Financial tips - 3rd Quarter 2009

Financial tips: if your kids are taking on seasonal work this summer, good news. Despite the tough economy and an unemployment rate reaching a 26-year high in June, the Federal minimum wage was increased on July 24th from $6.55 to $7.25 an hour.


According to the U.S. Department of Labor, this will impact 29 states, as employers are required to pay the higher rate between the Federal and state levels. 14 states and Washington D.C. already have a higher wage in place. This includes most of the western states, Vermont, Connecticut, Ohio, Illinois, and Rhode Island. In San Francisco, a city that imposes its own minimum wage, the rate is currently at $9.79.

And while the increase is good for millions of workers this summer season, the increase may be a double-edged sword for the economy and the job market. Many experts believe that a higher minimum wage leads to a more stable and productive work force with less turnover and less reliance on public assistance, but with so many layoffs and payroll cuts in retail and the restaurant sectors, the increase could make a tough job market even tougher in the coming months.

    The Child and Dependent Care Credit

Many parents who work or are looking for work this summer must arrange for care of their children under 13 years of age during the school break. With this in mind, here are a few facts about a tax credit available for child care expenses straight from the IRS.

The credit is called The Child and Dependent Care Credit and is available for expenses incurred during the summer and throughout the rest of 2009. The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

The cost of day camp can count as an expense towards the child and dependent care credit. Expenses for overnight camps do not qualify. If your childcare provider is a sitter at your home or a daycare facility outside the home, you'll get some tax benefit if you qualify for the credit. For more information, check out IRS Publication 503, Child and Dependent Care Expenses. This is available on the IRS Website,, or by calling 800-TAX-FORM.

        Graduate with Honors and Equity

According to Trends in College Pricing 2007, published by the College Board, room and board costs at private schools average $8,595 for the 2007-2008 school year, up 5 percent from the previous year. For public schools, the average cost for room and board rose 5.3 percent to $7,404 for the 2007-2008 school year. And this is nothing compared to off-campus living expenses, if your children aren’t staying with you at home.

With this in mind, many parents are taking advantage of lower home prices, low interest rates, and government loans to purchase a home instead of paying out additional funds for student housing or rent. With an FHA loan, for instance, homes can be purchased for as little as 3.5% down – and what a great investment. If history teaches us anything, it’s that home prices won’t stay this low for long. In four or five years, when your child graduates, you just may have some equity in this home while other parents are racking up a lifetime of debt.

For a few buyers, depending on your circumstances and financial status, you may even qualify for a portion of a special first-time home buyer tax credit of up to $8,000 which expires on November 30, 2009. Either way, give us a call. We’ll run the numbers and see which scenario makes the most sense for you and your family.

             Social Media Slip Ups

With corporations making an effort to be more visible in the social media space, the term social media résumé suddenly has a new significance for employees and potential employees. With so much competition for each job opening, employees need to be careful about how they present themselves online.

For potential employees, be aware that Human Resource departments do visit your social media sites when considering you for a job – and not just LinkedIn® – all of them. They’re browsing through your photos, your blogs, your updates, your Tweets, so make sure that anything available to them is something that you would be willing to share or discuss in an interview.

For current employees, more and more stories are being reported about workers being fired by their companies for their use of social media sites like LinkedIn®, Facebook, Twitter, and MySpace. If you’re going to post on these sites, be careful what you post, especially during work hours. Experts suggest avoiding announcements about interviews, raises, or new jobs. Avoid badmouthing your current and previous employers. And, last but not least, don’t mention your job searches while you’re still employed.

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