What can you do with $1,000 or less?
1.
Give a goat: Yes, you read that correctly! A grow- ing number of international charities now provide
you the opportunity to give a dairy goat, cow, flock of ducks, or other critical necessity delivered directly to communities in need around the world. In addition to providing life-giving sustenance, this type of gift is also a great way to get children and grandchildren interest- ed in charity. Or choose to share in a long-term project such as helping fund a school, dig a community well, or provide much-needed farming or livestock-manage- ment expertise. Although a single goat or flock of ducks might not sound like much to us, it can allow a family to move from poverty to self-sufficiency. Organizations such as
www.heifer.org and
www.samaritanspurse.org have online gift catalogs that allow you to choose a gift by type or by area most in need. Investment for one
dairy goat: $120; one dairy cow: $500; and one flock of ducks: $20.
2.
Be heart smart: Many Americans are choosing to invest in virtual physicals or full-body scans that
screen for a variety of health issues. Although the jury still is out in the medical community, with some physi- cians concerned about the usefulness of these physicals and others whole-heartedly endorsing them, virtual physi- cals are becoming more and more popular (especially among those with a fam- ily history of early cancer or other ailments). When virtual physicals became available nearly a decade ago, the cost was steep, often approaching
$5,000. However, competition and improved technol- ogy have lowered the price significantly. At Virtual Physical in Washington, D.C. (
www.virtualphysical .com), a full-body scan (which includes heart, lung, liver, and kidneys) costs $895. A virtual colonoscopy can be included for an additional $600. A board- certified radiologist reads the results and gives you a comprehensive report. Although most insurance plans (including TRICARE) do not cover these preventive services, it is a covered expense under most flexible spending accounts, allowing you to pay with pretax dollars at a savings of 15 cents to 40 cents on the dollar,
7 0 MI L I T A R Y O F F I C E R MAY 2 0 1 0
depending on your tax bracket. Invest-
ment for total-body scan virtual physical: approximately $895.
3.
Help a child (or grandchild)
start a Roth IRA: If children or grandchildren have earned income from baby- sitting, cutting grass, lifeguarding, or another part-time job, they can fund a Roth IRA. They may contribute up to $5,000 or the amount of their earn- [CONTINUES ON PAGE 72]
What can you do with more than $1,000?
1.
Start a college education fund for a child or grand- child: Because the costs of higher education cer-
tainly aren’t getting any cheaper, every little bit helps. Two popular accounts are Coverdell education savings accounts (ESAs) and Section 529 college savings plans (available in most states). Both types of accounts are funded with after-tax dollars and grow tax-deferred, and withdrawals are available income tax-free to meet quali- fied education expenses. Section 529 plan assets must be used for higher education expenses, but a Coverdell ESA may be used for pre-college expenses such as pri- vate secondary school or a computer (specifically used for educational purposes) for the kids. A Coverdell ESA — which can be opened at virtually any bank or broker- age firm — has an annual per-child contribution limit of $2,000. A Section 529 plan annual contribution limit is the same as the gift tax exclusion
[CONTINUES ON PAGE 73]
Aim to Break Even
Although the items covered in this article are great uses for a tax refund — big or small — one of the best things that you can do, according to many fi- nancial experts, is aim not to get a refund at all. A tax refund simply represents overpaying the govern- ment, meaning they get to use your money for up to a full year — and they don’t even send you a thank- you note. So consider adjusting your tax withholding, whether you currently are working or are retired, to come as close to owing nothing as possible.
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