at Thomson Reuters. On April 1, analysts thought earnings would grow 22.7% in the second quarter, and those estimates rose to 27.7% near the end of May. Analysts have trimmed their numbers only slightly since then, to the aforementioned 27%.
The good times should continue to roll for the next four quarters, based on analysts’ estimates. The Street is targeting growth of 25% in the third quarter, 33% in the fourth and 13% and 20% thereafter. In all, that would mean the S&P 500 would produce $82 of earnings this year and $96 the following year. That would catapult earnings above the previous record of $88, hit three years ago.
The recent market correction implies investors have major doubts about such optimistic projections. At some point such skepticism will be warranted, but the skeptics may be too early. “The trend over the last couple of quarters has been for more companies than normal to guide [earnings estimates] higher,” says Butters.
Investor uncertainty is evident in the S&P’s multiple, which stands at 12 times expected earnings, below the 14 multiple that shares enjoyed on average in the past five years. If CEOs confirm in coming weeks that the economy and business continue to improve—even if just marginally— those expecting a double-dip recession will be proven wrong and last week’s rally won’t be the market’s last.
THE WEEKLY UNEMPLOYMENT report on Thursday came in better than expected, and also bolstered the market’s confidence. Initial claims for unemployment fell by 21,000, to a seasonally adjusted 454,000, the Labor Department reported. The four-week average remained elevated at 466,000.
The news seemed to increase the odds that the economy will slowly creep along, avoiding the ever dreaded double-dip recession.
Shares of some companies tied to the employment market enjoyed gains that outpaced the broader market. Monster Worldwide (MWW) rose 9% last week; Manpower (MAN), an employment-services company, gained 10%, and Robert Half International (RHI) added 9%.
Jobs will be the key to the stock market’s performance in the second half, says James Paulsen, chief investment strategist at Wells Capital Management. Either claims will fall to 400,000 and the market will rally, or if they stay near current levels, the S&P 500 could return to 1,000.
Paulsen’s bet is that the former scenario will play out. “We’ve had greater economic growth and created jobs faster than in the two previous recoveries,” says Paulsen. “The stuff that makes jobs is there: a profit recovery.” (Source: Barrons Online).
U.S. Stocks and Foreign stocks both increased this week while bonds were little changed. During the last 12 months, STOCKS have substantially outperformed bonds.
Returns through 7-9-2010
1-week
Y-T-D
1-Year
3-Years
5-Years
10-Years
Bonds- BarCap Aggregate Index
-.1
5.3
8.3
7.8
5.6
6.4
US Stocks-Standard & Poor’s 500
4.2
-3.0
24.2
– 9.2
– .4
-1.4
Foreign Stocks- MS EAFE Developed Countries
5.4
-10.8
12.7
-15.0
– .7
-1.8
Source: Morningstar Workstation. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. Three, five and ten year returns are annualized. Assumes dividends are not reinvested.
In The Weekly Commentary of April 5, 2010, we discussed several issues: The economic stimulus coming out of Washington will dry up as the year unfolds. What will the economy do? Will it stagnate and perhaps fall back into recession (the so called “double dip”)? Or does the economy have sufficient “escape velocity” to continue a healthy expansion as the economic stimulus is used up? And, how about the income tax increase scheduled for January, 2011 – will that be the straw the breaks the economic camel’s back? Investors are debating whether a double-dip will occur during the next 12 months.
Meanwhile, I was on vacation last week in western Pennsylvania. I had to regularly feed my addiction for economic and investment information. Over the course of a few days I started the process of preparing our “mid-year review” – a report we intend to supply to you in The Weekly Commentary on Tuesday, July 6. I ran across several economic studies reported on by John Mauldin. (I love it when someone else does the work for me while I’m on vacation!). These reports address the questions posed in the previous paragraph. Stay tuned next week for this mid-year review. I tend to be an optimistic individual, but …..
I spent some time reviewing the much-discussed (proposed) legislation which appears destined to become law. I have been struck by one thought: If it were law since the year 2000, the only provision that would have prevented, or at least slowed down the 2008 financial crisis, was the new minimum underwriting standards for mortgages (by forbidding “No Doc” loans”). Lenders must verify income, credit history and job status certainly would have prevented the worst cases of sub-prime and exotic mortgages from ever being written, or subsequently securitized by Wall Street. Other than this provision, there is not a single element of the reform that would have prevented the last crisis. I suspect that anything else in this reform package is going to prevent the next one, either.
Question: My husband lost his job due to budget cutbacks. We have decided to relocate and we have been busy travelling to different locations looking for the right situation for a new job. Are our job-hunting expenses deductible?
Answer:
Yes, but the total of your job hunting expenses must exceed 2% of your “adjusted gross” income. They are deductible as miscellaneous itemized deductions. So, make sure you keep track of all of your job-hunting costs. As long as you’re looking for a new position in the same line of work (your first job doesn’t qualify), you can deduct job-hunting costs including travel expenses such as the cost of food, lodging and transportation, if your search takes you away from home overnight.
Feel free to contact me if you or someone you know has this type of situation. Tax laws can be tricky; thus, the above answer cannot be applied to all circumstances because the slightest variation could cause a different outcome.
