Things that make me "Crabby"

1. Co-workers who habitually arrive late to meetings.

2. The personal banker who neglected to tell me I will be charged a .50 cent fee every time I use my new debit card until after I had signed all the paper work. This fee would be charged on debit purchases only not credit purchases. Just curious, isn't a debit charge the whole purpose of a debit card?

3. The gal in my aerobics class who wears so much cheap perfume I feel nauseated by the end of class.

4. The new schedule of aerobic classes; all my favorites are either cancelled, too early for me to attend or so late I won't get home until after 8:00 p.m.

5. My inability to read the signs at the Amtrak station which say, "Meters do not give change," until after I have submitted my money.

Communicate, Communicate, Communicate

Communication is the key to successfully implementing change in your company’s policies and procedures. This was the message I took home from a recent seminar, "Implementing Lean in Administration/Office areas." In order to be successful, change must be communicated properly. It is a basic tenant of human nature to process under communicated change in the following manner:

1. Change is Discovered
2. Confusion & Rumors Ensue (Employees speculate; lean accounting sounds like layoffs. They begin wasting time developing lists of who they think should be laid off).
3. Fear Spreads
4. Resistance Generated
5. Resentment Develops
6. Interest Begins
7. Enthusiasm
8. Excitement

According to the presenter, if change is communicated properly, employees will go straight from step one when the change is communicated to step six where interest develops, skipping steps 2 through 5.

I was reminded of the importance of communication when our Human Resource Manager began a project to create job descriptions for all our employees this week. To kick off this project, she emailed a select group of employees requesting that they create a job description for their position. She gave them a two day deadline, and provided a sample format. She did not give them a reason as to why she was undertaking this project. Immediately, they were confused and fearful. Who could blame them, the media has bombarded us with talk of recession and our company’s sales have been lower than normal. With lighter work loads they assumed they were assigned this task because their job was in jeopardy. Every one of them resisted this project. Ms. HR Manager came to me complaining about our employees attitudes. I relayed my seminar's communication recommendation from above and suggested that she hadn’t explained her project clearly. She mulled my suggestion over for a couple seconds, decided that wasn’t the case stating our employees just couldn’t deal with change.

I disagree, ultimately she had to sit down with each employee, explain the purpose of her project; having a job description is a good business practice plus creating them was one of the tasks she was hired to do. She then had to convince them that by creating a job description they would not be putting their job in jeopardy and in many cases they would find the process beneficial. Only then did they enthusiastically complete the task.

Creative College Financing Triggers AMT

With the increasing cost of college tuition, more families are being forced to get creative with their finances in order to pay their children’s college tuition. In doing so, they may be in for a big surprise at tax time. Two years ago, a couple I know, struggling to educate their three daughters, sold a piece of property to help pay tuition costs. They knew at tax time they would owe a capital gain tax, but were shocked when the additional income also triggered an AMT tax. This past year, this same couple began drawing from a pension, in addition to earning their full time salaries, to help subsidize tuition costs. At tax time, they again found themselves subject to the AMT tax. As more middle class Americans are being hit with the Alternative Minimum Tax, I think there needs to be a better understanding of what this tax is and the impact certain financial decisions have on AMT tax liability.

What is AMT?
The Alternative Minimum Tax or AMT was designed in 1969. Its original purpose was to keep wealthy tax payers from using loopholes (many of which have since been closed) to avoid paying their fair share of income tax. Under AMT, once certain levels of income and deductions are reached; taxpayers are required to add back specific deductions, and pay an additional tax. This is to ensure all taxpayers pay at least a minimum tax.

What are some of the deductions that are required to be added back (disallowed)?
-State and local taxes.
-Medical costs are still allowed, but the AMT requires they exceed at least 10 percent of your adjusted gross income, rather than the 7.5 percent threshold of the regular tax system.
-Miscellaneous itemized deductions, although limited under the regular tax system, are disallowed under the AMT. This prevents the taxpayer from deducting large unreimbursed business expenses.
-Home ownership is not quite so desirable under AMT, while you are still allowed to deduct mortgage interest on both your main and second home, home equity loan interest is restricted. It can only be deducted if the money is used solely to pay for home improvements.
- Your home’s property taxes
- Personal exemptions. The more exemptions you claim the more likely it is you will have AMT liability.
- The Standard Deduction.

Why are more people subject to this tax?
Unlike regular income tax, the AMT tax was not indexed for inflation; AMT brackets have remained relatively constant at 26% and 28% while yearly wage increases have moved taxpayer income uncomfortably close or even into the AMT income bracket realm. To put this into context, AMT was originally created to target 155 filers with income of $200,000 who avoided paying any federal taxes, compare this with the nearly 4 million taxpayers subject to AMT in 2007, 80% of which had incomes between $100,000 and $200,000.

At what income levels are taxpayers affected?
Once you add back the AMT disallowances and run the numbers, AMT may be owed if your taxable income in 2007 was more than:
· $66,250 and you are married filing a joint return.
· $44,350 and you are filing as single or head of household.
· $33,125 and you are a married taxpayer filing a separate return

If the above income levels are met, how are you to determine whether you’re subject to the AMT?
IRS Form 1040 instructions includes a worksheet that may help you determine whether you're subject to the AMT, an electronic version of this worksheet is also available on the IRS website found here, but you may need to complete IRS Form 6251 to know for sure. Personally, I found Form 6251 to be confusing and relied on the IRS website results.

What are the more common AMT “triggers”?
Common AMT "triggers" include claiming a high number of personal exemptions, miscellaneous itemized deductions, and state and local tax deductions. In the example I sited above, the couple's increase in income along with their five personal exemptions and high state and property tax deductions (Wisconsin is a high-tax state) triggered AMT.

Bottom Line: As parents strategize to pay their children’s college tuition, it may me wise for them to meet with a good tax accountant or financial planner before making financial decisions that may seriously impact not only their income tax payments but their long term financial goals.