Archive - March 2014

1
Tax Deductions For Business Assets Loss Often Lost by Investors
2
Bonds Did OK in High Rate Era – But Circumstances May Change
3
Can You Itemize? Or, Should You Itemize?
4
Today’s 20-year Olds Will Need Over $7 Million For Modest Retirement Lifestyle
5
How To Save (and Pay) for College

Tax Deductions For Business Assets Loss Often Lost by Investors

I have met investors who made serious tax errors because they didn’t seek professional advice. One person had $78,000 of accrued interest from negative amortization on a rental property that became deductible when the loan was refinanced and paid off. However, the accrued interest was not properly reported by bank until several years later. When a property owner has a negative amortization mortgage the accrued interest is deferred until the loan is paid off or until the loan changes to a fully amortized loan. The interest can only be deducted when paid, assuming the taxpayer is using the cash method …

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Bonds Did OK in High Rate Era – But Circumstances May Change

Barron’s ran an article by Aberdeen on 3-21-2014 about the risks to bonds if rates rise. A study was commissioned and done by Strategas which showed that in 35 years the Barclays U.S. Aggregate Bond Index only had three negative years. The study said if history was run backwards for 30 years to the time in 1984 when rates were very high (the 6 year Treasury was yielding 12.3% to 14.3% in 1984) that the index would have produced a 4.8% annualized return.

What was not mentioned in the Barron’s article is that the Barclays Aggregate Index (formerly Lehman Index) …

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Can You Itemize? Or, Should You Itemize?

When you prepare your taxes each year, you’re faced with a decision – itemize deductions or take the standard deduction?  Most of the time it’s not a question of whether you can itemize, but rather should you itemize.

Most Anyone Can Itemize…

This is due to the fact that most anyone can itemize.  If you’ve paid state and/or local income or sales taxes, real estate taxes, or paid mortgage interest, you have deductions to itemize.  Same goes for charitable contributions.  All of these items that you’ve paid out are eligible to be deducted on Schedule A of your tax return, …

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Today’s 20-year Olds Will Need Over $7 Million For Modest Retirement Lifestyle

In “Tax By Inflation” we wrote:

The danger with short money is that it will almost certainly depreciate by inflation.

Most young people don’t understand inflation as well as their parents and grandparents. You have to either be a student of monetary history or an old movie buff who pays attention to the actor’s reaction to what something used to cost.

To illustrate the insidious effects of inflation here are some statistics from the official inflation numbers:

  1. Someone retiring in now in 2014 with $1 million at age 65 can safely withdraw $43,600 a year. [See safe withdrawal
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How To Save (and Pay) for College

Saving for college is a priority among many parents. Often we are asked about the right savings vehicle for college education. There are a few that parents can choose from between Coverdell ESAs, prepaid tuition and 529 college savings savings plans.

We’ll discuss the 529 plan here. The 529 plan is essentially a college savings vehicle very similar to an IRA or an employer-sponsored plan. Depending on the state you live in your state may have a 529 plan that will have access to stock and bond mutual funds and or a pre-determined mix that will invest the money and …

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