As I get older the one thing that is really starting to bother me more and more about politicians is they ALL think we are either stupid or naive! In 2011 as it sits right now we as Americans are set to start paying higher taxes. There are some new taxes being introduced and some old taxes that have been on hiatus making up the new tax laws as I understand it. The real problem is can our fragile economy stand any increase at this time? I don't pretend to be a tax expert or an expert on the economy, but it seems to me that when we have such high unemployment, a stock market that resembles a yoyo and companies of all sizes unwilling to invest to change either that this is probably not a good time to be changing policy.
Yes I know the republicans set the time schedule for the current tax rates to expire in 2011. And yes we are increasing the deficit daily, but as most Politian’s have done in the past, it may be better for the current administration to kick this can down the road, at least to 2012. That way both sides will have to deal with it in the general election, and perhaps we could get some truth out of both sides! (I doubt it too, but I can dream can’t I)
Until next time, Invest in some that you're passionate about!
2011 TAX HIKES - They will hit families and small businesses in three great waves on January 1, 2011:
Biggest surprise to working Americans:
Now your insurance is INCOME on your W2's......
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the "new and improved" healthcare legislation
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company.
You will now be required to pay taxes on a large sum of money that you have never seen.
Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your Tax debt. That's what you'll pay next year. For many, it also puts you into a new higher bracket so it's even worse.
Here is an explanation of the rest.
First Wave:
Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These tax cuts are all scheduled to expire on January 1, 2011:
Personal income tax rates will rise.
The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).
Itemized deductions and personal exemptions will be phased out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:
- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%
Higher taxes on marriage and family.
The child tax credit will be cut in half from $1000 to $500 per child.
The standard deduction will no longer be doubled for married couples relative to the single level.
The dependent care and adoption tax credits will be cut.
The return of the Death Tax. This year, there is no death tax.
For those dying on or after January 1 2011, there is a 55 percent top death tax rate.
Higher tax rates on RETIREES, Savers and Investors.
The capital gains tax on investment income will rise from 15 percent this year to 20 percent in 2011.
The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.
These rates will rise another 3.8 percent in 2013.
Second Wave:
Obama care
There are over twenty new or higher taxes in Obama care.
Several will first go into effect on January 1, 2011. They include:
The “Medicine Cabinet Tax”
Thanks to Obama care, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The “Special Needs Kids Tax”
This provision of Obama care imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States and many of them use FSAs to pay for special needs education. Under tax rules, FSA dollars cannot be used to pay for this type of special needs education.
The HSA Withdrawal Tax Hike.
This provision of Obama care increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent.
Third Wave:
The Alternative Minimum Tax and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—many AMT tax relief provisions will have expired.
The major items include:
The AMT will now apply to over 28 million families, up from 4 million last year.
These families will have to pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or depreciate”) equipment purchases up to $250,000.
This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”
Taxes will be raised on all types of businesses.
There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available.
Tax credits for education will be limited.
Teachers will no longer be able to deduct classroom expenses.
Education Savings Accounts will be cut.
Employer-provided educational assistance is curtailed.
The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs are no longer allowed.
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.
PDF Version Read more:http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171##ixzz0sY8waPq1
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.
Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.
Why am I sending you this? The same reason I hope you forward this to every single person in your address book.
People have the right to know the truth because an election is coming in November.
Sunday, August 8, 2010
Friday, July 16, 2010
Should you downsize for retirement?
Should You Downsize for Retirement?
It may be better to sell that big home rather than keep it.
You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven't fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it's time to downsize.
Lower expenses could put more cash in your pocket. If your home isn't paid off yet, have you considered how much money is going toward the home loan? The typical mortgage payment in the U.S. represents about 30% of gross income and about 50% of after-tax income.1 When you move to a smaller home, your mortgage expenses may diminish and your cash flow may greatly increase - and don't forget about interest savings over the life of the loan.
You might even be able to buy a smaller home with cash (if finances permit) and cut your tax liability. Optionally, that smaller home could also be in a region with lower income taxes and a lower cost of living.
You could capitalize on some home equity. Why not convert some home equity into retirement income? If you were forced into early retirement by some corporate downsizing, you might have a sudden and pressing need for retirement capital - another reason to sell that home you bought decades ago and head for a smaller one.
The lifestyle reasons to downsize (or not). Maybe your home is too much to keep up, or maybe you don't want to climb stairs anymore. Maybe a condo or an over-55 community appeals to you. Maybe you want to be where it seldom snows. On the other hand, you may want and need the familiarity of your current home and your immediate neighborhood (not to mention the friends attached).
If you decide to downsize, it may not pay to wait. Anyone who wants to retire in the current economy needs all the financial resources that can be mustered. Of course, the real estate market will eventually improve; it depends on how long you want to wait for improvement. Some people want to retire and then sell their home, but it may be wiser to sell a home and then retire since homes tend to sit on the market these days. If you sell sooner instead of later, you can always rent until you find a smaller house that could save you thousands (or tens of thousands) of dollars.
----------
D. Alan Mercurio
Mercurio Wealth Advisors
330 North Evergreen Road, Suite 3
Louisville, KY 40243
Phone: (502) 253-9366
Fax: (502) 253-9370
Alan@MercurioAdvisors.com
It may be better to sell that big home rather than keep it.
You want to retire, and you own a large home that is nearly or fully paid off. The kids are gone, but the upkeep costs haven't fallen. Should you retire and keep your home? Or sell your home and retire? Maybe it's time to downsize.
Lower expenses could put more cash in your pocket. If your home isn't paid off yet, have you considered how much money is going toward the home loan? The typical mortgage payment in the U.S. represents about 30% of gross income and about 50% of after-tax income.1 When you move to a smaller home, your mortgage expenses may diminish and your cash flow may greatly increase - and don't forget about interest savings over the life of the loan.
You might even be able to buy a smaller home with cash (if finances permit) and cut your tax liability. Optionally, that smaller home could also be in a region with lower income taxes and a lower cost of living.
You could capitalize on some home equity. Why not convert some home equity into retirement income? If you were forced into early retirement by some corporate downsizing, you might have a sudden and pressing need for retirement capital - another reason to sell that home you bought decades ago and head for a smaller one.
The lifestyle reasons to downsize (or not). Maybe your home is too much to keep up, or maybe you don't want to climb stairs anymore. Maybe a condo or an over-55 community appeals to you. Maybe you want to be where it seldom snows. On the other hand, you may want and need the familiarity of your current home and your immediate neighborhood (not to mention the friends attached).
If you decide to downsize, it may not pay to wait. Anyone who wants to retire in the current economy needs all the financial resources that can be mustered. Of course, the real estate market will eventually improve; it depends on how long you want to wait for improvement. Some people want to retire and then sell their home, but it may be wiser to sell a home and then retire since homes tend to sit on the market these days. If you sell sooner instead of later, you can always rent until you find a smaller house that could save you thousands (or tens of thousands) of dollars.
----------
D. Alan Mercurio
Mercurio Wealth Advisors
330 North Evergreen Road, Suite 3
Louisville, KY 40243
Phone: (502) 253-9366
Fax: (502) 253-9370
Alan@MercurioAdvisors.com
Tuesday, April 20, 2010
A WEALTHY MAN'S PENNY
This was sent to me by a friend, which I thought needed repeating, enjoy!
A WEALTHY MAN'S PENNY
I'll never again pick up a penny without thinking of this! Several years ago, a friend of mine and her husband were invited to spend the weekend at the husband's employer's home. My friend, Arlene, was nervous about the weekend. The boss was very wealthy, with a fine home on the water-way, and cars costing more than her house.
The first day and evening went well, and Arlene was delighted to have this rare glimpse into how the very wealthy live. The husband's employer was quite generous as a host, and took them to the finest restaurants. Arlene knew she would never have the opportunity to indulge in this kind of extravagance again, so was enjoying herself immensely.
As the three of them were about to enter an exclusive restaurant that evening, the boss was walking slightly ahead of Arlene and her husband. He stopped suddenly, looking down on the pavement for a long, silent moment. Arlene wondered if she was supposed to pass him. There was nothing on the ground except a single darkened penny that someone had dropped, and a few cigarette butts. Still silent, the man reached down and picked up the penny. He held it up and smiled, then put it in his pocket as if he had found a great treasure. How absurd! What need did this man have for a single penny? Why would he even take the time to stop and pick it up?
Throughout dinner, the entire scene nagged at her. Finally, she could stand it no longer. She casually mentioned that her daughter once had a coin collection, and asked if the penny he had found had been of some valuable.
A smile crept across the man's face as he reached into his pocket for the penny and held it out for her to see. She had seen many pennies before! What was the point of this?
"Look at it." He said. "Read what it says." She read the words "United States of America." "No, not that; read further." "One cent?""No, keep reading.""In God we Trust?""Yes!""And?" "And if I trust in God, the name of God is holy, even on a coin. Whenever I find a coin I see that inscription. It is written on every single United States coin, but we never seem to notice it!
God drops a message right in front of me telling me to trust Him? Who am I to pass it by? When I see a coin, I pray, I stop to see if my trust IS in God at that moment. I pick the coin up as a response to God; that I do trust in Him...For a short time; at least, I cherish it as if it were gold. I think it is God's way of starting a conversation with me.
Lucky for me, God is patient and pennies are plentiful!
When I was out shopping today, I found a penny on the sidewalk. I stopped and picked it up, and realized that I had been worrying and fretting in my mind about things I cannot change. I read the words, "In God We Trust," and had to laugh.
Yes, God, I get the message. It seems that I have been finding an inordinate number of pennies in the last few months, but then, pennies are plentiful! And God is patient.
A WEALTHY MAN'S PENNY
I'll never again pick up a penny without thinking of this! Several years ago, a friend of mine and her husband were invited to spend the weekend at the husband's employer's home. My friend, Arlene, was nervous about the weekend. The boss was very wealthy, with a fine home on the water-way, and cars costing more than her house.
The first day and evening went well, and Arlene was delighted to have this rare glimpse into how the very wealthy live. The husband's employer was quite generous as a host, and took them to the finest restaurants. Arlene knew she would never have the opportunity to indulge in this kind of extravagance again, so was enjoying herself immensely.
As the three of them were about to enter an exclusive restaurant that evening, the boss was walking slightly ahead of Arlene and her husband. He stopped suddenly, looking down on the pavement for a long, silent moment. Arlene wondered if she was supposed to pass him. There was nothing on the ground except a single darkened penny that someone had dropped, and a few cigarette butts. Still silent, the man reached down and picked up the penny. He held it up and smiled, then put it in his pocket as if he had found a great treasure. How absurd! What need did this man have for a single penny? Why would he even take the time to stop and pick it up?
Throughout dinner, the entire scene nagged at her. Finally, she could stand it no longer. She casually mentioned that her daughter once had a coin collection, and asked if the penny he had found had been of some valuable.
A smile crept across the man's face as he reached into his pocket for the penny and held it out for her to see. She had seen many pennies before! What was the point of this?
"Look at it." He said. "Read what it says." She read the words "United States of America." "No, not that; read further." "One cent?""No, keep reading.""In God we Trust?""Yes!""And?" "And if I trust in God, the name of God is holy, even on a coin. Whenever I find a coin I see that inscription. It is written on every single United States coin, but we never seem to notice it!
God drops a message right in front of me telling me to trust Him? Who am I to pass it by? When I see a coin, I pray, I stop to see if my trust IS in God at that moment. I pick the coin up as a response to God; that I do trust in Him...For a short time; at least, I cherish it as if it were gold. I think it is God's way of starting a conversation with me.
Lucky for me, God is patient and pennies are plentiful!
When I was out shopping today, I found a penny on the sidewalk. I stopped and picked it up, and realized that I had been worrying and fretting in my mind about things I cannot change. I read the words, "In God We Trust," and had to laugh.
Yes, God, I get the message. It seems that I have been finding an inordinate number of pennies in the last few months, but then, pennies are plentiful! And God is patient.
Subscribe to:
Comments (Atom)