Cash for Clunkers II: Rebates for energy-saving appliances (St Petersburg Times)

Florida Program

All States information



Florida sweetens deal for clunker appliances
By MARK ALBRIGHT
St. Petersburg Times

State officials have sweetened Florida's upcoming energy-efficient appliance rebate program with a $75 bonus to assure buyers retire the old energy hogs they are replacing.
Dubbed ``cash for clunkers'' for major appliances, the rebates bankrolled by last year's federal economic stimulus program will pay consumers 20 percent discounts on six types of Energy Star-rated appliances.

Florida retailers will offer the rebates April 16-25.

``We are trying to encourage energy efficiency, water conservation and recycling,'' said Brenda Buchan, the program coordinator, who works for the governor's Energy Office. ``So the bonus is designed to ensure people properly dispose of their old appliances rather than move that old refrigerator into the garage.''

Today's refrigerators are about five times as energy efficient as their 15-year-old ancestors.

The recycling bonus addresses issues raised by what had been a wary appliance industry. It substantially increases the savings of what had been a $100 discount on a $500 appliance. To get the additional $75, consumers will have to supply a receipt from a store or certified disposal facility or landfill. Retailers have to rejigger their delivery services, which now destroy four out of five appliances they pick up. The rest are resold as used machines, so they do not qualify for the recycling bonus.

``I don't see any problem adding this sort of receipt to delivery,'' said Al Greco , owner of Apsco Appliance Centers in Largo.

The $300 million rebate program already is under way in eight other states, but Florida is waiting until the week of Earth Day.

The state is negotiating with mail-in rebate contractors (American Express and Ohana Cos.) that submitted low bids to process the paperwork for an estimated 66,0000 rebates.

State officials hope buyers won't have to wait as long for their money as some store rebate programs.

The federal stimulus program, which is providing the cash to back what had been an unfunded 2005 Energy Star purchase incentive program, was unveiled last summer to help ease reluctant consumers into buying mode and revive a stagnant appliance industry.
The business suffered because of the housing slump and a credit meltdown that sidelined big-ticket home improvements.

Appliance manufacturers said thanks for the help, but they needed time to ramp up production without disrupting the market. So the government delayed the program until this year.

Last summer, appliance retailers feared news of rebates coming (with no firm date or rules for implementing the program yet established) would kill whatever demand they had while undermining discounts already planned for the holidays.

After the government backed off, major appliance sales volume jumped 5.5 percent nationally in the fourth quarter, according to NPD Group.

Much of the credit went to planned discounts and limited inventory that drew big Black Friday crowds.

Dividends and Taxes (Morningstar)

Dividends and Taxes: Dos and Don'ts

DividendInvestor editor Josh Peters goes over the basics of dividend tax treatment and highlights some potential pitfalls for MLP investors.

Jeremy Glaser: For Morningstar.com, I'm Jeremy Glaser. It's that time of year again, that investors are worrying about their taxes, and a question on a lot of people's mind is how dividends are taxed.

Here to discuss it with me is the editor of Morningstar DividendInvestor, Josh Peters. Josh, thanks for joining me.

Josh Peters: Happy to be here.

Glaser: Could you talk a little bit about the different types of dividends and income that investors could see and how those are going to be taxed?

Peters: Sure. When you're looking at common equities, they really fall into three categories. The first is the largest category by far, which is common stocks of traditional, what we call C corporations.

These corporations themselves pay federal income taxes. If they pay a dividend, because that corporation is paying income tax before it even has the opportunity to send a dividend to you, they're what are known as qualified dividends. And for federal income purposes, the tax rate is capped at 15%.

Then there is another group of very popular higher-yielding stocks, perhaps not so popular after the crash, but real estate investment trusts, or REITs. These are not eligible for the qualified dividend treatment because REITs themselves don't pay federal income taxes.

They're exempt from income taxes as long as they pay out at least 90% of their taxable income to their shareholders, so it's the shareholders who wind up being taxed on that income. Those dividends you have to pay tax at your ordinary tax rate, whatever your marginal tax rate is for the particular year.

And then there's another category called master limited partnerships. And these technically are not corporations at all and what you get are actually not even called dividends, they're just called generically cash distributions. In this case, like REITs, master limited partnerships don't pay federal income taxes.

Instead, what they do is they divvy up their taxable income to shareholders, actually technically partners, via a schedule K-1 that you receive in the mail, usually sometime in March. And it's those figures that you consolidate onto your tax return and that is the basis for what you might have to pay tax on, and if you owe tax, then it's paid at your marginal tax rate.

Glaser: What happens if you own these companies in an IRA or some other tax-advantaged account?

Peters: Well, with both the qualified dividend payers and the REITs, to own them in a tax-deferred account is advantageous because you're not obliged to pay tax on those earnings when you receive them. You have the opportunity to reinvest the whole thing and increase your income by owning more shares of a particular company, particular REITs, whatever the case may be, and you are only taxed when you make a withdrawal from the account.

Master limited partnerships, though, it's a little different story. Even though REITs are allowed to pay dividends into tax-deferred accounts and they themselves are not paying federal income taxes, master limited partnerships are taxed in a very, very different way, a whole different part of the tax code. And the government doesn't like for those income allocations to be made to tax-exempt entities. And it isn't just IRAs, it's even things like charitable trusts, are really not able to receive that partnership income.

It's not technically illegal, but in a worst-case scenario, if you receive more than a certain amount of master limited partnership-allocated income in an IRA, your IRA would owe tax and have to file its own tax return. You might have to cut a check from your IRA to pay tax that you would've owed as a regular taxable shareholder of a master limited partnership. So it gets very messy. My recommendation is to just not do it.

Glaser: So even if your broker says that you can do it, definitely something to stay away from?

Peters: Anybody who says that you can do it or there's a good way to get away with it, I would check with a tax advisor first because the way that master limited partnerships work is that you may be allocated, in fact, taxable losses, have no taxable income even though you're receiving cash distributions in the first couple of years you own a partnership because there's all these big depreciation charges that are front-loaded and you get the benefit of those up-front.
But later on, as those depreciation deductions become less valuable, that taxable loss that you might be allocated is turning into taxable income. And then if you should sell, all of a sudden there's a big catch-up provision where all of the excess depreciation deductions that you might've had or losses that you might've been allocated any particular year, those are all trued up to what you actually got for selling and you could find yourself with a big one-time gain just from a purely tax book perspective. And that's not the kind of situation that you want to run into.

I'm not going to say it's illegal, I'm not even going to say, you know, don't do it ever, ever, ever, but you have to be very, very careful because the limit, $1,000 a year worth of non-qualifying income in an IRA, is low. Even a relatively modest investment, if it turns out to be successful, could bump up against that limit.

Glaser: OK, great. Josh, thanks so much for talking with me today.

Peters: Yeah. Sorry this is so complicated, but just keep in mind, if you remember that MLPs really don't belong in IRAs or 401(k) plans, Roth accounts, things like that, you might save yourself some big headaches down the road.

LED Companies with Government Funding (Popular Mechanics)

Here's how the U.S. Department of Energy is investing in a future illuminated by light-emitting diodes (LEDs) and organic light-emitting diodes (OLEDs).

17 Projects Shaping the Future of LED Lights

Tax Savings to Use Now ( from H R Block)

Tax Tips: 5 Things To Know This Tax Season


Life changes can mean tax savings. From the home-buyer credit to parenthood, to higher education and buying a new car, changes in the tax code affect the complexity of the 2010 tax filing season and could mean more money in taxpayers’ pockets.

Overall, the changes help taxpayers in five key areas:

Buying a home
Workers
Parenthood
Higher education
In the garage

Buying a home
More American homebuyers will get tax relief thanks to changes and expansions made to the homebuyer credit.

From seniors looking to downsize, to families wanting to move, to those shopping for their first home, this credit paves the way for more people to positively impact their taxes through the benefits of homeownership.

There are two major provisions of the homebuyer credit to keep in mind.

There is a tax credit worth up to $6,500 for existing homeowners in the market to move.
There is a new closing deadline for both first-time and repeat homeowners of April 30, 2010 – extended from Nov. 30, 2009. Also, a special provision gives taxpayers two extra months to close if they’ve entered into a contract by April 30, 2010.

Workers
Millions of taxpayers, depending upon other tax breaks they may qualify for, could find themselves with a tax surprise because of the Making Work Pay tax credit unless they adjusted their withholding last year, according to analysis by The Tax Institute.

Ninety-five percent of taxpayers automatically started taking home more money in their paychecks last year thanks to a change in the IRS withholding tables, triggered by the Making Work Pay credit. Taxpayers who should take special care in understanding the implications when filing a tax return include:

Married couples with two incomes
Individuals with multiple incomes
Retirees who have taxes withheld from a pension or social security benefits
Individuals who work but who can be claimed as a dependent on someone else’s tax return.

The credit, which taxpayers actually claim when filing their 2009 returns, could mean up to $400 for individuals and $800 for couples in 2009 and 2010. There is a phase out of the credit starting at modified adjusted gross income (MAGI) of $75,000 for single filers and for married filers at MAGI of $150,000. It’s completely phased out at MAGI of $95,000 for singles and $190,000 for married filers.

Parenthood
The recovery act expands the Child Tax Credit, allowing families to begin qualifying for the credit with every dollar earned over $3,000. For taxpayers, this change translates into a refundable credit of up to $1,000 for each qualifying child under 17 – even if the taxpayer has no tax liability.
The act also increases the Earned Income Credit for families with at least three or more children, where previously EIC benefits were capped at two children. The credit also would increase the beginning of the phase out for all married couples filing a joint return. That’s good news for married couples regardless of the number of children they have.

Higher education
Taxpayers getting a higher education or supporting a dependent in college should be aware of several tax credits and deductions. More taxpayers will be able to qualify for the American Opportunity Tax Credit, with a new, partially refundable $2,500 tax credit for college tuition paid in 2009. Nearly 4 million low-income students now will be able to qualify for the credit – because the credit is partially refundable.

Also, computer and technology costs qualify under the Section 529 Education Plans, which are tax-exempt college saving plans. Previously, eligible expenses included only tuition, room and board, books, supplies and equipment that were required for attendance at the school.

Whether you’re saving for education or paying school-related expenses now, help is out there. These tax savings are available to reduce your tax liability and help cover the out-of-pocket expenses for college.

In the garage
Taxpayers may have gotten a great deal on a new car in 2009 – especially if they took advantage of the cash for clunkers program – and they'll want to take advantage of a sales tax deduction on their taxes.

For those who purchased a new car, motorcycle, or even motor home may be able to deduct the state and local sales and excise taxes paid on the purchase of vehicles. The vehicles must have been purchased between Feb. 17 and Dec. 31, 2009.

Bonds that Keep Up with Inflation (Forbes)

Forbes.com
Intelligent Investing Panel
The Case For Corporate Bonds
Alexandra Zendrian 02.10.10, 6:00 AM ET


Corporate bonds and equities have much in common--they have both had significant rallies since last March, and there are still opportunities in both markets for those willing to look for them.

"Default rates are down, and corporate earnings are improving," says Calvert Investments Chief Investment Officer Cathy Roy. She advises investors to buy corporate bonds from companies with strong fundamentals. Roy adds that investors should buy short-term bonds with durations of between two and five years as interest rates are slated to go up soon.

Knowing this Roy says floating-rate bonds are a good defensive play, as when interest rates go up these bonds get a boost. Calvert is underweighting mortgage-backed securities, as there doesn't seem to be a natural buyer in that market, and is also underweighting Treasuries.

Some financial advisors say corporate bonds are the best of a beleaguered bunch. To wit, corporates are in a much better place relative to Treasuries, says Shannon Zimmerman, an analyst with Motley Fool. This is because much of corporate America is deleveraging, while the government is taking on more debt.
.

Still, since higher interest rates and inflation seem increasingly imminent, bonds could be adversely affected.

As a result, Zimmerman says to look to bond alternatives. One way is for investors to take about half of their fixed-income assets and put them into blue-chip dividend stocks like: Johnson & Johnson, PepsiCo, Coca-Cola Company and Kraft Foods. That way investors gain a more steady income stream through dividends but remain exposed to the upside of equities market.

This is also the time to consider Treasury Inflation-Protected Securities (TIPS), Zimmerman says. TIPS prosper in an inflationary environment because they rise with inflation.

In this recovery Advisors Asset Management Chief Executive Officer Scott Colyer anticipates lower-quality corporate bonds will recover better than higher-grade ones. Why? Because during recoveries riskier investments tend to outperform safer ones.

Not all agree. Brent Burns, president of wealth management firm Asset Dedication, says that investors should aim for higher-rated bonds because of their security. Since he anticipates some AAA companies will not maintain that status for long, he recommends AA bonds, as AA is the new AAA.

Burns recommends investors purchase individual bonds as they provide more control over their portfolio than an exchange-traded fund. This is because with an ETF you are stuck with the entire basket of bonds, whether you want them all or not. LPL Financial Chief Investment Officer Burt White also sees some opportunities in investment-grade corporate bonds. "Once corporations embark on a path of deleveraging and cleaning up balance sheets, corporate bonds benefit over long periods of time," he says. He adds that "corporate credit-quality trends tend to be long-lasting." White says that as companies' balance sheets get healthier, "the prospect for narrower yield spreads suggests additional room for improvement."

Though White sees opportunities in investment-grade corporate bonds, high-yield bonds remain his firm's favorite fixed-income investment. "Following the past two recessions in the early 1990s and 2000s, high-yield bonds posted impressive outperformance for the subsequent two years following a bottom in the economy and a period of underperformance," he says. White anticipates these bonds delivering high single-digit or low double-digit returns.

Other financial advisors prefer exchange-traded funds. "Most individual investors probably shouldn't buy individual bonds because of the lack of diversification," says Klingman & Associates Chief Executive Officer Gerry Klingman. He recommends the iShares IBOXX Dollar Investment Grade Bond Fund ETF and mutual funds such as the Dodge and Cox Income Fund (DODIX) and Vanguard Intermediate-Term Investment Grade Fund (VBIIX).

Investors mindful of the potential rise in interest rates can also try the Leader Short-Term Bond Fund (LCCMX). It's top five holdings are the Freeport-McMoran Copper & Gold Floating-Rate Note, Fifth Third Bancorp FRN, Citigroup FRN, Hertz 10.5% and General Electric Capital Corp.

John Lekas, president of Leader Capital, adds that investors should avoid emerging market funds because they can become so volatile so quickly. For an example, one need look no further than Dubai, where news of widespread defaults sparked a near panic.

Quick Tax Info: Codes in the Box in 1099 R (retirement withdrawal)

On my 1099-R, what do the codes mean?

1—Early distribution, no known exception (in most cases, under age 59 1⁄2 ).

2—Early distribution, exception applies (under age 59 1⁄2 ).

3—Disability.

4—Death.

5—Prohibited transaction.

6—Section 1035 exchange (a tax-free exchange of life insurance, annuity, or endowment contracts).

7—Normal distribution. Over 59 1/2 years old.

8—Excess contributions plus earnings/excess deferrals (and/or earnings) taxable in 2009.

9—Cost of current life insurance protection (premiums paid by a trustee or custodian for current insurance protection, taxable to you currently).

A—May be eligible for 10-year tax option.

D—Excess contributions plus earnings/excess deferrals taxable in 2009.

E—Excess annual additions under section 415 and certain excess amounts under section 403(b) plans. Report on Form 1040/1040A on the line for taxable pension or annuity income. If the IRA/SEP/SIMPLE box is checked, you have received a traditional IRA, SEP, or SIMPLE distribution.

F—Charitable gift annuity.

G—Direct rollover to a qualified plan, a tax-sheltered annuity, a governmental 457(b) plan, or an IRA. May also include a transfer from a conduit IRA to a qualified plan.

J—Early distribution from a Roth IRA, no known exception (in most cases, under age 59 1⁄2 ). Report on Forms 1040 and 8606 and see Form 5329.

L—Loans treated as distributions.

N—Recharacterized - IRA contribution made for 2009 and recharacterized in 2009. Report on 2004 Form 1040/1040A and Form 8606, if applicable.

P—Excess contributions plus earnings/excess deferrals taxable in 2009.

Q—Qualified distribution from a Roth IRA. You are age 59 1⁄2 or over and meet the 5-year holding period for a Roth IRA.

R—Recharacterized IRA contribution made for 2009 and recharacterized in 2009.

S—Early distribution from a SIMPLE IRA in first 2 years, no known exception (under age 59 1⁄2 ). May be subject to an additional 25% tax.

T—Roth IRA distribution, exception applies. (You may not meet the 5-year holding period.) You are either age 59 1⁄2 or over or an exception (code 3 or 4) applies.