Business and Finance Lectures

Archive for the ‘Personal Finance’ Category

Evaluating the difference between an asset and tax basis is like comparing apples to oranges. However, the two concepts go hand in hand for federal income tax purposes. An asset includes all types of property you own, whereas the cost you incur to purchase, improve or construct it equals the asset’s tax basis. An asset’s tax basis is significant for calculating your taxable gain or loss when you sell the asset.

Capital Assets

A capital asset is a term the Internal Revenue Code uses to categorize all personal and investment property you own, but not property you use in a business. Capital assets include virtually everything you own such as your home, the furniture in it, your car, stock investments and collectible items, to name just a few.

Calculating Tax Basis

Every capital asset you own has a tax basis which represents the cost to acquire, construct and improve the asset. For example, when you purchase a home, the tax basis includes the full sales price and most of your closing costs such as legal fees, title searches and bank fees. However, the tax basis of your home is not set in stone. If you ever make improvements to it that either prolong its useful life or increase its market value, you can increase the tax basis for those improvement costs as well. This same fundamental principle applies to calculating the tax basis of all other assets. If you purchase stock, for example, its tax basis is the market price you pay for it plus any commissions your broker charges.

Taxable Gains and Losses

Knowing the tax basis of your assets is important because it is the threshold amount that determines if you must recognize a capital gain or loss on a subsequent sale. For example, if you purchase a stock for $50 and your broker charges a $5 fee to execute the trade, your tax basis in the stock is $55. If you later sell the same share of stock for $100, you have a taxable capital gain of $55. But if you sell it for $30, you have a capital loss of $25. However, how you treat this gain or loss depends on the length of time you own it before the sale.

Disability Insurance (and the integrity of your own coverage and how it suits your needs) is serious business; One in three people are disabled during their working lives, and those disabled for more than two months have an average disability length of two and a half years. Can you cover your expenses if you can’t work for that long?

Following is a Financial IQ Test to help you determine how healthy your disability insurance policy is. Simply look at each statement, and answer it with a YES, NO, or NOT SURE. Keep track of your answers, and we’ll see how you score at the end. Then, check out the resource articles below to increase your knowledge base.
Financial IQ Test: How Healthy Is Your Disability Insurance?
Disability Insurance Lingo

I understand the difference between the “any occupation,” “regular occupation,” and “own occupation” definitions of occupational coverage.

I understand the difference between Short-Term Disability and Long-Term Disability plans.

I understand some of the inherent pitfalls of employer disability insurance, and have weighed out the benefits and drawbacks.

I know that pregnancy-related disabilities are almost never covered.

I know what the exclusions are on my disability insurance policy.
Best Value

I have minimized my premiums by selecting an appropriate waiting period, benefit period, and benefit amount.

I comparison shopped for disability insurance.

I checked with my local industry association to see if they offer discounted disability insurance plans.

I decline coverage offered by telemarketers from my credit card company.
Policy Structure

I have considered a waiver of premium rider, to reduce my expenses in the event of a disability.

I pay for my disability insurance premiums with after-tax dollars only.

I have a cost of living adjustment on my policy which indexes my benefit amount to the rate of inflation.

My policy is non-cancelable (as in the insurance company can’t cancel the policy; I can if I choose to).

less-expensive plans have fewer benefits and higher out-of-pocket costs. More expensive plans include some extra benefits, like coverage for routine checkups, some Medicare deductibles, at-home care services, and more. For example, Medigap Plan A is the most basic policy; it covers co-payments (but not deductibles), skilled nursing care, or hospice care. Plan L, a more comprehensive policy, covers co-payments plus 75% of hospital deductibles, 75% of skilled nursing care expenses, and 75% of hospice care. Exercise caution if you decide to cancel or change your Medigap plan — if you bought the policy before 1992, changes to coverage standardization rules will make it impossible for you to get the same policy back once it has been canceled.

Regardless of what company sells it, each standardized Medigap policy is required to provide a basic level of benefits for consumers. However, insurance companies may vary in eligibility requirements, responsiveness, and customer service, so keep these things in mind when shopping for a Medigap provider.

As Congress debates entitlement cuts to lower-income individuals and retirees and as the health care debate rages on, Medigap insurance warrants a second (or third) look. Though everyone’s financial picture is unique, Medigap policies are gaining in popularity as healthcare costs continue to rise and as life expectancy increases.The reality is, we don’t know what healthcare will look like in this country in five or ten years, and we don’t know what form health insurance and government-sponsored coverage will ultimately take. In the meantime, the smart money is on research, preparation, and staying healthy.
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Instead of a mileage rate, you can deduct the expenses you actually pay to drive your car for business, including gas and oil, maintenance and repairs, lease payments if you lease the car or depreciation (up to a dollar limit) if you own it, insurance, and vehicle registration fees.

With the agreement announced June 23, 2011, by the U.S. and 27 other countries to release 60 million barrels of oil from strategic reserves, expect to see the price at the pump decline somewhat. This should ease your expense budget. As of June 23, 2011, the average price of gasoline in the U.S. was $3.60 per gallon. Experts predict that the release of oil reserves will drive down the price even more, but by how much no one knows.

Again, when deducting your car expenses under the actual expense method, be sure to keep records of your business driving. No deduction usually can be claimed without them. For details, see IRS Publication 463.

Which Write-Off Option to Use?

The answer depends on the number of miles you drive, what you pay for your car, and other factors. For example, a costly lease and minimal driving favors the use of the actual expense method. Buying an inexpensive vehicle and driving it extensively for business favors the use of the standard mileage rate. Unfortunately, the only way to know which method will save more taxes is to keep great records throughout the year (including receipts for gasoline and other car-related expenses). Then you can figure the deduction both ways and use the better alternative. However, your choice in a prior year can affect this year’s write-off method.

• If you own the car, you must use the standard mileage rate in the first year. You can later switch to the actual expense method.
• If you lease the car, you must use the standard mileage rate or the actual expense method for the entire term of the lease; there’s no switching allowed.

As always, when in doubt, talk with a trusted tax advisor!

There are few experiences in life more daunting than navigating our health-insurance system — especially when multiple policies are involved in a complex mix of public and private coverage. Such is the challenge for Medicare recipients who find themselves in need of supplemental insurance. Medicare is government-administered health insurance for people 65 and over, or who are under age 65 and permanently physically disabled (or those who meet other special criteria). But Medicare doesn’t cover everything. For those holes in Medicare coverage, a Medigap policy is needed. (See also: How to Examine Your Healthcare Plan and Save)

As the name suggests, Medigap policies are designed to fill the “gaps” in health care expenses that Medicare doesn’t cover or doesn’t cover completely. Medigap plans are private, not public, and they’re offered by most major insurers. Policies typically pay for the little things that can add up quickly (think co-payments, hospital stays, and deductibles). If you’re a Medicare beneficiary and have opted for a supplemental Medigap policy, Medicare will pay its share of approved expenses, and then your Medigap policy will kick in to (hopefully) cover all or most of the remaining expenses.

Medigap polices are strictly regulated by state and federal laws designed to clearly reflect the policy’s purpose and to protect Medicare consumers. There are twelve different types of Medigap policies to choose from, and each is designated by a letter A through N. For a comprehensive list of the different types of polices and a description of each, check out this Medigap policy overview.

If you drive your car for business, as many business owners do, there are two ways to write-off the cost of driving: deduct your actual costs or rely on an IRS-set mileage rate. Either way, you’re in for savings now.
Standard Mileage Rate

Whether you own or lease your vehicle, you can use a per-mile rate that’s fixed annually by the IRS to figure your deduction for business driving. Using the standard mileage rate relieves you of the need to keep track of car costs throughout the year.

Because of the increase in gasoline prices, the IRS raised the rate mid-year. For driving from January through June, the rate is 51¢ per mile; for driving in July through December, the rate is 55.5¢ per mile.

If you use the standard mileage rate, you can also deduct what you spend for parking, tolls, and interest on car financing. However, no deduction is allowed for parking tickets and fines for traffic violations.

Caution: Using the standard mileage rate doesn’t relieve you of the need to keep records of business driving. Records must include mileage, the date, the destination, and the purpose of each trip. Consider using an app for a smartphone, such as Tap2Track, to simplify this record-keeping chore.

• In the course of life, you will find the special moments where you have to spend large sums of money. For example, when your child signed up for their favorite university, you must pay a registration fee and this can not be postponed. Therefore, I teach you how to plan your financial future. Do not let the children can not school just because the problem of funds!

• The world increasingly rife with consumptive nature, especially with the existence of credit card that allows someone to shop without paying cash. Without realizing it had a lot of people into debt. Personal Finance for debt management teaches people to eliminate debts that cost them as quickly as possible. Out of money for paying interest on the debt, it is better to invest!
• You are guided to build wealth from your current circumstances. Not just theory, but through the steps that can actually be practiced.

Many people assume that rich people are the people who awarded various things. Of the characters that support them to succeed, a bonafide family environment, to a large fortune.

This is a wrong assumption. In fact, the majority of rich people are ordinary people start at the bottom. There are many examples of rich people who used to be farmers by profession, laborers, teachers, retailers, as well as people from various other public professions. They all became rich through their own efforts and how they earn money by using their respective expertise.

However, behind such diversity, they all have one thing in common. They have knowledge about what they should do with the money they can. They can maximize the usefulness of their money and use it to get more money.

You too can become rich as they are with and learn from their knowledge and practice are evident in your life. This knowledge is, after going through several stages of research, I have collected into a single package of personal finance science e-book alloys.

The topics would be discussed on this occasion is the relationship between health and finance. Maybe you’ve heard the proverb says that ‘Health is the most precious treasure’. This proverb TRUE once. Because we can do all our daily activities, making a living and managing finances, it is because we are blessed with a healthy body.

Without health, we can not go into the office to work. When we are sick constantly, our boss will be angry, or perhaps even dismiss us from the job now. As a result we could lose our revenue sources.

Costs incurred to treat illness should also not cheap. Physician costs, drug costs, especially if the disease is quite severe, so must stay to the hospital. All these costs would undermine our finances. Not a few people who become poor because of falling ill. Surely we do not want this to happen to us.

Therefore we should be grateful because we have been blessed with a healthy body. And we must keep our bodies in order to stay always healthy, because our body’s health is very important for our finances. Here are some tips to keep your body to stay healthy.

To conclude, then, it would seem That although it is now very Difficult for individuals, whether resident of New Zealand citizens or expats, to legally Achieve tax minimisation by investing or sheltering assets offshore, there are still opportunities on a corporate level, although the balance does seem to be in favour of foreign multinationals with subsidiaries or branches in New Zealand, rather Than the New Zealand companies with foreign interests. To conclude, then, it would appear that even though it is very difficult for the individual, whether citizen or expatriate New Zealand citizen, to achieve legal tax minimization by the investment or protect assets offshore, there are still opportunities at the firm level, although the balance seems to be supported foreign multinational companies with New Zealand subsidiary or branch, rather than New Zealand companies by foreign interests. And it is fair to say That the overalls Taxation regime in New Zealand is noticeably less harsh Than its equivalent in Australia. And it is fair to say that the overall taxation regime in New Zealand was less harsh than equivalents in Australia.