ENTERTAINMENT

Barack and Michelle Obama just released their joint tax return showing $5.6 million in income and $1.8 million in taxes. In addition, there was that $1.4 million in Nobel Prize money not included on the form because President Obama turned it entirely over to charity.

The Obamas set a good example in many ways by donating $329,100 in additional charitable gifts plus paying more than $139,000 in Social Security and Medicare taxes. They also put $49,000 into retirement plans (just in case their post-White House speaking and writing careers don’t pan out.)

But they did miss a few opportunities in filing their return. Here are some lessons to learn from the Obama tax return.

·         Target your charitable giving. The Obamas gave to a total of 50 organisations, everything from Book Worm Angels (a Chicago literacy program) to the Central Asia Institute. But with all this giving the point needs to be made that he has someone to open his mail for him. Imagine giving 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. Therefore 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.

·         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!

·         Max out your retirement savings. Getting a tax break for stashing money is a good thing, even if you already have a pension coming to you and bright prospects for a second post-retirement career. As mentioned the ‘First’ Couple already put $49,000 into their personal retirement plans.