Super Bowl XLVIII - 2014 Packages, Tickets, Events : T360Travel Classifieds, Travel Articles, Deals,

Super Bowl XLVIII - 2014 Packages, Tickets, Events : T360Travel Classifieds, Travel Articles, Deals,

The Secret Math Behind Early Retirement

Early retirement often seems impossible. It's difficult enough these days to retire at age 65, so the thought of retiring early is a pipe-dream for most people. Yet somehow this dream has become a reality for some diligent savers. In extreme cases, a few people have retired at an age when most of us are just getting started.

One well-known example is the man behind MrMoneyMustache.com, who retired at age 30 after just nine years of working. While he is the exception to the rule, he thinks that should change. He views early retirement as something most people can attain.

To understand how it works, let's take a look at the math behind early retirement. These numbers have implications for all retirees, not just those looking for an early exit. 

Read on your desktop or laptop

So even if you think you're too late for early retirement, these strategies will still improve your retirement finances.

The math. How quickly you can retire depends on how much you can save. If you are able to save the often-recommended 15 percent of your take home pay, it will take about 45 years to retire. This conclusion assumes investments earn a real return (after inflation) of 5 percent, and that you live off of 4 percent of your nest egg once you do retire.

Now let's say you are a frugal and committed saver. If you are able to save 30 percent of your take home pay, your working years fall to about 30. At 40 percent the necessary work years before retirement falls further to about 20. And if you are able to save 50 percent of your take home pay, you'll begin enjoying your golden years in less than 20 years. As my mom would say, now we're cooking with gas.

The magic behind this math is the result of three related factors. First, as the saving rate increases, the amount saved increases more quickly. Second, with the passage of time, the nest egg benefits from compounding of investment returns. Finally, as the savings rate rises, the amount of money needed for living expenses goes down.

Let's get real. I know what you're thinking. The math may be accurate, but saving 30 percent or more of take home pay is impossible. Don't tell Mr. Money Mustache or the bloggers at "Early Retirement Extreme" and "Can I Retire Yet?" The fact is that early retirement is a reality for many people, including those who earned an average income during their working years.

While each early retirement story is unique, many share several common themes. Early retirees shun certain expenses many of us take for granted, such as expensive cable and cellphone packages. They tend to spend less on cars and transportation, often living close enough to work to either bike or walk. They also spend less on food, eating out less frequently than most. Finally, they are often more self-sufficient, choosing to handle home and car maintenance and repairs on their own, rather than paying others for these services.

Implications for baby boomers. For those already approaching retirement, stories of early retirement may at first blush seem unhelpful. After all, baby boomers are long past retiring at age 30. However, study after study reveals that many older Americans are not prepared financially to retire. The principles behind extreme early retirement may be the answer. If extreme saving can enable some people to retire at age 30, the same methods can help prepare those in their fifties to retire by age 65.

Article written by Rob Berger who is an attorney and founder of the popular personal finance and investing blog, doughroller.net. He is also the editor of the Dough Roller Weekly Newsletter, a free newsletter covering all aspects of personal finance and investing, and a weekly podcast.

IRS Provides Tips on Year End Giving to Help Lower Your Taxes

Individuals and businesses making contributions to charity should keep in mind several important tax law provisions that have taken effect in recent years. Some of these changes include the following:
Special Tax-Free Charitable Distributions for Certain IRA Owners

This provision, currently scheduled to expire at the end of 2013, offers older owners of individual retirement arrangements (IRAs) a different way to give to charity. An IRA owner, age 70½ or over, can directly transfer tax-free up to $100,000 per year to an eligible charity. This option, first available in 2006, can be used for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible.

To qualify, the funds must be transferred directly by the IRA trustee to the eligible charity. Distributed amounts may be excluded from the IRA owner’s income – resulting in lower taxable income for the IRA owner. However, if the IRA owner excludes the distribution from income, no deduction, such as a charitable contribution deduction on Schedule A, may be taken for the distributed amount.

Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

Amounts transferred to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats amounts distributed to charities as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. See Publication 590, Individual Retirement Arrangements (IRAs), for more information on qualified charitable distributions.

Rules for Charitable Contributions of Clothing and Household Items
To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations
To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Reminders
To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:

• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2013 count for 2013. This is true even if the credit card bill isn’t paid until 2014. Also, checks count for 2013 as long as they are mailed in 2013.
• Check that the organization is eligible. Only donations to eligible organizations are tax-deductible. Exempt Organization Select Check, a searchable online database available on IRS.gov, lists most organizations that are eligible to receive deductible contributions. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in the database.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2013 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
• The deduction for a car, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
• And, as always it’s important to keep good records and receipts.

Lots of Delays, Updates and Changes for 2014 Tax Season

The delayed start to the filing season, taxpayers' confusion regarding the implications of the Affordable Care Act, uncertainty over the continuation into 2014 of a number of expiring provisions, the reintroduction of personal exemption phase-outs and Pease limitations on itemized deductions for high-income earners, and the Supreme Court decision on the Defense of Marriage Act are just a few of the issues that will impact practitioners as they gear up for the 2014 filing season.

IRS Announces 2014 Standard Mileage Rates for Business, Medical and Moving

2014 Standard Mileage Rates for Business, Medical and Moving Announced

WASHINGTON — The Internal Revenue Service today issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56 cents per mile for business miles driven
• 23.5 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

2013 Filing Season IRS Statistics, A Clear Picture Emerges

If you're wondering what would be a solid investment, take a look at these figures from the IRS on the use of consumer tax software!

More than 122 million Returns e-Filed in 2013

WASHINGTON — The Internal Revenue Service today announced a milestone for IRS e-file – more than 122 million returns were e-filed during 2013. The statistics provided today contain complete e-file totals for 2013.

This year, the IRS received more than 45.2 million returns from those who prepared and e-filed their own returns on home computers, up from 43.2 million a year earlier, an increase of 4.6 percent. E-filed returns from tax professionals increased slightly, totaling more than 77 million returns.

Whether they are self prepared or prepared by a tax return preparer, 91 percent of all tax returns filed by individuals are prepared on computers using tax preparation software, which improves the accuracy of those returns.
Other highlights from the new filing season statistics show:

• During 2013, the IRS issued more than 109 million refunds worth almost $300 billion.
• Almost 77 percent of refund recipients chose to receive their refunds through direct deposit.
• More people are using IRS.gov to get answers, file their returns and resolve issues. So far in 2013, the IRS web site has been accessed more than 430 million times, up almost 24 percent compared to the same time last year.

2013 FILING SEASON STATISTICS
Cumulative statistics comparing 11/23/12 and 11/22/13
Individual Income Tax Returns:	2012		2013		% Change
Total Receipts	147,874,000		147,744,000		-0.1
Total Processed	147,284,000		147,223,000		-0.04
E-filing Receipts:
TOTAL	119,560,000		122,515,000		2.5
Tax Professionals	76,322,000		77,268,000		1.2
Self-prepared	43,238,000		45,247,000		4.6
Web Usage:
Visits to IRS.gov	353,974,215		438,066,180		23.8
Total Refunds:
Number	110,224,000		109,261,000		-0.9
Amount	$307.983	Billion	$299.863	Billion	-2.6
Average refund	$2,794		$2,744		-1.8
Direct Deposit Refunds:
Number	82,735,000		83,728,000		1.2
Amount	$246.657	Billion	$244.929	Billion	-0.7
Average refund	$2,981		$2,925

From the IRS, Message to Employers, Hire Veterans by 12/31 Save on Taxes

This was in my in-box yesterday morning, sorry for the delay, I was finishing a new book entitled "Offshore Transparency" will be published soon.

IRS to Employers: Hire Veterans by Dec. 31 and Save on Taxes

If you plan to hire soon, consider hiring veterans. If you do, you may be able to claim the federal Work Opportunity Tax Credit worth thousands of dollars.

You must act soon. The WOTC is available to employers that hire qualified veterans before the new year.
Here are six key facts about the WOTC:

1. Hiring Deadline.  Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012. The American Taxpayer Relief Act of 2012 extended it for one year.

2. Maximum Credit.  The tax credit limit is $9,600 per worker for employers that operate a taxable business. The limit for tax-exempt employers is $6,240 per worker.

3. Credit Factors.  The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.

4. Disabled Veterans.  Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.

5. State Certification.  Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.

6. E-file.  Some states accept Form 8850 electronically.

For more about this topic, visit IRS.gov and enter ‘WOTC’ in the search box.

Additional IRS Resources:

• Work Opportunity Tax Credit Extended
• Work Opportunity Tax Credit - Frequently Asked Questions and Answers
• Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit

Heads Up, Potential New Investment and Work Opportunity

The U.S. Congress has directed the FAA to develop a plan to integrate drones into U.S. airspace by 2015. That led U.S. venture investors to pour $40.9 million into drone-related start ups in the first nine months of 2013, more than double the amount for all of 2012, according to data provided to Bloomberg News last month by PricewaterhouseCoopers and the National Venture Capital Association.

This news comes to light due to Amazon recent announcement of  testing drones to deliver goods as the world’s largest e-commerce company works to improve efficiency and speed in getting products to consumers.