If a lender allows a graduate to pay less than the full amount of a loan, that entire discount is considered taxable income by the IRS. Example: A lender agreed to reduce a student’s loan by $28,000 – so the IRS said that the student had $28,000 in taxable income. A court agreed with the IRS positions. What to do: Discuss any loan forgiveness or other changes in debt status with a knowledgeable financial advisor. Be aware the discount is not considered taxable income if the graduate works in certain professions for set periods in specified areas (such as a teacher in an inner city).
General Investing Tips Articles
The two bear markets over the last decade has impacted those close to retirement and those already retired.
TRowe Price examined this question using Monte Carlo probability analysis to look at likely outcomes of different responses to the bear market.
Mar 28
What is AMT?
Congress came up with this parallel tax system in 1969 as a way to stop the ultra wealthy from avoiding taxes. Problem is that the AMT (short for alternative minimum tax) treats the state income tax deduction and write off for your kids as if they were tax avoidance strategies and because it is not indexed for inflation the AMT hits millions, not just the rich.
Mar 28
Ways to Save More…
You may think you have squeezed the maximum from your budget, but there are always some painless ways to save more.
When mortgage rates are low, reduce your 30-year mortgage to a 15-year mortgage. Note that you will save 60% more in interest by refinancing to a 15-year loan. Tthis move will allow you to pay back more of the principal over a shorter term.
Dec 2
Smart Moves
1. If you have a stock or fund that is way up, consider reaping the gains while you are still paying 15%. If you have substantial losses, consider saving them to offset future gains.
Fall is the time to start thinking about taxes for the next several years and begin some strategic planning. And this year is different because it may be necessary to accelerate income and delay deductions.
Jun 23
Tax Breaks
A new law lets employers avoid the 6.2% share of Social Security tax on wages paid to new hires who certify they worked fewer then 40 hours in the prior 60 days. That even includes students who didn’t work because they were taking classes. The payroll-tax exemption is available for compensation paid after March 18th, 2010 and before January 1, 2011 to employees hired on or after February 4, 2010.
The idea of spreading your investments into many asset classes that rise and fall independently throughout market cycles has been considered a safe and sure move to make sure your assets are protected. So if any one basket falls, the other basket should keep your portfolio intact. That sounds good, but then there was 2008 to date, that keeps us all of wondering what to do. But using the financial crises to conclude that diversification is pointless because stocks, bonds, and other assets will move in tandem forevermore is a misreading of recent history.
Having an organized approach to financial records can remove much of the stress associated with living. We all play many roles, each with a trail of paper attached.
What to keep
Knowing what keep by separating your papers by your need to use them, keeping short-term items together and a longer term items together.
Getting a second opinion can help you to confirm that your investments are on track. It can also help you reduce risk and improve your return before it’s too late. A second opinion can determine whether or not your investment portfolio is designed as efficiently as it can be to achieve your goals. Read more…