By Sheryl Rowling
Q: My son is the apple of my eye. I want to set up a Section 529 college savings account for him, but heard that the custodian controls the investments. I’m not an expert, but I’d like to control the investments. What can I do?
A: Unfortunately, you can’t have your honey and eat it too. If you invest in a 529 plan (otherwise known as a Qualified Tuition Program), the custodian controls the investments. You can choose the management strategy, such as age-based, aggressive or conservative, but you cannot control the specific investment decisions. It may be best to trust the experts, lest you commit the sin of arrogance.
Q: I’m planning to do my part for my congregation’s Kol Nidre appeal. Are there any ways to maximize my contribution, while minimizing my taxes?
A: Yes, I have two suggestions. First, consider gifting appreciated shares of stock or mutual funds, rather than cash. You won’t pay tax on the gain, but you’ll still get to deduct the value. Second, consider paying off your entire pledge by the end of the year. You’ll be able to take the full deduction in this year’s tax return. These strategies can also apply to donations to any qualified charity, including those organizations that feed the poor or fight bigotry.
Q: I’m planning to stay home from work on the High Holydays. With tax rates the way they are, maybe I’d be better off not working at all. What do you think?
A: I think you might be committing the sin of cynicism. Until and unless the tax rates are 100% (or more), you’ll always be better off by working!
Q: I bought a book of Life Magazines at a second-hand shop for $2. The publisher’s price listed on the cover is $40. Can I deduct $40 if I contribute the book to my local public library?
A: Unless you’re contributing “capital gain property” (like stocks), the IRS limits your deduction to the lesser of cost or fair market value. In other words, you can’t deduct more than what you paid. If you claim the higher deduction and the IRS discovers your deceit, you might end up owing more tax as well as interest and penalties.
Q: I’m carrying the Torah on Yom Kippur. I’m very excited about the honor and I want to be the center of attention. Can I deduct the cost of a great outfit?
A: No. The only clothes you can deduct are work uniforms. Maybe you should avoid the sin of egotism and remember that the Torah is the center of attention.
Q: I love reading your column. You are so smart and knowledgeable. I raise my wine glass to your intelligence!
A: Flattery, huh? Didn’t the alphabet of sins skip the letter “f”?
Q: Do you have any New Year’s greetings for your readers?
A: I send my readers an alphabet of good wishes. May your new year be at peace, blissful, compassionate, divine, enjoyable, flourishing, gratifying, and healthful.
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