My CFO on the Go!

One of the lesser known tax credits out there is the Saver’s Credit. A credit is a dollar amount that reduces your taxes. It is better than a deduction, that reduces your taxable income. The Saver’s Credit allows lower to middle income taxpayers to take a credit based on the amount the taxpayer has contributed to a retirement plan. This is in addition to any other benefits you may get from contributing to your IRA or employer’s 401(k) plan. The credit can be as high as 50% of your retirement contribution. So say you Contribute $2,000 to your IRA account during the year. You will get to deduct $2,000 from your income, and that will save you at least $200 on your taxes. In addition, you may qualify for up to a $1,000 Saver’s credit. That is another $1,000 off your taxes. So the $2,000 IRA contribution really only cost you $800. The other $1,200 you would have paid in taxes if you hadn’t put it in your IRA. This is a really sweet deal. Anyone who’s income is under $26,000 if single, or $52,000 if married should look into this credit. And remember, you can make a 2007 IRA contribution as late as April 15, 2008.

Here is more on the Saver’s credit from the IRS.

If you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement, you may be able to take a tax credit.

The Savers Credit formally known as the Retirement Savings Contributions Credit applies to individuals with a filing status and income of:

• Single with income up to $26,000

• Head of Household with income up to $39,000

• Married Filing Jointly, with incomes up to $52,000

To be eligible for the credit you must be at least age 18, not a full-time student, and cannot be claimed as a dependent on another person’s return.

You may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly) if you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans.

The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.

When figuring this credit, you generally must subtract the amount of distributions you have received from your retirement plans from the contributions you have made. This rule applies for distributions starting two years before the year the credit is claimed and ending with the filing deadline for that tax return.

The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.

For more information, review IRS Publication 590, Individual Retirement Arrangements and Form 8880, Credit for Qualified Retirement Savings Contributions. The publication and form can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Publication 590, Individual Retirement Arrangements (PDF 1401.9K)

• Form 8880, Credit for Qualified Retirement Savings Contributions (PDF 273.8K)

With all the turmoil in the mortgage markets these days I thought it would be helpful to add a page of mortgage calculators. There are 20 calculators where you can see the effects of refinancing your mortgage, or making extra payments, or even going to interest only payments.

My Daddy once said to me, the only thing you have, that no one can ever take away from you, is your integrity. You can only give it away.  Everything else you have, even your life, can be taken away.   So never, ever, give away your integrity. It can be hard to get back.

I have been seeing a new “make money on the internet” widget popping up on blogs everywhere.  It is a simple concept.  You buy a widget.  You put it on your blog.  When other people buy the widget, you make money. How much money you make depends on how much you paid for your widget.  It sounds simple. It will work, at least in the beginning, and the company that came up with the idea is probably making a killing.

So what’s the problem?

It is just another  pyramid scheme, or ponzi scheme, with a Web 2.0 flair.

There is no real product being sold, no value being given.  Not even a poorly written e-book.  Just the promise of getting money without doing any real work.

The following is a quote from Wikipedia on pyramid schemes.

The essential idea behind each scam is that the individual makes only one payment, but is promised to somehow receive exponential benefits from other people as a reward. A common example might be an offer that, for a fee, allows the victim to sell the same offer to other people, or receive bonuses through other people they refer. Each sale includes a fee to the original seller.

Clearly, the flaw is that there is no end benefit; the money simply travels up the chain, and only the originator (or at best a very few) wins in swindling his followers. Of course, the people in the worst situation are the ones at the bottom of the pyramid: those who subscribed to the plan, but were not able to recruit any followers themselves.

The internet is huge, and it may very well be awhile before this particular scam hits the bottom and people are no longer able to make money. And that is where the ethics and integrity part comes in.

People who get into this right now will probably make a good deal of money. Many people don’t care that it is a scam, and that eventually, some people will get burned.  I have to admit that I had a little bit of temptation to go for this myself.  After all, it is the people who get in early that make the big bucks.  And with the vast market of the internet, it could be a long time before the market saturates and people start losing money.

BUT SOMEBODY WILL LOSE MONEY,BECAUSE THERE IS NO REAL PRODUCT!

And I can’t be knowingly responsible, not even distantly, for someone losing money to a scam.

Now I know probably most of the people who have this widget don’t know that it is a scam. At first glance it does look like a really good idea.  So how can you tell if something is a scam, or a valid money making opportunity.

It is simple, you just have to ask yourself one question.

Can I make money selling this product, without having to recruit anyone else into selling the product? 

If the answer is yes, then you have a real product and a real opportunity. (It might not be a great or even good opportunity, but it is a real opportunity.)  If the answer is no, you have a Ponzi scheme.

I’m not going to tell you the name of the widget.  There are plenty of people out there who don’t care that people will lose money, and I don’t want to help them find a new way to scam people.

However, if you have such a widget on your website, do the right thing and take it off.  You may lose some money in the short run, but in the long term, you  keep your integrity, and that is worth more than any money you could earn.

Please feel free to share this information with others. I would appreciate credit and a link back. Thanks.

 

The official title from the IRS is the Economic Stimulus Payment, but most people still call it the Tax Rebate Check and it’s going out to over 130 million US households beginning in May.

3 Simple Requirements

You must have a social security number, an ITIN (individual taxpayer identification number) will not work.

You must have at least $3,000 in qualified income. For your ESp (Economic Stimulus Payment) Social Security Payments, some veterans Benefits, and Railroad Retirement payments count towards the $3,000.

You must file a 2007 Tax Return. This means that many people who would not otherwise file a tax return, because there income is too low, or is not taxable, like Social Security Benefits, should file a tax return this year. This last point is very important. If you think you are not getting a Tax Rebate Check because you are not required to file a tax return, you are wrong! As long as you have at least $3,000 in qualified income you will get a check as long as you file a tax return. If you don’t normally file a return, you should be able to file the short form 1040A which is not too complicated and most can manage on their own.

File a return, even if you are not sure you qualify. If you don’t owe anything it doesn’t hurt to file a return. If it turns out you don’t qualify, you simply won’t get a check. Don’t worry. Filing a return this year doesn’t make the IRS “expect” a return next year.

How Much Will You Get?

If you qualify you will get at least $300 and no more than $600 per person. The exact amount depends on the information on your tax return. Higher income taxpayers will have their ESP reduced or even eliminated. With phaseouts beginning at AGI’s $75,000 for individuals and $150,000 for married couples.

Scam Alert

There is always someone wanting to take advantage. Here is a warning put out by the IRS.
If someone claiming to be from the IRS calls or e-mails you about the payments and asks you for a Social Security, bank account or credit card number, it’s a scam. The scammers are trying to get your personal and financial information so they can empty your bank account, run up charges on your credit card and more. Find out more — see IR-2008-11, IRS Warns of New E-Mail and Telephone Scams Using the IRS Name; Advance Payment Scams Starting.

If you have any questions you can leave a comment with the question, or you can visit the IRS Economic Stimulus Payment website.

Starting a new business is always fun and exciting! I should know. I have successfully launched 3 businesses and I am working on my fourth! But before you get carried away with the rush of starting a new venture, ask yourself a few questions.

#1. Is There a Market For My Product or Service?

Is there a market for your product? You may love it, but does anyone else? Can you convince people to part with their hard earned money? Check your competition. Is there lots of competition? Then how are you going to make your product stand out. No competition? That may be because you are the first, or it may be that there is no market for your product.

#2. Do I Have Enough Money to Get Me Through the First Year?

Do not expect to become an overnight success! It does happen, although it is rare. Starting a business can be very expensive. Just getting the word out about your product can burn through a lot of cash. Make a financial plan, assume almost no income for the first year, and make sure you have enough to cash to carry you through. Many businesses that fail, would have eventually succeeded if they had enough cash for their launch period.

#3. Do I Have a Plan?

Or maybe even two or three. You could have a marketing plan and a financial plan, but at the very least every business should have a business plan. It does not need to be complicated or long, it can be just a page or two, but it should be in writing. What are your goals for your business, and how do you expect to achieve those goals? How do you see your business one year from now, how about ten years from now?

#4. Who are my Advisers and Mentors?

Do not be a lone ranger and try to do everything yourself. Find a mentor who can give you good advice, and give a different perspective on your business. Find a tax adviser, someone who does more than just fill out tax forms. An excellent tax adviser will help you maximize the tax savings of your business, and will most likely save you more than their fees. Good legal advice will also save you money over the long term.

Answer these questions and you will be ahead of the game when it comes to starting a successful business.