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MAR APR MONEY2014

Life Income Gifts: Charitable Gifts That Benefit You Now, Charity Later

Plus... Education Tax Credits and Deductions Tips and Reminders for Your 2013 Tax Return Four Documents That Everyone Should Have © iStock.com/monkeybusinessimages© RETIREMENT

You can contribute to a traditional or Roth IRA even if you contribute Three Great Things to a retirement plan at work. However, participating in a retirement plan 1at work may affect your ability to deduct contributions to a traditional IRA if your to Know About income is over certain levels. Participating in a retirement plan at work does not affect your ability to contribute to a Roth IRA. Keep in mind, though, that your TIPS AND REMINDERS FOR YOUR 2013 TAX RETURN income must be under certain levels to contribute to a Roth IRA.

You and your non-working spouse can each contribute to IRAs. Generally speaking, you cannot contribute to an IRA unless you receive 2taxable compensation, such as wages and self-employment income. However, As almost everyone knows, a married couple who files a joint tax return can contribute to an IRA for each contributing to a traditional spouse—even if one spouse is not working—as long as the combined contribu- tions do not exceed the taxable compensation reported on the joint return. or Roth IRA is a great way to save for retirement, thanks You have until April 15, 2014 to make a contribution for 2013. to the tax benefits that IRAs IRAs offer a wide window of opportunity—up until April 15—to make 3a contribution for 2013 and possibly snag a tax deduction that can reduce your offer. But do you also know... 2013 taxes. The maximum contribution for 2013 is $5,500 for individuals under age 50; $6,500 for individuals age 50 or older. Additional limits may apply. n

Please talk to your financial advisor about whether an IRA should be part of your wealth management strategy.

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UP FRONT FEATURES FYI 2 Three Great Things to Know 6 Life Income Gifts: Charitable Gifts 16 Douro River: Ports of Call About IRAs That Benefit You Now, Charity Later 18 What's On at the Art Museums An introduction to three planned giving arrange- 3 Tips and Reminders for ments that may help you fulfill your charitable 19 Quiz: Fictional Detectives Your 2013 Tax Return goals while providing you with an income for life. 4 How Can I Invest Internationally? 10 Four Legal Documents That Everyone © 2014 Quinn Communications Inc. 5 Retirement Planning Quiz Should Have This publication was created by Quinn Communications Inc. (www.quinncom.biz) for the use of the sender. It is intended to 12 Tax Credits and Deductions May Help provide general information on the subject matter covered. It is not Offset Your College Expenses intended to provide a financial, legal, or other professional service. The information in this publication may not be appropriate for you. 14 Limit Your Health Care Costs in Contact a financial or legal professional before making changes to Retirement with Insurance your plans. 2 FX2013-1204-0036/E TAX

© iStock.com/robynmac

TIPS AND REMINDERS FOR YOUR 2013 TAX RETURN Haven't filed your 2013 individual tax return yet? These tips and reminders for your federal taxes may help.

You have until April 15, 2014 to file Child care expenses that you pay may There's a new 3.8% surtax on net invest- your 2013 personal tax return or to make you eligible for a tax credit. If you ment income this year for high-income request an extension. If you need extra paid someone to care for your young taxpayers. It affects taxpayers with time to complete your federal tax return, child (under age 13) so that you could income from interest, dividends, capital you can request an automatic 6-month work or look for work, you may be able gains, passive activities, and certain other extension. You will still have to pay your to claim a tax credit for a percentage of sources whose modified adjusted gross taxes by April 15, or you'll be stuck pay- the qualifying care costs that you paid. income exceeds $200,000 (unmarried), ing interest and penalties on the unpaid This credit can also generally be claimed $250,000 (married filing jointly), $125,000 amount. if you paid for the care of your spouse (married filing separately), or $200,000 or certain other individuals who are (head of household). The surtax does not There is a far simpler method to calcu- physically or mentally unable to care for apply to income from wages, self-employ- late the home office deduction this year. themselves. ment, an active trade or business, interest If you use part of your home exclu- on tax-exempt bonds, and distributions sively for business, all you have to do If you have a financial account or from IRAs and qualified retirement plans. is multiply the square footage of your assets in a foreign country, you may be workspace (up to 300 square feet) by $5. required to file certain IRS forms. Take your first RMD by April 1, 2014 if Or you can use the traditional method to Form 8938 should be submitted with you turned age 70½ in 2013. After age calculate the deduction if it results in a your tax return if you have a financial 70½, you generally must take a required larger deduction. interest in certain foreign financial assets minimum distribution (RMD) each year and their aggregate value exceeds the from your IRAs (traditional, SEP, and There is a large tax credit (up to $7,500) reporting threshold for your filing status. SIMPLE) and your employer-sponsored available if you purchased a plug-in To give you an example, an unmarried retirement plans. Normally, RMDs must electric-drive vehicle in 2013. The credit taxpayer living in the U.S. with a foreign be taken by December 31, but you get amount varies by vehicle model. financial account valued at more than extra time with your first one. $50,000 on the last day of the tax year or You may be able to claim a tax credit for more than $75,000 at any time during the If your name or marital status changed energy-efficient equipment installed tax year must file Form 8938. A second last year, let the Social Security Adminis- in your home in 2013. You can generally form, known as the Report of Foreign tration know before you file your taxes. claim 30% of the cost of alternative en- Bank and Financial Accounts (FBAR), When the name on your tax return does ergy equipment (solar, wind, geothermal, must also be filed by June 30th if you not match SSA records, the IRS flags it as or fuel cell) and a varying amount for have a financial interest in or signature an error, which can delay your refund. n windows, doors, roofs, insulation, water authority over a financial account in heaters, and heating and cooling equip- a foreign country and the combined Please contact your tax advisor for help ment. The equipment must meet specific value of your foreign accounts exceeded preparing your tax returns and for more energy standards to qualify for a credit. $10,000 at any time in 2013. information on the items mentioned here.

FX2013-1204-0036/E 3 INVESTING 101

How Can I Invest Internationally? Investing internationally offers an opportunity to diversify your portfolio and tap into markets that are growing at a faster rate than the United States. Here are a few ways to go about it.

AMERICAN DEPOSITARY RECEIPTS Want to own a piece of Toyota (or other foreign-based company)? It's easier than you may think. Many foreign-based companies trade on U.S. exchanges. But instead of shares of stock being traded, it is typically American Depositary © iStock.com/iofoto Receipts (ADRs). Each ADR represents ownership of a specific number of underlying shares in the foreign company. The benefits of ADRs are that they are quoted and traded in U.S. dollars, dividends are paid in U.S. dollars, and shareholder communications are in English.

STOCKS You may be able to purchase shares on a foreign stock exchange through U.S. brokers associated with those exchanges.

MUTUAL FUNDS If you prefer to leave the stock-picking to professionals, mutual funds may be the way to go. In addition to professional management, mutual funds generally offer a level of diversification within your international holdings not easily achieved when buying individual securities on your own.

ETFs Exchange-traded funds (ETFs) that track foreign market indexes can be a good choice if you are looking for exposure to stock, bond, and real estate markets from around the world. n

PLEASE NOTE: Foreign investments involve special risks due to currency fluctuations, economic and political factors, government regulations, differences in accounting standards, and other factors. Investing in emerging markets involves greater risk than investing in more estab- lished markets. Before investing in mutual funds or ETFs, investors should consider a fund's investment objectives, risks, charges, and expenses. Contact your financial advisor for a prospectus containing this information. Please read it carefully before investing. Investors cannot invest directly in an index. Bonds are subject to interest rate risk. When interest rates rise, bond prices usually fall. The effect is usually Please consult your more pronounced for longer-term securities. Fixed- financial advisor for income securities also carry inflation risk and credit help in developing and default risks for both issuers and counterparties. and implementing an Diversification does not ensure a profit or protect investment plan. against loss in declining markets.

4 FX2013-1204-0036/E RETIREMENT

RETIREMENT PLANNING QUIZ Retirement may be the largest financial goal of your life—but how much do you really know about saving and planning for retirement? Here's a chance to find out. Of course, the real test comes during retirement when you learn how well your plans worked. Your financial advisor can help with the real test, by estimating how much you may need to save for retirement and by suggesting strategies designed to help you move toward your goal. © iStock.com/dinnyd ©

1. Is age 50 too late to begin saving 5. When leaving a job, the assets in 9. The part of Medicare that is for retirement? your 401(k) can generally be: premium-free for people age 65 or older covers most: A. Yes A. Withdrawn as a lump sum B. No, it is never too late B. Left where they are A. Hospital expenses C. Transferred to an IRA B. Medical expenses, such as doctors' fees C. Prescription drugs 2. Roth IRAs offer which tax benefit? D. All of the above D. All of the above A. Qualified withdrawals are tax-free B. Contributions are tax-deductible 6. Can you work while collecting Social Security retirement benefits? 10. Long-term care in a nursing C. Both of the above home is generally covered by: A. Yes A. Medicare 3. You can generally begin con- B. No B. Health insurance tributing extra amounts, known as catch-up contributions, to your IRA C. Disability insurance 7. Will the amount of your Social D. None of the above and 401(k) at what age? Security benefit payments increase A. Age 45 if you wait longer to begin receiving B. Age 50 them? 11. On average, how much do people age 65 or older pay out-of- C. Age 55 A. Yes, but only up until age 65 pocket for health care each year? D. Age 60 B. Yes, but only up until age 70 C. Yes, but only up until age 75 A. $100 B. $1,100 4. Withdrawals from an IRA or D. No retirement plan prior to this age are C. $3,100 D. $5,100 generally subject to a 10% penalty, 8. The average monthly Social unless an exception applies: Security benefit for a retired A. Age 55 worker in June 2013 was: 12. Is it usually a good idea to pay off debt before you retire? B. Age 59½ A. $1,269 C. Age 62 B. $2,269 A. Yes D. Age 65 C. $3,269 B. No

D. $4,269 FX2013-1204-0036/E 12–A. 11–D, 10–D, 9–A, 8–A, 7–B, 6–A, 5–D, 4–B, 3–B, 2–A, 1–B, Answers: 5 PHILANTHROPY

Life Income Gifts: Charitable Gifts That Benefit You Now, Charity Later A life income gift can help you fulfill your charitable goals while providing an income stream for yourself or others.

HAVE YOU EVER WANTED TO MAKE vehicle, you can claim a charitable tax a major gift to your church, alma mater, deduction for a portion of the fair market or favorite charity, but stopped yourself How life income gifts value of your gift, which may benefit your because it might leave you short of funds current tax picture. The exact amount in retirement? A life income gift may generally work. of your deduction will depend on the enable you to make that gift during your amount of your contribution that is ex- lifetime without undermining your finan- pected to eventually pass to the charity. cial security. Here’s the deal. Funding a life income gift arrange- Life income gifts are a type of YOU ment with highly appreciated assets, such as planned giving arrangement that provides stock or other types of property, may also you with income for life and significant benefit your tax picture because you gen- Income erally do not pay capital gains tax when tax advantages in return for your chari- Your gift table gift. for life the assets are transferred to it. This leaves Three main vehicles are used to your entire gift available to be reinvested, make life income gifts. They are the resulting in what may be a larger income charitable gift annuity, the pooled in- than if you sold the assets yourself, paid the come fund, and the charitable remainder CHARITABLE GIFT ANNUITY, tax on them, and reinvested the remainder. trust. Each works in a similar fashion. POOLED INCOME FUND, OR No capital gains tax on the transfer of You irrevocably transfer cash or ap- CHARITABLE REMAINDER TRUST appreciated assets may also benefit you preciated assets, such as stock, to a life if you want to diversify a concentrated income gift vehicle. You then receive equity position in, say, your employer’s a stream of income for life or a speci- stock. If you sell long-term appreciated fied number of years. If you prefer, you Remainder stock yourself, as much as 23.8% of the can name a different beneficiary, such gain may go to federal taxes alone. as your spouse or other loved one, to While there are similarities among receive the income. The assets remain- life income gift arrangements, there are ing after the last beneficiary dies or the differences as well. Here’s a look at the trust ends are used by the charitable CHARITY three main types of life income gifts. organization. In addition to receiving income for Charitable Gift Annuity life, you also receive significant tax and A charitable gift annuity is a contract financial benefits. First on the list of between you and your chosen charity in benefits: an income tax deduction. When which the charity promises to pay you, you transfer assets to a life income gift or up to two people you name, a fixed

6 FX2013-1204-0036/E Life Income Gifts: Charitable Gifts That Benefit You Now, Charity Later

When you make a life income gift, you receive...

n An income for life for you, your beneficiary, or both of you. In many instances, the income is larger than what you previously received from your donated assets.

n A reduction in your current taxes and possibly your estate taxes.

n The satisfaction of support- ing your favorite charity. © iStock.com/monkeybusinessimages©

FX2013-1204-0036/E 7 A life income gift may be a good choice if you want to make a significant gift to charity and...

n You want to retain an income from the donated assets.

n You need more income from highly appreciated, low-yielding assets, such as stocks that have appreciated but do not pay dividends.

n You own a large amount of a single stock that you want to diversify out of without imme- diately paying tax on the capital gains. © iStock.com/graytown©

8 FX2013-1204-0036/E income for life in return for your gift Charitable Remainder Trust of cash, securities, or other assets. The A charitable remainder trust is a private promise of life-long income is backed by trust that you set up and fund to generate the charity’s assets. income for yourself or others with the re- The advantage of a fixed income pay- mainder going to your favorite charities. ment is that you know right from the start This type of life income gift offers how much income to expect each period far greater flexibility than charitable gift and that amount will never change regard- annuities and pooled income funds. With less of what is going on in the markets. a charitable remainder trust, you choose The amount of your income payment an individual or organization to manage will depend on several factors, includ- the trust. (This person or organization is ing your age when the payments begin known as the “trustee”.) You can name and whether the payments will last for more than two income beneficiaries. The one life or two. In general, your income income payments can last for life or for payments will be higher the older you are a period of years. You can select the rate when you begin receiving them. used to calculate the income payments. Gift annuities are offered by many (Most donors choose a rate in the five religious, educational, and charitable to seven percent range.) And you can organizations for a minimum donation choose more than one charitable organi- of, say, $5,000 or $10,000. zation to receive the remaining assets. Please be aware that you should never Depending on the type of charitable © iStock.com/nyul have to pay a commission, solicitor’s fee, remainder trust you create, the income or any similar payment to establish a gift payments will be either fixed or variable. Your tax and financial advisors annuity. A charity remainder annuity trust pays can help you select the giving beneficiaries a fixed amount each year Pooled Income Fund based on the trust’s initial value. A charity arrangement that best fits your A pooled income fund is a trust created remainder unitrust generally pays ben- philanthropic and financial goals. by a charitable organization in which eficiaries a fixed percentage of the trust’s your contribution is “pooled” for invest- assets as they are valued each year. As a ment purposes with contributions from result, a unitrust’s payments will fluctuate other donors. Each quarter, the fund pays based on how the trust's assets perform. you, or up to two beneficiaries, a pro- All this flexibility comes at a price. portional share of the fund’s net income. Because charitable remainder trusts are The amount of income you receive each custom designed and individually man- period will vary, depending on how the aged, there are significant costs associated fund’s investments have performed. with setting them up and running them. Income payments will continue until the A minimum contribution of $50,000 to last beneficiary dies, at which time your $100,000 may be needed to justify the cost. share of the fund’s principal is removed from the fund and can be used by the If you want to make a gift to charity charity. while retaining an income for life from Many charitable organizations have the gift, one of the arrangements de- one or more pooled income funds avail- scribed here may be right for you. But able to donors who want to support their please remember that your gift is irrevo- organizations. An initial contribution of cable, so it is a good idea to consult your $5,000 or more is required to participate tax and financial advisors before making in a pooled income fund. a move. n

FX2013-1204-0036/E 9 ESTATE

Four Legal Documents That Everyone Should Have These documents are designed to provide direction when you cannot.

AT THE VERY LEAST, EVERY ADULT A will is used to distribute assets that have the authority to oversee. Your estate should have four estate planning docu- are not being transferred by other means. planning professional can provide guid- ments: a durable power of attorney for fi- For example, the assets in your IRA will ance in this area. nances, a health care proxy, a living will, transfer to the beneficiary named on the It is important to note that some finan- and a last will and testament. With them, account regardless of directions that you cial institutions have their own power-of- you can help ensure that your directions leave in your will. For another example, attorney forms and may not readily honor are followed if you become incapacitated if you own property jointly with another one created elsewhere. It is a good idea to or die. Without them, the courts may person and both of you are titled as joint plan for this possibility with your estate need to appoint someone to handle your tenants with right of survivorship, your planning professional. financial and medical affairs and the interest in the property automatically laws of your state may dictate how your passes to the other owner after your death Health care proxy. A health care proxy, estate is distributed—situations that most regardless of directions in your will. also known as a durable power of attor- people would prefer to avoid. As you create your will, keep in mind ney for health care, is the legal document If you do not already have these four that you can change it in the future if you you use to name someone to make medi- essential documents, the time to put them change your mind about any aspect of it. cal decisions on your behalf in the event in place is now because you never know In fact, it is a good idea to review your you are unable to do so. This person can when you may need them. will periodically to ensure that it reflects be whomever you choose, for example, Creating the documents can be rela- your current wishes. your spouse, another family member, tively simple and straightforward. To give or a friend. Naming a health care proxy you an idea of what’s involved, here’s an Durable power of attorney for finances. can help avoid conflict among your loved overview of the four documents. The following three essential documents ones regarding your medical care. are designed to provide direction in the Last will and testament. A will is a key event you are ever mentally incapacitated Living will. Have you ever considered part of every estate plan. In it, you name and unable to manage your affairs or the type of care you want to receive if the beneficiaries that you want to receive make decisions on your own. you are in an end-of-life or permanently your assets after your death. Your ben- The durable power of attorney for unconscious situation? If so, conveying eficiaries might include family, friends, finances gives the person you choose the your choices regarding hydration, feeding, and charities. You also name a guardian legal authority to manage all or part of and resuscitation in a living will can help for your young children on the chance your business and personal affairs if you ensure that your wishes are carried out that you and the other parent die while become incapacitated. This person is and remove the burden of making such the children are young. And you name known as your agent or attorney-in-fact. tough decisions from your loved ones. someone to oversee the administration of If you become incapacitated, your your estate and see that it is distributed agent can step in and pay your bills, de- If you do not have these four essential according to the terms of your will. This posit your income, file your tax returns, documents in place, please consult an person is typically known as an executor oversee your investments, and so on. You estate planning professional for help in or a personal representative. choose the activities that your agent will creating them. n

10 FX2013-1204-0036/E Additional legal arrangements that help meet a variety of estate planning goals.

Revocable living trust. A revocable living trust is a legal arrangement that di- rects how the assets you put in the trust are to be managed during your lifetime and distributed after your death. The primary advantage of using a trust is that it avoids probate, a real plus if you live in a state with high probate costs or if you simply want the details of your estate to remain private.

Other trusts. There are several types of trusts available, each designed to meet specific estate planning goals. Here are a few examples. A trust is often used to provide for a special needs individual without harming that individual's eligi- bility for government benefits. Trusts are also used to minimize estate taxes. And trusts are used when you want a trustee to manage the trust assets for the ben- efit of your heirs. Your estate planning professional can help you determine if a trust is a good choice for your goals. © iStock.com/Valeriya ©

FX2013-1204-0036/E 11 TAX

Tax Credits and Deductions May Help Offset Your College Expenses If you pay college tuition, you may be eligible for one of the federal tax credits or deductions described here. American Opportunity Lifetime Learning Tuition and Fees Student Loan Interest Tax Credit Credit Deduction Deduction

DO YOU PAY COLLEGE TUITION FOR taxed on. Here’s an example. A $1,000 claim it. Plus, the student does not have Maximum benefit The maximum credit is The maximum credit is You can deduct up to You can deduct up to yourself, your spouse, or your depen- tax credit will result in a $1,000 reduction to be enrolled in a degree program for $2,500 per student per $2,000 per return. $4,000, $2,000, or $0 per $2,500 per year of the year. year, depending on your interest that you pay dents? If so, you may be able to trim in taxes, while a $1,000 tax deduction you to claim it. Taking just a course or The credit amount is MAGI. on a student loan. The credit amount is based on 20% of the thousands of dollars off your federal for someone in the 25% tax bracket will two to improve job skills is enough to This deduction is set to based on 100% of the first first $10,000 of eligible taxes by claiming a tax credit or deduc- result in a $250 reduction in taxes. qualify the student. expire after 2013. $2,000 of eligible expens- expenses you paid for all tion for the tuition you pay. For most taxpayers, the American The lifetime learning credit is based on es plus 25% of the second eligible students. But before you can claim a credit opportunity tax credit offers the greatest 20% of the first $10,000 of eligible expens- $2,000 of expenses for or deduction, you must meet certain potential reduction—up to $2,500 per es paid per year for all eligible students, up each eligible student. requirements. In general, you cannot student, provided the student is enrolled to a maximum credit of $2,000 per return. claim an education credit or deduction if at least half-time in a degree program and If income limits prevent a parent from Number of years Can only be claimed for There is no limit on the There is no limit on the This deduction is available you are listed as a dependent on some- does not have a felony drug conviction. claiming a credit, consider having the the benefit is the student's first four number of years that this number of years that this for the entire period of the available years of post-secondary credit can be claimed. deduction can be claimed. student loan. one else’s tax return, your filing status is The credit amount is based on 100% of the student claim it. As long as the student's education. married filing separately, or your income first $2,000 of eligible expenses paid plus income is under the limits and no one else exceeds the limits for the specific credit 25% of the second $2,000. Eligible ex- claims an exemption for the student on Eligible students The student must be The student must be en- The student must be The student must have or deduction. penses include tuition, required fees, and their tax return, the student can generally enrolled at least half-time rolled in at least one post- enrolled in one or been enrolled at least Fortunately, the income limits are course materials, but not room and board. claim a credit for eligible expenses that the in a degree program and secondary course that more courses at an half-time in a degree rather generous, enabling many low- and The credit has an added benefit: Up student, the parents, and other parties paid. not have a felony drug either leads to a degree or eligible post-secondary program. middle-income tuition payers to qualify for to 40% of it is generally refundable. This The rules for who can claim the tuition conviction. improves job skills. institution. an education credit or deduction. To give means that if the credit amount exceeds and fees deduction are slightly different. you an example, individuals with modi- your taxes for the year, 40% of the excess The deduction cannot be taken by anyone 2013 income limits The amount of your credit The amount of your credit The maximum deduction The amount of your will be reduced if your will be reduced if your is $4,000 per year if your deduction will be reduced fied adjusted gross incomes up to $80,000 (up to $1,000) will be refunded to you. who can be claimed as a dependent by NOTE: Married modified adjusted gross MAGI exceeds $53,000 MAGI is $65,000 or less if your modified adjusted taxpayers who file ($160,000 if you are married and file a No other education credit or deduction someone else even if that other person income (MAGI) exceeds ($107,000 if married filing ($130,000 or less if mar- gross income (MAGI) ex- separate tax returns $80,000 ($160,000 if mar- jointly). ried filing jointly). ceeds $60,000 ($125,000 if joint return) can claim up to the full $2,500 offers this benefit. does not actually claim the exemption. are not eligible for American opportunity tax credit for tuition The American opportunity tax credit A student loan interest deduction ried filing jointly). married filing jointly). these credits or You cannot claim the credit The maximum deduction paid for each eligible student. (The income can be used for the first four years of a is also available and may allow you to deductions. You cannot claim the credit if your MAGI is $63,000 or is $2,000 per year if your You cannot claim the limits for 2013 are shown on page 13.) student’s post-secondary education. Once deduct up to $2,500 per year of the inter- if your MAGI is $90,000 or more ($127,000 or more if MAGI is between $65,000 deduction if your MAGI For tuition paid in 2013, there are two the student is in year five, you’ll need est you pay, provided the student was more ($180,000 or more if married filing jointly). and $80,000 ($130,000 is $75,000 or more married filing jointly). and $160,000 if married ($155,000 or more if credits and one deduction available. You to use either the lifetime learning credit enrolled at least half-time in a degree pro- filing jointly). married filing jointly). can choose only one for each student per or the tuition and fees deduction. (The gram and your income is under the limits. year so it is important to choose the one tuition and fees deduction expired at the If you, your spouse, or your depen- You cannot claim the deduction if your MAGI that results in the largest tax reduction. end of 2013, but may yet be extended for dent is in college, talk to your tax advisor exceeds $80,000 ($160,000 When choosing the credit or deduc- 2014 and can still be used for 2013.) about whether you can claim an educa- if married filing jointly). tion, keep in mind that tax credits and The lifetime learning credit is avail- tion credit or deduction. Your advisor can deductions work differently. Tax credits able for all years of post-secondary edu- help you determine your eligibility (all Refundable Yes. If your credit exceeds No. No. No. directly reduce your income tax. Tax cation, including graduate school. There of the requirements are not covered here) your tax, 40% of the excess deductions reduce the income you are are no limits on how many years you can and how much you can claim. n (up to $1,000) can gener- ally be refunded to you. 12 FX2013-1204-0036/E Compare education tax credits and deductions.

Generally offers the Ideal if the student is in A good choice if you The interest you pay on largest tax break, but year five or greater or is do not qualify for the your student loans may Kyrylyuk iStock.com/Volodymyr © may only be used for just taking one or two credits or if it results in a reduce your taxable the first four years of courses to improve his larger tax reduction. income for the year. higher education. or her job skills.     American Opportunity Lifetime Learning Tuition and Fees Student Loan Interest Tax Credit Credit Deduction Deduction

Maximum benefit The maximum credit is The maximum credit is You can deduct up to You can deduct up to $2,500 per student per $2,000 per return. $4,000, $2,000, or $0 per $2,500 per year of the year. year, depending on your interest that you pay The credit amount is MAGI. on a student loan. The credit amount is based on 20% of the This deduction is set to based on 100% of the first first $10,000 of eligible expire after 2013. $2,000 of eligible expens- expenses you paid for all es plus 25% of the second eligible students. $2,000 of expenses for each eligible student.

Number of years Can only be claimed for There is no limit on the There is no limit on the This deduction is available the benefit is the student's first four number of years that this number of years that this for the entire period of the available years of post-secondary credit can be claimed. deduction can be claimed. student loan. education.

Eligible students The student must be The student must be en- The student must be The student must have enrolled at least half-time rolled in at least one post- enrolled in one or been enrolled at least in a degree program and secondary course that more courses at an half-time in a degree not have a felony drug either leads to a degree or eligible post-secondary program. conviction. improves job skills. institution.

2013 income limits The amount of your credit The amount of your credit The maximum deduction The amount of your will be reduced if your will be reduced if your is $4,000 per year if your deduction will be reduced NOTE: Married modified adjusted gross MAGI exceeds $53,000 MAGI is $65,000 or less if your modified adjusted taxpayers who file income (MAGI) exceeds ($107,000 if married filing ($130,000 or less if mar- gross income (MAGI) ex- separate tax returns $80,000 ($160,000 if mar- jointly). ried filing jointly). ceeds $60,000 ($125,000 if are not eligible for ried filing jointly). married filing jointly). these credits or You cannot claim the credit The maximum deduction deductions. You cannot claim the credit if your MAGI is $63,000 or is $2,000 per year if your You cannot claim the if your MAGI is $90,000 or more ($127,000 or more if MAGI is between $65,000 deduction if your MAGI more ($180,000 or more if married filing jointly). and $80,000 ($130,000 is $75,000 or more married filing jointly). and $160,000 if married ($155,000 or more if filing jointly). married filing jointly).

You cannot claim the deduction if your MAGI exceeds $80,000 ($160,000 if married filing jointly).

Refundable Yes. If your credit exceeds No. No. No. your tax, 40% of the excess (up to $1,000) can gener- ally be refunded to you. FX2013-1204-0036/E 13 HOW TO HELP YOUR RETIREMENT SAVINGS LAST

Limit Your Health Care Costs in Retirement with Insurance

HEALTH INSURANCE CHANGES FOR spouse are still working and you are cov- Prescription Drug Plan or sign up for most people at age 65—the age when they ered by a group health plan based on that a Medicare Advantage Plan that offers become eligible for Medicare. The deci- work. If that is the case, you have up to prescription drug coverage. sions you make regarding your cover- eight months after the employment ends If you decide to purchase a Medicare age at age 65 can have a lasting impact or the group health plan insurance based Prescription Drug Plan, known as Part on your out-of-pocket health care costs on that employment ends, whichever hap- D, it is a good idea to enroll when you during retirement. Here’s an overview pens first, to start Part B without penalty. are first eligible. If you enroll later and of your basic Medicare choices and their do not have creditable prescription drug potential impact on your wallet. MEDIGAP INSURANCE. Even with Origi- coverage from another source during that nal Medicare coverage, you may still pay period, a late enrollment penalty will gen- ORIGINAL MEDICARE. Original Medi- a considerable amount out of your pocket erally be added to your monthly premium care has two parts. Part A is hospital each year on deductibles, copayments, and for as long as you have Part D coverage. insurance and helps pay for inpatient care coinsurance. For example, an inpatient in a hospital or skilled nursing facility. stay at a hospital has a $1,216 deductible MEDICARE ADVANTAGE PLANS. If you Part B is medical insurance and helps pay for each benefit period in 2014. And if you prefer to get your Medicare coverage from for doctors' services, outpatient care, and are stuck in the hospital for a long time, one source, consider enrolling in a Medi- other medical services. the coinsurance for days 61–90 of your care Advantage Plan. These plans are If you or your spouse paid Medicare stay may cost you $304 per day in 2014. offered by private companies that have taxes while working, you generally will To help protect yourself from large contracted with Medicare to provide Part not have to pay a monthly premium for out-of-pocket expenses, consider pur- A and Part B benefits. Many of them also Part A. However, you will pay a monthly chasing Medicare supplement (Medigap) provide coverage for prescription drugs, premium for Part B if you decide to keep insurance from a private company to help vision care, dental care, and medical emer- it. The premium amount depends on your pay some of the costs not covered by Part gencies that occur outside of the United annual income from two years ago. The A and Part B. States. Depending on the plan you choose, monthly premium for 2014 ranges from There are ten standard Medigap plans, you may be limited to in-network doctors $105 for single individuals with a modi- typically labeled A through N. Pricing and providers for non-urgent care. fied adjusted gross income (MAGI) of varies among companies for the same There are differences among Medi- $85,000 or less ($170,000 or less for joint coverage so it pays to shop around. care Advantage Plans so it is important to filers) to $336 for single individuals with shop around for the plan in your area that a MAGI above $214,000 (above $428,000 PRESCRIPTION DRUG COVERAGE. It offers the coverage, features, and pricing for joint filers). should not come as a surprise that pre- that suits you best. As you approach age 65, it is a good scription drugs can be very expensive. idea to evaluate your Medicare options What may be a surprise is that Origi- Please be sure to factor the cost of health and make decisions about your cover- nal Medicare does not cover the cost care into your retirement planning. Your age. If you wait until after age 65 to of prescription drugs nor do Medigap financial advisor can help you estimate begin Part B, your monthly premium will policies sold in recent years. If you want how much you may need to save for increase 10% for every full 12-month prescription drug coverage, you will retirement and create a financial plan period that you wait, unless you or your generally have to purchase a Medicare aimed at reaching that goal. n

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The ABCs and Ds of Medicare

Part A Part B Part C Part D

HOSPITAL INSURANCE MEDICAL INSURANCE MEDICARE ADVANTAGE PRESCRIPTION DRUG   PLANS COVERAGE Helps pay for inpatient Helps pay for doctor services   care in a hospital or and outpatient care. Provides Part A and Part B Helps pay for skilled nursing facility.  benefits. May also include prescription drugs.  You pay a monthly premium coverage for prescription  Premium-free for most for Part B coverage, plus any drugs and other services. Monthly premiums vary by people, however, you deductibles, copayments,  plan. Plus, your income af- pay any deductibles, and coinsurance that apply. Monthly premiums, fects the premium amount; copayments, and deductibles, copayments, higher-income individuals coinsurance that apply. and coinsurance vary by plan. pay more. Deductibles and copayments may apply.

FX2013-1204-0036/E 15 TRAVEL

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DOURO RIVER | Ports of Call BY BRIAN JOHNSTON

THOSE ANCIENT ROMANS KNEW A towers, art treasures, and taste for pink grape varieties. International wine critics thing or two about a good location. Two excess. They crammed Porto’s churches are paying attention. So are discerning thousand years ago they tramped about with gold looted from the Americas and travelers. The oldest demarcated wine re- the western edge of Europe, found a the dusty bones of city notables. gion in the world (officially established in likely looking spot, and founded Porto, Today, Porto’s old town has a shabby 1756) now features hip architect-designed Portugal by knocking up a little town and elegance, but a new energy is rippling cellar doors and Michelin-starred restau- planting some grape vines by the Douro through the Douro Valley that it com- rants, yet so far has none of the crowds of River. The town would eventually give mands. Until recently, this was a lost Europe’s better-known wine regions. its name to the type of wine produced corner of northeast Portugal known only What better place for a river cruise? here—and to a new country. to a few British tourists, here to sit in the The Douro might be a compact river but By the Middle Ages, Portuguese trade sun as they drank port, a fortified wine it packs a considerable historical and sce- had created the jaunty old town you see most people associated with post-prandial nic punch that will especially appeal to today, clinging to the slopes of a rocky gentlemen in stuffy Victorian parlors. repeat cruisers looking for an alternative gorge as if about to slide into the river in Now a new generation of wine makers European destination. Several companies a tumble of churches and guildhalls. Then is fashioning new ports like the lighter, operate on the river, often cobbling on a those baroque-era, renovation-rescue busy- fruitier pink variety, and moving into land-based tour extension to destinations bodies came along with their fairy-floss interesting table wines using indigenous such as Lisbon. 16 Terraced hillsides (left), planted with grape vines and olive trees, rise precipitously above Portugal's Douro River. The Plaza Mayor (below), is a popular gathering area in the heart of Salamanca and is widely regarded as one of the most beautiful squares in Spain.

Vila Nova de Gaia on the opposite lean over the balustrades and pluck Tinta encore as you sail back towards Porto. bank to Porto proper is the river-cruise Roriz grapes from the vines. This is more fjord than valley, with terminal. It’s the perfect place to begin a Next day, the ship might dock at Vega plunging granite cliffs where fish eagles trip, since this has been the Douro’s port de Teron. The Douro soon reduces to an drift on rising air. By lunchtime, vine- for centuries: the place where grapes are unnavigable ribbon of a river that forms yards have returned. Ferradosa is just brought down the valley and stored in the the border between Portugal and Spain. the place to walk off dessert among the caves that riddle the hillside here, before You’ve come just 125 miles since Porto vineyards of a local quinta or farmhouse, being transformed into port. Before you and will now have to retrace your route where another bit of wine tasting is a fine hop on board, visit one of Vila Nova de back downstream. Given the scenery, salute to the glorious scenery. Gaia’s cellar doors. They aren’t hard to that should be no complaint, and stops If you tie up in Pinhão for the eve- miss: the names of famous port ning, stroll up to the train station, producers such as Porto Ramos, which is notable for its traditional Croft, and Sandeman are embla- blue-and-white azulejos tiles zoned in white across their red-tiled showing wine harvest scenes. roofs. If you don’t know much about The next day, you can ascend the port, you can lurk among the giant hills to Lamego, where bishops vats and familiarize yourself with ruled the roost in the bad old the subtleties of vintage, ruby, and days, spending alms on castles tawny varieties. and campaniles. Gargoyles leer at In the old days, wine traders passers-by and pigeons bathe in travelled on the wooden sailboats ornate public fountains. Sunlight

called rabelos that you can still see © iStock.com/danileon2 splashes across old walls like © iStock.com/PRG-Estudio lined up on the waterfront. They’re the sparkling Raposeira wine for a tourist whimsy these days. Locks and are made at alternative destinations on which Lamego is famous. dams have tamed the once turbulent the way back. But first, a daylong trip This is an important pilgrimage site river, making it slow as a transport route, across the border to Salamanca usually too: old ladies in shawls send whispers and grapes are now rather unromantically awaits on most cruise itineraries. around the Sanctuary of Our Lady of trucked into town. Never mind: the slow Salamanca is the quintessential Span- Remedies, having hobbled up 700 steps pace is just the thing as you depart on ish town: regal, flamboyant, rich with a from the town in an agony of staid black your cruise ship, admiring the passing strangely melancholy sense of history stockings and arthritis. If you aren’t feel- landscape and the captain’s tricky nego- and former glories, coupled with the at- ing pious, you can satisfy the flesh at a tiations in and out of locks. tractive energies of modern Spanish life. local bakery, with its temptations of mar- At Régua, wine country begins. Lo- A university founded in 1218, shuttered zipan and almond biscuits and custard cals rather poetically claim the best wine nunneries, Gothic gargoyles, and saints tarts hot from the oven. is produced from vines that can ‘hear’ the weeping in gloomy churches supply the By evening you’re back in Porto, river flowing. From here for 30 miles up- history. Modern life comes in the guise bridges draped in lights, church spires stream, hillsides rise precipitously from of 30,000 university students browsing illuminated in gold like medieval draw- the water’s edge, terraced by a thousand the bookshops and busking on street cor- ings in a book of prayers. An evening of years of diligent farmers and planted with ners, housewives prodding eggplants at fado is a splendid goodbye. This soulful vines and silvery olive trees. street stalls, and chattering, tapas-eating singing is the quintessential sound of A ride up the hillside from Vila Real crowds in the town’s bars. It all comes traditional Portugal. The music is lilting on a shore excursion showcases the scen- together in the glorious Plaza Mayor, and lamenting, lyrics telling stories of the ery around hairpin bends. Mateus, one of glowing with yellow sandstone and lined lonely and broken-hearted, the poor and Portugal’s best-known wine labels, has by arcaded shops. You could spend most oppressed. A rather melancholy end to a vineyards here. Winemaking was good of the day just lazing at one of the cafés lovely river trip, perhaps, but a haunting business in the old days: the estate boasts and watching the passing parade. reminder of 2,000 years of sweat and toil a bijou baroque palace surrounded by This is a treat you’ll only have once, and tears that have created this place of cypress-dotted gardens. You can almost but fortunately the upper Douro gets an such historic beauty. n 17 FYI

What's On

At The Art Museums derek9pine iStock.com/susib, ©

Atlanta, GA Wynn Bullock: Revelations High Museum of Art · Opens June 2014 This retrospective traces the evolution of one of the most significant mid-20th century pho- tographers, Wynn Bullock (1902–1975), from his experimental work of the 1940s, through the mysterious black-and-white imagery of the 1950s and the color light abstractions of the 1960s, to his late metaphysical photographs of the 1970s.

Bentonville, AR The William S. Paley Collection: A Taste for Modernism Crystal Bridges Museum of American Art · March 15–July 7, 2014 Particularly strong in French Post-Impressionism and Modernism, this exhibition from the Mu- seum of Modern Art in New York includes multiple works by Cezanne, Matisse, and Picasso, as well as significant works by Degas, Toulouse-Lautrec, Gauguin, Derain, and Rouault.

Indianapolis, IN Face to Face: The Neo-Impressionist Portrait, 1886–1904 Indianapolis Museum of Art · June 15–September 7, 2014 Devoted solely to portraits of the Neo-Impressionist movement, this exhibition will fea- ture more than 30 paintings and 20 works on paper by artists such as Vincent van Gogh, Paul Signac, Henri-Edmond Cross, and Maximilien Luce.

New York, NY Charles James: Beyond Fashion The Metropolitan Museum of Art · May 8–August 10, 2014 The inaugural exhibition of the newly renovated Costume Institute will focus on the work of 20th-century Anglo-American couturier Charles James (1906–1978) and his revolution- ary ball gowns and innovative tailoring that continue to influence designers today.

Norfolk, VA Chrysler Museum of Art reopens April 12, 2014 The Chrysler Museum of Art's newly renovated and expanded main building will open in April 2014. The debut exhibits will include massive cast-glass sculptures by Libensky and Brychtova and favorite works selected by popular vote from the Museum's collection.

San Francisco, CA Modern Nature: Georgia O'Keeffe and Lake George The de Young Museum · Through May 11, 2014 This exhibition examines the body of work created by Georgia O'Keeffe during her time (1918 until the early 1930s) in Lake George, NY at Alfred Stieglitz's family property. Sub- jects of the 55 works to be displayed include magnified botanical compositions, abstract- ed barns and buildings, and panoramic views of the lake and surrounding mountains. n 18 QUIZ Fictional Detectives

1. The NCIS team is headed by: 7. Sonny Crockett and Rico Tubbs are 9. D.B. Russell replaced Catherine Willows A. Special Agent Gibbs Metro-Dade cops in this stylish 1980s as night shift supervisor on this long- B. Inspector Clouseau television series and 2006 movie: running TV crime drama: A. Miami Vice A. CSI: Crime Scene Investigation 2. This TV series' main character, Jes- B. CSI: Miami B. CSI: Miami sica Fletcher, resides in Cabot Cove, Maine, a small town with a surpris- 8. OCD and a plethora of phobias don't 10. Dr. Temperance Brennan, a forensic ing number of murders: hold back this former San Francisco anthropologist, and FBI Special Agent police detective from solving crimes: Seeley Booth are the main characters in A. Murder, She Wrote this TV series: B. Police Woman A. Joe Friday B. Adrian Monk A. Body of Proof 3. "Who loves ya, baby" is the catch- B. Bones phrase of this Tootsie-Roll-Pop- loving NYC policeman: 11. Outcry from the fans contributed to the return of this 1980s police drama about A. John Munch two female detectives after it had been B. Theo Kojak cancelled: A. Cagney & Lacey 4. Beloved by generations of young B. Rizzoli & Isles readers, this amateur sleuth began solving mysteries as a teenager, at 12. Andy Sipowicz, Bobby Simone, and times with her good friends, Bess Danny Sorenson are just a few of the and George: detectives in this police drama that ran A. Nancy Drew from 1993 to 2005: B. Trixie Belden A. Hill Street Blues B. NYPD Blue 5. Deputy Chief Brenda Leigh Johnson always gets her man in: 13. This amateur detective A. Major Crimes appears in twelve Agatha B. The Closer Christie crime novels: A. Ellery Queen 6. This private detective was the main B. Miss Marple character in The Maltese Falcon: A. Sam Spade B. Charlie Chan

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7–A, 8–B, 9–A, 10–B, 11–A, 12–B, 13–B. 12–B, 11–A, 10–B, 9–A, 8–B, 7–A,

ANSWERS: ANSWERS: 1–A, 2–A, 3–B, 4–A, 5–B, 6–A, 6–A, 5–B, 4–A, 3–B, 2–A, 1–A,

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