Financial Beat

By Yvonne Chilik Wollenberg

Taxes: Not all contributions are deductible

If you donated to disaster relief efforts for victims of the Sept. 11th terrorist attacks, your contributions are probably deductible. To check whether gifts to a particular charity qualify for the writeoff, call the IRS at 877-829-5500, or see Publication 78, "Cumulative List of Organizations," at www.irs.gov.

When making a donation, keep the canceled check or a receipt. If you contribute $250 or more, you need written acknowledgment from the organization. If you donate more than $75 and receive something in return, such as a ticket to a fundraising event, you also need a note from the organization that specifies the value of what you received. You should reduce your deduction by that amount.

You can't deduct donations made directly to an individual or family. You also don't get a deduction for volunteering your time to relief efforts, though you can write off the transportation costs you incurred.

If you were directly affected by the terrorist attacks, you can get until Jan. 15 to pay estimated tax that was due Sept. 17. If you already had an extension that was due to expire between Sept. 11 and Nov. 30, you have an extra 120 days to file. Write in red ink at the top of your tax form: "Sept. 11, 2001—Terrorist Attack."

Real Estate: Don't take home equity for granted

For many affluent families, the biggest source of wealth is a home, according to a study released by the Consumer Federation of America and Providian Financial. For families with net assets of $100,000 to $250,000, home equity represented 43 percent of their wealth. Over half of all households headed by someone over 45 years of age have net assets of at least $100,000.

Investing: Be suspicious of inflated offers

Uncertain economic times are ripe for con artists pushing schemes on worried investors. The North American Securities Administrators Association warns the public to be suspicious of telephone, mail, or Internet pitches for antiterrorist technologies, exotic financial products, or supposedly safe investments such as precious metals, oil, and gas. Check whether an investment or seller is licensed and registered by calling your state securities regulator. Look for the phone number in the government listings of your telephone book or by visiting www.nasaa.org. Request written information explaining the investment, and get professional advice about pitches offering unusually high returns.

Insurance: Will your policies cover you against terrorism?

Most life insurance policies will pay the beneficiaries of terrorism victims in the United States, say insurance experts. Companies generally stopped putting act-of-war exclusions in life insurance policies when the Vietnam war ended, says the American Council of Life Insurers. Individual life insurance policies also usually lack terrorism exclusions, which generally are added only for people who travel to places where terrorist acts are common.

Home and auto insurance policies also rarely exclude acts of terrorism, thoughthey don't generally cover acts of war. But most companies have promised to payclaims resulting from the attacks on Sept. 11, says the National Association of Insurance Commissioners.

Bonds: Those boring old savings bonds look better

You can make a patriotic investment and earn decent interest at the same time by buying US Savings Bonds. The yields, currently 4.40 percent for Series I and 4.07 percent for Series EE bonds, rival the 4.34 percent you'd earn with the average five-year certificate of deposit, according to Bankrate.com. What's more, savings bond earnings are exempt from state and local taxes, and federal taxes are deferred until redemption.

I bonds have an advantage over EE bonds because the interest rate is indexed to keep up with inflation. They earn a fixed rate of return that lasts the life of the bond, plus a variable rate that is adjusted every May and November to reflect inflation. Interest is added monthly and compounded semiannually, can continue for up to 30 years, and is paid when you cash the bond.

You can buy up to $30,000 a year in I bonds and can cash them in after six months. Unlike EE bonds, I bonds are purchased at full face value. You'll forfeit three months of interest, however, if you cash them in during the first five years. For more information, go to www.savingsbonds.gov .

The writer is a freelance writer in Teaneck, NJ.

Yvonne Wollenberg. Financial Beat.

Medical Economics

2001;22:13.