President Barack Obama – and wife Michelle – released their 2009 joint tax return and many financial experts are praising the first couple for setting a good example for U.S. taxpayers. In addition to handing over his full $1.4 million Nobel Prize award to charity they also donated $329,100 to charitable causes and put $49,000 into retirement plans. MoneyWatch.com put together a list of the 5 most important lessons to learn from the Obamas’ tax return. I have included a section of their article below, but you can find the full text here.
Target your charitable giving.
The Obamas gave to a total of 50 organizations, everything from Book Worm Angels (a Chicago literacy program) to the Central Asia Institute. Yikes! Of course, as a politician and president of all of the people, Barack Obama has an incentive to spread his gifts far and wide. More to the point, he has someone to open his mail for him. If you or I gave away money to 50 different groups, we’d be buried in renewal notices and new solicitations, and never again able to eat a dinner uninterrupted by phone calls. For the rest of us, it makes more sense to carefully choose a handful of groups we particularly care about — one disease, one alma mater, one church, and one special issue — and focus. It makes even more sense to give locally, as the Obamas did in their old Chicago neighborhood.
A side business is nice.
Their return shows a mere $374,000 in salaries, and $5.1 million in business income, mostly from book royalties. Your business might be smaller — say, an eBay-selling project or consulting gig. But it opens the door to deductions and savings (not to mention income) that you wouldn’t otherwise have.
No deduction is too small to capture.
Barack Obama wrote off $866 in office expenses against his business income. And $279 that he had to return in overpaid royalties. So… save every receipt!