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Archive for January, 2014

5 Things To Know Before You Start Investing Your Money

It’s not a bad idea to think about finding ways to grow your finances through investing. With that said, one has to know that investing can be dicey, and rushing into it without knowing the good and the bad is basically gambling with your finances. I know many people who were cruising along with their investments until the recession of 2008-2009 hit, and many people lost money needlessly, although those who were able to weather the storm made it back and more over the last couple of years.

It’s not that investing isn’t easy; it really is. All you have to do is give the right person some money and off you go. But how do you determine who the right people are? Here are 5 tips to help you:

1. Ask people who they invest with specifically, but initially only stick with people you can talk to or research online. Everyone knows at least a couple of people who are investing their money in some fashion, whether directly with a broker or through some plan at work. If you can, get names of some of these brokers and the names of their company as well. If you can find out who’s backing them even better, as many brokers are associated with a specific trade organization.

2. Research everyone, always. Ever heard of Google? There’s no excuse for not going online to check out every person whose name you might get, as well as learning something about the companies they work with. Just because someone might not be online may not mean they’re not capable, but the way I see it if they’re not visible online and you can’t get information on them be wary.

3. If they claim high rates of returns, beware and research strongly. Remember the name Bernard Madoff. There were a lot of people vouching for this guy, many famous people who thought they were making money hand over fist, and when it all came crashing down it was ugly, not only for Madoff’s family and people who were cheated but people who had cashed in, thinking they’d earned their profits legitimately and suddenly found themselves being sued by the government to return those funds. When something sounds too good, it’s smart to look at the negative reviews and see why some people might not trust them; there was a lot out on Madoff that those investing with him decided to ignore.

4. Only invest what you can stand to lose. Starting off relatively small, maybe $100 a month if you can handle it, is a lot smarter than giving someone $5,000 without knowing if you might have something major coming up such as having to replace a furnace and not having the funds to take care of it. No matter how much you invest, the returns are relatively small percentage wise, even with the most aggressive investing position. Always take care of your present as much as your future.

5. Even if you don’t understand it, make sure you talk to your broker at least once every 3 months and open your mail regularly. A big mistake many people make is not opening up their mail and seeing if their money is moving in a positive direction or not. A secondary mistake is not keeping up with their brokers, who are sometimes known to leave and suddenly you have no idea who’s managing your money, if there is anyone managing it.
 

15 Tax Related Events Affecting You In 2014

If you were hoping for 2014 to be a good year when it came to tax related items we’re sorry to be the bearers of bad news but it’s not happening. That Congress is actually talking and starting to get things done is nice. Unfortunately, unless they take up some of the items on this list there’s little benefit to we, the taxpayers, in 2014. If you acted quickly before the bell tolled on December 31st you got the best you were probably going to get.

It’s not all bad, and in actuality, saying things are bad is kind of a misnomer. What’s happened is all the tax breaks that were pushed through during the Bush Administration, as well as some of those the Obama Administration allowed in 2009 and 2010 when the economy was in the tank, have expired. It’s good and bad news in a way. The good news is that the government will generate more income, and with spending still in check the deficit will come down. The bad news… there’s a lot that’s going to cost us, or not benefit us anymore. Let’s look at the list:

1. Mileage reimbursement falls from 56.5 to 56 cents a mile. That’s not too bad but it’s still less for our business expenses.

2. Teachers were allowed to deduct $250 worth of pencil and paper purchases if those items went for their students; yes, some teachers actually do this. Unfortunately, that deduction is gone.

3. If you missed the cutoff for the 10% tax break on energy efficiency that’s too bad because it’s gone now.

4. We used to be able to write off mortgage premiums if we put down less than 20% on a home purchase. It’s not totally gone, but it’s only available if you itemize.

5. In 2013, if you commuted to work you could deduct up to $245 a month, the same as the parking deduction. In 2014 the commuter benefit drops to to $130, but the parking benefit is the same.

6. Did you try to conserve by buying an electric car? You used to get a tax credit of $7,500; that’s now gone.

7. If you or anyone invested in a small business you used to be able to write off 100% of it. That now goes to 50%.

8. Late in 2013 there was a lot of talk in Congress about extending a tax benefit to help college students or parents of around $4,000; it didn’t pass, so it’s now gone.

9. The standard deduction rises to $6,200 (was $6,100) for single taxpayers and married taxpayers filing separately. The standard deduction is $12,400 (was $12,200) for married couples filing jointly and $9,100 (was $8,950) for heads of household.

10. As you know, the Affordable Care Act has gone into effect. You actually get a tax credit for this of 72.5% as long as you pay more than 50% of the premiums on a qualified plan. This means if you’ve qualified for a reduction of more than 50% of your premium, you can’t write anything off.

11. While we’re talking about health care, if you don’t get it or have coverage at least 8 months during the year it’ll cost you either a flat fee of $95 or 1% of your taxable income per uninsured adult and $47.50 per child (up to $285 for a family), whichever amount is higher. By the way, it jumps much higher in 2015.

12. The top tax rate in the country goes to 39.6% and is for individuals that make $400,000 or married couples filing jointly who make $450,000.

13. While we’re talking about tax rates, those folks who make more than $200,000 ($250,000 for married couples) will have to pay a Medicare surtax in 2014.

14. If you’re self employed, you get a little bit of a break. You get to claim a deduction for your home office of $5 per square foot as opposed to going through all those weird calculations your accountant has always had to figure out before.

15. The federal government is recognizing all same sex marriages this year, which means that gay couples will be subject to paying the marriage tax like every other couple this year, even if you’re living in a state that doesn’t recognize your marriage.

The one caveat we can give everyone is that there has been some talk that Congress might bring some of these back in 2014, in which case you’ll still get to make those deductions at the end of the year. We’ll see if it works out.