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4 Quick Ways to Get a Bigger Tax Refund

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4 Quick Ways to Get a Bigger Tax Refund

As we get closer to the April 15th filing deadline, it’s important that you take advantage of every opportunity available to lower your taxes.

Last year the IRS issued almost 122 million refunds, and here are a few tax tips you can use to make sure Uncle Sam sends you the largest refund check possible.

Increase Your Retirement Contributions

One of the fastest and easiest ways to lower your taxes is by contributing as much as you can towards your retirement accounts.

For most of us, this means adding money to an IRA (individual retirement account). The benefit is that when you contribute to your IRA, your taxable income is reduced by the same amount.

With a traditional IRA the maximum you can contribute for the 2019 tax year is $6,000. If you are over the age of 50, you can contribute an additional $1,000. 

The great news is that you can contribute up to this year’s tax deadline and still claim the deduction against last year’s (2019) taxes.

If you are self-employed and contributing to a SEP-IRA (Simplified Employee Pension IRA) you can contribute 25% of your net earnings, up to a maximum of $57,000.

Start a Health Savings Account (HSA)

With an HSA, you are setting aside money to pay for future medical bills like doctor visits, prescriptions and dental care. 

Like an IRA, your contributions are pre-tax, helping to lower your overall tax bill. You can contribute up to $3,500 if you are single or up to $7,000 if the coverage is for a family, and if you are over 55 you can add an extra $1,000.

An additional benefit of HSA’s is that any unused money can roll over from year-to-year, so over time you can build up a nice nest egg that can be invested. And because the contributions are pre-tax, any gains are tax-deferred.

Deduct Investment Losses

If you lost money on some of your investments, you can turn that loss into a win by using it to offset some of your capital gains.

For example, let’s say you sold a few stocks that went up in value and you now have a capital gain of $6,000. If you also took a loss of $2,000 on a few bad stock picks, you can use this loss to offset your capital gains. 

Instead of paying a capital gains tax on the $6,000 profit, you can deduct the $2,000 loss from your profit to reduce your capital gain down to $4,000. So you only pay capital gains tax on the net gain of $4,000. 

The maximum you can deduct each calendar year is $3,000. Any losses above that can be carried forward to the next tax year.

Itemized vs. Standard Deduction

For single filers the standard deduction for the 2019 tax year is $12,200 and for married couples filing together its $24,400. 

Most taxpayers simply elect to take the standard deduction. It’s quicker and easier, but for some taxpayers, it pays to itemize.

If your deductions for mortgage interest, state and local taxes, personal property taxes, etc. are more than the standard deduction, go ahead and itemize to reduce your overall taxable income.

Nobody likes doing their taxes, but don’t be afraid to spend a few minutes looking them over to make sure you are taking advantage of as many tax breaks as you can to reduce your tax bill.

As always, if you have any questions please meet with a tax professional.

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Business

Market Volatility Rises As Election Polls Show Tightening Race

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Market Volatility Rises As Election Polls Show Tightening Race

The relatively calm markets earlier this month are giving way to more volatility as we approach the election. This is according to a team of strategists at JPMorgan.

“While it is perhaps true that during the first two weeks of October risk markets were supported by a widening of US presidential odds, which by itself implied a lower probability of a close or contested US election result, over the past week or so these odds have started narrowing again,” said a team of strategists at JPMorgan Chase, led by Nikolaos Panigirtzoglou.

According to recent polls by RealClearPolitics, in key battleground states, Democratic nominee Joe Biden leads President Trump by 3.9 percentage points, 49.1 vs. 45.2. That lead has shrunk from a 5 percentage point advantage for Biden about a week ago.

A general election nationwide poll by RCP shows a wider 8.6 percentage-point lead for Biden. However, there are many who feel those polls are not correcting for sampling bias.

Polls Inaccurate?

MarketWatch recently interviewed Phil Orlando, the chief equities strategist at Federated Hermes. There, he said he doesn’t believe the polls accurately reflect how close the race is. In relation to this, he pointed to the surprise win by Trump against Democrat Hillary Clinton in 2016.

“Our base case is that the polls are wrong, there’s an oversampling biased error that a lot of polls aren’t correcting for,” Orlando said.

With a tightening race for the White House, volatility has returned to the market. It will also likely increase in the final two weeks leading up to the election.

A report put out yesterday by SentimenTrader showed that the CBOE Volatility Index or VIX, jumped to levels last seen during the Great Financial Crisis, and tends to rise as stocks fall as it is typically used as a hedge against market downturns.

Market analysts use the ratio to measure how speculative traders are getting. A rise in the put/call ratio means that investors are expecting plenty of volatility between now and November 3.

The VIX, which measures investor bullish or bearishness on the S&P 500 for the next 30 days, is currently near 29, well above its historical average between 19 and 20. This week alone the VIX jumped 6.3%.

Source of Volatility

Jeffrey Mills, the chief investment officer at Bryn Mawr Trust, said some of the volatility likely comes from investors trying to position their portfolios based on who they perceive will win the election.  “There could be some front-loaded selling but I do feel like that’s a near-term phenomenon,” he said. But he says no matter who wins, there’s really only one place to invest, and that’s the stock market.

“There is going to be this continued pull toward equity markets — where else are you going to go when you need to earn a certain percentage to fund retirement, fund education?”

If investors are moving money today based on who they think will win the election, Daniel Clifton, head of policy research at Strategas Securities said each candidate will likely benefit different sectors.

A Biden victory will be good for stocks in the infrastructure, renewable energy and technology sectors, said Clifton.

If President Donald Trump is reelected, Clifton said there’s “huge upside” in some sectors. These include defense, financials and even the for-profits like prisons, education and student loan lenders.

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DOJ Files Suit Against Google Over Anti-Competitive Behavior

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DOJ Files Suit Against Google Over Anti-Competitive Behavior

After a nearly 16-month investigation, the Justice Department filed an antitrust lawsuit against Google, part of Alphabet. This is the first of likely a handful of lawsuits against one of the FAANG stocks.

The suit alleges that Google has engaged in anticompetitive conduct to preserve monopolies in search and search advertising. It is the most notable lawsuit on the grounds of anticompetitive behavior in nearly 20 years. The last one was when Microsoft had been sued by the government in 1998 accusing the software giant of unlawful monopolization.

The lawsuit alleges that Google is acting as a gatekeeper to the internet. It acts as such by creating exclusionary and interlocking business agreements that prevent competition. For example, the government says Google uses the billions of dollars it collects from advertisers to pay cell phone manufacturers to install Google as their preset, default search engine.

The DOJ lawsuit specifically points out that Google’s search application is preloaded on mobile phones running its popular Android operating system. It also points out the fact that this app can’t be deleted. The lawsuit adds that Google unlawfully prohibits competitors’ search applications from being preloaded on phones under revenue-sharing arrangements.

Keeping an Eye on Tech Companies

Large tech companies, like Alphabet’s Google, along with Facebook, Apple and Amazon, are in the crosshairs of legislators in Washington, D.C., who think that the government should have more control over how the companies operate.

In the U.S., nearly all state attorneys general are separately investigating Google. Eleven state attorneys general, all Republicans, joined the Justice Department’s case.

It’s not just Republicans who have a problem with Google’s actions. Democrats on a House antitrust subcommittee released a report this month saying all four tech giants wield monopoly power and recommending congressional action.

The company’s problems aren’t limited to US regulators, either. European Union regulators have also hit Google with three antitrust complaints and fined it about $9 billion. However, the lawsuits and fines have apparently done little to slow the company down.

Lawsuit Too Broad?

Amazingly, as news broke of the DOJ lawsuit, Google’s share price actually rose.

Fox Business’ Charlie Gasparino says it’s because investors think the lawsuit is too broad and will take years to litigate.

“When the news hit, when they read the complaint, let’s just say “underwhelmed” was the word of the day. Investors we are talking to are downplaying the impact of this suit on Google. They believe the suit, if you look at it, there’s a lot of heated language, but in terms of comparing to other anti-trust suits on tech, such as Microsoft that had really specific issues that Microsoft did to hurt a competitor… this lacks that type of specificity.”

He then added that even a worst-case scenario could be good for Google investors.

“They believe it’s too broad, they believe it’s going to take years to litigate, they believe Google has the financial resources to fight, and here’s the other interesting thing. They actually think that Google, even if you broke it up, and that’s the worst-case scenario, you could get a lot of value out of the sum of its parts,” said Gasparino.

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Business

Rickards: Get Ready For Deflation, And Here’s Where Gold Prices Are Headed

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Rickards: Get Ready For Deflation, And Here’s Where Gold Prices Are Headed

Yesterday we brought you the first part of an interview by James Rickards. In it, he gave his outlook on the stock market. He also shared his viewpoints on why the Federal Reserve can’t create inflation despite printing trillions of dollars.

Today we bring you the second part of the interview, where Rickards discusses why he thinks we are headed towards deflation and not inflation, why gold falls when the stock market falls, and where he sees gold prices headed.

Moving Toward Deflation?

He says we are headed toward deflation despite trillions of dollars in money printing. Rickards thinks it’s because we aren’t spending any of that money.

“The greatest danger in the macro-economy today is deflation, because declining labor force participation, declining productivity, most of all velocity. Velocity is the turnover of money. It doesn’t matter what the money supply is. If there’s not turnover, if there’s not lending and spending, if the people aren’t chasing the goods, you’re not going to get inflation. But velocity is a psychological phenomenon. How do you feel? Do you feel prosperous, do you feel confident, do you want to go out and buy dinner or drinks, or do you feel cautious, do you feel concerned, you saw your neighbor lose her job, you’re worried about losing your job, so you save more,” said Rickards.

He said the savings rate is still at levels well above anything we’ve seen historically here in the US.

“The evidence is people are saving more. We’re in a liquidity trap. Saving was sort of working its way up from 5% to 8%, in April it was 33%. In May it was still 25%, in June it was 17%. So savings can be a good thing in the long run, but in the short run savings comes out of consumption. If I make money I’m either going to spend it or save it. Well if I save more I spend less. So all the signs are pointed to deflation. They can say they want inflation and they can print all the money they want, it doesn’t mean they’re going to get it.”

Gold Buyers

There are two types of gold buyers according to Rickards. The “strong hands” will be around when gold runs to $15,00 per ounce.

“There are two kinds of buyers of gold or investors in gold generally. The strong hands and the weak hands. The strong hands don’t use a lot of leverage, they use cash or capital, they’re in it for the long haul, they’re not day traders, I mean I watch the tape because I’m an analyst, I do a lot of interviews about it and I write about it, but I’m not a day trader. I don’t get too euphoric if gold goes up, I don’t get depressed if it goes down. I know where it’s going in the long run, it’s going in the neighborhood of $15,000 an ounce.”

Not Out of the Ordinary

He doesn’t offer a timeframe for the massive run-up in gold prices. However, he says it isn’t uncommon for gold to sell off along the way.

“That doesn’t have to happen next year or the year after. That’s the trend. I like to remind people, if it’s going to $15,000 an ounce, which it is, it’s got to go to $3,000 – $4,000 – $5000 – $6,000 along the way. So that’s the long term trend, so I don’t worry about the wiggles. As far as the stock market is concerned, this happened in 2008, I remember the worst part of it in 2008 in September, October and November when the stock market was absolutely crashing, gold was going down. And I was getting all these calls, ‘Gold is a safe haven, how come it’s going down?'” he said.

“What happens is in a liquidity crisis, everybody sells everything, especially the weak hands. If you’re leveraged and you’re in the gold futures market and you’re long and the market is collapsing, you’ve got to sell and get out, you’ve got to cut your losses.”

“Strong Hands” Stepping In

When this happens and prices drop, Rickards says the “strong hands” step in and start buying.

“If you’re a leveraged player, you’ve got to either come up with cash for the margin, or you have to sell your position which makes it worse. So what people do is sell gold to get cash to meet the margin call on the stock losses. Or they’re on the wrong side of the gold market and they’re leveraged and they just sell to cut their losses. So it does go down, it’s highly predictable. But the strong hands are waiting. It’s like a lynx or a mountain lion hunt. They don’t stalk their prey, they just sit there and wait and then pounce. Strong hands are watching, they don’t jump in on day one, they wait until it goes down enough and then they come in and buy and it goes right back up again.”

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