Archive for the ‘Tax Planning’ Category

Tis the Season of giving – But wait…

December 17th, 2009 Vijaianand

It is the time of joy and merriment. The festive season is all about fun family time, holiday parties, gift exchanges and giving gift. Gift giving has been a tradition for many decades. But how many of you really get the gifts which you really like and how many of you really know what you want to buy for your cousin this christmas.


According to Waldfogel, an economist at the Wharton School of the University of Pennsylvania,  gift giving is a Holiday waste.


He makes the case in his book, Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.  He says, when you buy something for yourself, you will only spend, say, $50, if you look it over and decide it’s worth at least $50 to me. When someone else sets out to spend $50 on me, they’re at a real disadvantage. They don’t know what I like unless they are real close to you. They don’t know what I have. There’s just no guarantee that what they buy will be worth at least $50 — or more — to me. So it real waste of money. And what the data show is that, on average, stuff that other people buy as gifts is worth 20 percent less per dollar than the stuff we buy for ourselves. And so, in that way, when we go out and spend money on gifts, we’re destroying a lot of value.


It’s not so much that people shouldn’t give gifts, period. It’s that you should give gifts when you have a fair shot at doing well. And so those are the people you know well and, frankly, the people you care about. He recommends, it’s often better (more efficient) to simply give cash or pre-paid gift cards. You can read more about this Holiday Gift waste in his book, Scroogenomics.

At the sametime, Holiday season is not just about giving gifts to friends and family, it is also about giving the gift of hope and happiness to most needed ones. Charitable giving  is a big aspect of the holiday season. Whether you make a difference in one’s life or just make one smile by showering gifts in this holiday season, it will surely piles up good karma in you.


“What you think about and thank about, we bring about” – Dr. John Martini in the book, “The Secret”.

An inspiring quote from an excellent book which I recently read and strongly recommend. It just reforces the fact that “Think and Do good things, it will bring good things to you“. This very thought is the prime reason for many millionairs who spend millions in philanthropy. By doing so, they continue to attract more money and become more rich while many of us are worrying about living pay check to pay check. That’s the difference in mind set. 

We worked hard and devoted all our attention in making money, saving money and investing money all this year for the future. It’s hard to think seriously about giving money away. It is even harder for many without job in this tough and challenging year 2009.  But the good news, the year is almost over and recession has come to an end at least in papers. That’s big sign of relief. We all can only hope for the next year to bring greater perspectives in both job and economic front through outall over the world.


While we wait to welcome the New year, many of us should be lucky and grateful to have a reasonable job and a decent life. Instead of cribbing about not enough money to donate or give way, we should open our heart and show our gratitude by giving and helping others in need.

How can you contribute?


Whether it is small or big, capacity doesn’t matter. What matters the most is the Charitable thought. There are lot of ways you can give especially suiting your life style, you life goals, your passion and more. If you are pet lover, you can give to Humane Society to protect animals. If you want to encourage kids education, you can donate to globalgivingeducation funds. If you care about developing nations, you can give gift to world relief. With webspace loaded with gift giving advices, you better do your research to find the right option and avenue to route your money to the right place. Here is some help to do some true gift giving.


Tools – Charity Finder


It’s easy to check on a charity’s business practices to make sure the bulk of your contribution is going toward the cause you select, instead of being spent on fund-raising expenses or salaries. There are web sites like www.CharityNavigator.comand www.GuideStar.org allow you to search for a charity by name or cause, as well as view and compare their annual IRS filings under Form 78, which details their expenses and costs.

 
Websites like http://www.goodsearch.com/and http://www.searchkindly.org/are search engines that donate a portion of their revenue to the charities and schools designated by its user.

We will see more about different ways of gift giving and possible Tax Implications in the next blog post.

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THREE NUMBERS TO KNOW FOR 2009

February 4th, 2009 Vijaianand

Posting on behalf of Manisha Thakor, CFA


When it comes to numbers – we are all swimming in them. We have our home phone numbers, our cell phone numbers, our bank card PIN numbers and the list goes on and on. So when it comes to getting your finances back on track, here are three numbers that everyone should know as they head into 2009!

* $16,500 – This is maximum amount that you can contribute to your 401(k) plan if you are under the age of 50. With the scary market of 2008, a lot of people decided they didn’t want to go there. However if history is any guide, this is a great time to be adding to your retirement funds if you are young. The market is low and if you are under 50 you have time on your side. If you are over 50, the government is giving you some added turbo juice – you can put in an extra $5,500 for a total annual contribution of $22,000. A couple things to note. First, if your employer matches – meaning for every $1 you contribute they will put in $0.50 or $1.00 up to some predefined amount – you DEFINITELY want to do this. It’s free money. Second, it’s not enough to just sign up for your 401k / 403b / 457 plan, you have to specify what you want your funds invested in. If investing over whelms you, a target date retirement fund can be a great keep it simple option. Third, don’t touch this money unless it’s a life or death emergency.

* $5,000 – This is the maximum amount you can put into an IRA (individual retirement account) if you are under the age of 50. A lot of people don’t realize that you can have both a 401k and an IRA. If you are single and make less than $104,000 or less a year – or if you are married filing your taxes jointly and make less than $166,000 a year you can contribute to a special kind of IRA called a ROTH IRA These are special because you pay taxes on the money before you put it into the account but then when you take it out in retirement it’s all yours, no more taxes ever. Oh, and if you are over 50 you can add an extra $1,000 a year for a total contribution limit of $6,000.

* $5,950 (& $3,000) – This is the maximum amount a family (& a single filer, respectively) can contribute to an HSA (Health Savings Accounts). These are “tax-advantaged” savings accounts available to anyone who has a “high deductible” or “catastrophic” health insurance plan (“HDHP”). An HDHP generally costs less than what traditional health care coverage costs, so the money that you save on insurance can therefore be put into the Health Savings Account. You get an “above the line” tax deduction on the money you contribute and you do not have to pay taxes on the money you take out if the funds are used for qualified medical expenses. As an added bonus, unlike flexible spending accounts, the money can roll over from year to year and be used for any qualified medical expense (withdrawals for other uses will be taxed in a similar fashion to early withdrawals on IRAs)

No doubt, it’s scary out there. Our economy is going through a very rough patch. The best thing each of can do to protect ourselves is to focus on we can control. If you’d like to learn more about taking charge of your financial life, visit my site at www.OnMyOwnTwoFeet.com.

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Tax Refund – What did you do?

March 28th, 2008 Vijaianand

“Beware of little expenses; a small leak will sink a great ship.” – Benjamin Franklin



I hope many of you by this time filed your taxes some might have gotten your tax refunds. Unfortunately some of you might not be in the receiving end and owed to Uncle Sam. According to me, almost all the time you should be able to get a refund if you plan and file properly. I never paid Uncle sam, always got refund atmost break even. Anyways, that’s a different topic altogether.

Did you get a tax refund?!

Don’t think its a free money, its your money and you own it. I know its pretty exciting to get a big chunk of change at this time of year. Many already have plans for it. Whatever plans you have please make a wise decision and use it properly.

What did I do?

Let me tell you what I did. I got my refund 2 weeks ago and planned to pay part of my 0% balance transfer credit card debt. You might wonder how come I have a debt? Everybody has debt and its a good thing if you manage it well. My debt on 0% balance transfer card is about getting free money for a year and leverage it to invest on real estate or Cd’s to get a good gain from it. If you are smart, you can do the same. Don’t throw away your free 0% balance transfers offer. You won’t find them these days because of credit problem.

If you do get those deals, select a good card with $0 balance transfer and put the money either in Cd’s or invest on good vehicle like Real estate. That’s one way of getting free money without no interest. No body lend money for free these days. So I plan to use that refund to pay off my debt but I am not doing it immediately.

I opened a WAMU CD account which is going to pay 4% interest on 6 months CD until 2 days ago(not anymore). Then take it out and payoff the debt. Why did I do that? I know I still have time to payoff my credit card debt till Nov. What is the benefit I am going to get by paying it off now? SO I leveraging the time and money in my favor to gain every penny of it. Hope you got the point.

What you can do?

I would suggest you to think twice before you make a decision. Jot down your current situation and list the options you have and take the right step. These are my suggestions:

1. If you have a high credit card debt, just pay it off or reduce the amount by paying it off.

2. If you don’t have any CC debt, paying off your Auto Loan or any personal loan which might have interest rate higher than CD can yield. Don’t payoff your Home loan unless its closes off your loan.

3. If you don’t have any debts, think about short term needs. If you don’t have short term emergency savings.

Start one right now with part of the amount as CD. Then use the other part to either add to your IRA account or kids education account. If a vacation is long due, plan for it but put this money as CD for that time being.If you planning to jump to any investment vehicle and test the water. Don’t dump all the amount into it. First test the waters with small amount and once comfortable start adding it in slowly.



To conclude, Money doesn’t find us easily. If it finds its way, don’t let it go easily.

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