Grubman Seems a Popular Name Recently

Question: What do Jack Grubman of Salomon Smith Barney, Lizzie Grubman, celebrity publicist of Britney Spears, and Alan Grubman, entertainment lawyer for Madonna have in common?

Answer: They are NOT related to Audrey Grubman.

Capital Gains on Home Sales

Rising home prices can create a tax problem for some homeowners.

Homesellers currently can exclude up to $250,000 of gain from tax when they have owned and lived in their home for at least two of the last five years.

If the home sale is due to a change in job location or health, and you have owned and lived in your home for less than two years, you may still qualify to claim a prorated portion of the exclusion.

Homeowners with deferred gains from before 1997 must include those gains when calculating the taxable gain in a home sold after 1997. The deferred gain reduces the basis of your current home under the new (post-1997) rules.

Taxable gain on a home sale can be offset by capital losses from other investment asset sales.

More details may be found on our web site in the Library, under "Capital Gains on Home Sales." Homeowners should consult with their financial advisor before considering a home sale.

401(k) maximum contribution for 2002

In 2002 the 401(k) contribution limit has been increased to $11,000 for workers under age 50 and $12,000 for those age 50 and older.

Some employers have not yet updated their benefit plans and may have unknowingly limited contributions for 2002 to $10,500. Check your paystub and ask your employer to increase the contribution limit before year-end if they have not allowed the full contribution of $11,000 (or $12,000 for age 50 and older).

While the contribution difference is only $500, the tax savings and employer matches can increase the real benefit up to $1,250.

Disability Insurance - Read the Fine Print!

In general, employer-paid and pre-tax benefits are a great deal for employees, but not when it comes to disability insurance.

If your employer pays disability insurance premiums on your behalf, or if you pay with pre-tax dollars, any disability benefits paid to you are subject to income tax.

To add insult to injury, the first six months of benefit payments are subject to employment taxes. If you pay the premiums with after-tax dollars, disability benefits paid to you are not taxed.