We are nearing the end of the first tax season post Tax Reform, formally known as the "Tax Cuts and Jobs Act". The majority of filers saw a reduction in their tax liability this year as noted by my colleague Bill Starnes. Many people, however, got lower refunds. This is because their tax withheld during the year was less. Your tax refund is not your tax liability. Your tax liability is the amount of tax you owe. Your tax liability in 2018 compared to 2017 depends on a lot of things. Whether you itemized or took the standard deduction Whether you are self-employed and got the new Qualified Business Income Deduction Whether you have children and how old they are …
Beware of The Diderot Effect
I recently read the best seller "Atomic Habits" by James Clear. In fact it was my book giveaway in January, I highly recommend it. In this book I learned the tale of the French philosopher Denis Diderot, who in 1765 found himself unable to pay for his daughter's wedding. He was poor, but well known as the co-founder and writer of Encyclopédie, one of the most comprehensive encyclopedias of the time. Catherine the Great, Empress of Russia, was a fan of his encyclopedia and offered to buy his personal library for £1000 - more than $150,000 today. She also offered to pay him a yearly salary to act as her librarian. Suddenly Diderot found himself wealthy. He paid for the wedding and …
Gift Taxes – the short and long of it.
The gift tax short version: You can give up to $15,000 per year of cash or property (in 2019) to as many people as you wish without filing a gift tax return. The gift is not taxable to the recipient. Now the gift tax long version: 1. Gift tax, if due, is generally paid by the DONOR, not the recipient. 2. There is an annual gift exclusion in 2019 of $15,000. You can give $15,000/year to as many people as you want without having to file a gift tax return. This amount is adjusted each year for inflation 3. Under current law you can give away $11,400,000 during life and at death without owing any gift or estate taxes. Yes, that is over 11 million dollars Think …
It was the best of times, it was the worst of times… especially in the stock market
It was the best of times, it was the worst of times. So begins the Charles Dickens classic "A Tale of Two Cities". Which by the way I haven't read. Have you? Recently we've seen some good times and bad times in the stock market. On Thursday, January 3rd, 2019 the S&P 500 (an index of the 500 largest US stocks) was down 2.48% On Friday the front page headline in the Wall Street Journal read: Then the very next day, Friday January 4th, the same index was up 3.43% Saturday's headline read: So what can we expect over the next days/weeks/months? Will the markets be up, down, or sideways? Many prognosticators purport to have a crystal ball that can …
The Power of 1% – Small Changes Produce Big Results Over Time
I am currently reading "Atomic Habits" by James Clear. He writes compellingly about creating big improvements in nearly any area of our lives by making small steady changes over time. I'm not quite done with the book so it is not this month's book giveaway - tune in next month to win a free copy! This formula certainly works for saving money. Many 401k plans have encouraged the idea by offering an "auto escalation" feature. With auto escalation the percentage of salary you contribute goes up, typically by 1% each year. When you sign up for this feature this happens automatically which is a great way to save! To see the impact of escalating your savings percentage let's take a look …
