Jewish World Review May 18, 2000 /13 Iyar, 5760
Building a college fund
DEAR BRUCE: I am a single father raising a 6-year-old whose mother passed away two years ago. She receives $430 a month from Social Security, and my income is such that I can support her without these benefits. I would like to invest this money for her college education. What would you suggest? -- B.D., via e-mail
DEAR B.D.: My advice would be to invest the money in some relatively aggressive long-term securities to be held in your name. I am not suggesting dot-com investments.
Given the numbers that you gave me, this account will be substantial in a matter of ten years. You might wish to consider some type of trust fund for your daughter for after she graduates, or you can give the money to her when the time comes, assuming she's a responsible young woman. Obviously I would want to see the money in your name so you will have total control.
I am sorry that you lost your wife, but this young lady will have a very good start in life with the money you are putting aside for her benefit.
DEAR BRUCE: My son lived and worked in Wisconsin for three months last year and then moved to California, where he remained for the rest of the year. He retained his residence in Wisconsin because he is coming back here shortly.
When we were doing his state taxes, I called the Wisconsin Department of Revenue offices. They said he had to file in Wisconsin and had to get California to release the tax money that his employer there paid him. When I called California, they said that they would not release these funds and that the California state taxes would be paid to California. -- B.T., via e-mail
DEAR B.T.: If money is earned in California, the state of California is going to get their fingers on it. What I don't understand is why you called Wisconsin and went through the explanation with them about his moving. Why not just file the three-month return showing the money that was earned in Wisconsin and let it go at that?
Now that you have muddled this up, I am not at all certain how to get it straightened out. You will have to file a tax return in California and see if those taxes are paid.
Again, I think that this seems to be a case of volunteering information that did not have to be volunteered.
DEAR BRUCE: We have a modest income of $80,000 a year, and our home is paid for. Our financial situation is good. However, since our children are all gone, we have been socked with extremely high income taxes, $3,000 to $5,000 over and above what is deducted from our paychecks.
Last year we changed our deduction status to single with zero deductions in an effort to lower our end-of-year tax obligation. Even so, we are still having to pay way too much in taxes. We both have IRAs, to which we make fairly good contributions. Would putting additional money in these help? -- N.P., Topeka, Kansas
DEAR N.P.: If you are not covered by any other pension plans, then $2,000 put into your traditional IRAs would be deductible. You are not allowed to invest additional money in your IRAs, even if it is available to you. In the case of the Roth, any fund contributions must be after-tax dollars.
According to those rascals in Washington, you and your husband are "rich," and of course the rich must pay. If you can understand the logic, please explain it to
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05/11/00: Your heirs, your choice
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03/16/00: How to buy government bonds
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01/19/00: Selling a second home
01/18/00: Running from a time-share
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