Posts Tagged ‘Taxes’

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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Stimulus Bill 2.0 & Taxpayers Tax Credits and more – Part 3

April 27th, 2009 Vijaianand

I started out on Tax credit blog series and posted already 2 blogs(Taxpayer Tax credit and New Home buyer Tax credit) talking about useful Obama’s Tax credits which many tax payers like you and me can use. In this 3rd part of the series,  I am collected some details and providing insight about the energy credits.

ENERGY TAX CREDIT: Weatherizing homes will save money


The stimulus 2.0 bill provides about $50 billion aimed at ushering in a clean-energy future and includes tax credits for Americans to weatherize their homes and buy hybrid cars. 


The bill extends and modifies the tax credits for qualifying products as established in the Energy Tax Policy Act of 2005. Qualifying products purchased between February 17, 2009 and December 31, 2010 are eligible for a tax credit equal to 30 percent of the product cost. The maximum amount of homeowner credit for all improvements combined (including windows, doors, roofing, insulation, HVAC, and water heaters) is upto $1,500 during 2009 and 2010.

The bill sets aside $5 billion to weatherize more than 1 million modest-income homes, saving families an average $350 a year. It devotes $6.3 billion to improve federally backed and public housing projects with new insulation, windows and furnaces. Higher-income households can make similar improvements and get expanded tax credits.

While many analysts cheered provisions to weatherize homes as both an instant way to create jobs and put money in consumers’ pockets, some say other initiatives are insufficient and won’t deliver a quick economic boost.

The bill also has provision to give tax credit of up to $7,500 for families that buy plug-in hybrids to spur a new generation of cars which is a good to help the environment and help Detroit. But automakers won’t have plug-in hybrids and battery-power electrics in showrooms until next year at the earliest. “To roll that into a stimulus is almost misleading,” echoed by many analyst .

As usual, there are caveats to this tax credit as well. Here is some I collected from web:


Tax credits are now available for home improvements:

  • must be “placed in service“ from January 1, 2009 through December 31, 2010
  • must be for taxpayer’s principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes and rentals qualify)
  • $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009&2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
  • must have a Manufacturer Certification Statement to qualify
  • for record keeping, save your receipts and the Manufacturer Certification Statement
  • improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
  • If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.

You can get more detail breakdown at energystar.gov

Vijai’s 2 cents:

I myself currently researching into getting some energy efficient windows and doors for my house if they can promise good energy and money savings. It is good way to go green and get green(money) back.

But the usual energy star rated windows and door won’t cut the deal. What you need is, any replacement window or door you buy has to be an U-Factor and SHGC of .30 or less. If the window company won’t show you the NFRC sticker certifying the ratings, walk away. If you’re unsure or suspicious, visit the NFRC at http://www.nfrc.org. You can verify ratings in the product directory or contact them directly. This article from Ezinearticles.com has some more details.

So if its going to cost me $2500 for the total project and I can get the maximum credit of $1500. My investment is only $1000. If I can get $50 savings per month, I can recoup my money in 2 years, its all savings after that. You can get some manufacturer and retailer details at nfrc.org

Some content sources are: usatoday.com, energystar.gov

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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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