Archive | Economy

Obamacare Card Calls are Scams

Watch out! A flood of scammers are exploiting the national state of confusion over the Affordable Care Act – Obamacare – to steal your credit card, Social Security, and bank account numbers.

According to the Federal Trade Commission (FTC), co…

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Extended Business Tax Returns Due Soon – Are You Ready?

You already filed an application for an extension on your 2012 business taxes. Now, you must file your tax return. But when? It depends on your business type.

Extension Due Dates:

Corporate tax returns were originally due March 15. Extensions are for six months, so the tax return is now due September 16, 2013 (September 15 is a Sunday in 2013).

Partnership tax returns were originally due April 15. Extensions on partnership returns are for five months, so the tax return is now due September 16.

Multiple-member LLCs file taxes as partnerships, and these partnership tax returns are also due on September 16.

Sole proprietors and single-member LLC members filing on Schedule C along with personal tax returns have until October 15 to file extended tax returns.

If you have not started on your tax return:

  • Contact your tax advisor to review your financial situation and possible tax savings
  • Collect documents you will need to file your tax return
    • For corporate tax returns
    • For S corporation tax returns
    • For partnership tax returns
  • Use the correct income tax form for your business type.

Answers to commonly asked questions about Business Tax Return Extensions

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Source: About.com

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Will You Get “Slammed” by Obamacare?

A reader writes:

I am scared to death of Obamacare and what it means to me and my family. So far, the promise of lower premiums is not happening in my state because of lack of competition. I expect to get slammed the first of the year, according to everything I’m hearing. I will find out soon enough what the damage is.

Actually, you can find out now. Get familiar with the health care exchanges. You can find out today what subsidies you might be eligible for. You can also see if your insurance plan provides the 10 essential health benefits mandated by the Affordable Care Act.  Find out all the deadlines in When Does Obamacare Start?

As for what happens to you in January, it all depends on your current income. Here’s a way to estimate now what you will pay with Obamacare if you purchase insurance through the exchanges. How Can I Get an Estimate of My Costs Now?

Related Articles

  • How to Get Obamacare
  • How Does Obamacare Work?
  • 5 Obamacare Definitions You Need to Know

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Source: About.com

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Will You Get “Slammed” by Obamacare?

A reader writes:

I am scared to death of Obamacare and what it means to me and my family. So far, the promise of lower premiums is not happening in my state because of lack of competition. I expect to get slammed the first of the year, according to everything I’m hearing. I will find out soon enough what the damage is.

Actually, you can find out now. Get familiar with the health care exchanges. You can find out today what subsidies you might be eligible for. You can also see if your insurance plan provides the 10 essential health benefits mandated by the Affordable Care Act.  Find out all the deadlines in When Does Obamacare Start?

As for what happens to you in January, it all depends on your current income. Here’s a way to estimate now what you will pay with Obamacare if you purchase insurance through the exchanges. How Can I Get an Estimate of My Costs Now?

Related Articles

  • How to Get Obamacare
  • How Does Obamacare Work?
  • 5 Obamacare Definitions You Need to Know

Connect with: NEWSLETTER | E-COURSE | TWITTER | GOOGLE PLUS | FACEBOOK

Source: About.com

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Text Message Scams: Don’t Text Back

The Federal Trade Commission (FTC) is warning of a new identity theft scam that attacks you through text messages on smart-phones. While the scam is dangerous, the defense is simple, according to the FTC, “Don’t text back.”

The scarily convin…

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Why Is the Bond Market Crashing?

A reader asks:

Are you able to explain why the bond market is crashing right now? Why is it that rates are rising all of a sudden? Is this expected or could this end badly? What happens as a result?

Since May, U.S. Treasury yields rose 75%. The yield on the benchmark 10-year Treasury note is now around 2.8%. Investors began selling Treasuries when Federal Reserve Chairman Ben Bernanke announced the Fed may begin tapering its $85 billion a month purchases. Bernanke said the Fed would only back away from Quantitative Easing if the economy kept improving. However, bond buyers started fleeing as if it had already happened.

That’s because bonds are in demand as a safe haven when the economy is doing poorly. The Fed was signalling that the economy is improving, so bonds won’t be as popular. In addition, the Fed’s purchases have kept bond yields artificially low. Remember, just last year the yield was at its lowest point in 200 years. Even though the Fed will reduce its purchases slowly, bond buyers react swiftly. Even though bond yields rose 75% in three months, they are really just approaching more normal levels.

How It Affects You

First, the interest rates on all long-term bonds rise in reaction to Treasury yields. However, the interest rate on a 30-year, fixed rate mortgage is still only 4.59%. That’s still low by historical standards. In fact, a recent Goldman Sachs study said that even if rates hit 6%, homes would still be affordable. They are forecasting that home prices will still rise 4%-5% annually over the next few years. (Source: WSJ, Mortgage Rates Rise But Still a Bargain, June 18, 2013)

Related Articles

  • How Bonds Affect Mortgage Interest Rates
  • Protect Yourself From Interest Rate Increases
  • Relationship Between Treasury Notes and Mortgage Rates

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Source: About.com

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DOD, VA, Other Agencies to Study PTSD, TBI

The Departments of Defense (DOD) and Veterans Affairs (VA) have launched a $107 million project to develop improved methods of diagnosis and treatment of post-traumatic stress disorder (PTSD) and traumatic brain injury (TBI) in U.S. veterans.

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Who Would You Pick as Fed Chair?

This fall,  President Obama will pick a new Federal Reserve Chairman. The Current Chair, Ben Bernanke, has already indicated he would like to return to academia when his term expires in January 2014. The two top contenders are current Fed Vice-Chair Janet Yellen and former Treasury Secretary Larry Summers.

Yellen is most likely to follow Bernanke’s policies, being cautious about tapering Quantitative Easing, keeping interest rates relatively low, and focusing more on reducing unemployment. In fact, as a professor at she focusing on measuring true unemployment as her specialty. For this reason, she is more favored by Wall Street and Republicans.

Summers is more concerned about inflation, and has gone on record to say that Quantitative Easing hasn’t really helped the economy. He is an advocate of expansionary fiscal policy. He was the architect of the Economic Stimulus Act in 2009. He is favored by the Obama administration. However, many Democrats in Congress would oppose him on the grounds that he was active in repealing Glass-Steagall, and would therefore be less aggressive in regulating banks.

How It Affects You

The leader of America’s central bank is the most powerful person in the world. That’s because the Fed’s ability to raise and lower interest rates is more effective than the ability of the President and Congress to change taxes and government spending. Whatever the U.S. does greatly impacts the rest of the world. Therefore, your personal finances will be immediately impacted as soon as Obama makes his selection.

What will happen? If Yellen is appointed, not much will change. She will continue Bernanke’s policies, and even has his same calm demeanor. If Summers is appointed, then expect a long battle in Congress as his many critics oppose him. It will also create some turmoil in the financial markets, as investors fret over whether he will cut QE too fast, or allow interest rates to rise too soon.

Related Reading

  • How Are Interest Rates Determined?
  • A Quick Guide to the Federal Reserve
  • How Does the Fed Control Inflation?

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Source: About.com

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USPS Lost Less Money in Third Quarter

While the U.S. Postal Service (USPS) lost another $740 million in the third quarter of 2013, that was a lot less than the $5.5 billion it lost during the same period last year. Could the Postal Service be on its way out of financial darkness a…

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Lift the Debt Ceiling or Cut Spending?

A reader asks:

Economists, such as Paul Krugman, argue the US Government and Federal Reserve should initiate further stimulus, acquiring more debt / widening the monetary base, to bring the economy out of a recession. His argument is that whilst there is a long-term debt problem, unemployment is affecting people’s lives and stagnating the economic recovery now and therefore this issue takes priority over the debt problem. Of course, this would be a viable solution under Keynesian thinking; bolstered by the US being the reserve currency and showing signs of a recovery (even if the economic data is manipulated) which is much better than the U.K. or Europe which have implemented austerity. My question is: if the US continue to “lift” the debt ceiling and provide expansionary monetary policy this will:

  1. Weaken the dollar’s strength as a reserve currency.
  2. Decrease the image of US as a safe haven for foreign investors (pushing up interest rates).
  3. Perhaps bring the economy to a speedier recovery.
  4. Perhaps lead to too much inflation (which could be delayed) “Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.” – last FOMC STATEMENT JULY 2013.

If the US decide to increase taxes (implement restrictive fiscal policies) to combat the debt problem and baby boomer issue and the Federal Reserve taper drastically or remove stimulus this will:

  1. Send bond yields higher; again raising the value of debt owed (decreasing the US’s image as a safe haven).
  2. Dampen the economic recovery making the ability to pay off the debt harder as GDP decreases and surplus cash used by US  to pay their debt will also decrease.
  3. Again weaken the US currency (because of a lack of confidence from investors).
  4. Strengthen the dollar as other countries eg. Japan seek to weaken their own currency – weakening trade.
  5. Lead to more deflation  (James Bullard [FOMC] wary of low inflation & wants to continue bond buying).
  6. OR cause stagflation as producers decide to go to developing countries where disposable income is higher and the price of goods is rising (using the law of supply; lower price = lower ambition to supply) ; lack of supply will then increase prices (stagflation).

Which is the better option?

Option 1 is the best until GDP growth is solidly in the 2-3% ideal growth range. Once growth goes to 4%, then option 2 is best.

It all depends on which phase of the business cycle you’re in. Right now, the U.S. is still struggling to shake off the remnants of the Great Recession. Unemployment must be reduced to spur more consumer spending and demand. Weaker U.S. currency can help spur exports, and attract foreign investors. Once growth reaches the “Peak” phase of the business cycle, then raise taxes and interest rates, and cut spending, to tone down “irrational exuberance.”

How It Affects You

Before making any financial decision, know where you are in the business cycle. The expansionary phase can last years, and you’re better off if growth is 2-3%, not 4-5%. When GDP growth reaches those high levels, get ready for the recession that’s sure to follow.

The contractionary phase, usually a recession, normally lasts 18 – 24 months. The Great Recession was unusual in that it’s lasted much longer. The official definition of a recession is when GDP growth is negative. However, by then it’s too late to do anything.

You can’t time the market, but you can assess where you are in the business cycle, and take appropriate action. When times are good, pay off debt, sell your house, and save money. When times are bad, you can use these assets to support you if you lose your job. If you’ve saved enough, you can increase your wealth by buying things cheap, like real estate, stocks and loans.

Related Articles

  • Who Owns the U.S. Debt?
  • Watch the Video: What Is the National Debt?
  • Beware the Asset Bubble

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Source: About.com

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