Obama walks the walk

The president is putting his money where his mouth is on his IRS Form 1040, maxing out education and retirement savings, and reporting healthy charitable donations, according to an expert who reviewed the tax returns the country's chief executive made public after paying his family's annual bill. In what has become a presidential tradition — and one that has a parallel in the personal financial disclosures by members of Congress — President Barack Obama on April 18 revealed that he and first lady Michelle Obama paid $453,770 in total federal taxes on an income of $1.73 million, the majority of which came from sales of his books. The first family's returns show that they take advantage of tax-favored plans to save for college tuition for their daughters Sasha and Malia. The Obamas are investing up to $60,000 in the educational future of each of their children and have been taking the $12,000 annual tax exclusion since 2007, according to Lou Hutt, managing member of Bennett Hutt & Co. LLC. The practice dovetails with Mr. Obama's efforts to put education near the top of his policy agenda. “It is the purest form of transparency,” Mr. Hutt said of the Obamas' making their tax returns public. The Obamas also gave $245,075 to 36 charities and paid $51,568 in Illinois state taxes. His return clearly demonstrates that Mr. Obama is among the high-income individuals who he says should be paying more in taxes to reduce the federal deficit. Mr. Obama also allocated the maximum amount he could to retirement funds in 2010. “This is an opportunity to generate a tax deduction and save tax money while investing wisely in yourself,” Mr. Hutt said. “It hits all three of those key tax-planning objectives for self-employed individuals.” Looking ahead to 2011, Mr. Obama might want to put some thought into obtaining tax credits to make his Chicago home more efficient, according to Mr. Hutt. Such retrofitting is a policy that Mr. Obama has promoted as part of his energy agenda.