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U.S. Savings Bonds
U.S. Savings Bonds that were purchased in 1973 will mature this year.
This means the Treasury department will stop paying interest to you on
them this year. Unless you enjoy loaning money to the government and
not earning any interest on the loan, you will be forced to choose either
to cash them in or swap them for Series HH Bonds. If you choose to
cash them in, you will be subject to Federal Income Tax on the interest
that has accumulated on the bond since you purchased it. Ohio will
not tax this interest, nor is it subject to taxation by cities in Ohio.
The amount of interest is calculated by deducting one-half of the face
value of the bond from the redemption amount. If you choose to swap
them for Series HH Bonds, you may elect to defer reporting the interest
earned by the Series E Bond until the Series HH Bonds are cashed in, stop
earning interest in 20 years, or are reissued. The Series HH Bonds
are issued in $500, $1,000, $5,000 and $10,000 denominations. If the
value of the E or EE bonds you are exchanging is not an exact multiple of
$500, you may make up the difference with other funds, or may choose to
receive any excess cash. Any money that you receive will be taxable.
There is no limit on the amount of Series HH Bonds you can acquire in a
calendar year. You may check the value of your
Savings Bonds at the
U.S. Treasury website or click on the link in our website at
www.newlandcpa.com
FDIC Insurance
Both the House of Representatives and
the Senate are considering bills to increase the Federal Deposit Insurance
Corporation coverage from $100,000 to $130,000. This new amount
would be indexed for inflation. This will be the first increase in
coverage since 1980. The $100,000 limit has been eroded by inflation
to be only half of what it was worth 23 years ago. This $100,000
limit applies to each account of a different type, such as savings,
checking or retirement account that a depositor has with a financial
institution. These bills H.R.522 and S.229 would also mandate the
merger of the Bank Insurance Fund and Savings Association Insurance Fund
into new Deposit Insurance Fund.
Overtime Pay
The Department of Labor is proposing
regulations to extend the overtime pay provisions to white-collar worker
who earn less than $425 per week. Currently, a white collar worker
who earns $155 or more per week is not subject to the overtime provisions.
These regulations will also redefine executive, administrative, and
professional duties.
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Time To Plan
Now that the mad rush of tax season is
over and before the insights gained by it are forgotten, it is now a good
time to begin planning for the future. This planning may be for the
coming year, minimizing taxes, improving your finances (both personal and
business), your retirement, your estate, or for the succession of your
business. A review of the last two years financial information and
defining the goals that you wish to accomplish will become the basis of a
plan designed to fulfill your dreams and make them a reality.
Your dream may be to be financially
secure, to own your own home or business, to finance your children's
education, to retire comfortably, to provide for long term nursing care.
These dreams are important to you and your family's well being. Are
they important enough to you to plan for their success?
Success is driven by careful planning
that sets goals, identifies the resources available and needed to achieve
these goals, identifies the obstacles to your goals, and finds solutions
to overcome these obstacles.
Remember, the more thorough the plan,
the more likely the outcome!
Financial Truth #2
"LITTLE THINGS MEAN A LOT! A SMALL
CHANGE IN YOUR LIFESTYLE NOW, CAN MAKE A LARGE CHANGE IN YOUR FUTURE."
Just investing $20 per week, can result in significant wealth. That
is correct, investing less than $3 per day can make you wealthy.
Most of us waste more than $3 per day. If a person would invest $20
per week starting at the age of 18 at an average rate of return of just
8%, he or she would have accumulated more than $550,000 by the time they
retire. This is a lot more than the $16,000 the average retiree has
saved now. This $550,000 will provide monthly retirement payments of
$4,200 per month for over 20 years without any additional contributions.
This is a significant improvement over relying only on Social Security.
James E. Newland, CPA
939 Center Road
Eastlake, Ohio 44095
440-951-9799
Service@NewlandCPA.com
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