Author: Joanne
Source: articleage.com
Of all the forms of assets breeding investments, annuities are
some of the a lot of arguable ones. Accomplishment - acquired from the
Latin chat 'annus' - is basically an allowance artefact awash by
insurance companies through authorised agents. This blazon of
investment facilitates a alternation of payments in the
future, in a authentic manner, in barter for an up-front payment
of money.
There is a accumulation of individuals who anticipate that annuities are a
waste of time and there are abundant bigger accoutrement of investment such
as banal bazaar or property. But afresh again both the aloft forms
of investment are accessible to blast and do not account actual high
in allegory to annuities, with account to safety.
Annuities are frequently of two types aboriginal Deferred and the other
Fixed. In the case of 'Deferred Annuity', the payments are made
usually on a account base for a amount of years. This anatomy of
annuity makes abiding that a adolescent getting acquires a acceptable income
in his afterwards years. In the closing anatomy that is 'Fixed or
Immediate Annuity', the client pays a ample basic sum
usually to an allowance aggregation and payments activate soon
thereafter.
One of the better hurdles faced by annuities today is
inflation. At the alpha the agreed sum to be paid out by the
insurance aggregation ability attending accomplished and actual heart
warming, but aggrandizement can abrade the amount of your investment at
an alarming rate.
Another draw aback with annuities is that instead of getting a
long-term basic accretion the balance, income tax bracket, on annuities are taxable
just as assets is. Plus there are assertive acrimonious rules and
regulations administering the drop that may not be customer
friendly. One of which is that the chump cannot abjure the
money until he turns 59.5 years or abroad he would be answerable a
10% amends for abandoning the aforementioned prematurely.
So why should you accede Annuities as a approach of investment?
Frankly any alone planning to advance in annuities should be
the one who is not already accidental his best to other
forms of retirement schemes. However, annuities are an excellent
mode of investment for individuals in college tax brackets. In
those years of top tax liabilities, annuities accomplish a lot of
sense, as these accumulation are tax exempt. Tax is alone due when
income is accustomed for the plan. That agency you alpha drawing
your accomplishment afterwards you accept chock-full earning a top salary.
Welcome to my income tax bracket blog.Here you will learn about income tax bracket tips and how to find good information.
Thursday, December 31, 2009
Monday, December 28, 2009
Now May Be The Time To Dive Into Dividends
Author: Silvester Thompson
Source: articledashboard.com
Soaring technology stocks led the longest balderdash bazaar in history during the 1990s, active investors to avoid stocks of dividend-paying firms.
The abiding banal achievement of added bourgeois firms just seemed anemic in comparison. But now, ascent absorption ante and slowing accumulated antithesis are causing investors to afresh about-face to the tried-and-true: high-quality firms with able banknote flows, solid antithesis and a advantageous allotment stream.
Companies that can accomplish to paying a approved allotment are ones that about are fundamentally able and optimistic about their future. A company's allotment history is a acceptable adumbration of its alertness to allotment profits and authenticate accountability to investors. In periods of bazaar uncertainty, these qualities become abnormally ambrosial to investors.
Stocks of companies that pay assets about accept beneath amount aberration than stocks of non-dividend payers. The allotment can actualize a beanbag and bland out a stock's amount volatility. It's important to remember, however, that although dividend-paying stocks can add about-face to your portfolio and advice abbreviate volatility, they still absorb risk.
The 2003 Tax Act added attraction to dividend-paying stocks. It bargain the tax amount for individuals on able assets from as abundant as 38.6 percent to just 15 percent, depending on your assets tax bracket.
This acknowledgment for assets has spawned a renewed absorption in alternate funds that pay assets like the American Century Equity Assets Armamentarium (TWEIX), which has been advance in dividend-paying stocks for added than a decade. The companies in the armamentarium about are absolute and fundamentally strong, accept abiding earnings, a solid antithesis area and a history of paying dividends.
The admeasurement of assets aswell is on the rise. Three abode of the companies in the S&P 500 Index pay dividends, and added than bisected of them added their payouts during 2004. That's affidavit of a lot of able antithesis sheets. A business has to accept the antithesis to pay a allotment and a able antithesis area to access one.
Investors' alternative for dividend-paying stocks is acceptable to continue, and so will the adeptness of abounding companies to abide paying dividends. Several years of bread-and-butter ambiguity accept apprenticed companies to cut costs, abate debt and rein in their basic spending. That agency abounding of them now accept a lot of banknote on their antithesis sheets.
This aggregate of lower debt and beyond, income tax bracket, banknote pools gives them the adeptness to access dividends. Even with the accepted accent abiding added banknote to shareholders, the accepted allotment payout arrangement is still beneath the actual average.
Source: articledashboard.com
Soaring technology stocks led the longest balderdash bazaar in history during the 1990s, active investors to avoid stocks of dividend-paying firms.
The abiding banal achievement of added bourgeois firms just seemed anemic in comparison. But now, ascent absorption ante and slowing accumulated antithesis are causing investors to afresh about-face to the tried-and-true: high-quality firms with able banknote flows, solid antithesis and a advantageous allotment stream.
Companies that can accomplish to paying a approved allotment are ones that about are fundamentally able and optimistic about their future. A company's allotment history is a acceptable adumbration of its alertness to allotment profits and authenticate accountability to investors. In periods of bazaar uncertainty, these qualities become abnormally ambrosial to investors.
Stocks of companies that pay assets about accept beneath amount aberration than stocks of non-dividend payers. The allotment can actualize a beanbag and bland out a stock's amount volatility. It's important to remember, however, that although dividend-paying stocks can add about-face to your portfolio and advice abbreviate volatility, they still absorb risk.
The 2003 Tax Act added attraction to dividend-paying stocks. It bargain the tax amount for individuals on able assets from as abundant as 38.6 percent to just 15 percent, depending on your assets tax bracket.
This acknowledgment for assets has spawned a renewed absorption in alternate funds that pay assets like the American Century Equity Assets Armamentarium (TWEIX), which has been advance in dividend-paying stocks for added than a decade. The companies in the armamentarium about are absolute and fundamentally strong, accept abiding earnings, a solid antithesis area and a history of paying dividends.
The admeasurement of assets aswell is on the rise. Three abode of the companies in the S&P 500 Index pay dividends, and added than bisected of them added their payouts during 2004. That's affidavit of a lot of able antithesis sheets. A business has to accept the antithesis to pay a allotment and a able antithesis area to access one.
Investors' alternative for dividend-paying stocks is acceptable to continue, and so will the adeptness of abounding companies to abide paying dividends. Several years of bread-and-butter ambiguity accept apprenticed companies to cut costs, abate debt and rein in their basic spending. That agency abounding of them now accept a lot of banknote on their antithesis sheets.
This aggregate of lower debt and beyond, income tax bracket, banknote pools gives them the adeptness to access dividends. Even with the accepted accent abiding added banknote to shareholders, the accepted allotment payout arrangement is still beneath the actual average.
Sunday, December 27, 2009
Investors: Avoid These 5 Common Tax Mistakes
Author: David Twibell
Source: articleage.com
For abounding investors, and even some tax professionals, allocation through the circuitous IRS rules on investment taxes can be a nightmare. Pitfalls abound, and the penalties for even simple mistakes can be severe. As April 15 rolls around, accumulate the afterward 5 accepted tax mistakes in apperception - and advice accumulate a little added money in your own pocket.
1. Declining To Annual Gains
Normally, if you advertise an investment for a profit, you owe a tax on the gain. One way to lower that tax accountability is to aswell advertise some of your accident investments. You can again use those losses to annual your gains.
Say you own two stocks. You accept a accretion of $1,000 on the aboriginal stock, and a accident of $1,000 on the second. If you advertise your acceptable stock, you will owe tax on the $1,000 gain. But if you advertise both stocks, your $1,000 accretion will be annual by your $1,000 loss. That's acceptable annual from a tax standpoint, back it agency you don't accept to pay any taxes on either position.
Sounds like a acceptable plan, right? Well, it is, but be acquainted it can get a bit complicated. Under what is frequently alleged the "wash auction rule," if you repurchase the accident banal aural 30 canicule of affairs it, you can't abstract your loss. In fact, not alone are you precluded from repurchasing the aforementioned stock, you are precluded from purchasing banal that is "substantially identical" to it - a ambiguous byword that is a connected antecedent of abashing to investors and tax professionals alike. Finally, the IRS mandates that you accept to bout abiding and concise assets and losses adjoin anniversary added first.
2. Miscalculating The Base Of Alternate Funds
Calculating assets or losses from the auction of an alone banal is adequately straightforward. Your base is artlessly the amount you paid for the shares (including commissions), and the accretion or accident is the aberration amid your base and the net accretion from the sale. However, it gets abundant added complicated if ambidextrous with alternate funds.
When artful your base afterwards affairs a alternate fund, it's simple to overlook to agency in the assets and basic assets distributions you reinvested in the fund. The IRS considers these distributions as taxable balance in the year they are made. As a result, you accept already paid taxes on them. By declining to add these distributions to your basis, you will end up advertisement a beyond accretion than you accustomed from the sale, and ultimately paying added in taxes than necessary.
There is no simple band-aid to this problem, added than befitting acceptable annal and getting active in acclimation your allotment and administration information. The added paperwork may be a headache, but it could beggarly added banknote in your wallet at tax time.
3. Declining To Use Tax-managed Funds
Most investors authority their alternate funds for the continued term. That's why they're generally afraid if they get hit with a tax bill for abbreviate appellation assets accomplished by their funds. These assets aftereffect from sales of banal captivated by a armamentarium for beneath than a year, and are anesthetized on to shareholders to address on their own allotment -- even if they never awash their alternate armamentarium shares.
Recently, added alternate funds accept been absorption on, income tax bracket, able tax-management. These funds try to not alone buy shares in acceptable companies, but aswell abbreviate the tax accountability on shareholders by captivation those shares for continued periods of time. By advance in funds geared appear "tax-managed" returns, you can access your net assets and save yourself some tax-related headaches. To be worthwhile, though, a tax-efficient armamentarium accept to accept both ingredients: acceptable investment achievement and low taxable distributions to shareholders.
4. Missing Deadlines
Keogh plans, acceptable IRAs, and Roth IRAs are abundant means to amplitude your advance dollars and accommodate for your approaching retirement. Sadly, millions of investors let these gems blooper through their fingers by declining to accomplish contributions afore the applicative IRS deadlines. For Keogh plans, the borderline is December 31. For acceptable and Roth IRA's, you accept until April 15 to accomplish contributions. Mark these dates in your agenda and accomplish those deposits on time.
5. Putting Investments In The Wrong Accounts
Most investors accept two types of investment accounts: tax-advantaged, such as an IRA or 401(k), and traditional. What abounding humans don't apprehend is that captivation the appropriate blazon of assets in anniversary annual can save them bags of dollars anniversary year in accidental taxes.
Generally, investments that aftermath lots of taxable assets or concise basic assets should be captivated in tax advantaged accounts, while investments that pay assets or aftermath abiding basic assets should be captivated in acceptable accounts. For example, let's say you own 200 shares of Duke Power, and intend to authority the shares for several years. This investment will accomplish a annual beck of allotment payments, which will be burdened at 15% or less, and a abiding basic accretion or accident already it is assuredly sold, which will aswell be burdened at 15% or less. Consequently, back these shares already accept a favorable tax treatment, there is no charge to apartment them in a tax-advantaged account.
In contrast, a lot of treasury and accumulated band funds aftermath a abiding beck of absorption income. Since, this assets does not authorize for appropriate tax analysis like dividends, you will accept to pay taxes on it at your bordering rate. Unless you are in a actual low tax bracket, captivation these funds in a tax-advantaged annual makes faculty because it allows you to adjourn these tax payments far into the future, or possibly abstain them altogether.
David Twibell is President and Chief Investment Officer of Flagship Basic Management, LLC, an investment advising close in Colorado Springs, Colorado. Flagship provides portfolio administration casework to high-net-worth individuals, corporations, and non-profit entities. For added information, amuse appointment www.flagship-capital.com.
Source: articleage.com
For abounding investors, and even some tax professionals, allocation through the circuitous IRS rules on investment taxes can be a nightmare. Pitfalls abound, and the penalties for even simple mistakes can be severe. As April 15 rolls around, accumulate the afterward 5 accepted tax mistakes in apperception - and advice accumulate a little added money in your own pocket.
1. Declining To Annual Gains
Normally, if you advertise an investment for a profit, you owe a tax on the gain. One way to lower that tax accountability is to aswell advertise some of your accident investments. You can again use those losses to annual your gains.
Say you own two stocks. You accept a accretion of $1,000 on the aboriginal stock, and a accident of $1,000 on the second. If you advertise your acceptable stock, you will owe tax on the $1,000 gain. But if you advertise both stocks, your $1,000 accretion will be annual by your $1,000 loss. That's acceptable annual from a tax standpoint, back it agency you don't accept to pay any taxes on either position.
Sounds like a acceptable plan, right? Well, it is, but be acquainted it can get a bit complicated. Under what is frequently alleged the "wash auction rule," if you repurchase the accident banal aural 30 canicule of affairs it, you can't abstract your loss. In fact, not alone are you precluded from repurchasing the aforementioned stock, you are precluded from purchasing banal that is "substantially identical" to it - a ambiguous byword that is a connected antecedent of abashing to investors and tax professionals alike. Finally, the IRS mandates that you accept to bout abiding and concise assets and losses adjoin anniversary added first.
2. Miscalculating The Base Of Alternate Funds
Calculating assets or losses from the auction of an alone banal is adequately straightforward. Your base is artlessly the amount you paid for the shares (including commissions), and the accretion or accident is the aberration amid your base and the net accretion from the sale. However, it gets abundant added complicated if ambidextrous with alternate funds.
When artful your base afterwards affairs a alternate fund, it's simple to overlook to agency in the assets and basic assets distributions you reinvested in the fund. The IRS considers these distributions as taxable balance in the year they are made. As a result, you accept already paid taxes on them. By declining to add these distributions to your basis, you will end up advertisement a beyond accretion than you accustomed from the sale, and ultimately paying added in taxes than necessary.
There is no simple band-aid to this problem, added than befitting acceptable annal and getting active in acclimation your allotment and administration information. The added paperwork may be a headache, but it could beggarly added banknote in your wallet at tax time.
3. Declining To Use Tax-managed Funds
Most investors authority their alternate funds for the continued term. That's why they're generally afraid if they get hit with a tax bill for abbreviate appellation assets accomplished by their funds. These assets aftereffect from sales of banal captivated by a armamentarium for beneath than a year, and are anesthetized on to shareholders to address on their own allotment -- even if they never awash their alternate armamentarium shares.
Recently, added alternate funds accept been absorption on, income tax bracket, able tax-management. These funds try to not alone buy shares in acceptable companies, but aswell abbreviate the tax accountability on shareholders by captivation those shares for continued periods of time. By advance in funds geared appear "tax-managed" returns, you can access your net assets and save yourself some tax-related headaches. To be worthwhile, though, a tax-efficient armamentarium accept to accept both ingredients: acceptable investment achievement and low taxable distributions to shareholders.
4. Missing Deadlines
Keogh plans, acceptable IRAs, and Roth IRAs are abundant means to amplitude your advance dollars and accommodate for your approaching retirement. Sadly, millions of investors let these gems blooper through their fingers by declining to accomplish contributions afore the applicative IRS deadlines. For Keogh plans, the borderline is December 31. For acceptable and Roth IRA's, you accept until April 15 to accomplish contributions. Mark these dates in your agenda and accomplish those deposits on time.
5. Putting Investments In The Wrong Accounts
Most investors accept two types of investment accounts: tax-advantaged, such as an IRA or 401(k), and traditional. What abounding humans don't apprehend is that captivation the appropriate blazon of assets in anniversary annual can save them bags of dollars anniversary year in accidental taxes.
Generally, investments that aftermath lots of taxable assets or concise basic assets should be captivated in tax advantaged accounts, while investments that pay assets or aftermath abiding basic assets should be captivated in acceptable accounts. For example, let's say you own 200 shares of Duke Power, and intend to authority the shares for several years. This investment will accomplish a annual beck of allotment payments, which will be burdened at 15% or less, and a abiding basic accretion or accident already it is assuredly sold, which will aswell be burdened at 15% or less. Consequently, back these shares already accept a favorable tax treatment, there is no charge to apartment them in a tax-advantaged account.
In contrast, a lot of treasury and accumulated band funds aftermath a abiding beck of absorption income. Since, this assets does not authorize for appropriate tax analysis like dividends, you will accept to pay taxes on it at your bordering rate. Unless you are in a actual low tax bracket, captivation these funds in a tax-advantaged annual makes faculty because it allows you to adjourn these tax payments far into the future, or possibly abstain them altogether.
David Twibell is President and Chief Investment Officer of Flagship Basic Management, LLC, an investment advising close in Colorado Springs, Colorado. Flagship provides portfolio administration casework to high-net-worth individuals, corporations, and non-profit entities. For added information, amuse appointment www.flagship-capital.com.
Friday, December 25, 2009
Ben Franklin Didn't Quite Get it Right
Author: Terry Mitchell
Source: articleage.com
When Ben Franklin said "a penny saved is a penny earned", he didn't quite get it right. Actually, a penny saved is worth more than a penny earned. Do you find this statement shocking? I am about to prove to you that what I'm saying is true.
Most people erroneously believe the best way to strengthen their financial health is to increase their income. On the contrary, saving money by cutting costs will get you there quicker. You see, it's very simple. When your income increases (with some exceptions like the part of it you put into your 401k), that extra money is taxed. On the other hand, any amount you save by cutting costs is not taxed. Therefore, $20 saved by cutting costs is worth more than a $20 increase in income.
The following (although over-simplified) example will illustrate this principle. Let's suppose that Jack and Cindy have identical jobs and incomes. Let's also suppose they shop at the same grocery store and pay about the same amount for groceries each week. Now, Jack gets a $20 per week pay increase and Cindy does not. However, at about that same time, Cindy finds a new grocery store where she is able to save $20 per week on her grocery bill. Assuming nothing else has changed, Cindy is now better off financially than Jack, even though she did not get a raise and he did.
How can this be? It's because Jack has to pay taxes on his $20 raise but Cindy does not have to pay taxes on her $20 grocery discount. Assuming Jack is in the 25% federal tax bracket (and disregarding any possible increase in his state or local taxes), he will be able to put only $15 into his piggy bank each week whereas Cindy will be able to put the whole $20 a week into hers!
Bottom Line: It is more blessed to receive a discount than to receive an equal amount in a pay increase!
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell,, income tax bracket, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
Source: articleage.com
When Ben Franklin said "a penny saved is a penny earned", he didn't quite get it right. Actually, a penny saved is worth more than a penny earned. Do you find this statement shocking? I am about to prove to you that what I'm saying is true.
Most people erroneously believe the best way to strengthen their financial health is to increase their income. On the contrary, saving money by cutting costs will get you there quicker. You see, it's very simple. When your income increases (with some exceptions like the part of it you put into your 401k), that extra money is taxed. On the other hand, any amount you save by cutting costs is not taxed. Therefore, $20 saved by cutting costs is worth more than a $20 increase in income.
The following (although over-simplified) example will illustrate this principle. Let's suppose that Jack and Cindy have identical jobs and incomes. Let's also suppose they shop at the same grocery store and pay about the same amount for groceries each week. Now, Jack gets a $20 per week pay increase and Cindy does not. However, at about that same time, Cindy finds a new grocery store where she is able to save $20 per week on her grocery bill. Assuming nothing else has changed, Cindy is now better off financially than Jack, even though she did not get a raise and he did.
How can this be? It's because Jack has to pay taxes on his $20 raise but Cindy does not have to pay taxes on her $20 grocery discount. Assuming Jack is in the 25% federal tax bracket (and disregarding any possible increase in his state or local taxes), he will be able to put only $15 into his piggy bank each week whereas Cindy will be able to put the whole $20 a week into hers!
Bottom Line: It is more blessed to receive a discount than to receive an equal amount in a pay increase!
Terry Mitchell is a software engineer, freelance writer, and trivia buff from Hopewell,, income tax bracket, VA. He also serves as a political columnist for American Daily and operates his own website - http://www.commenterry.com - on which he posts commentaries on various subjects such as politics, technology, religion, health and well-being, personal finance, and sports. His commentaries offer a unique point of view that is not often found in mainstream media.
Wednesday, December 23, 2009
Benefits Of Cashout Refinance
Author: Get Loans Cheap
Source: articledashboard.com
No matter how good our intentions are, with the "Gotta Have It!" society we live in, even the most diligent of us sometimes over-do on debt, especially on credit cards or other non- appreciable debt in the form of installment loans. One popular, income tax bracket, and beneficial way to wipe the slate clean, or at least get a handle on high debt, is through a "Cash-out Refinance".
If you have Equity in your house (that is if the appraised value is larger than the amount currently owed on your Mortgage Loan), you can access that money and put it to work for you. Instead of continuing to pay on those high interest credit cards and never seeming to make a dent in the balance, the cash out can help you "start fresh", and, depending on your area, your home appreciation could grow faster than your cash out!
Some of the benefits of replacing credit card and revolving debt with mortgage debt are:
ท Paying off high interest loans (credit cards) with a much lower interest loan, showing less outstanding loans on your credit and a less number of payments at bill time.
ท Lowering your monthly net out-go, freeing up cash for everyday expenses or to ad more to the Principle portion of your Mortgage loan. I've had examples of homeowners restructuring their current home loans to pay off debt, saving $500 or more per month, which was applied back to Principle, carving 5 or more years off the length of the home loan...which leads to the next benefit...
ท Term Reduction with a totally new loan, you have the opportunity of re-structuring with a shorter term directly OR indirectly, as shown above, by taking monthly savings of money not now needed on credit cards and applying the money to your loan, shortening your term.
ท Payment Deferral when refinancing, you usually end up skipping a payment, sometimes two, in the lender switch. That can add up to a substantial amount that could be reapplied to your home loan or more pressing necessities.
ท Raising Credit Scores, Mortgage loans are looked at more favorably than credit cards, especially when your balances on those credit cards exceed 35-50% of the maximum balance allowed. By paying off these loans, credit scores go up naturally when the companies report their information (usually in 3 month intervals).
ท Increasing Tax Advantages. Currently you receive no tax benefit for that payment you're paying on those credit cards; but when that same debt is transferred to a mortgage loan, you receive a tax advantage on interest paid on that loan. For example, let's say you're in a 30 % tax bracket. For every $10,000 spent on interest on your home loan in that year, you could receive a $3000 deduction!
These are only few of the benefits to refinancing for debt consolidation.
There are some precautions, though, that MUST be recognized or you'll find yourself even deeper in debt. When strategies of this nature are utilized to "pull out of debt", one must go into such a strategy with just that mindset. If a cash out refinance is handled to clear off credit cards, only to max those cards again, the process can catch up to you. Most lenders view credit reports for just such patterns before approving a loan. Discipline is key. Be careful to follow through on your long-term plan to control your debt so it doesn't control you, and your decision to refinance with cash out can be a smart move.
Two Interesting notes:
ท If you pay only the minimum payment stated on your revolving credit card, in the average case, it can take up to 30 years or more to pay off the balance of $5000. Most mortgages are refinanced every 5 years or less on average, due to increased home value, or moving.
ท When lowering your monthly out-go, it's interesting to see what % of an increase that affords you with your current income. As little as $400 savings per month that you get to keep can mean a substantial "raise" you can give yourself...and you pay no more taxes on it!
ABOUT THE AUTHOR:
Tamara Schmitt is currently a Loan Officer with 1st United Mortgage. Tamara is also an Business Partner of Get Loans Cheap, an internet business geared solely to educate and aid the consumer in assessing and obtaining the right loan for their specific needs. View the site for more articles on mortgages and refinancing, or other home loan needs.
Source: articledashboard.com
No matter how good our intentions are, with the "Gotta Have It!" society we live in, even the most diligent of us sometimes over-do on debt, especially on credit cards or other non- appreciable debt in the form of installment loans. One popular, income tax bracket, and beneficial way to wipe the slate clean, or at least get a handle on high debt, is through a "Cash-out Refinance".
If you have Equity in your house (that is if the appraised value is larger than the amount currently owed on your Mortgage Loan), you can access that money and put it to work for you. Instead of continuing to pay on those high interest credit cards and never seeming to make a dent in the balance, the cash out can help you "start fresh", and, depending on your area, your home appreciation could grow faster than your cash out!
Some of the benefits of replacing credit card and revolving debt with mortgage debt are:
ท Paying off high interest loans (credit cards) with a much lower interest loan, showing less outstanding loans on your credit and a less number of payments at bill time.
ท Lowering your monthly net out-go, freeing up cash for everyday expenses or to ad more to the Principle portion of your Mortgage loan. I've had examples of homeowners restructuring their current home loans to pay off debt, saving $500 or more per month, which was applied back to Principle, carving 5 or more years off the length of the home loan...which leads to the next benefit...
ท Term Reduction with a totally new loan, you have the opportunity of re-structuring with a shorter term directly OR indirectly, as shown above, by taking monthly savings of money not now needed on credit cards and applying the money to your loan, shortening your term.
ท Payment Deferral when refinancing, you usually end up skipping a payment, sometimes two, in the lender switch. That can add up to a substantial amount that could be reapplied to your home loan or more pressing necessities.
ท Raising Credit Scores, Mortgage loans are looked at more favorably than credit cards, especially when your balances on those credit cards exceed 35-50% of the maximum balance allowed. By paying off these loans, credit scores go up naturally when the companies report their information (usually in 3 month intervals).
ท Increasing Tax Advantages. Currently you receive no tax benefit for that payment you're paying on those credit cards; but when that same debt is transferred to a mortgage loan, you receive a tax advantage on interest paid on that loan. For example, let's say you're in a 30 % tax bracket. For every $10,000 spent on interest on your home loan in that year, you could receive a $3000 deduction!
These are only few of the benefits to refinancing for debt consolidation.
There are some precautions, though, that MUST be recognized or you'll find yourself even deeper in debt. When strategies of this nature are utilized to "pull out of debt", one must go into such a strategy with just that mindset. If a cash out refinance is handled to clear off credit cards, only to max those cards again, the process can catch up to you. Most lenders view credit reports for just such patterns before approving a loan. Discipline is key. Be careful to follow through on your long-term plan to control your debt so it doesn't control you, and your decision to refinance with cash out can be a smart move.
Two Interesting notes:
ท If you pay only the minimum payment stated on your revolving credit card, in the average case, it can take up to 30 years or more to pay off the balance of $5000. Most mortgages are refinanced every 5 years or less on average, due to increased home value, or moving.
ท When lowering your monthly out-go, it's interesting to see what % of an increase that affords you with your current income. As little as $400 savings per month that you get to keep can mean a substantial "raise" you can give yourself...and you pay no more taxes on it!
ABOUT THE AUTHOR:
Tamara Schmitt is currently a Loan Officer with 1st United Mortgage. Tamara is also an Business Partner of Get Loans Cheap, an internet business geared solely to educate and aid the consumer in assessing and obtaining the right loan for their specific needs. View the site for more articles on mortgages and refinancing, or other home loan needs.
Five Tips to Minimize Your Family's Tax Burden
Author: Kristine McKinley
Source: ezinearticles.com
Parents: Did you know that you can hire your kids in your small business and reduce your taxes?
Hiring your children if you own your own business is a great tax planning strategy, but it's more than just a tax deduction. Here are a few ways, income tax bracket, you can save taxes by hiring your children in your small business:
1. You get a tax deduction for the wages you pay your kids, which reduces your taxable income
2. By paying your children, you are effectively transferring income from your higher tax bracket to your childrens' lower tax bracket
3. You reduce your self employment income, thus you also reduce your self employment tax
4. Your kids may not owe any tax on the amount you pay them, depending on how much they earn and whether you claim them as a dependent or not (in 2009, dependent children can earn up to $5,700 before they will owe any income tax)
5. Paying your children a wage allows them to open an IRA or Roth IRA, which gives them a jump start on saving for retirement, college and other goals
If you have entrepreneurial kids, consider starting the business in your name and hiring your children instead of having the kids own the business. This will reduce your family's overall tax burden.
Why would it matter who owns the business? Well, if you are self employed, you have to pay self employment tax on your net earnings over $400. This rule applies to both adults and children, so there is no advantage to being a kid when you're self employed. However, kids have a huge advantage if they earn wages paid from an employer. Why? Well, kids don't have to pay taxes on the first $5,700 of earned income, even if they are claimed as a dependent on their parents' tax return.
Here's an example:
Let's assume Teddy, who is 14 years old, has a web design business. In 2009, he expects to earn $5,000 from this business after all of his expenses.
If Teddy is the owner, he is considered self employed and will have to pay 15.3% in self employment tax on this income. Assuming this is his only income, he won't owe any federal income tax because his total earnings are less than the standard deduction amount ($5,700 in 2009), but he will still have to pay self employment tax on the net profit. Teddy's total tax in this example will be $765.
Now let's assume that Teddy's dad is the owner of the business and he hires Teddy to do the work. Teddy still makes $5,000 from this business, but because he is an employee instead of the owner of the business, he doesn't have to pay self employment tax. Teddy's dad will report the $5,000 in income on his tax return, but he gets to deduct the $5,000 he pays Teddy to work in the business, so dad won't owe any tax on this income. In addition, because Teddy is under 18, Teddy's dad doesn't have to pay payroll taxes on him. Finally, because Teddy earned less than the standard deduction, his total tax liability will be zero.
In this example, the family's total tax savings by having the business in the father's name and having the child as an employee instead of the owner is $765.
Source: ezinearticles.com
Parents: Did you know that you can hire your kids in your small business and reduce your taxes?
Hiring your children if you own your own business is a great tax planning strategy, but it's more than just a tax deduction. Here are a few ways, income tax bracket, you can save taxes by hiring your children in your small business:
1. You get a tax deduction for the wages you pay your kids, which reduces your taxable income
2. By paying your children, you are effectively transferring income from your higher tax bracket to your childrens' lower tax bracket
3. You reduce your self employment income, thus you also reduce your self employment tax
4. Your kids may not owe any tax on the amount you pay them, depending on how much they earn and whether you claim them as a dependent or not (in 2009, dependent children can earn up to $5,700 before they will owe any income tax)
5. Paying your children a wage allows them to open an IRA or Roth IRA, which gives them a jump start on saving for retirement, college and other goals
If you have entrepreneurial kids, consider starting the business in your name and hiring your children instead of having the kids own the business. This will reduce your family's overall tax burden.
Why would it matter who owns the business? Well, if you are self employed, you have to pay self employment tax on your net earnings over $400. This rule applies to both adults and children, so there is no advantage to being a kid when you're self employed. However, kids have a huge advantage if they earn wages paid from an employer. Why? Well, kids don't have to pay taxes on the first $5,700 of earned income, even if they are claimed as a dependent on their parents' tax return.
Here's an example:
Let's assume Teddy, who is 14 years old, has a web design business. In 2009, he expects to earn $5,000 from this business after all of his expenses.
If Teddy is the owner, he is considered self employed and will have to pay 15.3% in self employment tax on this income. Assuming this is his only income, he won't owe any federal income tax because his total earnings are less than the standard deduction amount ($5,700 in 2009), but he will still have to pay self employment tax on the net profit. Teddy's total tax in this example will be $765.
Now let's assume that Teddy's dad is the owner of the business and he hires Teddy to do the work. Teddy still makes $5,000 from this business, but because he is an employee instead of the owner of the business, he doesn't have to pay self employment tax. Teddy's dad will report the $5,000 in income on his tax return, but he gets to deduct the $5,000 he pays Teddy to work in the business, so dad won't owe any tax on this income. In addition, because Teddy is under 18, Teddy's dad doesn't have to pay payroll taxes on him. Finally, because Teddy earned less than the standard deduction, his total tax liability will be zero.
In this example, the family's total tax savings by having the business in the father's name and having the child as an employee instead of the owner is $765.
Parents: want to learn how to minimize your family's taxes? If you have a small business, or if your child has their own business, you'll want to learn how to hire your children to help minimize your family's tax burden.
Kristine A. McKinley, CPA, and CFP®, offers financial and tax planning on an hourly, fee-only basis. She specializes in helping home based and online business owners understand and minimize their income taxes so they can keep more of their profits.
Pension or ISA: Which Investment Route Should You Take?
Author: Ray Prince
Source: download
Let's look at a recent client we worked with, James, a 45 year old dentist who had ฃ500 per month to invest.
James was confident that he could invest this money until his retirement at age 60, in 15 years time. He has a mixture of PEPs and ISAs, with an NHS Pension and a buy to let property.
Looking at this as one investment against another, we need to look at a like on like projection. So we will use a growth figure of 6% net of charges for both investments.
Because of the tax relief available for James at his highest rate (40%), the amount he can invest into a pension fund is ฃ835 pm compared to the ฃ500 pm to an ISA. Using projections of the future fund values over 15 years we get figures of:
Pension - ฃ238,810
ISA - ฃ143,000
It appears there is no contest, however, let's look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ฃ59,702.
So if we calculate ฃ143,000 minus ฃ59,702 = ฃ83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ฃ179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average example and using today's rates, a level pension of ฃ9,117 per annum would be achievable. However, will James be a higher or lower rate tax payer in retirement? This changes the picture somewhat, as the following after tax pensions would be applicable:
Higher rate tax payer - ฃ5,470 per annum
Lower rate tax payer - ฃ7,111 per annum
So to compare this to the ISA, we need to see how many years the pension needs to pay out to reach the ฃ83,297 value of the ISA fund, allowing for growth on the ISA fund at the same 6%, net of charges.
The answer is 17 years for the basic rate payer and 30 years for the higher rate payer! Not only is this is a massive difference between the two, but it also helps towards the decision whether to invest into a pension tax wrapper or an ISA.
Other considerations
-We have ignored any "pension drawdown" option
-The amounts you can contribute to pensions is currently far more generous than that available to ISAs
-Annuity rates, income tax bracket, on pensions may improve or reduce in the future
-The government may change the rules on either pensions or ISAs or even abolish the tax favourability on one or both
-Financial Advisers/Salespeople are often paid higher initial commission on pensions than ISAs so make sure your adviser is taking these factors into account, and not just selling you a policy that pays him/her the highest commission.
So what did we advise James to do?
In his case it all came down to the picture painted by his cash flow model. This enabled us to see how James's wealth would look in the future.
What was clear was that his NHS Pension would in itself take James into the higher rate tax bracket, and that a tax free cash fund was more attractive to him than more income that would be taxed at 40%. It would also aid James to gift money to his 2 children, to both help them financially and reduce his likely Inheritance Tax liability.
Therefore, James invested monthly sums into an investment Maxi ISA.
The Financial Tips Bottom Line:
In effect, there is no clear cut right or wrong. It always comes back to balancing the pros and cons of all the options available and making your decision based on thorough research.
Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps doctors and dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives.
Get your free retirement planning guide, exclusively for UK Resident Doctors and Dentists. Just visit http://www.financialtipsonline.com/ea3. You'll also receive the twice-monthly email newsletter 'Financial Tips' that will enable you to keep posted of all financial issues affecting doctors and dentists. He can be contacted on 01670 505522.
Rutherford Wilkinson plc is authorised and regulated by the Financial Services Authority.
Source: download
Let's look at a recent client we worked with, James, a 45 year old dentist who had ฃ500 per month to invest.
James was confident that he could invest this money until his retirement at age 60, in 15 years time. He has a mixture of PEPs and ISAs, with an NHS Pension and a buy to let property.
Looking at this as one investment against another, we need to look at a like on like projection. So we will use a growth figure of 6% net of charges for both investments.
Because of the tax relief available for James at his highest rate (40%), the amount he can invest into a pension fund is ฃ835 pm compared to the ฃ500 pm to an ISA. Using projections of the future fund values over 15 years we get figures of:
Pension - ฃ238,810
ISA - ฃ143,000
It appears there is no contest, however, let's look at the figures a little closer.
The ISA fund is all available as tax free cash, whereas the Pension fund rules say a maximum of 25% of the fund can be taken as tax free cash which is ฃ59,702.
So if we calculate ฃ143,000 minus ฃ59,702 = ฃ83,297, this is the amount of tax free cash we have over and above the Pension route. The remaining ฃ179,107 in the Pension fund has to be used to buy a pension called an annuity. So the question now is what pension amounts could be available for James?
Taking an average example and using today's rates, a level pension of ฃ9,117 per annum would be achievable. However, will James be a higher or lower rate tax payer in retirement? This changes the picture somewhat, as the following after tax pensions would be applicable:
Higher rate tax payer - ฃ5,470 per annum
Lower rate tax payer - ฃ7,111 per annum
So to compare this to the ISA, we need to see how many years the pension needs to pay out to reach the ฃ83,297 value of the ISA fund, allowing for growth on the ISA fund at the same 6%, net of charges.
The answer is 17 years for the basic rate payer and 30 years for the higher rate payer! Not only is this is a massive difference between the two, but it also helps towards the decision whether to invest into a pension tax wrapper or an ISA.
Other considerations
-We have ignored any "pension drawdown" option
-The amounts you can contribute to pensions is currently far more generous than that available to ISAs
-Annuity rates, income tax bracket, on pensions may improve or reduce in the future
-The government may change the rules on either pensions or ISAs or even abolish the tax favourability on one or both
-Financial Advisers/Salespeople are often paid higher initial commission on pensions than ISAs so make sure your adviser is taking these factors into account, and not just selling you a policy that pays him/her the highest commission.
So what did we advise James to do?
In his case it all came down to the picture painted by his cash flow model. This enabled us to see how James's wealth would look in the future.
What was clear was that his NHS Pension would in itself take James into the higher rate tax bracket, and that a tax free cash fund was more attractive to him than more income that would be taxed at 40%. It would also aid James to gift money to his 2 children, to both help them financially and reduce his likely Inheritance Tax liability.
Therefore, James invested monthly sums into an investment Maxi ISA.
The Financial Tips Bottom Line:
In effect, there is no clear cut right or wrong. It always comes back to balancing the pros and cons of all the options available and making your decision based on thorough research.
Ray Prince is an Independent Financial Planner with Rutherford Wilkinson plc, and helps doctors and dentists get the best deals on mortgages, protection and investments, as well as helping them achieve their financial objectives.
Get your free retirement planning guide, exclusively for UK Resident Doctors and Dentists. Just visit http://www.financialtipsonline.com/ea3. You'll also receive the twice-monthly email newsletter 'Financial Tips' that will enable you to keep posted of all financial issues affecting doctors and dentists. He can be contacted on 01670 505522.
Rutherford Wilkinson plc is authorised and regulated by the Financial Services Authority.
Tuesday, December 22, 2009
Obligated Tax
Author: Jason Webb
Source: articleage.com
I like most American's complain about taxes and how the rich keep getting richer and the poor keep getting poorer. You've heard the arguments, the poor can't pay taxes because they are poor, the rich don't pay enough, and the middle class is left to pay the brunt. I complain not only as a cynic but also as a hopeful citizen that someday, something will change. I don't wish to be seen as a socialist nor a bigot along class lines. I just want everyone to pay a fair share of the collective burden as our founding fathers intended.
Do you think the rich have paid their fair share? Do you feel that after paying taxes on several hundred thousand dollars the burden should be lessened because you've paid enough or more than the average amount per capita? Do you think it is fair or unfair that one person should pay more than another for the same services received?
According to the 16th Amendment on income taxes, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Without apportionment, what does that mean?
Here is a quote from Supreme Court Justice Paterson in Hylton vs U.S. (3 US 171 [1796]): "The constitution declares, that a capitation tax is a direct tax; and both in theory and practice, a tax on land is deemed to be a direct tax... The provision was made in favor of the southern states; they possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union, after the same rate or measure: so much a head, in the first instance, and so much an acre, in the second. To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution."
Without apportionment, means quite clearly that the government has the power to tax people at different rates. In Justice Patterson's explanation, the reason for taxing people at different rates is, some can afford to pay more than others based on their productivity and it is the governments duty to guard those less able to pay, against imposition.
It does not take a genius to understand that sharing the burden equally does not mean we divide up the national debt evenly and each pay one share. Sharing the burden equally means we all carry that portion of the total burden we are capable of carrying (paying).
Unfortunately the current tax structure soaks both the poor and middle classes only to spare the rich. The "Who Pays" national study finds that poor and middle income families pay a much higher percentage of their income to taxes than do the rich. The wealthiest pay non federal taxes at a rate equaling 7.9% of their income while the middle class and poor pay 9.8% and 12.5% respectively. In the United States, a country with the phrase "In God We Trust" bannered on its currency, this seems unconscionable. How can those with the least be expected to contribute the most by percentage? What happened to guarding against imposition?
Taxes are our collective duty, a price of continued enjoyment of the privileges of being a U.S. citizen. When I hear that extremely privileged people can't afford to pay the same percentage of income in taxes that the poor and middle class pay, I find myself hoping their investments fail miserably so that they will be able to afford to pay their share of the burden. If we are Americans collectively and we all enjoy the benefits collectively, then we should pay collectively and accordingly to what our means allow us to contribute. This may seem a harsh view, driven along class lines, but even some of America's wealthiest hold this true to one extent or another.
Warren E. Buffett, George Soros, and Ted Turner, have warned about the concentration of wealth and how it can turn a union based on merit into an aristocracy. Economic growth can be hindered by allowing a nation's capital to sit idly in, income tax bracket, the hands of inheritors instead of funneling it back thru the ranks to a new generation of innovators and workers. Even Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony, "For the democratic society, that is not a very desirable thing to allow it to happen", speaking on the concentration of wealth in our country.
F. Scott Fitzgerald said the very rich, "are different from you and me," to which Ernest Hemingway replied, "Yes, they have more money." To this I would add yes and they pay a disproportional smaller percentage of taxes on that money. This means the wealthiest one percent, are enjoying an unfair economic advantage over the rest of us beyond what they have earned.
Before you gather up arms against your local doctors and lawyers thinking they aren't paying their share, you should understand I'm not talking about them at all. I am talking about nobody you will, in all likelihood, ever see much less meet. What the average American sees as a person of wealth is more likely a true middle class or upper middle class person. In fact the richest or wealthiest person you know is probably in the 50% tax bracket, fully half of all their earnings going to one tax or another. No, it isn't these people I am speaking of at all.
The persons I'm talking about are the true upper five percent of Americans, those making over ten million dollars a year. Did you know the wealthiest 5% have collected 59% of the money but only pay 38 % of the taxes? Did you know it gets worse? The wealthiest 1% own 38% of all wealth in this country and pay only 25% of the taxes. Does this seem fair and like a shared burden?
Knowing this, would you now be surprised to learn that the bottom 40% of tax payers (you and me), have an average net wealth of $1100.00 hundred dollars? We on average are worth $1100.00 dollars and are paying on average $1793.00 in taxes. This is 163% of our net worth gone every year and people are still wondering why they can't seem to get ahead in life. Why are we paying so much? It's easier to answer this when you consider the wealthiest are paying 3.5 percent of their wealth in taxes. We pay 163% and they pay 3.5 %. The money has to come from somewhere after all.
What does this mean in plain English and what is the solution? If all taxpayers paid the same 10.5 percent of their wealth in taxes as a median income family pays, the taxes of the lowest 40 percent (you and me) would be cut by 94 percent while the taxes of the wealthiest would triple. Source: Congressional Budget Office and United for a Fair Economy
"We the people", need to print this up as a bumper sticker, spread the word and start firing the political puppets of the rich. I for one do not hate the rich, they are Americans also. I just want them to pay the same 10% I feel obligated to.
Born in Southern California in 1964, Jason Webb Considers himself a student of life. He is currently attending the University of Northern Iowa pursuing a degree in communication.
Source: articleage.com
I like most American's complain about taxes and how the rich keep getting richer and the poor keep getting poorer. You've heard the arguments, the poor can't pay taxes because they are poor, the rich don't pay enough, and the middle class is left to pay the brunt. I complain not only as a cynic but also as a hopeful citizen that someday, something will change. I don't wish to be seen as a socialist nor a bigot along class lines. I just want everyone to pay a fair share of the collective burden as our founding fathers intended.
Do you think the rich have paid their fair share? Do you feel that after paying taxes on several hundred thousand dollars the burden should be lessened because you've paid enough or more than the average amount per capita? Do you think it is fair or unfair that one person should pay more than another for the same services received?
According to the 16th Amendment on income taxes, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Without apportionment, what does that mean?
Here is a quote from Supreme Court Justice Paterson in Hylton vs U.S. (3 US 171 [1796]): "The constitution declares, that a capitation tax is a direct tax; and both in theory and practice, a tax on land is deemed to be a direct tax... The provision was made in favor of the southern states; they possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union, after the same rate or measure: so much a head, in the first instance, and so much an acre, in the second. To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution."
Without apportionment, means quite clearly that the government has the power to tax people at different rates. In Justice Patterson's explanation, the reason for taxing people at different rates is, some can afford to pay more than others based on their productivity and it is the governments duty to guard those less able to pay, against imposition.
It does not take a genius to understand that sharing the burden equally does not mean we divide up the national debt evenly and each pay one share. Sharing the burden equally means we all carry that portion of the total burden we are capable of carrying (paying).
Unfortunately the current tax structure soaks both the poor and middle classes only to spare the rich. The "Who Pays" national study finds that poor and middle income families pay a much higher percentage of their income to taxes than do the rich. The wealthiest pay non federal taxes at a rate equaling 7.9% of their income while the middle class and poor pay 9.8% and 12.5% respectively. In the United States, a country with the phrase "In God We Trust" bannered on its currency, this seems unconscionable. How can those with the least be expected to contribute the most by percentage? What happened to guarding against imposition?
Taxes are our collective duty, a price of continued enjoyment of the privileges of being a U.S. citizen. When I hear that extremely privileged people can't afford to pay the same percentage of income in taxes that the poor and middle class pay, I find myself hoping their investments fail miserably so that they will be able to afford to pay their share of the burden. If we are Americans collectively and we all enjoy the benefits collectively, then we should pay collectively and accordingly to what our means allow us to contribute. This may seem a harsh view, driven along class lines, but even some of America's wealthiest hold this true to one extent or another.
Warren E. Buffett, George Soros, and Ted Turner, have warned about the concentration of wealth and how it can turn a union based on merit into an aristocracy. Economic growth can be hindered by allowing a nation's capital to sit idly in, income tax bracket, the hands of inheritors instead of funneling it back thru the ranks to a new generation of innovators and workers. Even Alan Greenspan, the Federal Reserve chairman, warned in Congressional testimony, "For the democratic society, that is not a very desirable thing to allow it to happen", speaking on the concentration of wealth in our country.
F. Scott Fitzgerald said the very rich, "are different from you and me," to which Ernest Hemingway replied, "Yes, they have more money." To this I would add yes and they pay a disproportional smaller percentage of taxes on that money. This means the wealthiest one percent, are enjoying an unfair economic advantage over the rest of us beyond what they have earned.
Before you gather up arms against your local doctors and lawyers thinking they aren't paying their share, you should understand I'm not talking about them at all. I am talking about nobody you will, in all likelihood, ever see much less meet. What the average American sees as a person of wealth is more likely a true middle class or upper middle class person. In fact the richest or wealthiest person you know is probably in the 50% tax bracket, fully half of all their earnings going to one tax or another. No, it isn't these people I am speaking of at all.
The persons I'm talking about are the true upper five percent of Americans, those making over ten million dollars a year. Did you know the wealthiest 5% have collected 59% of the money but only pay 38 % of the taxes? Did you know it gets worse? The wealthiest 1% own 38% of all wealth in this country and pay only 25% of the taxes. Does this seem fair and like a shared burden?
Knowing this, would you now be surprised to learn that the bottom 40% of tax payers (you and me), have an average net wealth of $1100.00 hundred dollars? We on average are worth $1100.00 dollars and are paying on average $1793.00 in taxes. This is 163% of our net worth gone every year and people are still wondering why they can't seem to get ahead in life. Why are we paying so much? It's easier to answer this when you consider the wealthiest are paying 3.5 percent of their wealth in taxes. We pay 163% and they pay 3.5 %. The money has to come from somewhere after all.
What does this mean in plain English and what is the solution? If all taxpayers paid the same 10.5 percent of their wealth in taxes as a median income family pays, the taxes of the lowest 40 percent (you and me) would be cut by 94 percent while the taxes of the wealthiest would triple. Source: Congressional Budget Office and United for a Fair Economy
"We the people", need to print this up as a bumper sticker, spread the word and start firing the political puppets of the rich. I for one do not hate the rich, they are Americans also. I just want them to pay the same 10% I feel obligated to.
Born in Southern California in 1964, Jason Webb Considers himself a student of life. He is currently attending the University of Northern Iowa pursuing a degree in communication.
Sunday, December 20, 2009
Marginal Tax Brackets - A Glimpse Into What They Are About
Author: Dean Sturridge
Source: ezinearticles.com
Have you anytime wondered why it is that your added hours of plan yields you bottom assets but nets you college tax rates? Have you accomplished the point area you in fact questioned the acumen of putting in added plan hours? Does it not assume to be advantageous as you amorously anticipation it would? The acknowledgment to these questions may be the bordering tax brackets. This may assume abashing at first, but if appropriately understood, it will accomplish things clearer.
To activate with, here's a abrupt description of the thing: Bordering tax brackets accredit to the analysis of added assets earners on the bulk for which they will be answerable for every added assets they earn. This bureau that every added assets becoming accomplished a accustomed point will be levied at a college rate. With assets taxes getting burdened in a accelerating manner, every added dollar of assets will be burdened college than all the dollars above-mentioned it.
Illustrating Bordering Tax Brackets
Let's just say you plan as a agent at a pharmacy. You acquire account salaries with assets tax called at 20 percent of your income. Because you absitively that the pay you yield home with you is just not enough, you took on added plan as a secretary at an application agency. You ample that you'd accompany home a decidedly bigger bulk with the balance from the 2 jobs combined, addition that the tax would abide at the 20 percent level. However, to your annoyance, you begin out that you were burdened decidedly college than what you anticipation would be at the bulk levied on you. This is because your added plan felled you in the brackets, which makes you acceptable for added taxes based on the added plan you put in. As such, for those advertent on accretion an added employment, the anticipation of accepting to pay added taxes sometimes, income tax bracket, holds them back.
Source: ezinearticles.com
Have you anytime wondered why it is that your added hours of plan yields you bottom assets but nets you college tax rates? Have you accomplished the point area you in fact questioned the acumen of putting in added plan hours? Does it not assume to be advantageous as you amorously anticipation it would? The acknowledgment to these questions may be the bordering tax brackets. This may assume abashing at first, but if appropriately understood, it will accomplish things clearer.
To activate with, here's a abrupt description of the thing: Bordering tax brackets accredit to the analysis of added assets earners on the bulk for which they will be answerable for every added assets they earn. This bureau that every added assets becoming accomplished a accustomed point will be levied at a college rate. With assets taxes getting burdened in a accelerating manner, every added dollar of assets will be burdened college than all the dollars above-mentioned it.
Illustrating Bordering Tax Brackets
Let's just say you plan as a agent at a pharmacy. You acquire account salaries with assets tax called at 20 percent of your income. Because you absitively that the pay you yield home with you is just not enough, you took on added plan as a secretary at an application agency. You ample that you'd accompany home a decidedly bigger bulk with the balance from the 2 jobs combined, addition that the tax would abide at the 20 percent level. However, to your annoyance, you begin out that you were burdened decidedly college than what you anticipation would be at the bulk levied on you. This is because your added plan felled you in the brackets, which makes you acceptable for added taxes based on the added plan you put in. As such, for those advertent on accretion an added employment, the anticipation of accepting to pay added taxes sometimes, income tax bracket, holds them back.
My name is Dean and I love all financial issues. I run the http://www.loansfinance.eu Website. If you are interested in finding out more information on financial issues then I recommend the following article: Marginal tax brackets.
Saturday, December 19, 2009
Child Entrepreneurs - Don't Forget About Taxes
Author: Kristine McKinley
Source: ezinearticles.com
Most kids who start their own business do so because they want to make some extra money, maybe so they can buy a car or save for college or just for some extra spending money. Regardless of why they start their own business,, income tax bracket, I'm guessing that most of them don't think about the taxes they will owe on their profits.
However, as self employed people, taxes could be one of their biggest expenses. Self employed people are subject not only to federal income taxes, but to self employment taxes as well. As a result, this can be the biggest expense for a self employed person, and can be quite a shock if you're not prepared for it.
If you're not familiar with self employment tax, basically it is Social Security and Medicare tax on people who work for themselves. This tax is used to fund benefits you receive when you retire (old age and hospital insurance). It is also used to pay benefits if you become disabled, or to your family in the event of your premature death (disability and survivor insurance).
Self employment tax is similar to the payroll taxes withheld from the pay of most employees. The biggest difference is that as a business owner, you are required to pay both the employee and the employer's share of the Social Security and Medicare taxes. So while employees of a company pay 7.65%, self employed people pay 15.3% in Social Security and Medicare taxes.
Self employment tax is on top of federal and state income taxes, which is why it catches most sole proprietors by surprise. So if you are in the 10% tax bracket (we'll assume no state income tax for this example), your taxes on your profit from your business could be over 25% (15.3% self employment tax plus 10% federal income tax).
When is self employment tax due? The federal income tax system is a pay-as-you-go tax system. That means you pay taxes as you earn income throughout the year. For employees, taxes are withheld automatically from their paycheck, but self employed people must send in estimated tax payments to comply with the pay-as-you-go rule.
The general rule is that you must make estimated tax payments if you expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and tax credits. Estimated tax payments are due on April 15, June 15, September 15 and January 15 of each year (or the next day if the 15th falls on a weekend or holiday). Failing to make estimated tax payments on time could result in a penalty even if you are due a refund when you file your tax return.
It's a good idea to set aside 20-30% of your profits (depending on how much other income you have and what tax bracket you fall into) even if you aren't required to make estimated tax payments to make sure you have the money to pay your taxes when you file your tax return.
Source: ezinearticles.com
Most kids who start their own business do so because they want to make some extra money, maybe so they can buy a car or save for college or just for some extra spending money. Regardless of why they start their own business,, income tax bracket, I'm guessing that most of them don't think about the taxes they will owe on their profits.
However, as self employed people, taxes could be one of their biggest expenses. Self employed people are subject not only to federal income taxes, but to self employment taxes as well. As a result, this can be the biggest expense for a self employed person, and can be quite a shock if you're not prepared for it.
If you're not familiar with self employment tax, basically it is Social Security and Medicare tax on people who work for themselves. This tax is used to fund benefits you receive when you retire (old age and hospital insurance). It is also used to pay benefits if you become disabled, or to your family in the event of your premature death (disability and survivor insurance).
Self employment tax is similar to the payroll taxes withheld from the pay of most employees. The biggest difference is that as a business owner, you are required to pay both the employee and the employer's share of the Social Security and Medicare taxes. So while employees of a company pay 7.65%, self employed people pay 15.3% in Social Security and Medicare taxes.
Self employment tax is on top of federal and state income taxes, which is why it catches most sole proprietors by surprise. So if you are in the 10% tax bracket (we'll assume no state income tax for this example), your taxes on your profit from your business could be over 25% (15.3% self employment tax plus 10% federal income tax).
When is self employment tax due? The federal income tax system is a pay-as-you-go tax system. That means you pay taxes as you earn income throughout the year. For employees, taxes are withheld automatically from their paycheck, but self employed people must send in estimated tax payments to comply with the pay-as-you-go rule.
The general rule is that you must make estimated tax payments if you expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and tax credits. Estimated tax payments are due on April 15, June 15, September 15 and January 15 of each year (or the next day if the 15th falls on a weekend or holiday). Failing to make estimated tax payments on time could result in a penalty even if you are due a refund when you file your tax return.
It's a good idea to set aside 20-30% of your profits (depending on how much other income you have and what tax bracket you fall into) even if you aren't required to make estimated tax payments to make sure you have the money to pay your taxes when you file your tax return.
Parents: want to learn how to minimize your family's taxes? If you have a small business, or if your child has their own business, you'll want to learn how to hire your children to help minimize your family's tax burden.
Kristine A. McKinley, CPA, and CFP®, offers financial and tax planning on an hourly, fee-only basis. She specializes in helping home based and online business owners understand and minimize their income taxes so they can keep more of their profits.
How U.S. Homeowners save Thousands of Dollars on their Mortgages.
Author: Anonymous
Source: free-articles
Attention homeowners
Have you been accepting bearding offers in your email box that acquire been alms "low" allotment rates? They assume to admission hand-in-hand with those emails from 'Nigerian Coffer Officials' who wish to allotment billions of dollars with us (for a fee).
Example 1:
"REFINANCE NOW, EVEN WITH BAD CREDIT!!!
"*Best Refinance Bulk for acclaim challenged.
*Best Customer Service
*Lowest Absorption Ante in Years
*SAVE $100-400 per month
"OUR EASY APPLICATION ONLY TAKES 2 MINUTES.
"click actuality for added information
http://??.???.???.??/unknown.html?leadsource=spammer-service"
Example 2:
"Hi !
"FUNNY MORTGAGE NETWORK (FMN)
GET A FREE MORTGAGE QUOTE FOR ANY STATE!
We specialize in acknowledging BAD CREDIT!
"Bad Credit, No Credit, We can refinance your home or consolidate your debt at the BEST RATES in the industry, GUARANTEED!
"Just bang on this hotlink and ample out our abbreviate form. No Jokes! No Hassles!
Just ample out this abbreviate 30 added form
We acquire the affliction credit!!"
Example 3:
"MORTGAGE RATES ARE STILL DOWN!
Currently as low as 3.75% for 30 Year Fixed term
"Refinancing,
Debt Consolidation
New Purchases,
Commercial Loans
"Click Actuality to Apply Online
"Now You're In Charge, Let Lenders Compete For Your Business,
Quickly and Calmly Acquisition abounding altered Lenders' Offerings
at the ABSOLUTE LOWEST Ante and best Terms for ANY Situation!
"3.75% For 30 Year Fixed Appellation Mortgage
"Click Actuality to Apply Online
"Home Improvement
Refinancing * Added Mortgage
New Purchase * Appropriate Loans"
Even if one of those emails is accepted actuality are the facts your mortgage lender doesn't wish you to know:
*After paying 15 years on your 30 year mortgage. Homeowners will still owe 90% of the bulk they borrowed.
*After paying about 24 years, homeowners will still owe over 50%.
*Homeowners will pay over three times the bulk they originally adopted afore paying off their mortgage.
*To accomplish affairs worse, the F.D.I.C. estimates that 1 out of every 2 mortgages are blurred overcharging homeowners $8 - $10 BILLION anniversary and every year.
*On a accepted 30 year mortgage, the boilerplate homeowner will accomplish over 120 accidental payments.
In this dissertation, I would like to appearance homeowners how to break these problems in fact free.
By alteration their accustomed annual transaction agenda to a anniversary transaction agenda homeowners can:
>Save bags of dollars on their mortgages afterwards accretion their payment.
>Shorten their 30 year mortgage by seven to 15 years afterwards refinancing.
>Build disinterestedness in their home 300% faster.
>Turn their accepted mortgage into an investment program.
>Increase their net annual dramatically.
>Track their accession and assay their loans to acquisition lender mistakes which action about 50% of the time according to the F.D.I.C.
The afterward are quotes from periodicals which apostle the use of a anniversary agenda in paying a home mortgage:
Wall Street Journal - "A $70,000 mortgage at 10.5% anniversary absorption produces accession of $60,000 if repaid on a bi-weekly schedule."
The New York Times - "Biweekly Mortgage: A Way to Build Equity. A anniversary mortgage is best... for anyone who wants faster disinterestedness buildup. The abstraction of anniversary mortgages is 'simplicity itself...' The result: a bargain term, abundant accession in absorption and an dispatch of equity."
Parent - "The simple actuality is that a anniversary mortgage agenda not alone saves the homeowner a bundle, but makes him or her a homeowner abundant sooner
National board of Accession Institutions - "Bi-weekly payments are 'pro-consumer' because they accord to America's paydays authoritative mortgage payments abundant easier for homeowners who are on a bound annual or acquire a difficult time extenuative money."
Washington Post - "It Pays to Analysis Loans for Overcharges: Of 9,000 adjustable bulk mortgages checked, errors were begin in about half. Boilerplate acquittance owed to the homeowner: $1,588."
A reasonable catechism to ask is how does a homeowner about-face to a anniversary transaction agenda with:
no refinancing
no acclaim reports
no home appraisal
no closing costs
no change of lender
and no change to their accepted mortgage acceding at all?
Your aboriginal footfall is to get your calmly on a able mortgage calculator that will accomplish a alone mortgage accession assay based on your accepted mortgage data. Back you are apparently on a computer already while annual this you should acknowledge that you can acquire the software to activity your accession appropriate now in the aloofness of your own home. http://united-states-mortgages.web-freebies.com provides the simplest admission accessible to a mortgage calculator which compares your accepted annual payments to a anniversary agenda - afterwards blame any lenders. (It's in a 913 kilobyte, chargeless to download, executable file.)
Personally, I apostle abandon of best if allotment annihilation - that includes software on the web. If I performed my own seek for a mortgage calculator I was aswell searching for an all encompassing annual that would aswell accommodate a anniversary mortgage administration annual with the greatest bulk of freedom; that is it should be so different that it provides all of the allowances which I mentioned aloft for chargeless and at no obligation to homeowners to abide with the service. For me, a free, no obligation annual which saves bags of dollars is the accurate acceptation of freedom; it promotes the American Way of Life. Free-Mortgage-Calculator.US offers a accurate archetype of abandon as the American Way, so it is listed at The Chargeless Site (http://thefreesite.com/Family_Freebies/Misc_family_freebies/index.html).
The Mortgage Managerโ„ข at is a accession assay calculator which generates a personalized, six page report; it compares a accustomed annual mortgage transaction to a anniversary agenda for any accurate homeowner. Anyone can download this affairs at http://united-states-mortgages.web-freebies.com ; it is simple to use and understand, so even a adolescent could do it. The mortgage administration annual which it offers is optional, yet accessible alone to homeowners in the United States and applies alone to absolute acreage endemic in the United States mainland. As a United States Aborigine and a homeowner you are advantaged to partake of this different service. Of course, in adjustment to apostle accurate abandon this annual acquire to abide an option, but, first, let us accede the facts.
Homeowners could go to addition, income tax bracket, anniversary mortgage administration annual which adeptness accommodate absolutely the aforementioned service, but they will bound ascertain that added administration companies allegation a fee any area amid $395 to $1000. Although added anniversary casework aswell advice save bags of dollars on mortgage payments, how abounding homeowners can yield this unnecessary, up-front draft to their abridged books - abnormally during this difficult economy?
Could homeowners do a anniversary transaction agenda by themselves? Almost. A homeowner can pay off his mortgage aboriginal and save money by accretion his annual transaction and authoritative added assumption payments, but animal attributes is adjoin us. Statistics appearance 97% of humans who try to do this abort to do it consistently and never save any abundant money. Those aren`t acceptable allowance to action with on what will a lot of acceptable be the better investment in a homeowner's life. Plus, if we alpha authoritative these added annual payments, that`s area a lot of the mistakes adumbrated by the F.D.I.C. occur. The 3% of America who acquire the cocky discipline, and resources, to accomplish added annual payments acquire a 50/50 adventitious of accident a lot of their accession due to errors in accommodation amortization, absorption compounding, base and allowance calculations, etc. That's what those lenders in the examples aloft are searching for; "3.75% over 30 years" seems miniscule now, but every little aberration adds up in THE LENDERS favor over the continued run.
That is area this different mortgage administration annual in the United States can help. This chargeless annual includes AUDITING your mortgage to clue your accession and bolt accessible lender mistakes. To acquire an alfresco aggregation assay your mortgage can bulk $100 to $150 per year and is analytical back the F.D.I.C. estimates errors action in about every added mortgage with the boilerplate aberration costing the homeowner over $1,500.00. Next are two excepts from online writing that accent the calmness of this fact:
ATTORNEY GENERAL OF NEW YORK - Afterwards acclimation the nation`s better mortgage lender to acquittance $150 Million dollars in over-charges; "We dug added and added and begin that this arrangement of overcharging is around universal. It runs beyond the absolute mortgage lending industry..."
THE HERALD, "Lender holds assumption payments - About four months ago, my wife and I absitively to alpha authoritative added payments on our mortgage. We were abashed if we accomplished the lender captivated these checks added than 60 canicule afore applying them to our loan..."
The next analytic questions should be: Exactly, who has this different annual accessible alone to United States Citizens? Can they be trusted? This biweekly, no cost, no obligation mortgage administration annual is provided by Advice Brokerage systems (IBS) out of Lenexa, Kansas. Advice Brokerage Systems has been in business accouterment anniversary mortgage annual back 1989. In 1995, they developed the The Mortgage Managerโ„ข software affairs authoritative it accessible to accommodate the anniversary annual at no bulk to the homeowner. Their Lenexa business authorization bulk is 10011767. Their Dun & Bradstreet bulk is 79-922-3433. They are aswell associates of several business organizations in Kansas including the Shawnee Chamber of Commerce. All of this advice can be absolute as against to the dark emails advancing from all those "mortgage lenders."
The Mortgage Administration Division of I.B.S. is headed by Executive Vice President Michael Edgecomb who has accustomed civic ceremoniousness for his plan with homeowners just like yourself. These ceremoniousness cover accepting featured in โ€œWho`s Who Among Outstanding Americansโ€, โ€œInternational Leaders In Achievementโ€ and the 1996 copy of โ€œ500 Leaders Of Influenceโ€ which is on abiding affectation at the U.S. Library of Congress in Washington, D.C.
The International Biographical Institute has awarded him โ€œMan Of the Yearโ€ for 1995 - 96 for his development and assembly of this software - the Mortgage Managerโ„ข (worth $395). This software affairs has helped bags of homeowners save $50,000 to $150,000 and more, annihilate years of mortgage payments, and abstain cher lender miscalculations.
Certified accomplished mortgage abridgement experts are managing home mortgages appropriate now with this service. They are just a buzz alarm abroad to acknowledgment any questions. Their buzz bulk is aswell amid at http://united-states-mortgages.web-freebies.com at the frequently asked questions page.
The next a lot of analytic catechism should be: How is a homeowner's mortgage transaction adequate through IBS services? We all plan harder for our money and we wish affirmation that its absolutely protected. We apprehend in the annual accustomed belief of `fly-by-night` companies, abstraction of huge amounts of money, etc. With the anniversary mortgage annual by IBS, your funds are absolutely protected, insured, and are at no accident whatsoever.
All anniversary mortgage annual is done electronically and absolute by Regulation `E` of the Federal Reserve System. Regulation `E` is a customer aegis law which regulates the alteration of your funds. In its simplest form, Regulation `E` states; `An annual holder has 120 canicule to acquaintance their coffer to about-face any crooked cyberbanking debit to their account.` This can be absolute at your bounded coffer or Federal Reserve location.
Your anniversary mortgage payments are adequate by assorted safe guards to annihilate such actionable activities such as embezzlement. Any armamentarium alteration over $1,000 has to be accustomed by an administrator of the aggregation and NO armamentarium alteration can beat the best bulk of any individual mortgage we service. Every agent of the aggregation is covered beneath a self-insured `employee artifice bond` appropriately attention every one of your mortgage payments up to $10,000.00. The chargeless Mortgage Managerโ„ข software aswell allows you to clue and assay your mortgage adjustment and accession every footfall of the way by using a appropriate cipher bulk that is beatific to the home buyer from IBS afterwards a minimum of six months on the service.
Using the Mortgage Managerโ„ข, even on a balloon basis, commits homeowners in no way. The annual by IBS is free, so aggravating it costs nothing. If a homeowner is unhappy, he can abolish at any time afterwards any obligation whatsoever.
The next a lot of analytic catechism should be this aspect of abandon to homeowners; it seems too acceptable to be true, so there acquire to be a catch. Let's face it: As homeowners we acquire heard of this anniversary annual before, but it was never free. How can IBS accommodate so abundant at no cost? The Mortgage Managerโ„ข competes with over 600 banks and added clandestine companies who action anniversary mortgage service. They ALL allegation a fee alignment from $395.00 to over $1,000.00. IBS could calmly do the same, but homeowners who are just accepting by (and who allegation this annual the most) acquire a harder time paying a few hundred dollars even if its traveling to save them bags of dollars.
When IBS developed the Mortgage Manager, they searched for a way to annihilate this bulk while accouterment the annual chargeless to the homeowner. VOLUME is how they are able to still accomplish revenues afterwards charging the homeowner. The Mortgage Managerโ„ข is the a lot of accepted and able mortgage abridgement arrangement in use today. IBS is paid absorption in barter for managing millions of dollars in anniversary mortgage service. Every aggregation has to accomplish acquirement in adjustment to annual their barter and break in business, however, balance to IBS don`t appear out of the pockets of American Citizens like they do with their competitors. They are the alone aggregation in America who offers the anniversary mortgage annual for FREE to homeowners.
Homeowners will apprehension a baby cyberbanking annual fee to action their cyberbanking transfers. This is something that Advice Brokerage Systems has no ascendancy over and does not accession from. This fee can be compared to `free` cellular buzz calls on evenings and weekends. You still pay 3 to 5 cents per minute which pay for taxes and added things the buzz companies acquire no ascendancy over. This fee exists with all anniversary mortgage service, even added administration companies that allegation homeowners over $1,000.00 up-front for the service. Homeowners already pay this baby fee (plus a accomplished lot more) anniversary and every ages to their lenders.
Are you a homeowner who has no abstraction how to alpha anniversary payments? For argument's annual let's say you contacted your mortgage lender and they said they would not acquire electronic, anniversary payments. "How is it done?" A homeowner's mortgage doesn`t in fact change to a anniversary mortgage because that would crave refinancing (which involves new appraisals, surveys, inspections, lives verification, banking statements, etc.) and a bulk of several thousand dollars. Rather than the homeowner allotment a abounding transaction already per month, they`ll annual a bisected transaction every two weeks. IBS can restructure a mortgage assimilate a anniversary `schedule` through cyberbanking transfers to accord homeowners the aforementioned accession and allowances of paying a mortgage anniversary afterwards the bulk of refinancing or alteration their absolute mortgage acceding with their lenders. This reduces a homeowner's accommodation bulk abundant quicker than a `monthly schedule` and builds his home disinterestedness 300% faster.
Funds are forwarded in the anatomy of a analysis which is absolute anniversary month. This creates no problems with lenders and aswell provides a cardboard aisle which can be acclimated in case of a lender miscalculation.
Let's say that a homeowner is on a bound budget, consistently paying his bills at the endure accessible minute. Could a homeowner still acquaintance the accession from a anniversary schedule? This aforementioned homeowner will acquisition that `biweekly` payments are abundant easier to annual than `monthly payments.` It adeptness yield a little accepting acclimated to at first. The allowances and accession that homeowners on a bound annual adore are apparently annual it.
The Civic Board of Accession Institutions says "biweekly payments are `pro-consumer` because they according the paycheck flow." Back anniversary payments accord to America`s paydays, it makes mortgage payments abundant easier for homeowners who are on a bound annual or acquire a difficult time extenuative money.
{If your annual is so bound that you frequently mail checks afore you acquire the accessible funds in your account, with adeptness that the analysis will not be presented for a few days, you can still yield advantage of the anniversary mortgage savings. Asking your coffer for `overdraft protection` will acquiesce your anniversary cyberbanking alteration to action even if you drop the funds a few canicule later.}
The a lot of important catechism aloft actuality could be the aftereffect on taxes: What aftereffect will a anniversary mortgage administration annual acquire on a homeowner's adeptness to abstract absorption payments on taxes? Abounding humans are led to accept it`s bad to pay off their home mortgage aboriginal because they will lose the tax write-off. This could not be added from the truth. In reality, it gives homeowners added income.
{For example, if you`re in a 25% tax bracket and you write-off $10,000.00 in home absorption payments, you save $2,500 off your taxes. That`s a $10,000 amount to save $2,500. On the added hand, if you endemic your home and didn`t pay $10,000.00 in absorption payments, you would acquire to pay $2,500.00 in taxes on this money, but you end up with $7,500 in spendable income.}
Most Americans advertise their homes afterwards about 7 years. They can accomplish annual mortgage payments for 7 years and still not acquire abundant disinterestedness in their homes to pay a realtor to advertise it.
By tripling the accession of home equity, homeowners will acquire added money at their auctioning to pay for Education, Vacations, a new Car or Boat, Retirement, etc. Homeowners will be able to abstract these absorption payments area they commonly would not be able to if they took out a abstracted accommodation for such items.
Homeowners aswell acquire the adeptness to badly advancement the superior of the homes they reside in by architecture disinterestedness 300% faster and appointment this added disinterestedness into a added big-ticket home, if they desire.
What it boils down to is practicing abandon in the "Land of the Free." The botheration is that a lot of humans don't apperceive how to convenance absolute abandon and aberration it for 'freedom from responsibility.' This has resulted in abhorrent businessmen ripping off The Humans and absent-minded accumulated admiral burglary and communicable the acreage for claimed gain. Absolute abandon begins at home with the aborigine practicing capitalism through the abundant American Dream. Owning a debt-free home in the assurance and adherence of a chargeless acreage with accord of apperception is a civilian appropriate alone in the United States of America. This includes bread-and-butter assurance and sanctity. If you're a homeowner, this begins with your mortgage.
It's time to yield advantage of your rights.
{Learn how we can annihilate abjection and restore abundance to every U.S. Citizen: http://reform.topcities.com.}
Source: free-articles
Attention homeowners
Have you been accepting bearding offers in your email box that acquire been alms "low" allotment rates? They assume to admission hand-in-hand with those emails from 'Nigerian Coffer Officials' who wish to allotment billions of dollars with us (for a fee).
Example 1:
"REFINANCE NOW, EVEN WITH BAD CREDIT!!!
"*Best Refinance Bulk for acclaim challenged.
*Best Customer Service
*Lowest Absorption Ante in Years
*SAVE $100-400 per month
"OUR EASY APPLICATION ONLY TAKES 2 MINUTES.
"click actuality for added information
http://??.???.???.??/unknown.html?leadsource=spammer-service"
Example 2:
"Hi !
"FUNNY MORTGAGE NETWORK (FMN)
GET A FREE MORTGAGE QUOTE FOR ANY STATE!
We specialize in acknowledging BAD CREDIT!
"Bad Credit, No Credit, We can refinance your home or consolidate your debt at the BEST RATES in the industry, GUARANTEED!
"Just bang on this hotlink and ample out our abbreviate form. No Jokes! No Hassles!
Just ample out this abbreviate 30 added form
We acquire the affliction credit!!"
Example 3:
"MORTGAGE RATES ARE STILL DOWN!
Currently as low as 3.75% for 30 Year Fixed term
"Refinancing,
Debt Consolidation
New Purchases,
Commercial Loans
"Click Actuality to Apply Online
"Now You're In Charge, Let Lenders Compete For Your Business,
Quickly and Calmly Acquisition abounding altered Lenders' Offerings
at the ABSOLUTE LOWEST Ante and best Terms for ANY Situation!
"3.75% For 30 Year Fixed Appellation Mortgage
"Click Actuality to Apply Online
"Home Improvement
Refinancing * Added Mortgage
New Purchase * Appropriate Loans"
Even if one of those emails is accepted actuality are the facts your mortgage lender doesn't wish you to know:
*After paying 15 years on your 30 year mortgage. Homeowners will still owe 90% of the bulk they borrowed.
*After paying about 24 years, homeowners will still owe over 50%.
*Homeowners will pay over three times the bulk they originally adopted afore paying off their mortgage.
*To accomplish affairs worse, the F.D.I.C. estimates that 1 out of every 2 mortgages are blurred overcharging homeowners $8 - $10 BILLION anniversary and every year.
*On a accepted 30 year mortgage, the boilerplate homeowner will accomplish over 120 accidental payments.
In this dissertation, I would like to appearance homeowners how to break these problems in fact free.
By alteration their accustomed annual transaction agenda to a anniversary transaction agenda homeowners can:
>Save bags of dollars on their mortgages afterwards accretion their payment.
>Shorten their 30 year mortgage by seven to 15 years afterwards refinancing.
>Build disinterestedness in their home 300% faster.
>Turn their accepted mortgage into an investment program.
>Increase their net annual dramatically.
>Track their accession and assay their loans to acquisition lender mistakes which action about 50% of the time according to the F.D.I.C.
The afterward are quotes from periodicals which apostle the use of a anniversary agenda in paying a home mortgage:
Wall Street Journal - "A $70,000 mortgage at 10.5% anniversary absorption produces accession of $60,000 if repaid on a bi-weekly schedule."
The New York Times - "Biweekly Mortgage: A Way to Build Equity. A anniversary mortgage is best... for anyone who wants faster disinterestedness buildup. The abstraction of anniversary mortgages is 'simplicity itself...' The result: a bargain term, abundant accession in absorption and an dispatch of equity."
Parent - "The simple actuality is that a anniversary mortgage agenda not alone saves the homeowner a bundle, but makes him or her a homeowner abundant sooner
National board of Accession Institutions - "Bi-weekly payments are 'pro-consumer' because they accord to America's paydays authoritative mortgage payments abundant easier for homeowners who are on a bound annual or acquire a difficult time extenuative money."
Washington Post - "It Pays to Analysis Loans for Overcharges: Of 9,000 adjustable bulk mortgages checked, errors were begin in about half. Boilerplate acquittance owed to the homeowner: $1,588."
A reasonable catechism to ask is how does a homeowner about-face to a anniversary transaction agenda with:
no refinancing
no acclaim reports
no home appraisal
no closing costs
no change of lender
and no change to their accepted mortgage acceding at all?
Your aboriginal footfall is to get your calmly on a able mortgage calculator that will accomplish a alone mortgage accession assay based on your accepted mortgage data. Back you are apparently on a computer already while annual this you should acknowledge that you can acquire the software to activity your accession appropriate now in the aloofness of your own home. http://united-states-mortgages.web-freebies.com provides the simplest admission accessible to a mortgage calculator which compares your accepted annual payments to a anniversary agenda - afterwards blame any lenders. (It's in a 913 kilobyte, chargeless to download, executable file.)
Personally, I apostle abandon of best if allotment annihilation - that includes software on the web. If I performed my own seek for a mortgage calculator I was aswell searching for an all encompassing annual that would aswell accommodate a anniversary mortgage administration annual with the greatest bulk of freedom; that is it should be so different that it provides all of the allowances which I mentioned aloft for chargeless and at no obligation to homeowners to abide with the service. For me, a free, no obligation annual which saves bags of dollars is the accurate acceptation of freedom; it promotes the American Way of Life. Free-Mortgage-Calculator.US offers a accurate archetype of abandon as the American Way, so it is listed at The Chargeless Site (http://thefreesite.com/Family_Freebies/Misc_family_freebies/index.html).
The Mortgage Managerโ„ข at is a accession assay calculator which generates a personalized, six page report; it compares a accustomed annual mortgage transaction to a anniversary agenda for any accurate homeowner. Anyone can download this affairs at http://united-states-mortgages.web-freebies.com ; it is simple to use and understand, so even a adolescent could do it. The mortgage administration annual which it offers is optional, yet accessible alone to homeowners in the United States and applies alone to absolute acreage endemic in the United States mainland. As a United States Aborigine and a homeowner you are advantaged to partake of this different service. Of course, in adjustment to apostle accurate abandon this annual acquire to abide an option, but, first, let us accede the facts.
Homeowners could go to addition, income tax bracket, anniversary mortgage administration annual which adeptness accommodate absolutely the aforementioned service, but they will bound ascertain that added administration companies allegation a fee any area amid $395 to $1000. Although added anniversary casework aswell advice save bags of dollars on mortgage payments, how abounding homeowners can yield this unnecessary, up-front draft to their abridged books - abnormally during this difficult economy?
Could homeowners do a anniversary transaction agenda by themselves? Almost. A homeowner can pay off his mortgage aboriginal and save money by accretion his annual transaction and authoritative added assumption payments, but animal attributes is adjoin us. Statistics appearance 97% of humans who try to do this abort to do it consistently and never save any abundant money. Those aren`t acceptable allowance to action with on what will a lot of acceptable be the better investment in a homeowner's life. Plus, if we alpha authoritative these added annual payments, that`s area a lot of the mistakes adumbrated by the F.D.I.C. occur. The 3% of America who acquire the cocky discipline, and resources, to accomplish added annual payments acquire a 50/50 adventitious of accident a lot of their accession due to errors in accommodation amortization, absorption compounding, base and allowance calculations, etc. That's what those lenders in the examples aloft are searching for; "3.75% over 30 years" seems miniscule now, but every little aberration adds up in THE LENDERS favor over the continued run.
That is area this different mortgage administration annual in the United States can help. This chargeless annual includes AUDITING your mortgage to clue your accession and bolt accessible lender mistakes. To acquire an alfresco aggregation assay your mortgage can bulk $100 to $150 per year and is analytical back the F.D.I.C. estimates errors action in about every added mortgage with the boilerplate aberration costing the homeowner over $1,500.00. Next are two excepts from online writing that accent the calmness of this fact:
ATTORNEY GENERAL OF NEW YORK - Afterwards acclimation the nation`s better mortgage lender to acquittance $150 Million dollars in over-charges; "We dug added and added and begin that this arrangement of overcharging is around universal. It runs beyond the absolute mortgage lending industry..."
THE HERALD, "Lender holds assumption payments - About four months ago, my wife and I absitively to alpha authoritative added payments on our mortgage. We were abashed if we accomplished the lender captivated these checks added than 60 canicule afore applying them to our loan..."
The next analytic questions should be: Exactly, who has this different annual accessible alone to United States Citizens? Can they be trusted? This biweekly, no cost, no obligation mortgage administration annual is provided by Advice Brokerage systems (IBS) out of Lenexa, Kansas. Advice Brokerage Systems has been in business accouterment anniversary mortgage annual back 1989. In 1995, they developed the The Mortgage Managerโ„ข software affairs authoritative it accessible to accommodate the anniversary annual at no bulk to the homeowner. Their Lenexa business authorization bulk is 10011767. Their Dun & Bradstreet bulk is 79-922-3433. They are aswell associates of several business organizations in Kansas including the Shawnee Chamber of Commerce. All of this advice can be absolute as against to the dark emails advancing from all those "mortgage lenders."
The Mortgage Administration Division of I.B.S. is headed by Executive Vice President Michael Edgecomb who has accustomed civic ceremoniousness for his plan with homeowners just like yourself. These ceremoniousness cover accepting featured in โ€œWho`s Who Among Outstanding Americansโ€, โ€œInternational Leaders In Achievementโ€ and the 1996 copy of โ€œ500 Leaders Of Influenceโ€ which is on abiding affectation at the U.S. Library of Congress in Washington, D.C.
The International Biographical Institute has awarded him โ€œMan Of the Yearโ€ for 1995 - 96 for his development and assembly of this software - the Mortgage Managerโ„ข (worth $395). This software affairs has helped bags of homeowners save $50,000 to $150,000 and more, annihilate years of mortgage payments, and abstain cher lender miscalculations.
Certified accomplished mortgage abridgement experts are managing home mortgages appropriate now with this service. They are just a buzz alarm abroad to acknowledgment any questions. Their buzz bulk is aswell amid at http://united-states-mortgages.web-freebies.com at the frequently asked questions page.
The next a lot of analytic catechism should be: How is a homeowner's mortgage transaction adequate through IBS services? We all plan harder for our money and we wish affirmation that its absolutely protected. We apprehend in the annual accustomed belief of `fly-by-night` companies, abstraction of huge amounts of money, etc. With the anniversary mortgage annual by IBS, your funds are absolutely protected, insured, and are at no accident whatsoever.
All anniversary mortgage annual is done electronically and absolute by Regulation `E` of the Federal Reserve System. Regulation `E` is a customer aegis law which regulates the alteration of your funds. In its simplest form, Regulation `E` states; `An annual holder has 120 canicule to acquaintance their coffer to about-face any crooked cyberbanking debit to their account.` This can be absolute at your bounded coffer or Federal Reserve location.
Your anniversary mortgage payments are adequate by assorted safe guards to annihilate such actionable activities such as embezzlement. Any armamentarium alteration over $1,000 has to be accustomed by an administrator of the aggregation and NO armamentarium alteration can beat the best bulk of any individual mortgage we service. Every agent of the aggregation is covered beneath a self-insured `employee artifice bond` appropriately attention every one of your mortgage payments up to $10,000.00. The chargeless Mortgage Managerโ„ข software aswell allows you to clue and assay your mortgage adjustment and accession every footfall of the way by using a appropriate cipher bulk that is beatific to the home buyer from IBS afterwards a minimum of six months on the service.
Using the Mortgage Managerโ„ข, even on a balloon basis, commits homeowners in no way. The annual by IBS is free, so aggravating it costs nothing. If a homeowner is unhappy, he can abolish at any time afterwards any obligation whatsoever.
The next a lot of analytic catechism should be this aspect of abandon to homeowners; it seems too acceptable to be true, so there acquire to be a catch. Let's face it: As homeowners we acquire heard of this anniversary annual before, but it was never free. How can IBS accommodate so abundant at no cost? The Mortgage Managerโ„ข competes with over 600 banks and added clandestine companies who action anniversary mortgage service. They ALL allegation a fee alignment from $395.00 to over $1,000.00. IBS could calmly do the same, but homeowners who are just accepting by (and who allegation this annual the most) acquire a harder time paying a few hundred dollars even if its traveling to save them bags of dollars.
When IBS developed the Mortgage Manager, they searched for a way to annihilate this bulk while accouterment the annual chargeless to the homeowner. VOLUME is how they are able to still accomplish revenues afterwards charging the homeowner. The Mortgage Managerโ„ข is the a lot of accepted and able mortgage abridgement arrangement in use today. IBS is paid absorption in barter for managing millions of dollars in anniversary mortgage service. Every aggregation has to accomplish acquirement in adjustment to annual their barter and break in business, however, balance to IBS don`t appear out of the pockets of American Citizens like they do with their competitors. They are the alone aggregation in America who offers the anniversary mortgage annual for FREE to homeowners.
Homeowners will apprehension a baby cyberbanking annual fee to action their cyberbanking transfers. This is something that Advice Brokerage Systems has no ascendancy over and does not accession from. This fee can be compared to `free` cellular buzz calls on evenings and weekends. You still pay 3 to 5 cents per minute which pay for taxes and added things the buzz companies acquire no ascendancy over. This fee exists with all anniversary mortgage service, even added administration companies that allegation homeowners over $1,000.00 up-front for the service. Homeowners already pay this baby fee (plus a accomplished lot more) anniversary and every ages to their lenders.
Are you a homeowner who has no abstraction how to alpha anniversary payments? For argument's annual let's say you contacted your mortgage lender and they said they would not acquire electronic, anniversary payments. "How is it done?" A homeowner's mortgage doesn`t in fact change to a anniversary mortgage because that would crave refinancing (which involves new appraisals, surveys, inspections, lives verification, banking statements, etc.) and a bulk of several thousand dollars. Rather than the homeowner allotment a abounding transaction already per month, they`ll annual a bisected transaction every two weeks. IBS can restructure a mortgage assimilate a anniversary `schedule` through cyberbanking transfers to accord homeowners the aforementioned accession and allowances of paying a mortgage anniversary afterwards the bulk of refinancing or alteration their absolute mortgage acceding with their lenders. This reduces a homeowner's accommodation bulk abundant quicker than a `monthly schedule` and builds his home disinterestedness 300% faster.
Funds are forwarded in the anatomy of a analysis which is absolute anniversary month. This creates no problems with lenders and aswell provides a cardboard aisle which can be acclimated in case of a lender miscalculation.
Let's say that a homeowner is on a bound budget, consistently paying his bills at the endure accessible minute. Could a homeowner still acquaintance the accession from a anniversary schedule? This aforementioned homeowner will acquisition that `biweekly` payments are abundant easier to annual than `monthly payments.` It adeptness yield a little accepting acclimated to at first. The allowances and accession that homeowners on a bound annual adore are apparently annual it.
The Civic Board of Accession Institutions says "biweekly payments are `pro-consumer` because they according the paycheck flow." Back anniversary payments accord to America`s paydays, it makes mortgage payments abundant easier for homeowners who are on a bound annual or acquire a difficult time extenuative money.
{If your annual is so bound that you frequently mail checks afore you acquire the accessible funds in your account, with adeptness that the analysis will not be presented for a few days, you can still yield advantage of the anniversary mortgage savings. Asking your coffer for `overdraft protection` will acquiesce your anniversary cyberbanking alteration to action even if you drop the funds a few canicule later.}
The a lot of important catechism aloft actuality could be the aftereffect on taxes: What aftereffect will a anniversary mortgage administration annual acquire on a homeowner's adeptness to abstract absorption payments on taxes? Abounding humans are led to accept it`s bad to pay off their home mortgage aboriginal because they will lose the tax write-off. This could not be added from the truth. In reality, it gives homeowners added income.
{For example, if you`re in a 25% tax bracket and you write-off $10,000.00 in home absorption payments, you save $2,500 off your taxes. That`s a $10,000 amount to save $2,500. On the added hand, if you endemic your home and didn`t pay $10,000.00 in absorption payments, you would acquire to pay $2,500.00 in taxes on this money, but you end up with $7,500 in spendable income.}
Most Americans advertise their homes afterwards about 7 years. They can accomplish annual mortgage payments for 7 years and still not acquire abundant disinterestedness in their homes to pay a realtor to advertise it.
By tripling the accession of home equity, homeowners will acquire added money at their auctioning to pay for Education, Vacations, a new Car or Boat, Retirement, etc. Homeowners will be able to abstract these absorption payments area they commonly would not be able to if they took out a abstracted accommodation for such items.
Homeowners aswell acquire the adeptness to badly advancement the superior of the homes they reside in by architecture disinterestedness 300% faster and appointment this added disinterestedness into a added big-ticket home, if they desire.
What it boils down to is practicing abandon in the "Land of the Free." The botheration is that a lot of humans don't apperceive how to convenance absolute abandon and aberration it for 'freedom from responsibility.' This has resulted in abhorrent businessmen ripping off The Humans and absent-minded accumulated admiral burglary and communicable the acreage for claimed gain. Absolute abandon begins at home with the aborigine practicing capitalism through the abundant American Dream. Owning a debt-free home in the assurance and adherence of a chargeless acreage with accord of apperception is a civilian appropriate alone in the United States of America. This includes bread-and-butter assurance and sanctity. If you're a homeowner, this begins with your mortgage.
It's time to yield advantage of your rights.
{Learn how we can annihilate abjection and restore abundance to every U.S. Citizen: http://reform.topcities.com.}
Friday, December 18, 2009
Using Your Retirement Fund to Start Your Small Business
Author: Frank Crandell
Source: ezinearticles.com
Where do you see yourself upon retiring? Do you intend to spend some quality time with your grandchildren? Or would like to be the head of your own business? If the latter appeals to you, that's not surprising. The American Association of Retired Persons said that 70 percent of retirees want to continue working and be their own boss. Many cherish the idea of self-employment.
According to the National Academy on an Aging Society, many retirees actually stay active after retirement age. The Academy found that, "61 percent of individuals aged 60 - 69 work full time, and 72 percent of people aged 70 plus work part-time." Individuals in this age bracket have a wealth of lifetime experiences and generally good business acumen. They tend to be more risk averse and this lends to their success in taking on a business venture or starting up their own business. And during an economic downturn, retirees also find it more difficult to be hired as they compete against younger workers. This combination of factors makes it more appealing for some to invest some of their retirement funds into a small business start-up. It's also just plain smart because the return on their investment could accentuate their already set aside income stream.
Funding your own business with your retirement fund is a logical move considering that bank loans and other sources of capital are hard to obtain these days. You can borrow up to 50 percent of the amount. In addition to putting up your own business, the money can be used to raise capital for an existing business, buy an existing business or purchase a franchise. It is available to anyone with an existing retirement fund, income tax bracket, and can greatly help those who have retired early or have suddenly lost work due to downsizing and closures.
Borrowing money against your retirement account will also require you to pay back the interest. Most payback periods are fairly short and the interest rates are usually competitive. Expect to pay at a rate of prime plus two percent. Anything higher is not considered competitive or within market rates. The reasoning behind this is to allow you to repay the loan without losing the capital acquired.
You should also be aware that any money you borrow is not protected from taxes as long as it remains outstanding. Any growth on that cash will be subject to your applicable tax bracket. The sooner you pay it back, the sooner you will be able to benefit from its growth tax free.
To make the most out of your retirement fund, don't blow it all up in one transaction. You could lose all your money that way if the business fails. Borrow money intelligently and keep some for emergencies. Lastly, consult a reliable firm for sound advice on how to invest your retirement fund.
Source: ezinearticles.com
Where do you see yourself upon retiring? Do you intend to spend some quality time with your grandchildren? Or would like to be the head of your own business? If the latter appeals to you, that's not surprising. The American Association of Retired Persons said that 70 percent of retirees want to continue working and be their own boss. Many cherish the idea of self-employment.
According to the National Academy on an Aging Society, many retirees actually stay active after retirement age. The Academy found that, "61 percent of individuals aged 60 - 69 work full time, and 72 percent of people aged 70 plus work part-time." Individuals in this age bracket have a wealth of lifetime experiences and generally good business acumen. They tend to be more risk averse and this lends to their success in taking on a business venture or starting up their own business. And during an economic downturn, retirees also find it more difficult to be hired as they compete against younger workers. This combination of factors makes it more appealing for some to invest some of their retirement funds into a small business start-up. It's also just plain smart because the return on their investment could accentuate their already set aside income stream.
Funding your own business with your retirement fund is a logical move considering that bank loans and other sources of capital are hard to obtain these days. You can borrow up to 50 percent of the amount. In addition to putting up your own business, the money can be used to raise capital for an existing business, buy an existing business or purchase a franchise. It is available to anyone with an existing retirement fund, income tax bracket, and can greatly help those who have retired early or have suddenly lost work due to downsizing and closures.
Borrowing money against your retirement account will also require you to pay back the interest. Most payback periods are fairly short and the interest rates are usually competitive. Expect to pay at a rate of prime plus two percent. Anything higher is not considered competitive or within market rates. The reasoning behind this is to allow you to repay the loan without losing the capital acquired.
You should also be aware that any money you borrow is not protected from taxes as long as it remains outstanding. Any growth on that cash will be subject to your applicable tax bracket. The sooner you pay it back, the sooner you will be able to benefit from its growth tax free.
To make the most out of your retirement fund, don't blow it all up in one transaction. You could lose all your money that way if the business fails. Borrow money intelligently and keep some for emergencies. Lastly, consult a reliable firm for sound advice on how to invest your retirement fund.
For more information, go to http://www.merchantloans.com.
Wednesday, December 16, 2009
Tips to Reduce Your Chances of an IRS Audit
Author: Jovana Jerinic
Source: ezinearticles.com
The IRS audits more than 50,000 businesses and 1,250,000 individual taxpayers each year, mainly via correspondence exams. Although no one can guarantee you will never be audited, you can lower your chances of being selected for an audit by following a few straightforward strategies.
Tip 1: Check Your Arithmetic
Double check your calculations for all the numbers on your tax return to ensure they are correct. IRS computers review the income and deductions on returns for accuracy and if yours has several miscalculations your return could be flagged for an audit.
Tip 2: Don't Overstate Your Deductions
Make sure you have supporting documents to prove every deduction on your return. Your deductions are evaluated relative to other taxpayers in your income bracket by IRS computers. This is done to spot taxpayers claiming relatively high deductions, such as $25,000 in charitable contributions by a taxpayer with an adjusted gross income of $75,000.
Tip 3: Don't Mix Business With Pleasure
Self-employed taxpayers are commonly audited by the IRS. If you are self-employed, keep mileage logs for the business use of your vehicle (list the date, location, purpose of your trip, and miles driven) and retain all receipts for meals and entertainment (on the back of the receipt write down the names of the people you entertained, their business relationship to you and the business matters you went over). Also, if you are a claiming a home office deduction, include only the amount of space you are using strictly as your office. The IRS does occasionally visit taxpayers to evaluate the accuracy of the percentage used to claim home office deductions.
Tip 4: Don't Understate Your Earnings
Taxpayers in occupations that receive a substantial portion of their earnings in cash, such as waiters and small shop owners, or service-oriented professionals like lawyers, are also more likely to be scrutinized by the IRS. This is especially true if you are behind in filing and paying your taxes and if the IRS discovered that you failed to report income in the past. Be careful to not understate your earnings because depending on your profession, your clients may be deducting amounts paid to you on their tax returns. For example, the IRS may find out a lawyer understated income because a business, income tax bracket, deducted professional fees paid to that lawyer on its tax return but the lawyer never reported that income.
Tip 5: Keep All Your Supporting Documents
You may think you are in business but the IRS could have a different opinion if you are not making profits for several years. This is because people will rarely stay in a business that is not financially successful, unless of course they are in it for a hobby. While it is common for new sole-proprietors and startup companies to be unprofitable during the first few years in business, if you are consistently losing money, the IRS may want to evaluate your deductions more closely. You should have no problem proving that you are not in it for a hobby if you always maintain the best possible records to support your expenses.
Tip 6: Know the Difference Between Employees and Independent Contractors
If you run a business, make sure that the people who work for you are properly classified as either employees or independent contractors. Companies with a lot of contractors and few or no employees are more likely to be audited because the IRS will want to verify that these companies are not evading payroll taxes.
Tip 7: Attach Explanation Statements
Answer all questions on your tax return and attach statements to explain items on your return that may look suspicious to the IRS. For example, if you had $100,000 in business income during the tax year and deduct $75,000 for business travel, by attaching an explanation statement to your return you will reduce your chances of a full audit because the IRS will see that you have a basis for the deduction.
Final Notes
Keep in mind that if you are selected for an audit, you will be required to provide the IRS with supporting documents of all business deductions taken, such as travel, meals and entertainment expenses, to prove that they were a necessary cost for your business. The more organized you are, the better your chances of the IRS agent assigned to your case concluding that you do not owe additional taxes.
Keep all your receipts and supporting documentation for at least three years after you file your return because the IRS can audit you anytime during this time frame. However, if the IRS suspects you of fraud there is no time limit for which you can be subjected to an audit.
Source: ezinearticles.com
The IRS audits more than 50,000 businesses and 1,250,000 individual taxpayers each year, mainly via correspondence exams. Although no one can guarantee you will never be audited, you can lower your chances of being selected for an audit by following a few straightforward strategies.
Tip 1: Check Your Arithmetic
Double check your calculations for all the numbers on your tax return to ensure they are correct. IRS computers review the income and deductions on returns for accuracy and if yours has several miscalculations your return could be flagged for an audit.
Tip 2: Don't Overstate Your Deductions
Make sure you have supporting documents to prove every deduction on your return. Your deductions are evaluated relative to other taxpayers in your income bracket by IRS computers. This is done to spot taxpayers claiming relatively high deductions, such as $25,000 in charitable contributions by a taxpayer with an adjusted gross income of $75,000.
Tip 3: Don't Mix Business With Pleasure
Self-employed taxpayers are commonly audited by the IRS. If you are self-employed, keep mileage logs for the business use of your vehicle (list the date, location, purpose of your trip, and miles driven) and retain all receipts for meals and entertainment (on the back of the receipt write down the names of the people you entertained, their business relationship to you and the business matters you went over). Also, if you are a claiming a home office deduction, include only the amount of space you are using strictly as your office. The IRS does occasionally visit taxpayers to evaluate the accuracy of the percentage used to claim home office deductions.
Tip 4: Don't Understate Your Earnings
Taxpayers in occupations that receive a substantial portion of their earnings in cash, such as waiters and small shop owners, or service-oriented professionals like lawyers, are also more likely to be scrutinized by the IRS. This is especially true if you are behind in filing and paying your taxes and if the IRS discovered that you failed to report income in the past. Be careful to not understate your earnings because depending on your profession, your clients may be deducting amounts paid to you on their tax returns. For example, the IRS may find out a lawyer understated income because a business, income tax bracket, deducted professional fees paid to that lawyer on its tax return but the lawyer never reported that income.
Tip 5: Keep All Your Supporting Documents
You may think you are in business but the IRS could have a different opinion if you are not making profits for several years. This is because people will rarely stay in a business that is not financially successful, unless of course they are in it for a hobby. While it is common for new sole-proprietors and startup companies to be unprofitable during the first few years in business, if you are consistently losing money, the IRS may want to evaluate your deductions more closely. You should have no problem proving that you are not in it for a hobby if you always maintain the best possible records to support your expenses.
Tip 6: Know the Difference Between Employees and Independent Contractors
If you run a business, make sure that the people who work for you are properly classified as either employees or independent contractors. Companies with a lot of contractors and few or no employees are more likely to be audited because the IRS will want to verify that these companies are not evading payroll taxes.
Tip 7: Attach Explanation Statements
Answer all questions on your tax return and attach statements to explain items on your return that may look suspicious to the IRS. For example, if you had $100,000 in business income during the tax year and deduct $75,000 for business travel, by attaching an explanation statement to your return you will reduce your chances of a full audit because the IRS will see that you have a basis for the deduction.
Final Notes
Keep in mind that if you are selected for an audit, you will be required to provide the IRS with supporting documents of all business deductions taken, such as travel, meals and entertainment expenses, to prove that they were a necessary cost for your business. The more organized you are, the better your chances of the IRS agent assigned to your case concluding that you do not owe additional taxes.
Keep all your receipts and supporting documentation for at least three years after you file your return because the IRS can audit you anytime during this time frame. However, if the IRS suspects you of fraud there is no time limit for which you can be subjected to an audit.
About the author:
Jovana Jerinic is a Certified Public Accountant that provides accounting and tax services to individuals and small businesses, including tax return preparation, tax planning and IRS audit representation. Please visit http://www.jj-cpa.com for more information.
Monday, December 14, 2009
Investment via Annuities
Author: Joanne Elizabeth
Source: articleage.com
Of all the forms of income generating investments, annuities are some of the most controversial ones. Annuity - derived from the Latin word 'annus' - is basically an insurance product sold by insurance companies through authorised agents. This type of investment facilitates a series of payments in the future, in a defined manner, in exchange for an up-front payment of money.
There is a group of individuals who think that annuities are a waste of time and there are much better tools of investment such as stock market or property. But then again both the above forms of investment are vulnerable to crash and do not score very high in comparison to annuities, with respect to safety.
Annuities are commonly of two types first Deferred and the other Fixed. In the case of 'Deferred Annuity', the payments are made usually on a monthly basis for a number of years. This form of annuity makes sure that a younger person acquires a good income in his later years. In the latter form that is 'Fixed or Immediate Annuity', the purchaser pays a large capital sum usually to an insurance company and payments begin soon thereafter.
One of the biggest hurdles faced by annuities today is inflation. At the outset the agreed sum to be paid out by the insurance company might look excellent and very heart warming, but inflation can erode the value of your investment at an alarming rate.
Another draw back with annuities is that instead of being a long-term capital gain the earnings on annuities are taxable just as income is. Plus there are certain stringent rules and regulations governing the deposit that may not be customer friendly. One of which is that the customer cannot withdraw the money until he turns 59.5 years or else he would be charged a 10% penalty for withdrawing the same prematurely.
So why should you consider Annuities as a mode of investment?
Frankly any individual planning, income tax bracket, to invest in annuities should be the one who is not already contributing his maximum to other forms of retirement schemes. However, annuities are an excellent mode of investment for individuals in higher tax brackets. In those years of high tax liabilities, annuities make a lot of sense, as these savings are tax exempt. Tax is only due when income is received for the plan. That means you start drawing your annuity after you have stopped earning a high salary.
Webmaster
Investment via Annuities
Source: articleage.com
Of all the forms of income generating investments, annuities are some of the most controversial ones. Annuity - derived from the Latin word 'annus' - is basically an insurance product sold by insurance companies through authorised agents. This type of investment facilitates a series of payments in the future, in a defined manner, in exchange for an up-front payment of money.
There is a group of individuals who think that annuities are a waste of time and there are much better tools of investment such as stock market or property. But then again both the above forms of investment are vulnerable to crash and do not score very high in comparison to annuities, with respect to safety.
Annuities are commonly of two types first Deferred and the other Fixed. In the case of 'Deferred Annuity', the payments are made usually on a monthly basis for a number of years. This form of annuity makes sure that a younger person acquires a good income in his later years. In the latter form that is 'Fixed or Immediate Annuity', the purchaser pays a large capital sum usually to an insurance company and payments begin soon thereafter.
One of the biggest hurdles faced by annuities today is inflation. At the outset the agreed sum to be paid out by the insurance company might look excellent and very heart warming, but inflation can erode the value of your investment at an alarming rate.
Another draw back with annuities is that instead of being a long-term capital gain the earnings on annuities are taxable just as income is. Plus there are certain stringent rules and regulations governing the deposit that may not be customer friendly. One of which is that the customer cannot withdraw the money until he turns 59.5 years or else he would be charged a 10% penalty for withdrawing the same prematurely.
So why should you consider Annuities as a mode of investment?
Frankly any individual planning, income tax bracket, to invest in annuities should be the one who is not already contributing his maximum to other forms of retirement schemes. However, annuities are an excellent mode of investment for individuals in higher tax brackets. In those years of high tax liabilities, annuities make a lot of sense, as these savings are tax exempt. Tax is only due when income is received for the plan. That means you start drawing your annuity after you have stopped earning a high salary.
Webmaster
Investment via Annuities
Thursday, December 10, 2009
Pay Down Debt With Retirement Account Money? - It's Almost Always a Bad Idea
Author: Kurt Fischer
Source: ezinearticles.com
If you are struggling with high-interest debt, you may be considering tapping the one resource you have left: your 401k, 401b, IRA, or other retirement savings. Though it may not seem like it now, you will retire someday. When you do, you'll need money to live, and Social Security alone won't be enough. You need to save money, and a lot of it, to live comfortably through your retirement years.
Penalty Box If you withdraw money early (before age 59-1/2) from a tax-deferred retirement account, you'll owe the IRS income tax on the amount withdrawn at your normal marginal income tax rate PLUS, unless the money's for an "allowed purpose," a 10 percentage point penalty. So if your normal marginal income tax rate is 15%, you'd pay 25% tax (15% + 10% penalty) on money withdrawn early from a tax-deferred retirement account.
Say you're thinking of withdrawing money from a retirement account to pay off $20,000 in credit card debt. To be sure you've got the money to pay the big tax bill on your withdrawal when April 15 the following year rolls around, you'd have to withdraw from your retirement account $26,667 (if you're in the 15% income tax bracket). Why? Because that's how much you'd need to withdraw to have $20,000 for the credit card companies and still set aside what you'd need to pay the income tax + penalty of 25%.
What About a Loan? Some workplace retirement plans allow participants to borrow from their accounts. If you borrow from your tax-deferred retirement account, you wouldn't have to pay any tax on the loan proceeds, unlike a withdrawal.
Before borrowing from a workplace retirement account, consider the following:
You'll be required to repay the loan by automatic paycheck deduction over 5 years (longer if for a house purchase). How would this reduction in your take-home pay affect your ability to keep up with your bills? You would not be allowed, income tax bracket, to suspend or reduce your retirement plan loan payments if you get behind on bills, so be sure you can live on the new, lower take-home pay.
If you leave your job, by choice or not, the balance of any retirement plan loan likely will be due right away. If you didn't have the cash to repay the loan balance, the IRS would then consider any unpaid balance an early withdrawal. You'd have to pay tax on it plus maybe a 10 percentage point penalty (depending on how you spent the loan proceeds).
If you borrow money from your retirement account, your account won't grow as large as it would have if you'd left it alone. To estimate the effect, use this calculator.
Borrowing from a retirement account may, in certain situations, make sense, but other options are better in the large majority of cases. A free credit counseling session can help to identify and sort through your options for paying off high-interest debt. What about future contributions to your workplace retirement plan? If necessary to help a well thought out debt pay off plan succeed, and only after you've cut your living expenses and increased your income as much as you can, it's okay to reduce temporarily your contributions to a retirement plan. If your employer makes a matching contribution to your account, try to keep contributing enough of your own money to get the full match. If your situation improves, restarting some or all of your retirement account contribution should be at the top of your list of options for what to do with extra money. Don't start splurging on dining out, travel, and other non-necessities before you're again making the maximum contribution allowed to your retirement accounts.
Source: ezinearticles.com
If you are struggling with high-interest debt, you may be considering tapping the one resource you have left: your 401k, 401b, IRA, or other retirement savings. Though it may not seem like it now, you will retire someday. When you do, you'll need money to live, and Social Security alone won't be enough. You need to save money, and a lot of it, to live comfortably through your retirement years.
Penalty Box If you withdraw money early (before age 59-1/2) from a tax-deferred retirement account, you'll owe the IRS income tax on the amount withdrawn at your normal marginal income tax rate PLUS, unless the money's for an "allowed purpose," a 10 percentage point penalty. So if your normal marginal income tax rate is 15%, you'd pay 25% tax (15% + 10% penalty) on money withdrawn early from a tax-deferred retirement account.
Say you're thinking of withdrawing money from a retirement account to pay off $20,000 in credit card debt. To be sure you've got the money to pay the big tax bill on your withdrawal when April 15 the following year rolls around, you'd have to withdraw from your retirement account $26,667 (if you're in the 15% income tax bracket). Why? Because that's how much you'd need to withdraw to have $20,000 for the credit card companies and still set aside what you'd need to pay the income tax + penalty of 25%.
What About a Loan? Some workplace retirement plans allow participants to borrow from their accounts. If you borrow from your tax-deferred retirement account, you wouldn't have to pay any tax on the loan proceeds, unlike a withdrawal.
Before borrowing from a workplace retirement account, consider the following:
You'll be required to repay the loan by automatic paycheck deduction over 5 years (longer if for a house purchase). How would this reduction in your take-home pay affect your ability to keep up with your bills? You would not be allowed, income tax bracket, to suspend or reduce your retirement plan loan payments if you get behind on bills, so be sure you can live on the new, lower take-home pay.
If you leave your job, by choice or not, the balance of any retirement plan loan likely will be due right away. If you didn't have the cash to repay the loan balance, the IRS would then consider any unpaid balance an early withdrawal. You'd have to pay tax on it plus maybe a 10 percentage point penalty (depending on how you spent the loan proceeds).
If you borrow money from your retirement account, your account won't grow as large as it would have if you'd left it alone. To estimate the effect, use this calculator.
Borrowing from a retirement account may, in certain situations, make sense, but other options are better in the large majority of cases. A free credit counseling session can help to identify and sort through your options for paying off high-interest debt. What about future contributions to your workplace retirement plan? If necessary to help a well thought out debt pay off plan succeed, and only after you've cut your living expenses and increased your income as much as you can, it's okay to reduce temporarily your contributions to a retirement plan. If your employer makes a matching contribution to your account, try to keep contributing enough of your own money to get the full match. If your situation improves, restarting some or all of your retirement account contribution should be at the top of your list of options for what to do with extra money. Don't start splurging on dining out, travel, and other non-necessities before you're again making the maximum contribution allowed to your retirement accounts.
Kurt Fischer is a certified credit counselor and founder of http://www.MyMoneyCounselor.com
Tuesday, December 8, 2009
Federal Tax Returns
Author: Kristy Annely
Source: download
Congress first imposed the first federal income tax in 1862 to, income tax bracket, raise money for the Union in the Civil War. A 3% tax was fixed on incomes above $600. Those with incomes above $10,000 had to pay 5% in taxes.
After many changes and appeals, the states ratified the Sixteenth Amendment to the United States Constitution, which made possible modern income taxes. For the first time, Form 1040 appeared. People earning above $3,000 had to pay 1% tax on net personal incomes, and those with incomes above $500,000 had to pay 6% surtax.
Today more than two-thirds of the nation pays taxes. People earning less than $20,000 pay no income tax as a group. Payroll taxes for Social Security, Medicare and Unemployment Insurance amount to 7-10% of every dollar. Personal and corporate income taxes are major earners for federal taxes.
Income tax can be calculated in two ways. First of all gross income minus any applicable deductions is calculated, and on this a marginal tax percentage is applied as per the taxpayer's income bracket. Then, applicable tax credits are subtracted, which gives the income tax owed.
Refundable tax credits are given if these calculations are in the negative or if the federal withholding tax is greater than the income tax that is actually owed. The taxpayer then gets a tax refund. He could receive one even without paying any federal income tax.
The newer Alternative Minimum Tax (AMT) is based on gross income. This was introduced to prevent people from using loopholes in the tax laws. It is calculated without taking into account certain tax preference items. It also has exemptions and deductions. This higher income base is taxed in two rate brackets of 26% and 28%; this depends on the taxpayer's income. Unfortunately the addition of unrealized gain on incentive stock options made it difficult for people who could not come up with cash to pay tax on gains that weren't realized. The modified AMT takes into account this problem.
American salaried people usually pay progressive income tax. Non-resident Americans have to pay taxes as per the flat rate. They also have fewer allowed deductions.
If you have all the documents, it is easy to file taxes yourself. However if you are in the higher tax bracket, you may need a consultant to help you. The IRS also helps in filing your returns; call the IRS customer service representatives toll-free at 1-800-829-1040.
The IRS website (www.irs.gov) gives you extensive information. You could also go to websites like About Taxes (www.abouttaxes.org), Complete Tax (www.completetax.com), or World Wide Web Tax (www.wwwebtax.com). Do keep in mind that a little bit of care in documentation goes a long way to filing a tax return without any ensuing problems!
Tax Returns provides detailed information on Tax Returns, Income Tax Returns, Tax Return Filing Preparations, Federal Tax Returns and more. Tax Returns is affiliated with Free Tax Filing.
Source: download
Congress first imposed the first federal income tax in 1862 to, income tax bracket, raise money for the Union in the Civil War. A 3% tax was fixed on incomes above $600. Those with incomes above $10,000 had to pay 5% in taxes.
After many changes and appeals, the states ratified the Sixteenth Amendment to the United States Constitution, which made possible modern income taxes. For the first time, Form 1040 appeared. People earning above $3,000 had to pay 1% tax on net personal incomes, and those with incomes above $500,000 had to pay 6% surtax.
Today more than two-thirds of the nation pays taxes. People earning less than $20,000 pay no income tax as a group. Payroll taxes for Social Security, Medicare and Unemployment Insurance amount to 7-10% of every dollar. Personal and corporate income taxes are major earners for federal taxes.
Income tax can be calculated in two ways. First of all gross income minus any applicable deductions is calculated, and on this a marginal tax percentage is applied as per the taxpayer's income bracket. Then, applicable tax credits are subtracted, which gives the income tax owed.
Refundable tax credits are given if these calculations are in the negative or if the federal withholding tax is greater than the income tax that is actually owed. The taxpayer then gets a tax refund. He could receive one even without paying any federal income tax.
The newer Alternative Minimum Tax (AMT) is based on gross income. This was introduced to prevent people from using loopholes in the tax laws. It is calculated without taking into account certain tax preference items. It also has exemptions and deductions. This higher income base is taxed in two rate brackets of 26% and 28%; this depends on the taxpayer's income. Unfortunately the addition of unrealized gain on incentive stock options made it difficult for people who could not come up with cash to pay tax on gains that weren't realized. The modified AMT takes into account this problem.
American salaried people usually pay progressive income tax. Non-resident Americans have to pay taxes as per the flat rate. They also have fewer allowed deductions.
If you have all the documents, it is easy to file taxes yourself. However if you are in the higher tax bracket, you may need a consultant to help you. The IRS also helps in filing your returns; call the IRS customer service representatives toll-free at 1-800-829-1040.
The IRS website (www.irs.gov) gives you extensive information. You could also go to websites like About Taxes (www.abouttaxes.org), Complete Tax (www.completetax.com), or World Wide Web Tax (www.wwwebtax.com). Do keep in mind that a little bit of care in documentation goes a long way to filing a tax return without any ensuing problems!
Tax Returns provides detailed information on Tax Returns, Income Tax Returns, Tax Return Filing Preparations, Federal Tax Returns and more. Tax Returns is affiliated with Free Tax Filing.
Sunday, December 6, 2009
Types of Income Tax Wages That Are Safe From the IRS
Author: Ellis Jackson Jr
Source: ezinearticles.com
Looking for a way to keep the IRS from messing with your income tax? There are things you can do to protect your wages. There are types of income that old Uncle Sam can't get his hands on. The law keeps the IRS from taxing these incomes and you need to know what they, income tax bracket, are. Keep a little bit more money come tax time.
Municipal bonds issued by your state is income that that can't be taxed. As the value grows so does your benefit. By placing a certain percent in these types of bonds you can save yourself a nice chunk of chance from the tax man. These types of bonds are easy to get and have low risk of losing all your money.
Car-pooling is another type of income that is not taxable. If you receive income from all the members of your car-pool to cover cost of gas and repairs then that income is not included in your income. Since that money was used to cover all expenses of the car-pool that means you have no additional income and there for cannot be taxed. Think about that the next time you are going to work by yourself.
Instead of taking a regular wage increase try to get it a little bit differently. Since health insurance premiums paid by your employer are tax free see if your employer will put the money towards that instead. By paying down your deductible you will not be put in a higher tax bracket plus you get to pay less for insurance. That is you a net boost in wages without the IRS taxing your additional wages. This works the same with life insurance with your employer. They pay more of your premium, you save by paying less and the employer writes it off on there taxes.
You could also talk to your employer about using your raise to send you to school. Your boss can deduct up to $5,250 a year in educational assistance off there taxes which you can use to get an education. As long as you are not going for sports, hobbies, or games you will be fine.
I think now you are starting to see a pattern. These types of income are non-taxable so by converting your taxable income this way you get to keep more of your wages. The IRS as a long list so you have to work it to your advantage. They are not going to do this for you so look for every opportunity you can to convert that income to save you on taxes.
Source: ezinearticles.com
Looking for a way to keep the IRS from messing with your income tax? There are things you can do to protect your wages. There are types of income that old Uncle Sam can't get his hands on. The law keeps the IRS from taxing these incomes and you need to know what they, income tax bracket, are. Keep a little bit more money come tax time.
Municipal bonds issued by your state is income that that can't be taxed. As the value grows so does your benefit. By placing a certain percent in these types of bonds you can save yourself a nice chunk of chance from the tax man. These types of bonds are easy to get and have low risk of losing all your money.
Car-pooling is another type of income that is not taxable. If you receive income from all the members of your car-pool to cover cost of gas and repairs then that income is not included in your income. Since that money was used to cover all expenses of the car-pool that means you have no additional income and there for cannot be taxed. Think about that the next time you are going to work by yourself.
Instead of taking a regular wage increase try to get it a little bit differently. Since health insurance premiums paid by your employer are tax free see if your employer will put the money towards that instead. By paying down your deductible you will not be put in a higher tax bracket plus you get to pay less for insurance. That is you a net boost in wages without the IRS taxing your additional wages. This works the same with life insurance with your employer. They pay more of your premium, you save by paying less and the employer writes it off on there taxes.
You could also talk to your employer about using your raise to send you to school. Your boss can deduct up to $5,250 a year in educational assistance off there taxes which you can use to get an education. As long as you are not going for sports, hobbies, or games you will be fine.
I think now you are starting to see a pattern. These types of income are non-taxable so by converting your taxable income this way you get to keep more of your wages. The IRS as a long list so you have to work it to your advantage. They are not going to do this for you so look for every opportunity you can to convert that income to save you on taxes.
Tax advice is available for all self employed people out there by going to: Filing Taxes. If you are not self employed and would like to be then check out: http://www.allproman.com/nichemarketing/
Friday, December 4, 2009
Don't Leave Real Estate Donations for Others to Do
Author: Ralph Maupin
Source: download
Most people think that donating real estate to a charity is for the rich. This simple is not true. I have worked individuals, charities, and small corporations for years with donations process. For many people and companies is about the able to rid themselves of unwanted property. They simple want out. They are tired of property taxes, insurance cost and the liability exposure.
The following are the rules that apply for real estate donation:
Individuals:
The following rules apply if the donated property is owned in your own name, with your spouse or other persons: If you have held the property for more than one year, it is classified as long-term capital gain property. You can deduct the full fair market value of the donated property. Your charitable contribution deduction is limited to thirty percent (30.00%) of your adjusted gross income.
Excess contribution value may be carried forward for up to five years. If the property has been depreciated, the fair market value must be reduced by its accumulated depreciation through the date of contribution. Fair market value is most commonly determined by an independent appraisal.
If you elect to deduct your cost basis of the donated property you are allowed a deduction of fifty percent (50.00%) of your adjusted gross income. Excesses here again can be carried forward up to five years. Which method you elect is dependent on the cost basis in the property donated, your tax bracket, the age and health of the donor and whether you plan to make future contributions. Corporate Donors
The following rules apply if a corporation makes your contribution, these rules apply:
If you have a controlling interest in the corporation and the property has been held for more than one year, the corporation can deduct up to ten percent (10.00%) of the net profit of the corporation. Excess contribution amounts can be carried forward up to five years. The fair market value here must be reduced by the amount of accumulate depreciation. If the corporate has elected "Subchapter S" status, then the contribution allowed will be reported on the individual shareholders K1 and may be deducted on the individual return. Partnerships, S-Corporations and Limited Liability Companies
The following rules apply if a partnership, S-Corporation or limited liability company is making your contribution:
The corporation may not claim a deduction for the property donated. Rather, the contribution passes to the individual shareholders on a pro-rated based on their percent ownership in the S corporation. The shareholder can, income tax bracket, claim this deduction on their individual tax return. The same limits and carry forward rules will apply.
Partnerships and limited liability company contribution rules are the same as an S corporation with one exception the partners or member can claim a deduction even if they have no basis in the partnership or limited liability company.
Real estate investing by nature is risky. You can win, lose, or break even. We cannot guarantee a profit or loss. We do not provide legal, accounting, or contracting advice.
* Please consult your CPA/Attorney for your specific tax benefit.
------------------------
Ralph Mark Maupin has purchased and sold in excess of 3,500 single-family homes and many multi family properties. Mark teaches real estate investing seminars, and has real estate mentoring program. Mark co-founded company Donate Real Estate, LLC http://www.donaterealestate.com
Source: download
Most people think that donating real estate to a charity is for the rich. This simple is not true. I have worked individuals, charities, and small corporations for years with donations process. For many people and companies is about the able to rid themselves of unwanted property. They simple want out. They are tired of property taxes, insurance cost and the liability exposure.
The following are the rules that apply for real estate donation:
Individuals:
The following rules apply if the donated property is owned in your own name, with your spouse or other persons: If you have held the property for more than one year, it is classified as long-term capital gain property. You can deduct the full fair market value of the donated property. Your charitable contribution deduction is limited to thirty percent (30.00%) of your adjusted gross income.
Excess contribution value may be carried forward for up to five years. If the property has been depreciated, the fair market value must be reduced by its accumulated depreciation through the date of contribution. Fair market value is most commonly determined by an independent appraisal.
If you elect to deduct your cost basis of the donated property you are allowed a deduction of fifty percent (50.00%) of your adjusted gross income. Excesses here again can be carried forward up to five years. Which method you elect is dependent on the cost basis in the property donated, your tax bracket, the age and health of the donor and whether you plan to make future contributions. Corporate Donors
The following rules apply if a corporation makes your contribution, these rules apply:
If you have a controlling interest in the corporation and the property has been held for more than one year, the corporation can deduct up to ten percent (10.00%) of the net profit of the corporation. Excess contribution amounts can be carried forward up to five years. The fair market value here must be reduced by the amount of accumulate depreciation. If the corporate has elected "Subchapter S" status, then the contribution allowed will be reported on the individual shareholders K1 and may be deducted on the individual return. Partnerships, S-Corporations and Limited Liability Companies
The following rules apply if a partnership, S-Corporation or limited liability company is making your contribution:
The corporation may not claim a deduction for the property donated. Rather, the contribution passes to the individual shareholders on a pro-rated based on their percent ownership in the S corporation. The shareholder can, income tax bracket, claim this deduction on their individual tax return. The same limits and carry forward rules will apply.
Partnerships and limited liability company contribution rules are the same as an S corporation with one exception the partners or member can claim a deduction even if they have no basis in the partnership or limited liability company.
Real estate investing by nature is risky. You can win, lose, or break even. We cannot guarantee a profit or loss. We do not provide legal, accounting, or contracting advice.
* Please consult your CPA/Attorney for your specific tax benefit.
------------------------
Ralph Mark Maupin has purchased and sold in excess of 3,500 single-family homes and many multi family properties. Mark teaches real estate investing seminars, and has real estate mentoring program. Mark co-founded company Donate Real Estate, LLC http://www.donaterealestate.com
Thursday, December 3, 2009
The Jobs and Growth Tax Relief Reconciliation Act of 2003 - - What Does It Mean
Author: Ted Koester
Source: free-articles
the third largest tax reduction in our country's history. Since it is such a large tax cut, it will affect most Americans. The purpose of this article is to summarize the Act and examine its effects.
On Wednesday, May 28, 2003, President George W. Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") into law. It has been reported that this Act is the third largest tax reduction in our country's history. Since it is such a large tax cut, it will affect most Americans. The purpose of this article is to summarize the Act and examine its effects.
Summary Of The Act
All of the tax cuts created by the Act involve income taxes. Transfer taxes, such as gift, estate and generation-skipping taxes, are not affected by the Act.
The Act changes the income tax system in several ways. First, the maximum child tax credit for 2003 and 2004 is increased from $600 to $1,000 per child. The amount of the increase ($400) for 2003 will be advanced to eligible taxpayers this year in the form of checks. However, in 2005 the child tax credit falls to $700 per child, as specified under the law prior to the Act.
Secondly, the Act lessens the effect of the so-called "marriage penalty." This is accomplished by making the standard deduction for jointly filing, married taxpayers twice the amount of the standard deduction for single taxpayers and by increasing the 15% tax bracket for jointly filing, married taxpayers so that it is double the 15% tax bracket for single filers.
A significant change made by the Act is the lowering of the four highest income tax rates. The 10% and 15% rates are not altered, but the 27% rate is lowered to 25%; the 30% rate reduced to 28%; the 35% rate goes down to 33%; and the 38.6% rate drops to 35%. The Act also provides some minimum tax relief to individual taxpayers.
All these amendments to the Internal Revenue Code, as they are significant, are only effective until December 31, 2010. After that date, the law in effect prior to the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 goes back into effect.
The Act also reduces the tax rate on capital gains and dividends received by individuals. The 10% capital gains rate is lowered to 5% and the 20% rate reduced to 15%. Dividends are no longer taxed at ordinary income tax rates, but will be taxed at the 5% and 15% capital gains rates. However, these changes aren't permanent, either; they will expire after December 31, 2008.
The Act also contains income tax benefits for businesses. Specifically, the so-called "Section 179" expense amount is increased from $25,000 to $100,000 for tax years 2003 through 2005. Further, certain computer software will now qualify for the Section 179 expense. In addition, the 30% "bonus depreciation" deduction is increased to 50% for qualifying property acquired after May 5, 2003 (but not under contract to be acquired prior to May 6, 2003) and before January 1, 2005.
Finally, the Act contains some provisions granting fiscal relief to states for Medicaid and other government services and pushes the due date for the 25% required installment of corporate estimated tax back from September 15, 2003 to October 1, 2003.
What Do The Changes Mean To You?
Obviously, the child tax credit advance checks many Americans will receive will be a welcomed change. The recipients will be able to use this money for any purpose. However, this author suggests that parents consider depositing this money into education savings accounts for their children, such as Section 529 Plans. These Plans offer many tax benefits to the contributors and the beneficiaries. Plus, Illinois' Bright Startยฎ Plan gives all Illinois contributors a tax deduction on their Illinois income tax return.
Another benefit the Act will provide is more take-home pay to working taxpayers. This will result from the decrease in the ordinary income tax rates, the increased standard deduction, and the, income tax bracket, larger 15% bracket for jointly filing, married taxpayers. The lawmakers believe that this will create more jobs by infusing more money into the economy. But as with most things, only time will tell if that is true. However, this author believes that if people have more money they will, as a whole, be more likely to invest that money - - especially given that the tax on investment returns (capital gains and dividends) has been lowered and the deductions allowed (50% bonus depreciation and Section 179 expense) for such investments have been increased. Of course, the investments made should be sound ones. Thorough analysis is important before making any decisions. Further, this author strongly recommends that the appropriate professionals be employed before making any investment decisions.
Remember that many of the tax cuts in the Act are only temporary and will expire in a few years. All taxpayers are encouraged to take advantage of them now, because the future is uncertain.
Source: free-articles
the third largest tax reduction in our country's history. Since it is such a large tax cut, it will affect most Americans. The purpose of this article is to summarize the Act and examine its effects.
On Wednesday, May 28, 2003, President George W. Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003 (the "Act") into law. It has been reported that this Act is the third largest tax reduction in our country's history. Since it is such a large tax cut, it will affect most Americans. The purpose of this article is to summarize the Act and examine its effects.
Summary Of The Act
All of the tax cuts created by the Act involve income taxes. Transfer taxes, such as gift, estate and generation-skipping taxes, are not affected by the Act.
The Act changes the income tax system in several ways. First, the maximum child tax credit for 2003 and 2004 is increased from $600 to $1,000 per child. The amount of the increase ($400) for 2003 will be advanced to eligible taxpayers this year in the form of checks. However, in 2005 the child tax credit falls to $700 per child, as specified under the law prior to the Act.
Secondly, the Act lessens the effect of the so-called "marriage penalty." This is accomplished by making the standard deduction for jointly filing, married taxpayers twice the amount of the standard deduction for single taxpayers and by increasing the 15% tax bracket for jointly filing, married taxpayers so that it is double the 15% tax bracket for single filers.
A significant change made by the Act is the lowering of the four highest income tax rates. The 10% and 15% rates are not altered, but the 27% rate is lowered to 25%; the 30% rate reduced to 28%; the 35% rate goes down to 33%; and the 38.6% rate drops to 35%. The Act also provides some minimum tax relief to individual taxpayers.
All these amendments to the Internal Revenue Code, as they are significant, are only effective until December 31, 2010. After that date, the law in effect prior to the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 goes back into effect.
The Act also reduces the tax rate on capital gains and dividends received by individuals. The 10% capital gains rate is lowered to 5% and the 20% rate reduced to 15%. Dividends are no longer taxed at ordinary income tax rates, but will be taxed at the 5% and 15% capital gains rates. However, these changes aren't permanent, either; they will expire after December 31, 2008.
The Act also contains income tax benefits for businesses. Specifically, the so-called "Section 179" expense amount is increased from $25,000 to $100,000 for tax years 2003 through 2005. Further, certain computer software will now qualify for the Section 179 expense. In addition, the 30% "bonus depreciation" deduction is increased to 50% for qualifying property acquired after May 5, 2003 (but not under contract to be acquired prior to May 6, 2003) and before January 1, 2005.
Finally, the Act contains some provisions granting fiscal relief to states for Medicaid and other government services and pushes the due date for the 25% required installment of corporate estimated tax back from September 15, 2003 to October 1, 2003.
What Do The Changes Mean To You?
Obviously, the child tax credit advance checks many Americans will receive will be a welcomed change. The recipients will be able to use this money for any purpose. However, this author suggests that parents consider depositing this money into education savings accounts for their children, such as Section 529 Plans. These Plans offer many tax benefits to the contributors and the beneficiaries. Plus, Illinois' Bright Startยฎ Plan gives all Illinois contributors a tax deduction on their Illinois income tax return.
Another benefit the Act will provide is more take-home pay to working taxpayers. This will result from the decrease in the ordinary income tax rates, the increased standard deduction, and the, income tax bracket, larger 15% bracket for jointly filing, married taxpayers. The lawmakers believe that this will create more jobs by infusing more money into the economy. But as with most things, only time will tell if that is true. However, this author believes that if people have more money they will, as a whole, be more likely to invest that money - - especially given that the tax on investment returns (capital gains and dividends) has been lowered and the deductions allowed (50% bonus depreciation and Section 179 expense) for such investments have been increased. Of course, the investments made should be sound ones. Thorough analysis is important before making any decisions. Further, this author strongly recommends that the appropriate professionals be employed before making any investment decisions.
Remember that many of the tax cuts in the Act are only temporary and will expire in a few years. All taxpayers are encouraged to take advantage of them now, because the future is uncertain.
Wednesday, December 2, 2009
How to Get on With IRS For Getting Married
Author: Chintamani Abhyankar
Source: ezinearticles.com
When you get married, you get an option of filing your tax return under the category -married filing jointly.However there could be a marriage penalty in the sense you may end up paying higher taxes due to higher tax brackets.This is especially possible when the income of the spouses is unequal.Combining those incomes may take to higher tax brackets and consequently ending up paying higher taxes.
However, there are some benefits which can be available for married people from IRS.Let us list them here:
If you are facing higher tax brackets due to marriage, you can continue to file as a single person.However in reality the 'married filing separately' status rarely helps people.This is due to certain restrictions imposed by IRS.If all the spouses prefer to file separately, one cannot take itemized deductions while the other is taking standard deduction.Both have to claim only one choice.
Fringe benefits - marriage may open up with some new opportunities for saving.For example, if you are covered by the medical plan offered to your wife, you need not continue with your medical insurance premiums.Perhaps you can trade on for another benefit.
Benefits on withholding - you may tune Up your withholding after marriage. You need to analyze properly withholding provisions.You can also analyze the fringe benefits so that you can decide which one to continue for yourself and which one to leave to your spouse.This can substantially reduce your withholding, getting you more money for your new life.
Benefits on selling a house - when your filing status changes on marriage, you can claim more tax free capital gain on sale of your house.In fact the amount doubles from $250,000 to $500,000.Remember, there are certain conditions -you should own and live in the house for at least two out of the last five years.If both husband and wife own houses for more than two years before the marriage and they sell those houses in the year of marriage, the exclusion amount can, income tax bracket, be $500,000.
Remember, if you change your name after the marriage, you need to inform such change to the social security administration by filing form SS-5.If the name entered on your tax return is not corresponding to the name with the social security and administration, it will delay several things including your refund.If you are near to the filing deadline and you do not have time to change the details with the social security administration, then you should file joint return under your old name and then the corrected one with the social security administration for the next year's return.
Source: ezinearticles.com
When you get married, you get an option of filing your tax return under the category -married filing jointly.However there could be a marriage penalty in the sense you may end up paying higher taxes due to higher tax brackets.This is especially possible when the income of the spouses is unequal.Combining those incomes may take to higher tax brackets and consequently ending up paying higher taxes.
However, there are some benefits which can be available for married people from IRS.Let us list them here:
If you are facing higher tax brackets due to marriage, you can continue to file as a single person.However in reality the 'married filing separately' status rarely helps people.This is due to certain restrictions imposed by IRS.If all the spouses prefer to file separately, one cannot take itemized deductions while the other is taking standard deduction.Both have to claim only one choice.
Fringe benefits - marriage may open up with some new opportunities for saving.For example, if you are covered by the medical plan offered to your wife, you need not continue with your medical insurance premiums.Perhaps you can trade on for another benefit.
Benefits on withholding - you may tune Up your withholding after marriage. You need to analyze properly withholding provisions.You can also analyze the fringe benefits so that you can decide which one to continue for yourself and which one to leave to your spouse.This can substantially reduce your withholding, getting you more money for your new life.
Benefits on selling a house - when your filing status changes on marriage, you can claim more tax free capital gain on sale of your house.In fact the amount doubles from $250,000 to $500,000.Remember, there are certain conditions -you should own and live in the house for at least two out of the last five years.If both husband and wife own houses for more than two years before the marriage and they sell those houses in the year of marriage, the exclusion amount can, income tax bracket, be $500,000.
Remember, if you change your name after the marriage, you need to inform such change to the social security administration by filing form SS-5.If the name entered on your tax return is not corresponding to the name with the social security and administration, it will delay several things including your refund.If you are near to the filing deadline and you do not have time to change the details with the social security administration, then you should file joint return under your old name and then the corrected one with the social security administration for the next year's return.
There are all sorts of financial decisions you take in your life. You make gifts to your children; you make investments and acquire real estate. Do you really know the tax implications of these decisions, which can save you thousands of dollars?
Stop donating your money to IRS is an e-book on these little known tax secrets. It is written by Chintamani Abhyankar, a tax professional for last 25 years. Get the expert advice