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Letter to the editor

Personal Finance questions: Investors weather ups and downs

We asked, "Has the downturn in the economy affected your income?"

By Helen Huntley, Times Personal Finance Editor
Published January 20, 2008

We asked

Has the downturn in the economy affected your income?

Not at all, because I am heavy in high-dividend-paying preferred stocks. My portfolio has dropped in total value, but the dividends keep coming in.

Bob Lartz, St. Petersburg

As a financial planner, uncertain times create more activity for me, so my income does not suffer. I personally don't think we are heading for a recession. Most of my clients are adjusting their income investments, but not canceling them.

Frank Giordano, Tampa

My Social Security payment increased by 2.3 percent even though the inflation rate for seniors on a fixed income has probably increased by nearly 10 percent. But I've put away enough to weather this relatively minor setback.

Mike Rosenthal, Clearwater

We have three retail businesses and they are all slower than they should be; two are worse than last year and one is about the same as last year. Through attrition, we will have fewer employees and we have borrowed money we wish was not necessary.

James Nannen, St. Petersburg

Lower interest rates won't affect me. My wife and I have always lived below our means.

Gil Weber, Spring Hill

You asked

We are expecting a six-figure windfall this year. Is there something we should be doing to prepare for it taxwise?

Yes. Make quarterly estimated tax payments in 2008 so your total withholdings from your paychecks and estimated payments are equal to 100 percent of your 2007 tax liability. If your joint adjusted gross income for 2007 was $150,000 or more, your estimated payments should be at least 110 percent of your 2007 liability. If you are a due a refund on your 2007 return, you can have it applied to your 2008 tax payments.

How, as a grandparent, can I use EE savings bonds to pay my grandson's college tuition and deduct it from my income tax? If I use a prepaid fund, can I deduct the tuition from my income tax?

It's great that you want to help out your grandson, but unless you claim him as a dependent on your tax return, you don't get any education tax breaks for your generosity.

The savings bond tax break applies only to bonds issued in 1989 or later to buyers at least 24 years old who use them to pay college tuition for themselves, their spouses or dependents.

You must meet income requirements. IRS Publication 970 gives details on the tax breaks available for education.

Next week's question

What's the best thing you ever bought for $1 or less?

To ask a question, make a comment or answer the Money Question of Week, e-mail hhuntley@sptimes.com or write Helen Huntley, P.O. Box 1121, St. Petersburg, FL 33731. Visit her MoneyTalk blog (blogs.tampabay.com/money) for more money information.

[Last modified January 18, 2008, 22:33:41]