Health care reform The subject of health care reform is the topic of choice for most everyone today. It looks like health care reform is going to happen. Read what Senator Max Baucus, chairman of the powerful Senate Finance Committee, recently had to say in response to a question of about the odds of a health care reform bill passing this year: “100 percent. Given. Inevitable. The country wants it. The president wants it.” Given the fact Senator Baucus speaks for enough senators to pass a bill no matter what we may or may not think, I believe he is right in his calculations. We are most likely going to have health care reform. There are two big questions that come to mind in this debate on health care reform. First, will our government be able to efficiently run its part of the reform package? Second, what exactly will that reform look like? Efficiency and the federal government are not words that are discussed in the same sentence very often. The federal government has a history of being good at dealing with concrete issues, such as building the interstate highway system that links the north with the south and the east coast with the west coast. In the previous century, they built the railroad system. In the 1960s, they put a man on the moon. Granted private industry did much of the work, but the federal government was the grand designer and they were good at making that happen. Solid projects with a black-and-white goal in sight: Connect the railroad system from coast to coast. Build a highway system to move products and people easily anywhere in the country. Beat the Russians to having an American walk on the moon. What is their history, though, when it comes to the managing of life’s softer issues? For example, President Johnson’s Great Society was going to eradicate poverty and eliminate discrimination, among other admirable goals. It hasn’t happened yet, but billions of dollars were spent in the pursuit of those goals. There really wasn’t a black-and-white goal, so there really was no project completion. Another example that hits home a little closer would be the State of Massachusetts and their mandatory health insurance program. Currently, 97% […]
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Should the government be in charge of our health care? I think it’s time that we discuss the new health care reform initiative that is working its way through Congress. Most of us will agree that our health care system has problems, and those problems have to be addressed. Most of us will agree also that our health care system really has no equal in the world when it comes to delivering health care to the public. If I have an immediate health problem, whether I have insurance or not, I can go to any one of a number of emergency rooms in the area and very quickly be well-taken-care-of. If I should require surgery, it’s scheduled and gets done. We don’t have the delays that our friends up in Canada encounter. The Canadians come south of the border to our Mayo Clinic or the Cleveland Clinic for diagnosis and/or surgeries when their system is out of money for the year. We also don’t have the end-of-life issues that some of our European friends encounter. It’s expensive, really expensive, to care for our elderly, but no government bureaucrat is presently making an end-of-life decision for us based on the economics of the situation. It’s hard for me to imagine that a government bureaucrat in Washington, who has written a set of guidelines, could decide that one of us is too old to have a surgery, too old for a certain procedure, or just too old to treat. That’s a little scary. However, we have several negatives in our present system. We have an inordinate amount of people who are not covered by insurance and the number of people who can’t afford to pay for any coverage seems to be rising daily. We have a system with costs that are spiraling upward at a rate faster than the cost of attending college. We have the baby boomers, a group of people who are all getting older at the same time. They are going to live longer than previous generations and are going to put stresses on the health care system that could be crushing. We are a country that is searching for a blue-ribbon solution that will take the best part of our present health […]
Do you qualify for the First Time Homebuyer credit? There are some government programs that seem to generate more and more questions. The federal First Time Homebuyer Program is one of those programs. The fact that there is $8,000 in totally refundable dollars at stake might have something to do with creating questions. Taxpayers are trying to fit home purchases into the credit. Some of those purchases do not qualify while some do qualify, but a particular scenario was not considered when the law was enacted and now requires some explanation. Let’s go over some of those instances where the credit is in question. The questions can be grouped in two groups. The first group concerns questions of whether the taxpayer is considered a first-time homebuyer. Did the taxpayer own or constructively own a home within the past two years? Seems like a straight-forward question, but it really isn’t. The second group of questions concerns the purchase. Who did the taxpayer buy the home from or jointly with, and does it qualify for the credit? The first group of questions comes up in conjunction with the requirement that in order to be considered a first-time homebuyer, the taxpayer must not have owned a personal residence for the past two years. For example, a taxpayer owns a personal residence, but five years ago converted that house to a rental when the taxpayer moved into a rented apartment. The taxpayer still owns the rental. Does the taxpayer qualify for the credit even though he/she still owns the prior residence? The Internal Revenue Service says that because the taxpayer did convert the prior residence more than three years ago and has not used the rental as a residence for even one day within the previous three years, he/she does qualify for the credit. Another example involves married taxpayers. A husband and wife have been separated for the last five years and file separate tax returns. The husband has not owned a house during the previous three years. The wife currently has owned and currently occupies a residence. Can the husband claim the credit because they filed separate tax returns, maintain separate households, and he has not owned a residence for the last three years? The IRS says that […]
First-time homebuyer credit needs to be clarified Over the past few weeks, we have received a number of calls requesting further information and clarification on the federal government’s first-time homebuyer credit. The confusion relates to the differences between the credit that was available for homes purchased in 2008 and the credit available for homes purchased in 2009. Federal Form 5405 is filed to claim either of the credits. However, if the home was purchased in 2009, there is a box that is checked indicating that the home was purchased between January 1, 2009 and November 30, 2009. If this box is checked, the amount of the credit is $8,000. If this box is not checked, the home is presumed to have been purchased between April 8, 2008 and December 31, 2008. The amount of the credit for these 2008 purchases is $7,500. The 2009 credit is $8,000 and the 2008 credit is $7,500 for a difference of only $500, an apparently small amount. But the main difference is much more than the $500. The 2008 credit is really a loan and must be paid back at the rate of $500 per year over 15 years. The $500 will be considered an added tax beginning in the 2010 tax year. We are presuming there will be a line added to the tax return where the $500 will be entered. In our world of phenomenally high-powered computers, the Internal Revenue Service (IRS), without a doubt, will track this credit and will expect the $500 to be paid each year. There will be no interest charged on the $7,500. It just has to be re-paid at the rate of $500 per year. If the taxpayer sells the house before the full amount of the loan has been repaid, the unpaid remaining amount must be paid on the next filed tax return. For houses purchased in 2009, the $8,000 credit is not a loan. It is a true refundable credit and does not have to be re-paid. The purchasers must keep the house as their primary residence for the next three years after the purchase, or the entire $8,000 must be paid back. There is no proration of the $8,000. Either the purchasers get the full credit to […]
What makes a professional a professional Last week I attended a convention sponsored by Money Concepts, the financial planning company that I am associated with. The convention was held in Asheville, North Carolina, which is a sightseer’s paradise. Of course, I have to attend educational classes, but there was time set aside to enjoy the sights and sounds of the Asheville area. This included visiting the famous Biltmore Mansion and the Asheville Brewing Company, one of the micro-breweries in the area. Deb and I also took a side trip across the Blue Ridge Parkway to Cherokee, N.C. In case you haven’t been across the Blue Ridge Parkway, it’s one of the curviest roads I have ever seen. On one side of the road is the straight-up side of a mountain and on the other side of the road is a straight-down drop-off. There are innumerable scenic pull-off spots to gaze at the mountains and take some wonderful pictures. While in Cherokee, we visited a reconstructed Cherokee Indian village. Cherokees were the original inhabitants of the North Carolina area but they were forcefully transplanted in the 1830s from North Carolina to Missouri and places west. Some of the descendants have since moved back to the Cherokee area and purchased the land, now known as the Cherokee Indian Reservation, back from the federal government-good for them. For what the federal government did to their ancestors, I hope they got it cheap. From Cherokee, we crossed over the Great Smoky Mountains, stopping at the spot where the Appalachian Trail crosses over the highway. I have heard of people hiking the Appalachian Trail, of course, but I wasn’t really sure of what the Appalachian Trail would look like. We have the White Pine Trail here in town so I presumed it would probably be something similar to that-wrong. It’s a lot narrower than the White Pine Trail, it’s a lot rockier than the White Pine Trail, it’s a lot muddier than the White Pine Trail, it’s a lot longer than the White Pine Trail, it’s a lot steeper than the White Pine Trail, and it’s not paved either. It looked like a lot of work to hike the Appalachian Trail. All in all, it was a good week. Denis […]