The U.S. loses about $100 billion annually due to offshore tax evasion, according to a Senate probe that is taking aim at Swiss bank UBAG and Liechtenstein's LGT Group for allegedly marketing tax-evasion strategies to wealthy Americans.

U.S. clients hold about 19,000 accounts at UBS, with an estimated $18 billion to $20 billion in assets in Switzerland, according to the findings from the Senate probe and Justice Department prosecutors.

The probe adds fuel to a burgeoning effort by tax authorities around the globe to shatter the veil of bank secrecy that tax havens hide behind in catering to the world's elite.

Investigators were not able to obtain data about LGT but said the IRS has identified at least 100 accounts with U.S. clients at the Liechtenstein bank.

Documents highlighted in the Senate probe include one LGT memorandum that describes a client using accounts to move

funds "to the USA and Panama and may be classified as bribes.”

An LGT spokesman said it provided information to the committee investigators and characterized as "dated" many of the

For investigators and prosecutors, the biggest break has come from testimony given by former employees of UBS and LGT. UBS banker, Bradley Birkenfeld, pleaded guilty to helping his U.S. clients evade taxes. He told U.S. prosecutors that the Swiss bank generates some $200 million a year in revenue from US. clients.

UBS is in talks with the IRS and the Justice Department. Authorities are having a tougher time seeking help from Liechtenstein, which is clinging to its secrecy laws. A UBS spokeswoman said the company continues to work with authorities to correct any improprieties found by the investigation.

A recent criminal case involving wealthy donors, religious groups and secret kickbacks of donations provides an object lesson in how not to give to charity.

The government contends that two men solicited millions of dollars in contributions to charitable organizations by promising to secretly refund large portions of those gifts, typically 80% to 95%, to donors, who would then deduct the full amount of their original gifts on their tax returns. One of those men and another individual recently pleaded guilty, and others accused of wrong doing are scheduled to face trial later this year. The government is targeting more than 100 donors as part of its continuing investigation.

While most contributors play by the rules, law-enforcement officials say some do not and are robbing the US. Treasury Department of large amounts of revenue. Sometimes the abuse appears to be intentional, resulting in criminal charges. In other cases, donors may be led astray and may inadvertently run afoul of complex tax-law provisions.

Whatever the case, the Internal Revenue Service has been turning up the heat in recent years on what officials consider to be abuses ranging from fabricating deductions to making improper noncash gift valuations.

According to the latest IRS data, more than 41.4 million individual income-tax returns claimed charitable donations for 2006. Their donations totaled a record $173.02 billion, up 0.6% from the prior year.

Car donations have plummeted since Congress in 2004 tightened the tax rules for claiming charitable deductions.

Before 2005, taxpayers who donated a vehicle were allowed to deduct its fair market value. Tax legislation enacted in 2004 changed the rules to generally limit vehicle donation deductions of over $500 to either the actual proceeds from a vehicle's sale or the vehicle's fair market value, whichever is less.

Recently released IRS statistics reveal the 2004 law had an immediate and drastic effect on car donations. An analysis of the new numbers shows that between tax years 2004 and 2005, car donations of over $500 dropped by two-thirds.

Over 900,000 tax returns claimed deductions for donated automobiles in 2004. In 2005, the last year for which the IRS has detailed data, less than 300,000 tax returns included such claims. The total amount deducted for all car donations declined from $2.4 billion in 2004 to just a half a billion dollars the following year, a decrease of over 80%.

Congress was concerned that people were inflating the value of donated cars under the old system, claiming full blue book value for vehicles that had been turned down by the local junkyard. The hope was that charities would still get the same number of cars they could auction for the same amount of money, and the only change would be the elimination of excess charitable deductions. That hope was clearly not realized.

It is worth noting that although the total number of car donations fell by 67%, and the amount of deductions claimed as a result of such donations fell by over 80%, the deduction claimed per car donated only declined by 41 percent. This suggests a generous tax deduction was not the only thing lost with this change.

Donations of vehicles besides automobiles also declined. The number of returns claiming non-car vehicle donations dropped over 25% from 2004 to 2005, and the amount claimed in deductions fell from $205 million to $140 million.

The new restrictions on car donations have not dampened Americans' overall generosity. The total amount of deductions claimed for charitable deductions increased from $156 billion in 2004 to $172 billion in 2005. In 2006, the number increased again to $173 billion.

Overview of 2008 Income Tax Law Changes

Maximum tax rate on net capital gain and qualified dividends is reduced from 5% to 0% for taxpayers in the lowest two tax brackets for tax years after 2007.

The 15% rate remains unchanged.

The 0% rate applies for both regular tax and the Alternative Minimum Tax (AMT).

The contribution limits for traditional and Roth Individual Retirement Accounts (IRAs) has increased to the lesser of:

• $5,000 ($6,000 for taxpayers age 50 or older at the end of the year), or

• Taxable compensation.

If modified Adjusted Gross Income (AGI) exceeds the applicable limit in Rev. Proc. 2007-66and 2007-45 IRB970, the maximum traditional IRA deduction and maximum Roth IRA contribution may be limited.

Rollovers to Roth IRAs
After 2007, rollovers from the following plans can be made to a Roth IRA (in addition to a traditional, SEP, or SIMPLE IRA):

A qualified pension, profit-sharing or stock bonus plan (including a 401(k) plan),

An annuity plan,

A tax shelter annuity plan (section 403(b) plan), or

A deferred compensation plan of a state or local government (section 457 plan).

The rollover is subject to the same rules that apply for converting a traditional IRA into a Roth IRA.

Phaseout of Reductions of Personal Exemptions and Itemized Deductions For 2008, the amount by which these amounts can be reduced is only one-half of the amount that would otherwise apply. Example. The maximum reduction for the $3,500 personal exemption for 2008 is $1,167. The minimum exemption allowed after the phaseout is $2,333.

The "kiddie tax" rules (reflected on Forms 8615 and 8814) are expanded to cover:

A child who is age18 at the end of the year and whose earned income is not more than half of the child's support, and

A student who is under age 24 at the end of the year and whose earned income is not more than half of the child's support.

The sale occurs no later than two years after the date of the other spouse's death,

The ownership and use requirements for joint filers were met immediately before the date of such death, and

During the two-year period ending on the date of such death, there was no sale or exchange of a main home by either spouse that qualified for the exclusion.

Individuals can elect to postpone the running of the five-year test period for ownership and use for up to 10 years starting in 2008 while the individual or his or her spouse is serving outside of the United States in the Peace Corps.

For sales and exchanges after June 17, 2008, members of the intelligence community that elect to postpone the running of the five-year test period no longer are required to move to a duty station outside the United States.

For tax years 2008 through 2010, gross income does not include the following, if provided by a state or local government:

Rebates or reductions of property or income taxes for providing services as a member of a qualified emergency response organization.

Qualified payments (up to $30 per month) for providing services as a member of a qualified emergency response organization.

The excluded income reduces any related tax or contribution deduction.

For tax years beginning after 2007, taxpayers can claim a refundable credit figured in the same manner as the economic stimulus payment, except that the amounts are based on tax year 2008 instead of tax year 2007.

The amount of the credit is reduced by any economic stimulus payment received in 2008. If the credit is less than the payment received, the difference does not have to be repaid.

Special Depreciation Allowance

New 50% additional first-year special depreciation allowance applies to most new property purchased and placed in service after 2007.

To be eligible, the property must have a recovery period of 20 years or less, off-the-shelf computer software, qualified leasehold property, or water utility property. The special allowance does not apply if the ADS method is required.

The taxpayer may elect out for any class of property.

The allowance is figured after the section 179 deduction and before regular depreciation.

Maximum increases to $250,000 ($285,000 for enterprise zone and renewal community businesses; $350,000 if qualified section 179 Gulf Opportunity Zone property).

Phaseout begins when section 179 property exceeds $8OO,OOO ($1.4 million if qualified section 179 Gulf Opportunity Zone property).

Thresholds for farm and nonfarm optional methods increased to allow electing taxpayers to secure four credits of coverage each year. For 2008, lower limit increased from $1,600 to $4,200, and upper limit increased from $2,400 to $6,300.

Conservation Reserve Program payments excluded from net SE earnings for farmers receiving social security benefits.

The Internal Revenue Service has announced an increase in the optional standard mileage rates for the final six months of 2008. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

The rate increases to 58.5 cents a mile for all business miles driven from July 1, 2008, through December 31, 2008. This is an increase of eight cents from the 50.5cent rate in effect for the first six months of2008, as set forth in Revenue Procedure 2007-70.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2008. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

While gasoline is a Significant factor in the mileage rates, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by eight cents to 27 cents a mile, up from 19 cents for the first six months of 2008. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

The typical Medigap premium is $150 a month, though some plans "really ratchet up when you get older:' says Paul Precht, Policy Director for the Medicare Rights Center, a nonprofit advocacy group in Washington, D.C.

Medigap policies typically help pay some of the health-care costs that traditional Medicare coverage does not cover. That can be a big help, because “Medicare does have some high cost-shoring:” says Pamela Meliso, a senior attorney with the nonprofit Center for Medicare Advocacy, Inc. in Willimantic, Connecticut. For example, Medicare has a $1,024 deductible for hospital coverage and generally a 20% co-pay for services covered by Medicare Part B.

Depending on your overall income and assets, you might qualify for some relief that would allow you to drop your Medigap coverage, either through Medicaid, which is a state-administered health program, or through a Medicare savings program. For example, the Qualified Medicare Beneficiary Program, or QMB, typically covers cost-sharing for Medicare beneficiaries with incomes of up to 100% of the federal poverty level and assets of up to $3,000 for an individual or $6,000 for a married couple, though the income limits are higher in some states. In 2010, the federal income limits are expected to rise as part of the Medicare bill approved by Congress earlier this week.

If your income or assets are too high to qualify for government help, another option would be to switch to a cheaper Medigap plan. You could shop for a plan with fewer bells and whistles through the same insurer, or see if a different insurer offers the same level plan for less. You can get information about changing Medigap plans and premiums from the state insurance department where you live.

Individual counseling on Medicare issues can be obtained from the state health insurance counseling and assistance program, or SHIP. There is contact information at shiptalk.org or through the Eldercare locator at 800-677-1116.

Other sources of help: BenefitsCheckUp.org can help you figure out if you qualify for assistance. The Medicare Rights Center, medicarerights.org, has a consumer hotline at 800-233-4114, and the Center for Medicare Advocacy has detailed information on its Web site, medicareadvocacy.org.

According to the Environmental Protection Agency, more than 250 million computers will become obsolete in the next five years, many ending up in landfills. But this does not mean that old technology is worthless. Many organizations and people, from charities to identity thieves, would love to get their hands on discarded computers, and the following advice is offered on how to dispose of an obsolete PC or Mac safely and securely.

Computer manufacturers· depend on planned obsolescence, which means your new PC can be woefully behind the technology times in less than a year. Many Americans are not aware of the dangers associated with improperly disposing of a computer -namely ID theft and polluting the environment.

Simply tossing a computer out with the trash is a bad idea for two reasons. Not only does a computer store personal and financial information that a consumer would not want getting into the hands of ID thieves, but it is also composed of heavy metals and toxins that are extremely hazardous to the environment.

Consumers have options when it comes to discarding a computer. Selling an old computer as-is is one choice, but given that technology becomes obsolete fairly quickly, getting much money for it can be difficult. There are also recycling services that will take old computers and either refurbish them or take them apart and dispose of the non-valuable pieces properly.

Another option is to donate old computers to charity. The donation is tax deductible, and it can help a good cause. For guidance on finding a worthy cause, Techsoup.com has a list of organizations nationwide that accept computer donations. Consumers should always check out the charity before they donate.

Regardless of whether someone plans to donate an old computer to charity, sell it, or send it off to be recycled, it is important to completely erase all personal data and information from the computer to prevent ID theft. Simply deleting files or reformating the hard drive is not enough, since someone with a basic understanding of computers will still be able to retrieve key information.

There are several free software programs available for download online that will erase or wipe information effectively enough to prevent ID theft. Also, many operating systems and some antivirus software already come with a wiping feature. Keep in mind that data on personal computers is never completely erased, and the only way to completely wipe out information is to physically destroy the hard drive.

Americans are raiding their already fragile retirement accounts to get through financial hardships, such as unemployment, medical emergencies and buying a home.

And they are doing it even though borrowing a modest $5,000 can dramatically erode savings over time, according to a study released by the Center for American Progress.

The study found that workers in 2004 had $31 billion in outstanding 401 (k) loans, a fivefold increase from $6 billion in 1989. Between 1998 and 2004, an average of 12% of families with 401(k) plans borrowed from them.

As economic conditions grow bleaker, the number of people dipping into retirement money will only rise.

A $5,000 loan, for example, could cut retirement savings 22% even if the loan is repaid without penalty, accounting to the study. That is assuming the person has a $40,000 salary and is five years into a 38-year career.

One reason people are increasingly using 401(k) plans as a crutch is because they are so easy to access compared with pensions and IRAs.

The borrower acts like a bank to himself.

Typically, borrowers can repay loans within five years without penalty. Loans for first -time homes must be repaid within 15 years to avoid penalties.

That does not mean people are raiding savings to go on shopping sprees. Middleclass families in particular are turning to retirement money to get through financial crises such as unemployment and medical emergencies, the study found.

People typically can borrow half the vested balance of their 401 (k) accounts, typically at a high interest rate. Lessening the blow, however, is that workers pay the interest back into their own accounts.

Failing to repay loans on time typically incurs a 10% excise tax, and borrowers also must pay income tax on the amount withdrawn.

If you are seriously considering retirement, you also should be seriously thinking about how to ensure that your financial life is as comfortable and stress-free as possible.

Make the most of your remaining paychecks to save for retirement. How much money you will need to set aside for retirement -which for many people could last 30 years or more -will depend on a variety of factors. Among them: When do you expect to quit working? Will you continue to earn some income part-time? How much money do you have in savings and pensions? What kinds of expenses will you incur for housing and health care?

Because the future is uncertain, it makes sense, while you are still working, to put as much money as possible - 10 to 20% of your annual income, if not more, into savings for your golden years. Also make use of employer-sponsored retirement plans, especially if you will receive matching contributions, and tax advantaged IRAs.

Try to reduce or eliminate debt. Another way to save more money now for a more enjoyable retirement later is to cut back on unnecessary expenses, especially if you will need to go into debt to pay for them. Try to payoff most or all of your credit card balances and other loans to save on interest charges and avoid being burdened with repayment during your retirement years.

Develop a plan to stretch your money through a long retirement. The idea is to determine where your money will come from during retirement so you will not have to live in fear of running out of money.

Consult with the Social Security Administration. Call 800-772-1213 or go to www.socialsecurity.gov and learn how much Social Security and pension income you would get each month if you retire early -any time between 62 and your "normal" retirement age -and how much more you would receive if you hold off on retirement. The penalty for starting to collect Social Security payments early can be substantial.

Determine when to withdraw money from your tax-deferred retirement accounts, such as employer-sponsored retirement plans and traditional IRAs. Also periodically review your retirement portfolio, your mix amount of stocks, mutual funds, certificates of deposit, bonds and so on to be sure it is well-diversified. And, as you get closer to retirement, consider a more conservative investment strategy than in the past so you can avoid losses to principal that could mean having to postpone retirement or struggle financially.

As long as you end up living a long life, the monthly checks are the better deal. Let us say you retire at 65 and can collect a pension of $2,000 a month, payable for life, or a lump sum of $300,000, which you can roll over into an IRA, thus deferring taxes until you take withdrawals. If you choose the lump sum, the odds that you will be able to generate the same $2000-a-month income for the rest of your life hinge on how long you live and how good an investor you are.

That may not sound like a bad bet, especially since over the past three decades a conservative retirement portfolio -40% stocks, 40% bonds and 20% cash, at the outset, with a gradual shift to a 10-70-20 ratio returned about 7% a year. But keep in mind that those are long-term averages. Your annual returns will fluctuate.

The case against the lump sum may be even stronger if you are offered a bigger monthly pension as an incentive for retiring early. About half of all companies do not factor that extra amount into the lump-sum calculation.

If most of your retirement income will come from your pension, the monthly checks pose a different set of risks. Once you choose them, you cannot get at the lump sum. So if you need a lot of money in an emergency, you are out of luck. Thus, a better solution is to hedge your bets: Choose the lump sum and immediately buy a fixed annuity with a portion of the money. This will give you a monthly check just like a pension, and invest the rest for growth. Go to immediateannuities.com to compare annuities from highly rated insurance companies.

Also consider the lump sum if you are in poor health, and think about it if you have a generous pension and fear your company might go bankrupt. The federal Pension Benefit Guaranty Corp. guarantees benefits, but currently up to only $4,312 a month.

To see what you would have to earn to make the lump sum generate the same income as a monthly pension, use the investment distribution calculation at dinkytown.net.

In most cases, the monthly checks are the better choice.