Privacy, Banks, Tax Returns, New Tax Law
Parents have the right to say No when businesses request personal information about students in public schools, under the new education reform law. The privacy requirements, which cover elementary, middle, and secondary public schools, were included in the education bill and signed by President Bush in January. Parents must be notified by the school when marketers wish to gather students' personal information, and can refuse to let their children be included in such surveys.
Businesses have been collecting data about students for years, often without parents' knowledge. One company, American Student List, which collects personal information about school students and sells it to marketers, claims to have data, including family income, for over 25 million children through age 17.
It will be easier to file your taxes online this year, because you'll be able to use a self-selected personal identification number instead of mailing in a paper form with your signature as in the past, says the Internal Revenue Service. To file your taxes from your home computer, you can purchase commercially available software, download software from an Internet site, or prepare and file your return online. (For more on the latest tax-preparation software, see "Get the software you need".)In addition to the PIN, you'll need to enter your adjusted gross income and total tax from last year's 1040. The IRS will use that information, plus your birth date, to verify your identity. And visit www.irs.gov for a list of software companies; click on "e-file," and then "e-file partners."
Most states let you file your state return on line at the same time as your 1040. Online filing also allows you to have refunds sent directly to your bank account through direct deposit, and to send in your return early but delay payment until April 15.
Your heirs can now inherit more of your hard-earned money without having to pay estate taxes. Thanks to the new tax law, the amount exempt from estate taxes rose as of Jan. 1 from $675,000 to $1 million. The exemption rises to $1.5 million in 2004, $2 million in 2006, and $3.5 million in 2009. The top tax rate on inheritances over $1 million dropped from 55 to 50 percent and will continue to decrease by 1 percentage point each year until 2007, when it reaches 45 percent.
The contribution limit for IRAs goes up to $3,000 this year, or $3,500 if you are age 50 or older. The limit will rise to $4,000 ($4,500 for older taxpayers) in 2005 and $5,000 ($6,000) in 2008.
In the most recent 15 bank failures (since 1999), a total of $114 million in deposits wasn't insured, and many depositors weren't aware of that, says the FDIC. Most people know that deposits of up to $100,000 are federally insured, but many people who have accounts over that limit mistakenly believe they can get additional coverage simply by spreading the money over more accounts. To help consumers understand the law, the FDIC (www.fdic.gov) has identified some situations that commonly confuse depositors:
Trust accounts. Each share payable on your death can be insured up to $100,000, but only for your spouse, child, grandchild, parent, or sibling. Accounts that name other relatives and friends are insured only for a total of $100,000, no matter how many beneficiaries are involved. Living trust accounts that carry conditions (such as requiring children to earn a college degree before they can receive money) will not receive the additional insurance coverage, even if all the beneficiaries are qualified.
Retirement accounts. Separate retirement accounts in the same bank are lumped together and insured for a total of $100,000, even if there are different beneficiaries.
Bank CDs. All CDs sold by one bank will be added together and insured for $100,000, even if you bought the CDs from different brokers. Before you buy, ask the broker for a copy of the CD or other documentation to check the name of the bank issuing the security.
Yvonne Wollenberg. Financial Beat. Medical Economics 2002;3:17.