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News for 2006
 What To Do When Dad Dies
This Powerpoint presentation offers a practical guide to surviving wives and their daughters about issues they face after the death of Dad. It was first given to the Everywomen's Money Conference in Boise, Idaho on October 14, 2006. The conference is sponsored by the State of Idaho Treasurer and is annually attended by over 1,000 women.
Download PDF version - 160KB [top]  New Bank in Boise
New bank in BoDo puts focus on personal relationship; Idaho Trust Bank will offer concierge service at its first retail location to connect with customers. Tom Prohaska, president of Idaho Trust National Bank, hopes people yearn for the time before automatic tellers and Internet banking. A time when people knew their banker by name. A time when the local bank provided all your financial services. Prohaska and his brother Dan opened Idaho Trust National Bank location in Downtown Boise, 888 W. Broad St., last month in hopes of bringing back the personal touch they say has been lost in today´s banking industry. The brothers were estate planning attorneys when they founded Idaho National Trust bank in 1994 to provide investment management and trust services to clients. The bank manages $360 million in assets and helps clients manage investments and set up trust plans to provide for family members. But until now the bank didn´t offer consumer banking services like checking, savings and loans. Prohaska, 45, talked Wednesday about the opening of the first Idaho-owned bank in nearly 10 years to offer investment and trust services and retail banking services. Why did you decide to branch out into offering retail banking services? We have about 900 clients that we provide investment management and trust and estate management services to. They have been asking us for some time to create the additional service of retail banking. You´re opening a new bank in a market that has experienced a significant number of expansions from community and corporate banks recently—are you worried about the competition? Banking is a very competitive business, but we think we´re offering a banking solution that´s just different than anyone else. When you walk in the front door it doesn´t look like a traditional bank. We´re trying to create a different experience. What´s happened with too many banks is that they´ve taken the banking business and made it a commodity. It´s all about the free checking or the loan. Obviously, we have to provide those things and be cost effective, but we also want to give our clients an experience in a consulting relationship and not just as a seller of products. One of your unique offerings is a concierge service. Tell me about that? We actually have two concierge stations in the bank. We want our clients to have somebody who can be there not just to track down a lost check or to figure out what´s the right loan to get, but to see them as person and to build a relationship. We had a client mention recently that they were heading to Europe for the first time, so the concierge person sent them an e-mail with tips for first-time travel to Europe. I can guarantee that wouldn´t happen normally at a bank. What we´re trying to do is mirror the kind of personal service that you have at a high-end hotel or retailer. You´re bank is stressing personal service at a time when more corporate banks are moving more toward automation. Why do you think your approach is better? We still have to have the technology available because a lot of our clients do their banking at night and need access to a Web site to make transactions. But what they´re starving for is someone who´s paying attention to them. Someone who is anticipating needs and acting in a consulting way and not just providing a transaction. What we have to offer is really no different than any other bank, but what distinguishes us is going to be that relationship. I think people—particularly people in Idaho—don´t want to do everything in an impersonal way. We want to walk in and have people know who we are and know they´re thinking about us when we´re not there. Are there going to be certain requirements people have to meet to bank at Idaho Trust? We don´t want anyone to think they can´t afford to bank here. We want to be there for the people who have experienced some level of success and want a partner to take them to a higher level. But we also want to be there for those people who are aspiring to succeed. If the average person walks in and wants to put just $500 in a checking account we would love to have them. We see the possibilities in every person and we want to be there to help them grow. Do you have other expansion plans? We already own property in the Eagle area. Our goal is not to have a branch on every single corner, but be close to the locations where are clients are going to be populated. We also have plans to open a branch in North Idaho next year. What do you enjoy most about the banking business? The best part of banking is the ability to help people. That´s what attracted both my brother and I. We´re both lawyers, but we wanted to move away from dealing with controversy to dealing with solutions. It is so much fun to take a business client, learn about their business and figure out how we can help them to be more successful. To offer story ideas or comments, contact reporter Ken Dey at kdey@idahostatesman.com or 672-6757. Cutline: Gleaming marble, brushed steel and a friendly smile from the concierge are what Idaho Trust Bank President Tom Prohaska has designed to meet customers when they walk through the door of the new bank in the BoDo development Downtown. "What (clients ) are starving for is someone who is paying attention to them," Prohaska said. "The idea is to experience a relationship with your bank." Copyright © The Idaho Statesman. All rights reserved. Reproduced with the permission of Gannett Co., Inc. by NewsBank, inc. [top] Idaho Trust National Bank opens in BoDo downtown
by IDAHO BUSINESS REVIEW Idaho Trust National Bank opened last week at 888 W. Broad St., Boise, in the BoDo development downtown. The 12-year-old company recently expanded into business and personal banking, making Idaho Trust the first new bank to open in Boise in a decade. Syringa Bank was Boise's last new bank, opening in February 1997, although existing banks have entered the market in recent years. Idaho Trust National Bank employs 32, has $50 million in assets and manages about $360 million in client assets. Officials said the expansion into business and personal banking was in response to clients' requests for a single-source banking solution. Former trust and estate attorneys Dan and Tom Prohaska founded Idaho Trust and are CEO and president, respectively. A few years ago they moved the headquarters to Boise from Coeur d'Alene, where the company operates an office. Phil Bratton is executive vice president of Idaho Trust National Bank. He has been involved in numerous bank start-ups, mergers and acquisitions in nearly 30 years in the banking industry. Idaho Trust was vacating a downtown Boise office space at 300 Main St. last week. The bank targets professionals and owners of small businesses. Officials said Idaho Trust combines business and private banking with a concierge service, filling a void created in the 1980s and '90s when consolidation transferred many trust and investment services from local offices to out-of-state service centers. The community banks that opened during the period restored a level of personal service, and chose a traditional banking approach, Tom Prohaska said in a statement. “By starting instead with trust administration and investment management, and then adding business and personal banking services, our approach acknowledges the synergy between our clients' business activities and personal wealth management needs,” he said. “Added to this is a service mentality that respects their accomplishments while helping them move to the next level in their financial life.” [top] Hot Potato: With Racing Growth, Idaho Could Become Bank Activity's Next Big Breeding Ground
It's no secret that the high growth in several parts of the country has helped spark a flurry of bank deal activity over the past several months, and has had many industry observers looking for more to occur. But interestingly, and somewhat surprisingly, the banking masses have seemingly overlooked another area with similar growth trends and prospects, though that may not be the case for very long. Idaho. That's right, Idaho. Full Article: http://www.snl.com
Referenced Tickers: BAC, GBCI, MagnetBank, WFC, ZION, KEY, USB, Idaho [top] Idaho Trust Creates New Banking Niche
Addition of business and personal banking services to trust and investment management creates Idaho's only “private business bank” BOISE, ID - SEPT. 18, 2006—Former trust and estate attorneys Daniel and Tom Prohaska never set out to become bankers. They simply wanted their clients to establish banking relationships that were consistent with the wealth creation and management strategies the brothers provided through their legal practice. Their clients' frustration with local banking services, however, led them to establish Idaho Trust in 1994. Twelve years, 900 clients and $360 million in managed assets later, Idaho Trust is again responding to client needs: this time for a single source banking solution. On September 27, Idaho Trust National Bank will open the doors to Idaho's first private business bank, located in Boise's new BoDo complex. A String of Firsts The opening of Idaho Trust marks the creation of the first new bank in Boise in nearly a decade. More significantly, with $25 million in funding, the bank will open with five times the capital of any previous new bank in Idaho's history. The bank also boasts the industry's most seasoned management team. Heading the new bank as Executive Vice President is Phil Bratton, who during nearly 30 years in the banking industry has been involved in numerous bank start ups, mergers and acquisitions. In all, the commercial banking team brings with it more than 100 years of experience. The Private Business Bank By combining business and private banking with a personalized “concierge” service, Idaho Trust fills a void in local banking services. This void occurred in the aftermath of banking industry consolidation during the 1980s and 1990s, when many of the trust and investment services once provided by local banks were consolidated and transferred from local branches to out-of-state call centers. While community banks restored a level of personal service and local decision making that was lost as a result, they lacked the breadth of trust and investment services offered by the corporate banks. By creating a “private business bank,” Idaho Trusts occupies a unique niche between the breadth of services of the corporate banks and the more personal relationships and local decision-making that characterizes community banks. “The community banks that opened during the period we founded Idaho Trust chose a traditional banking approach with no ability to provide trust and investment management,” notes Tom Prohaska. “By starting instead with trust administration and investment management, and then adding business and personal banking services, our approach acknowledges the synergy between our clients' business activities and personal wealth management needs. Added to this is a service mentality that respects their accomplishments while helping them move to the next level in their financial life.” Idaho Trust's service philosophy is embodied in the very first thing that clients will encounter when they enter the bank's new BoDo headquarters: a concierge desk. The Prohaska brothers acknowledge borrowing this concept from legendary service cultures such as Nordstrom and the Ritz Carlton Hotel. It is also a natural extension of their philosophy as former attorneys. “When you work with people on strategies to preserve and create wealth you are dealing with basic human issues that require a strong sense of advocacy,” says Daniel Prohaska. “We are dealing with people who don't make a distinction between their personal, professional and financial lives. We are creating a product and service environment that reflects and validates that sense of continuity.” [top] Section 529 Plans and What You Should Know
Ask most families why they save and invest, and the common responses are likely to be to fund a comfortable retirement and to pay for their children's college expenses. With costs that continue to outpace inflation, the latter can be an especially formidable task-and not likely to get any easier in the future. Today, thanks to recent legislation that has made them more attractive, many families are considering establishing and making contributions to a Section 529 plan. There's been a lot of publicity about these plans and many questions as well. Here are a few of the inquiries from parents and grandparents that we've had recently about Section 529 plans. In a nutshell, what's a Section 529 plan? A Section 529 plan (the name comes from the U.S. Internal Revenue Code section that authorizes these plans) is a state-sponsored savings account set up, in most states, through a financial institution. The account is set up for the purpose of saving in order to pay for most "qualified" higher education expenses (tuition, room, board, supplies, etc.) at eligible institutions. Amounts accumulated in a Section 529 plan may be used for expenses at in-state or out-of-state colleges, universities and certain technical schools. The big attraction: There are a number of tax breaks associated with setting up a Section 529 plan. There is also another kind of Section 529 plan, usually referred to as a "prepaid tuition plan." These are state-offered plans that are not savings accounts but, rather, contract-based arrangements that lock in in-state tuition costs at current tuition rates. (In some cases amounts in these plans may be transferred to cover expenses at out-of-state institutions.) Are the tax breaks significant? Most definitely. No federal tax is paid on the income earned on amounts accumulated in a Section 529 plan. Even better, when withdrawals are made and used for qualified expenses, they won't be taxed either. (This special treatment currently is set to expire after 2010 unless Congress decides to extend this tax break.) Often, there won't be any tax consequences at the state level either. From an estate planning perspective, there can be tax advantages as well (more on this below). Are there a lot of restrictions that I need to worry about? Section 529 rules are fairly liberal. "Eligible" institutions are defined as those that may participate in U.S. Department of Education student aid programs. (There are over 8,000 schools from which to choose.) Section 529 plans may be set up for children, grandchildren or other individuals-even someone unrelated. Generally, there are no age or income limitations, nor any restrictions on the number of plans that may be set up for a beneficiary. There is no prohibition on contributing to an out-of state plan (assuming that the plan permits nonresident participants). Should the beneficiary of the plan not need the funds, or if funds are left over after all expenses have been paid, a new beneficiary can be named. Although the new beneficiary must be a relative, within that category there is a wide range of choices. How much may I contribute to a Section 529 plan? Contribution amounts may be relatively small — sometimes as low as three figures. Maximum contributions are set by the state and vary, but generally are at least $100,000 per plan beneficiary. As a measuring stick, maximum contributions may be no more than the amount necessary to pay for five years of undergraduate education and two years of graduate school. This has been interpreted in many states' plans to permit accumulations in excess of $200,000. Do I give up control of my money when I put it in a Section 529 plan? In general, the beneficiary of a Section 529 plan has no automatic right to the money in his or her account. In other words, you maintain control over when withdrawals are taken and for what purpose. Many state plans allow you to withdraw the funds for any reason, whenever you wish. However, for any amount withdrawn that is not used to pay the beneficiary's college expenses, a penalty of at least 10% will be owed on earned income and the net capital gain realized in the Section 529 plan assets, in addition to income tax at your marginal income tax rate. However, the penalty will not be assessed if the account is terminated as a result of the beneficiary's disability, or if funds are withdrawn because the beneficiary has received a scholarship and the funds are not needed for higher education expenses. And no tax or penalty is paid on the amount that represents a return of contributions. What are the investment choices offered in a Section 529 plan? There is a variety of investment options from which to choose, including growth and income funds and more conservative investments such as money market funds. Many plans offer an "age-based fund," which offers investments that have been targeted to a child's time horizon for entering college. In choosing a plan, the number of investment choices and fees associated with the plan should be considered. In most plans investment choices may be changed once every 12 months, sooner if you are changing the beneficiary. Are there estate planning implications to contributing to a Section 529 plan? Amounts contributed to a Section 529 plan are no longer considered to be your property and, as a result, are not subject to federal estate tax at your death-even though you retain control over the plan, the investments chosen, and how and when funds are distributed. The contributions are considered gifts for federal gift tax purposes and are eligible for the annual gift tax exclusion (in 2006, $12,000). A special federal gift-tax provision allows you to use five years' worth of annual exclusions, or $60,000 in 2006, at one time. Three points to consider: Taking maximum advantage of this special exclusion precludes additional annual exclusion gifts to the beneficiary for the year of the contribution and the next four years. And should you die anytime during that five-year period, a prorated amount will come back into your estate. Finally, contributions made in excess of the annual gift tax exclusion amount use up a portion of your lifetime gift tax exclusion (currently, $1 million). How does a Section 529 plan affect chances to qualify for federal aid? According to guidance provided by the U.S. Department of Education, the individual who sets up and contributes to a Section 529 plan is considered the owner of the plan for purposes of determining eligibility for federal financial aid. Thus, only 5.6% of the value of the account would be counted in figuring a parent's expected contribution toward costs for each academic year, much better than the 35% that would be assessed if the plan were to be considered as owned by the student or were in a custodial account. However, when a withdrawal is made, it is considered income to the student and, therefore, could affect eligibility for aid in a subsequent year. As you can see, a Section 529 plan offers significant benefits for college savers, but there's a great deal to learn as well. If you have additional questions about 529 plans, please call us at 800-549-3333. Or do you want to find out more? If so, let us know. We would be happy to assist you. If you prefer you can email your questions to LKC@idahotrust.com. [top] Systematic Investing: Retirement Plan Opportunities
Tax-deferred retirement plans, especially the popular 401(k) plans, have become the key to building financial independence through regular, systematic investing. Idaho Trust wants to educate you on several of your options. Are you self-employed, own a business or employed by someone else? You can start your own retirement plan or contribute to your companies existing plan. At Idaho Trust we strongly encourage all clients contribute to a plan, if possible, and witness the power of compounding. If you are employed by others but not covered by a retirement plan, and if neither you nor your spouse has access to a tax-deferred retirement plan at work, you're sure to be eligible for a fully tax-deductible IRA. Idaho Trust can help you set up such an IRA. The limit is $4,000 in 2006 and rises to $5,000 in 2008, with inflation-indexed increases in later years. Limits for taxpayers over age 50 will be even more generous, with an extra $1,000 starting this year. When you build financial independence through tax-advantaged retirement plans, your chances of success are increased in three ways: 1. Structured retirement programs such as 401(k) plans encourage you to invest regularly and systematically. For young people just starting their careers, the amount that they put aside and invest each year is less important than the fact that they're putting aside something. Tax-deferred compounding, "the eighth wonder of the world," can turn a little into a lot if you give it enough time to work. 2. By investing through a 401(k) plan, or a deductible IRA, you become a tax-advantaged investor. That's a major advantage. Even though you'll be taxed on the withdrawals that you eventually make from your retirement wealth, in the meantime you're accumulating a much, much more substantial nest egg. 3. Regular, systematic investing makes it safer to seek the superior long-term returns offered by common stocks. For example, suppose you were an investor back in 1929, the start of the worst ten-year period for stocks since 1925. If at the end of 1928, you had invested $10,000 in a portfolio of stocks equaling the return of the S&P 500-stock index, after ten years you would still be in the red, with an annualized investment return of -0.9%. Suppose, instead, that you had started your portfolio with a $1,000 investment and added $1,000 at the end of each year for a total of ten years. Despite the Crash of '29 and the Great Depression, ten years later you would have wound up with substantially more than your total investment of $10,000. In fact, your annualized investment return would have been a respectable +7%. Both the stock market and the bond market can be dangerous places for speculators and short-term investors. For systematic wealth-builders, however, market downturns represent buying opportunities rather than cause for despair. Tax-advantaged retirement plans You can put money aside for retirement, free from current income tax. Idaho Trust can help you invest the money and reinvest the investment earnings, both without current tax obligations. These are the basic tax advantages offered by various types of retirement plans. Even if it's only a small amount, you should budget to put something into your retirement plan. The power of compounding will surprise you one day. The following are a few retirement plan options available depending on your situation:
Idaho Trust would love the opportunity to guide you or educate you in the process of starting a retirement plan. We also work with individuals in rolling over an old plan into a new option or providing a better matched investment tool for the plan you have. Call us toll free 800-549-3333 or email Lanie at LKC@idahotrust.com for more information. There's no cost for an initial consultation or current retirement plan review. *Maximum contribution to retirement plans may be higher for those age 50 and older. [top] Keep Your Family Secure with a Comprehensive Financial Plan
Ensuring financial security for yourself and your family comes at a price. We're not talking about dollars, but commodities just as precious: your time and concentration. When was the last time that you undertook a review of all aspects of your financial life? Like many people, you've probably dealt with certain financial issues as they arose. But what about an integrated, strategic overview of where you stand today, and where you want to be tomorrow? Idaho Trust believes that there's no time like the present. Review your portfolio now, and regularly
Explore all the options for saving for college Given how much money is needed to pay for a college education these days, the time to begin is when the children are young. Establishing a plan now for saving and investing is a crucial step. Uncle Sam offers some assistance. For instance, you can open an Education IRA for each of your children and contribute up to $2,000 a year. The earnings in the account grow tax free as long as withdrawals are used for qualified education expenses. Unfortunately, an individuals' ability to contribute the full amount phases out between modified adjusted gross income of $95,000 and $110,000. For joint-filing couples the phase-out range is now double those amounts, $190,000 to $220,000. No such limits apply to Section 529 college savings plans. A Section 529 plan is a state-sponsored savings account, available in all 50 states. The account is set up for the purpose of saving in order to pay for most higher education expenses at eligible institutions. No federal tax is paid on the income earned on amounts accumulated in a Section 529 plan. Even better, when withdrawals are made and used for qualified expenses, they won't be taxed either. (This special treatment currently is set to expire after 2010 unless Congress decides to extend this tax break.) Often, there won't be any tax consequences at the state level either. Make certain that your insurance coverage is adequate A key element of financial planning is risk management: protecting your assets and income in the event of the unexpected. To have insurance in place that will keep your family financially secure should you not be available to provide for them. Idaho Trust can assist you in the process of finding the right insurance and how much to purchase. Put a plan in place for retirement Consider just a few of the tasks necessary to determine how much you'll need for your retirement. For instance, you'll need to project your annual income and expenses during retirement. Adjust your numbers for inflation between now and your retirement, and after retirement. Find out how much your Social Security benefits will be (and when you'll want to begin receiving them) as well as your retirement plan benefits (pension or lump sum payment). If you are entitled to receive a lump sum distribution, will you take it in hand or roll it over into an IRA? If you choose the latter route, you can continue to shelter your retirement assets from tax, but you'll need to take the right steps. In either case, you'll want to consider what kind of investments will best suit your needs. All these decisions need to be made well in advance of retirement in order to keep all of your options and opportunities available. Formulate and monitor your estate planning An initial estate plan is not a final one. Even if you have done some estate planning already, revisiting your planning regularly is essential. Idaho Trust can guide you through this process and even provide the names of estate planning attorneys who could assist you in updating your plan if necessary. Is your will and/or trust up to date? Changes to your family constellation (new children or grandchildren, marriage or divorce) may prompt some rethinking. Changes in your financial life may make new provisions a must (sale of a business, an inheritance). External factors (the ups and downs of the market, new tax laws) also may, in effect, rewrite your will and estate plan. If it is time for a comprehensive review of your financial plan, we would be happy to assist you in developing a strategy to meet your unique needs and circumstances. Call us 208-373-6500 or email your questions to LKC@idahotrust.com. We would love to hear from you! [top] Five Common Financial Mistakes
The start of a new year is always a good time to take a long, hard look at your family's financial picture. At Idaho Trust we've had the opportunity to talk to many clients over the years, and now we've been able to pinpoint many of the most common financial mistakes people make. Here are just a few of these pitfalls and some suggestions about how to avoid them. 1. Giving Uncle Sam a free loan. If you have been in the habit of getting a tax refund every year, ask your employer for a Form W-4 and recalculate the amount you are withholding. Form W-4 lets you take into account some of the deductions and credits to which you are entitled, in addition to personal exemptions. If you can increase your withholding allowances, do so. The money that you have been giving to Uncle Sam interest free is better off in your hands, where you can invest it and get a return on your investment. 2. Paying too much tax. Although top tax rates are coming down, taxes will hardly be insignificant. So the need for finding tax-exempt income remains critical. Investors still will find municipal bonds an attractive way to eliminate the federal tax on investment income. Those able to do so should take maximum advantage of retirement plans [401(k), Keogh plans] that allow them to defer tax on current income until after retirement. 3. Neglecting your estate plan. Family events (births, deaths, marriages, etc.) or a rise or fall in net worth always called for reviews and revisions of your will or trust. Now a changing estate and gift tax structure makes it all the more important for you to assure yourself that you are taking maximum advantage of all the possibilities for tax saving that are currently available. Using a trust plan can reduce significantly your federal estate liability. Call us and we can assist you by referring you to an estate planning attorney. 4. Failing to manage your portfolio properly. It's one thing to read about the latest developments on Wall Street and then make a few investments. It's another to be able to develop a sensible investment strategy, keep up with all the paperwork involved and know when to sell or when to keep your impatience reined in. Monitoring your investments can be a complex, time-consuming job. Consider delegating all or part of the work to professionals like Idaho Trust to provide the very best portfolio management possible. 5. Getting less-than-professional advice. An article in a financial periodical makes a particular investment sound attractive. Your cousin Ted made a "killing" recently. A phone call from an investment company makes you an offer that sounds interesting. The suggestions are numerous but the risks may not be known fully. Be sure to find out everything that you can, not only about the investment, but also the person offering the advice. If this short list has raised any questions in your mind, we'd be glad to discuss them with you further. Please feel free to give us a call toll free at 800-549-3333 or email us at LKC@idahotrust.com. [top] New Tax Credits for Energy Savers
A new year brings good news for the energy conscious and Idaho Trust wants to share this good news with you! The energy bill that was enacted into law last August provides federal tax credits for purchasers of fuel-efficient cars and trucks and for homeowners who purchase or install certain energy-saving fixtures and appliances. In the case of eligible vehicle purchases, the credits replace a tax deduction. A credit is more valuable to taxpayers because it offsets directly the tax owed, rather than just reducing the income that is subject to tax. But as is usually the case, the tax rules are complex and come with a slew of conditions. The information here is meant to serve only as an overview of the new credits. And a key point to mention at the outset: Generally, these credits have a limited life span. Credits for car and truck purchases and leases The tax credits for the purchase of cars and trucks (and leased vehicles) include qualified hybrids, "lean-burn" and alternative-fuel vehicles. Purchasers and lessors of hybrids and "lean-burn" vehicles may claim a two-part credit—a fuel economy credit and a conservation credit. The computation of the credits is complicated. In a nutshell, the fuel economy credit available varies with the rated fuel economy of the vehicle for city driving measured against a comparable 2002 model of the vehicle. The credit ranges between $400 for a vehicle that is at least 125% better that the base amount, rising to $2,400 for a vehicle with a fuel economy at least 250% better than the base amount. Credits are capped for hybrid and lean-burn vehicles—beginning when a manufacturer sells 60,000 of such vehicles—after which time the credit is reduced, and ultimately phased out. Because energy-efficient vehicle owners are not likely to have the necessary figures at hand, they are going to need to rely upon the automobile manufacturers and the IRS for assistance. The conservation credit is based upon the estimated lifetime fuel savings of a qualifying vehicle, again by comparison to a corresponding 2002 vehicle model. This credit ranges from $250 for a savings of at least 1,200 gallons of gasoline to $1,000 for a savings of at least 3,000 gallons. For alternative fuel vehicles (those that use natural gas, liquefied petroleum or natural gas, or 85% methanol), the credit may run as high as $4,000. Totaling it up: Tax credits will range from $650 to $3,400. The American Council for an Energy-Efficient Economy recently estimated that the purchasers of a Toyota Prius will be eligible for the biggest credit, probably $3,140. The law also includes credits for fuel-cell vehicles (for example, those that run on hydrogen cells), still somewhat of a rarity. The credit for these vehicles can be as high as $12,000. But keep in mind: As of December 2005, the tax credits promised for hybrid and diesel vehicles in the law had yet to be formalized by the IRS, though there are estimates available online that can provide guidance, according to the American International Automobile Dealers (AIAD). Further, although the legislation offered the possibility of tax breaks to diesel vehicle buyers, the reality is, says the AIAD, that diesel passenger vehicles most likely will not qualify for tax credits in 2006. Apparently, language in the Energy Act requires that diesels pass tighter emissions standards in order to qualify for the credit, and current diesel vehicles will not qualify. It is possible, however, that diesels could qualify for the credit in 2007, with expected emissions improvements. The news for homeowners Also starting in 2006, homeowners who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in their homes (a principal residence, not a vacation home) will be entitled to claim tax credits. There are different levels of credits depending upon the improvement made. However, the maximum amount of credits for all improvements combined cannot exceed $500 for 2006 and 2007, the two-year period for which the credit is available. What energy-efficient home improvements or purchases are eligible for the tax credits? For example, for added insulation to walls and ceilings, the credit covers 10% of the cost up to $500. Other incentives: for installation of replacement windows and exterior doors, 10% of the cost up to $200. Certain other items are not subject to the 10% limit. For instance, a maximum $300 credit is available for qualifying electric or geothermal heat pumps, or qualified central air conditioning. A credit of up to $150 is available for the purchase of qualified natural gas, propane or oil furnaces. A small credit of $50 is available for purchasing a main air-circulating fan. In addition, there's a separate tax credit for solar-powered hot water systems or photovoltaic (energy-generating solar) and fuel cell property that is not limited to the $500 cap. This credit is equal to 30% of a qualifying expenditure up to $2,000. (The systems must be used exclusively for purposes other than heating swimming pools and hot tubs.) Other tax credits are available for home builders and appliance manufacturers and for commercial buildings. Idaho Trust takes an active interest in providing you valuable information through articles such as this. If there is a topic you have a particular interest in, please let us know. You can contact an Idaho Trust Representative at LKC@idahotrust.com or toll free 800-549-3333. We would enjoy hearing from you. [top] |
  
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