Friday, February 28, 2014

Jason Theodore White, 10/4/68 - 2/27/14

We are all saddened to learn of the loss of our friend and colleague Dr. Jason T. White. Jason has been an important part of Family Investment Center since 2005, and we’ll miss his boyish wit and wisdom about investments and the markets. Our prayers especially go out to his family and students. We’ll miss you, friend.

Tuesday, February 25, 2014

IRA Quiz


What is the difference between a traditional IRA and a Roth IRA?  How long do you have to make 2013 contributions to your IRA?  How much can you contribute to your IRA?  Take this quiz to find out these answers and more about the basics of IRAs!
 
1) What does IRA stand for?
a. Initial Retirement Adjustment
b. Individual Retirement Account
c. Internal Revenue Association

2) A traditional IRA is a retirement account which...
a. Allows contributions from before-taxed income, so withdrawals in retirement are taxed.
b. Allows contributions from after-taxed income, so withdrawals in retirement are not taxed.
c. Is not taxed at all.

3) A Roth IRA is a retirement account which...
a. Allows contributions from before-taxed income, so withdrawals in retirement are taxed.
b. Allows contributions from after-taxed income, so withdrawals in retirement are not taxed.
c. Is not taxed at all.

4) What is the deadline for making 2013 annual contributions to either a traditional or Roth IRA?
a. December 31, 2013
b. April 15, 2014
c. August 1, 2014

5) What is the maximum annual amount the account holder 49 years and younger can contribute to either a traditional or Roth IRA for 2013?
a. $2,500.00
b. $5,500.00
c. Any amount

6) What is the maximum annual amount the account holder 50 years and older old can contribute to either a traditional or Roth IRA for 2013?
a. $6,500.00
b. $10,000.00
c. Any amount

7) What is the minimum annual amount the account holder (any age) can contribute to either a traditional or Roth IRA?
a. Any amount, up to the maximum
b. $1,000.00
c. $5,000.00

8) At what age can the account holder start making contributions to either a traditional or Roth IRA?
a. Any age, as long as he/she is earning income
b. 18 years old
c. 21 years old

9) At what age must the account holder stop making contributions to a traditional IRA?
a. 50 years old
b. 70 1/2 years old
c. There is no age limit

10) At what age must the account holder stop making contributions to a Roth IRA?
a. 50 years old
b. 70 1/2 years old
c. There is no age limit

11) What does RMD stand for?
a. Rollover Money Discount
b. Roth Maximum Disbursement
c. Required Minimum Distribution

12) At what age is the original account holder required to take an RMD from a traditional IRA?
a. 50 years old
b. 70 1/2 years old
c. There is no age requirement

13) At what age is the original account holder required to take an RMD from a Roth IRA?
a. 50 years old
b. 70 1/2 years old
c. There is no age requirement

14) What is the deadline for taking an initial RMD for 2013?
a. December 31, 2013
b. April 1, 2014
c. August 15, 2014


Answers:
1) b 2) a 3) b 4) b 5) b 6) a 7) a 8) a 9) b 10) c 11) c 12) b 13) c 14) b


Please visit the Official Website of the IRS for more information.

Friday, February 21, 2014

Interesting Facts About Taxes


- The word “tax” is from the Latin word “taxo”, meaning “I estimate.”
- The number of words in Atlas Shrugged is 645,000. The Bible has about 700,000 words. The number of words in the Federal Tax Code: 3,700,000.
- Excise taxes are also called “sin taxes.” They are taxes on alcohol, tobacco, and gambling.
- Roman emperor Vespasian placed a tax on urine in the 1st century A.D. Urine at that time was collected and used as a source of ammonia for tanning hides and laundering garments.
- A window tax in England eventually led to health problems 19.  In 1691, England taxed the number of windows on a house. Consequently, houses began to be built with very few windows or people would close up existing windows. When people began to suffer health problems from lack of windows/air, the tax was finally repealed in 1851.
- Russian Emperor Peter the Great placed a tax on beards in 1705. He hoped that the tax would encourage men to have a clean-shaven look that was popular in Western Europe.
- Over 1 million accountants are hired each year in America to help with taxes.
- England has a tax on televisions. Color TVs are taxed more than black-and-white TVs. However, if a blind person has a television, he or she has to pay only half the tax.
- Americans spend over $27.7 billion every year doing their taxes.
- In Texas, cowboy boots are exempt from sales tax. Hiking books are not.
- Following Jimmy Carter, every U.S. president has released their tax returns.
- The first income tax in the U.S was imposed in July 1861 to help pay for the Civil War. In 1862, it was repealed and replaced with the tiered income tax. The current income tax system was made into law in 1913, before the start of WWI.
- There are at least 480 tax forms on the IRS website.
- In 2007, the IRS reported that 99,316,995 taxpayers called, wrote, or walked into an IRS office for help. That is roughly 1 in 3 Americans.
- Albert Einstein once said: “The hardest thing in the world to understand is the income tax.”
- Alabama is the only state in the United States to impose a 10¢ playing card tax for decks of cards purchased in the state. In contrast, Nevada issues free decks of card with every tax return filed.
- In 2011, the IRS collected over $2.4 trillion from around 234 million tax returns (which included corporate, individual, and employment income tax returns). The IRS also provided approximately $416 billion in refunds.
- The IRS estimates that in 2007, Americans who didn’t pay their taxes collectively owed more than $345 billion in taxes.
- The Stamp Act of 1765 was the first tax imposed directly on the American colonies by England. The new tax required the American colonists pay a tax on every piece of printed paper they used.
- The most famous protest of taxation by the America colonies was the Boston Tea Party. On December 16, 1773, colonists dumped 342 chests of tea into the Boston Harbor to protest the Tea Act and other oppressive tax measures. They argued there should be no “taxation without representation.”
- WWII led to the creation of the Bureau of Internal Revenue, which later became the Internal Revenue Service (IRS). The IRS is the world’s largest accounting and tax-collection organization.
- In Britain, Lady Godiva made her famous au naturel ride as a tax protest.
- Cortez was able to defeat Montezuma largely because he incited a tax revolt among the peasants.
- England rose to power under Elizabeth the Great in large part because of her low tax policies. Concomitantly, Spain was losing power because of the onerous tax and religious policies of her brother-in-law, King Philip.
- According to one historian, plane geometry was not invented by Euclid but by ancient tax collectors who wanted to determine land size for harvest taxes.
- Newspapers have such large-sized sheets of paper because of a British 1816 tax on newspapers. The “knowledge tax” was levied by page. In response, newspapers started using larger paper size to accommodate more text, thereby reducing the number of pages taxed.
- In Switzerland, William Tell shot the apple off his son’s head as punishment for tax resistance.
- Over the entrance to the IRS building in Washington D.C. is a quote by Oliver Wendell Holmes: “Taxes are what we pay for a civilized society.”
- When Americans started paying annual federal income tax in 1913, they would save money in anticipation of paying a lump sum to the federal government. It wasn’t until WWII, when the government needed a more consistent stream of income to fund the war, that taxes started being withheld from paychecks.
- The Cayman Islands do not impose income or property taxes on its citizens. Instead it raises money through import and export taxes, tourist fees, work permit fees, and transaction fees.
- The largest tax evasion case in the history of the U.S. is the 2006 case of Walter Anderson, a telecommunications executive. Other famous tax cheats include mobster Al Capone, Girls Gone Wild creator Joe Francis, Wesley Snipes, and hotel operator Leona Helmsley, who once quipped, “We don’t pay taxes. Only the little people pay taxes.”

Friday, February 14, 2014

Inexpensive and Thoughtful Valentine’s Gifts For Your Sweetheart



If you’re like most couples, you’re watching your pennies this year and looking for ways to romance your sweetheart on Valentine’s Day without breaking the bank. This list, chosen from a list of 50 ideas from www.smartmarriages.com, will help:
 
# In the morning, tuck a love note in his pocket or her pocketbook or other certain-to-be-found spot. Jot down some meaningful words on a piece of paper – “Can’t wait to wrap my arms around you tonight!”; “What’s for ‘dessert’?”; “You make me happy every day!” – and tuck it in a conspicuous location to be easily discovered during the day.
 
# Pick a few household chores your Valentine usually does and surprise them by doing it before they get a chance, i.e., making the bed. It doesn’t sound romantic, but the thought will most certainly count.
 
# Create a year-long calendar with photos of just the two of you above (top page) each month. Office supply stores will insert the spiral/binding for you.
 
# Leave a note on your mate’s pillow expressing how special you think he/she is. Place a couple of mints on the pillow, too (or a single rose)…all to be discovered at bedtime.
 
# Create an indoor picnic with available props, i.e., picnic tablecloth, paper goods. Share finger foods and favorite treats along with a glass of wine. Spice up “dessert.” Enjoy your picnic on the living room floor or in bed. Play card games, board games, or make up your own.
 
# Decorate a unique-looking jar or box with craft items. Write numerous love notes on small pieces of paper and fill the jar with them. Present the jar to your sweetheart.
 
# Write “I love you because….” notes and insert them into balloons. Blow up the balloons, and spread the balloons throughout your bedroom for your Valentine to pop and capture each message.
 
# Write a “Top 10 Reasons Why I Love You” list.
 
# Present your Valentine IOU coupons: I will make dinner; I will do the laundry; I will take care of the kids one day a month for the next year; I will clean the kitchen for a week; I will serve you breakfast in bed.
 
# When you make that special dinner…Just like when you go to a fancy event and a “dinner menu” is put on each plate describing each food item, do something similar. For example, on your menu, write “Spaghetti & Meatballs, made with passion to be with YOU.” Don’t forget to give your “event” or “restaurant” a name at the top of the menu.
 
# If you don’t have a special sweetheart, focus on bringing a smile or laughter to everyone you come in contact with on Valentine’s Day.
 
See the full list of ideas for inexpensive gifts from www.smartmarriages.com by clicking here.

Friday, February 7, 2014

Could Your Tax Refund Be Costing You Money?


Time Business & Money posted an interesting article earlier this week titled “This Simple Tax Error Is Costing You $2,800”.  The article covers the relevant topic of tax refunds and discusses how having a large tax refund could actually be detrimental.  Read below to review key points of the article, or click here to read the article in its entirety.

Did you know?  Over 68% of Americans prefer to pay more taxes than they owe so they can receive a larger tax refund.

The average tax refund for 2012 was $2,803, which means an overpayment in taxes by about $54 per week per individual.

It seems many people use overpaying into their taxes as a sort of “forced-savings plan”.  Over 2/3 of those who receive a tax refund choose to either save/invest it, or they use it to pay off their debts, rather than simply spending the money.

Unfortunately, nearly 50% of people who pay the correct amount in taxes throughout the year, and thus have more take-home pay, actually end up spending the extra money rather than saving or investing it.

So what is the recommendation?  Pay the correct amount of taxes throughout the year and set up an automatic monthly withdrawal for the additional money.  The funds can either be transferred into a savings account or it can be used to pay down debt.

In a savings account, the money will earn interest, whereas sitting in Uncle Sam's pocket until tax-time earns you nothing.  Also, these funds will be accessible if needed for big expenses or an emergency situation, which will also help to avoid increasing debt (with high interest) to pay for these occurences.

Another option is to transfer the funds to pay down debts, and thus lower interest charges.  This maneuver could actually add up to an average savings of almost $200 a year, which can make a huge difference over time.

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