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Archive for the ‘Child Tax Credit’ Category

Question: Would traditional IRA be better?

My husband and I are both in our early 30’s. We are probably peaking at our salaries now and are in the 25% tax bracket. Also, our AGI (adjusted gross income) is such that certain deductions are starting to be phased out for us (student loan interest, dependent care credit, child care credit). I would expect for us to be in a lower tax bracket at retirement, relying mainly on investment income and social security income.

We would like to start contributing the maximum to IRA’s for each of us. Currently, that would be $8,000 per year for both of us. I have almost convinced myself that a traditional IRA would be better for us given our circumstances. Any thoughts or advice (from professionals, preferably)?
No, neither one of us are self-employed and neither one of us have retirement plans at our places of employment.

Answer: Personally I would go with the Roth. If you’re going to max it out either way, the Roth will be better for you in the long run. Say you max out your IRA for the next 20 or 30 years and end up with $1.5 million. If that money is in a Roth, you can withdraw the entire balance–you have $1.5 million. If that money is in a regular IRA, you can only withdraw around $1.2 million, assuming you’re in the 20% bracket. Is the minor tax deduction you’ll get each year really worth losing out on $300,000 in retirement funds?

Besides, you’re assuming tax rates stay the same. I think we’ll all be in higher tax brackets in 20-30 years because the government will have to raise them. 25% or 30% might seem very low when we retire! I’d rather not worry about that and pay taxes now.

Looking back at a year on the West Shore

This week residents will say goodbye to 2009 and hello to a new year.

HHS Secretary Sebelius Takes Questions from BlogHer on Health Reform

The best and only way to go is to buy new motorcycle parts as they are sold for half the price of new parts. Some salvage yards buy their bikes from insurance companies, dealerships and other individuals all over the country. They specialize in old parts for Honda, BMW, Suzuki and also Vespa. From 60s-80s motorcycles and ATV salvage. Missouri salvage yards not only have parts but also accessories for all major brands of motorcycles. You save money with Missouri Motorcycle salvage yards on used ATV and dirt bike parts for older models, new and used Japanese motorcycle parts and accessories. Bikes are often sent to salvage yards when an expensive critical part fails. This leaves many other good parts like brakes, shock and engine parts available.

This is even more critical if your motorcycle is a vintage as many of the parts that you need to replace are hard to find and expensive through regular dealership. The Motorcycle Salvage Yards in Missouri are dedicated to providing you with used parts at reasonable prices for your old or new motorcycle, whatever the model or make. It’s available where you can choose from a wide range of tines, turbo engines and much more. They are always updating their inventory. Some places also have special offers available if you purchase your parts during certain times. They not only provide us with parts at discounted prices, sometimes even half the usual price but they help to keep the environment clean. They recycle the parts and legally dispose at your motorcycle. This is a lot cheaper and more affordable than actually going out to buy a part from a regular dealer. It’s also available where you can actually buy a motorcycle that was in an accident and the salvage yard has remodeled it and now has it for sale.

Pet project hailed: Joplin woman’s efforts for pets recognized

What started as a New Year’s resolution more than a decade ago has put a Joplin native in the company of Oprah Winfrey, Hillary Clinton, Michelle Obama, Maria Shriver and Bette Midler.

Car loan rates are well worth considering when you decide to buy a new car. It is important to compare the rates provided by different car loan companies so that you can get the best car loans deal available rather than just taking the first you are offered and then regret your choice later.

Two major factors will affect your car loan rates: the amount of money you wish to borrow and the length of time that you will take to repay the loan. Although these seem obvious things to consider before choosing a car loan, the process of calculating how much you should apply for and the repayments that you will pay can present you with a few problems. This is where a car finance calculator comes in handy.

A car finance calculator is an online calculator that you can use to calculate your regular payments for a specific loan amount over a specific period of time. Our car loan calculator has an easy-to-use interface where you input data and it automatically does your calculations. At its simplest, enter the sum borrowed, the period of the loan and the interest rate and it will provide you with your monthly payment.

When it’s time to choose a car loan rate, the banks and the traditional lending firms are not always the best option for a cheap car loan, because they price their loans and usually arrive at their car loans interest rates based on different factors. For example your rates could depend upon:

Sometimes it will be more beneficial for you to refer to a car loan broker knowledgeable in car finance options and the prevailing market rates. You should then be offered a comparison of car loan rates with recommendations of your best options. Your choice of broker could determine your overall success in securing the loan you want at a price you can afford. They could also recommend the best bank for your circumstances.

Changes to child benefits: are you entitled to more?

NEW changes to child benefits and pension credits could mean Eastbourne residents may be entitled to morehelp. (23/12/2009 14:43:09)

How to complete a tax return with TaxBrain

Wikipedia defines ‘Child care’ as ‘the act of caring for and supervising children from 0-16 years of age’. Child care work includes working in nurseries, babysitting, child-minding, and nanny jobs.

According to Office for National Statistics (‘ONS’) figures for April to June 2009, 836,000 people were employed in ‘Childcare and related personal services’. These figures are a guideline. The breakdown of these figures were:

Employees – 749,000. 351,000 of these were full-time. 51,000 of those self-employed work full-time.

The figures for ‘child care’ etc work were:

Nearly all nursery nurses are employees. 95,000 work full-time.

76,000 childminders are self-employed, but a high proportion are employees. Part-time employees outnumbered full-time employees: with self-employed childminders the position is reversed.

Virtually no playgroup leaders and assistants were self-employed, and full-time workers were outnumbered by part-time workers by 7:2.

Educational assistants constituted the largest group listed under the child care heading.

Virtually none were self-employed, presumably because this work takes place mainly in schools, leaving little scope for self-employment. Full-time and part-time work was fairly evenly split, with the latter slightly outnumbering the former at 253,000 employees.

These figures under-estimate the number of people caring for children. Firstly the figures are for people who are employees or self-employed. They are not intended to include people remaining at home to look after their children, even though such work is financed by provisions such as Child Benefit and child tax credit (although both benefits are payable whether a parent stays at home or works full- or part-time).

Secondly a number of jobs are listed under other categories, such as primary school teachers, social workers, child psychologists and domestics; or not specifically included, such as au pairs and nannies. These latter jobs may well be included in the ‘childminders and related occupations’ category.

Numbers employed in Childcare and related services have increased slightly since April-June 2008 and further increases are likely over the years, particularly if the population continues to grow.

A 2009 Business Review: It Could Have Been Worse

For Loudoun, its businesses, consumers and residents, 2009 was a glass half full/glass half empty kind of year. It all depended on one’s perspective.

Child Care Tax Credit & Dependent Care Credit 2009, 2010

The Federal Government introduced the tax free savings account in their last budget. Basically any Canadian citizen over the age of 18 can open an account and is allowed to deposit $5,000 per year. Any unused portion of the $5,000 in a given year can be carried forward. The account has no impact on RRSP yearly contribution eligibility. All income earned by the funds in the account are tax free and can be taken from the account at any time.

RRSPs have been the most widely used form of saving for retirement. People like you and I blindly scramble towards the end of February each year to purchase RRSPs from our bank or financial planner so that we can get a small tax break. The majority of people investing this way do not have any idea what their RRSPs are actually being invested in. In many cases when the funds actually do show a return, that return sits idly in the RRSP account and is not put back to work earning more dollars for the investor. Many people are in for a shock when they retire as taxes can reduce the face value of the RRSP account by as much as 39%. Imagine planning to have a million dollars to carry you through your retirement years only to find out that after taxes you actually have $610,000. The other consideration that one must look at is the fact that the RRSPs are usually purchased with after tax dollars and those same dollars are taxed again when the account is liquidated.

Bankers are programmed to sell RRSPs and are generally quite good at it. They however, have failed miserably in selling the tax free savings account product. The returns offered on tax free savings accounts by the banks are nominal at best and in many cases just cover the bank fees on the account. A number of investment companies offer products with higher yields and should be considered as a legitimate alternative.

The best way to compare RRSPs to the tax free savings account is by way of an example:

The client has decided to invest $5,000 per year for the next 5 years at which point the investment will be cashed in. The rate of return for both products is 7.0%. The example assumes that the client will reinvest yearly earnings. The tax rate used is 39%.

RRSP TFSA
Year 1 $5,350 $5,350
Year 2 $11,075 $11,075
Year 3 $17,200 $17,200
Year 4 $23,754 $23,754
Year 5 $30,767 $30,767

Taxes on the RRSP balance will be $11,999 leaving the client with $18,760 for his 5 year investment of $25,000. As there is no tax on the tax free savings account the ivnestor will have $30,767 from his $25,000 investment. One might argue that the tax deduction created by purchasing an RRSP should be part of this equation. However, then one would have to calculate the initial income tax paid to earn the investment funds. These numbers basically cancel each other out.

The bottom line is that the federal government has provided Canadians with a way to accumulate tax free dollars. In order to take full advantage of this product the general public will have to consider alternative investments offered by private investment companies.

Money-saving moves to make before the new year

DENVER – As the recession just began easing up, 2009 still meant tough economic times for many of us. But financial advisor Gary Wagner says it’s not too late to save yourself some money before January 1st.

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