Mortgage interest

One of the biggest incentives to owning a home is that the interest you pay on your mortgage is tax-deductible. This deduction, like most other tax breaks for homeowners, applies to any kind of home. That includes a second home, as long as you spend a certain amount of time there: either 14 days each year, or 10 percent as much time as it’s rented.

You can deduct the interest on up to $100,000 of other debt that uses your home as security — for example, a home equity loan. However, the amount you can deduct may be limited if the money you borrow raises your debt above the home’s actual market value. This can sometimes happen when a lender extends you a loan based on more than the value of the house.

Tax-free profits

Another major advantage of home ownership is that, in most cases, you don’t have to pay taxes on any profit you make when you sell your home. The law allows you to exclude from taxes up to $250,000 in profit from the sale of your principal home — $500,000 for a couple who file jointly. This exclusion also covers the sale of a parcel of land adjacent to your house, unless it’s used for business.

There are some stipulations, however. The home must be your principal residence, and you (and your spouse, where applicable) must have lived there for at least two of the previous five years. You can only claim the exemption once every two years. If you don’t meet those requirements, you may still claim a partial exemption if the sale was due to a change in your place of employment, necessary for health reasons, or due to other unforeseen circumstances.

Property taxes

You can claim property taxes you pay as an income tax deduction. This applies to both your principal home and any others you may own.

In both cases, incorrectly capitalizing or expensing items will strip the financial statements of the reliability and transparency expected of them. The IRS and SEC have the enforcement authority to prosecute executives and accountants engaged in the deliberate misrepresentation of financial statements. Moreover, accountants cannot claim ignorance of the facts because (1) the IRS does not recognize ignorance as an excuse and (2) accountants study the rules, and are required to have the knowledge necessary to make decisions in an honest manner.

One example of costly accounting mistakes is Weatherford International Ltd. In March 2011, they recognized mistakes in “writing off tax assets.” CFO Andrew Becnell categorized the mistakes as embarrassing and “difficult, if not impossible, to quantify”. Their mistake will cause adjustments in the financial statements of 100 million to 150 million from 2007 to 2010. This highlights the importance of honesty, reliability, and verifiability in accounting.

According to the Bureau of Labor Statistics, manufacturing jobs will experience two percent decline in the near future (2008-18).  Globalization has opened markets across continents, and workers now compete with others half way around the world.  In the U.S. low skilled workers typically employed in low tech manufacturing are seeing a decline in their hours and hourly pay.  The days of strictly physical job availability are over.  For example, utility workers who simply paved streets or poured concrete in the past now have to read and communicate with a central station via laptops installed in their vehicles.  Police officers have moved from “walking the beat” to utilizing on-board computers and global positioning devices to anticipate crimes. Today’s doctors and nurses complete their chards on “tablets”.  A worker today is required to have a vast knowledge of the world around him/her, as technology becomes part of every job.

The U.S. needs to look at this trend and realize that manufacturing could be less than fifteen percent of the economy in the next twenty-five years.

Analyzing the prospects of low skilled jobs in the United States is a sobering task.  Manufacturing jobs are being moved abroad in order to maximize corporate profits and maintain low retail pricing.  There is plenty of blame to spread around, but that will not solve the immediate labor crisis in the U.S.  We live in a different world- a much more connected world.  Shipping goods around the globe is easier than ever, and information moves between countries at incredible speeds.  What used to take weeks to ship, now takes days or even hours.  The U.S. Postal Service has felt the punch more than any other shipping company.  They have had to close more than half their post offices in large cities due to the lack of mail volume.  Technology and private shippers have taken a big percentage of their customer base.

Aside from the bad news regarding manufacturing jobs, there are other industries that continue to grow.  High-tech and innovation are the keys to maintain and grow our labor force in the future.  Jobs that require a highly technical work force can stay; these jobs are in the energy field, bio-technology, bio-research, medical field, and teaching.  Since the labor force needs to be retrained, teachers will be needed.  As baby boomers retire, they will need a wide variety of services such as, medical, transportation, financial, and personal services.  In general, many other service related fields will continue to grow such as law, accounting, and medical.

In the end education will be the determining factor as to who wins and who loses.  Those who adhere to the warnings and begin to retrain today will be better off than those who wait and hope for a miracle.  With the information provided by the same technology that replaces low skilled workers, they can use it to make sure there is a place for them to succeed and reach their goals.