Author - Russell D. Francis, CPA, CFP®

1
Are You Paying Too Much Tax On Your Bond Income?
2
Increasing Your Income While Hedging Your Risk
3
Why You Shouldn’t Invest Your Self-directed IRA in Real Estate
4
How To Report Your Foreign Financial Accounts
5
Why This Downturn is a Great Investment Opportunity

Are You Paying Too Much Tax On Your Bond Income?

You may be overpaying or underpaying taxes on your bond income and not even know it. Bond taxation is complex because there are several considerations that require different tax treatments. If a bond is purchased at par and held to maturity, it is fairly simple. If it’s a taxable bond, you pay income tax on the coupon income. If it’s a tax-free municipal bond, you don’t.

But most bond purchases are not that simple. Bonds are generally purchased on the secondary market at a premium or a discount. Some bonds are purchased at original issue, but at a steep discount …

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Increasing Your Income While Hedging Your Risk

The equity (stock) market has done very well so far this year, and I hope it continues, but it is volatile and there is a real danger of the market making another significant correction. If you’re younger, in your 40s or early 50s, that isn’t necessarily be an issue, but if you are retired and living off of your investments, even a moderate decrease in your portfolio can have a significant impact over the long term.

For example, let’s say your portfolio is worth $100,000. If there is a 20% correction in the market, you would lose $20,000 and the …

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Why You Shouldn’t Invest Your Self-directed IRA in Real Estate

You might ask yourself, “With housing prices and interest rates so low, isn’t it a good time to invest my IRA in real estate?”

Think twice before you do. There are a lot of disadvantages when purchasing real estate with your IRA funds even if you think property prices have bottomed out and you feel strongly that real estate is a good investment.

Higher tax rates – When you sell real estate within an IRA, any gain distributed is taxed at ordinary income tax rates. This rate can be much higher than the capital gains rate you would pay on …

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How To Report Your Foreign Financial Accounts

During tax time we always ask our clients if they have financial accounts in a foreign country. We do this for a very good reason. There are strict reporting requirements if you have assets in a foreign account.

More specifically, you must file a Form TD F 90-22.1 with the Department of Treasury if:

  1. You are a US citizen or resident,
  2. You have a financial interest or signature authority of financial accounts in a foreign country,
  3. The aggregate value exceeds $10,000 at any time during the calendar year.

Foreign accounts include bank accounts, mutual funds, annuities, securities, and derivatives. The …

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Why This Downturn is a Great Investment Opportunity

The recent sell-off in stocks and commodities was not a direct result of the standoff in Congress over the debt ceiling or the U.S. downgrade; but a loss of investor confidence over the ineffectiveness the U.S. and the European Union have shown in resolving their fiscal problems.

I do not see this as a 2008 market crash because the correction is not based on economic fundamentals, but pure emotion, made worse by a breathless media that amplifies the mood of the moment. Because of this emotion, people tend to buy when prices are going up, and rush for the exits …

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