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Offer your insights or judgment on the input financial query or topic using your financial expertise. | What are the contents of fixed annuities? | "An annuity is a contract. Its contents are ""a contractual obligation from the issuing company"". If you want to evaluate how your annuity is likely to fare, you're essentially asking whether or not its issuer will honor its contract. They're legally required to honor the contract, unless they go bankrupt. (Even if they do go bankrupt, you will be a creditor and may get a portion of the assets recovered by the bankruptcy process.) Generally, the issuer will take the proceeds and invest them in the stock market (or possibly in similar instruments - e.g. Berkshire-Hathaway bought a railroad and invests some money in it directly). They invest in these places because that's where the returns are. One of the reason that annuities may have a good rate on paper is that they may end up taking some of your principal, because many are structured as some form of survivor's insurance policy. Consider: If you're 65 years old and have some retirement savings, you'd like to be able to spend them without fear of them running out because you live longer than you expected (e.g. you survive to your 90s). So, you could invest in the stock market and hope for a 7% return indefinitely and then plan to spend the returns - but if those returns don't materialize for a few years because there's a big stock market crash, you're in big trouble! Or, you could buy an annuity contract which will pay you 7% a year (or more!) until you die. Then you're guaranteed the returns unless the issuer goes bankrupt. (Sure, you lose all your principal, but you're dead, so hey, maybe you don't care.) The insurance company essentially sells risk-tolerance. Other annuities aren't structured like this, and may be marketed towards non-retirees. They're usually not such a good deal. If they appear to be such a good deal, it may be an illusion. (Variable annuities in particular are hard to reason about without a good deal of knowledge about how the stock market behaves on a year-to-year basis: many of them have a maximum return as well as a minimum, and the stock market may pile up a lot of its returns into one year, so after a ""crash and recovery"" cycle you might end up behind the market instead of ahead.) Annuities are a form of safety. Safety can be very expensive. If you're investing your own money, consider whether you need that safety. You probably needn't worry quite so much about the issuer being crazy-fraudulent or Ponzi-esque: you should worry mostly about whether it looks better on paper than it is." |
Share your insights or perspective on the financial matter presented in the input. | How to determine whether 1099-MISC income is from self-employment? | "These kinds of questions can be rather tricky. I've struggled with this sort of thing in the past when I had income from a hobby, and I wanted to ensure that it was indeed ""hobby income"" and I didn't need to call it ""self-employment"". Here are a few resources from the IRS: There's a lot of overlap among these resources, of course. Here's the relevant portion of Publication 535, which I think is reasonable guidance on how the IRS looks at things: In determining whether you are carrying on an activity for profit, several factors are taken into account. No one factor alone is decisive. Among the factors to consider are whether: Most of the guidance looks to be centered around what one would need to do to convince the IRS that an activity actually is a business, because then one can deduct the ""business expenses"", even if that brings the total ""business income"" negative (and I'm guessing that's a fraud problem the IRS needs to deal with more often). There's not nearly as much about how to convince the IRS that an activity isn't a business and thus can be thrown into ""Other Income"" instead of needing to pay self-employment tax. Presumably the same principles should apply going either way, though. If after reading through the information they provide, you decide in good faith that your activity is really just ""Other income"" and not ""a business you're in on the side"", I would find it likely that the IRS would agree with you if they ever questioned you on it and you provided your reasoning, assuming your reasoning is reasonable. (Though it's always possible that reasonable people could end up disagreeing on some things even given the same set of facts.) Just keep good records about what you did and why, and don't get too panicked about it once you've done your due diligence. Just file based on all the information you know." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Why do 10 year-old luxury cars lose so much value? | "They are overpriced to begin with. One reason is the fact that they are luxury cars. A second, related reason, is that they tend to push the technology envelope. All cars depreciate drastically the minute they are driven off the lot. This a good argument for buying a car that is 1-2 years old. The higher you are, the more you can fall. Repairs and maintenance are typically still expensive on these cars, due to relative rarity and the lack of necessary expertise. Here is where that advanced technology bites you. This is a reason that a 5 year old Civic may be worth more than than a 10 year old Benz. It may simply not be worth the hassle of maintaining/repairing a luxury car. This is especially true for an aging luxury car. There are some people that only buy domestic, precisely because of the maintenance costs. Also, a 10 year old car is still a 10 year old car, regardless of the make. (There are a few notable exceptions, like the NSX.) Hondas and Toyotas have a great reputation for reliability and (long-term) total cost of ownership. ""Better"" is a subjective issue, that depends on a variety of variables. A Civic is certainly not better in terms of technology, comfort, etc. But, it is likely better in terms of maintenance, reliability, etc. Which ""better"" you focus on, is up to you." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Automatic Extension online filing request gets denied w/ code R0000-052-01 - why? | There are penalties for failure to file and penalties for failure to pay tax. The penalties for both are based on the amount of tax due. So you would owe % penalties of zero, otherwise meaning no penalties at all. The IRS on late 1040 penalties: Here are eight important points about penalties for filing or paying late. A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you. The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date. If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time. If the IRS owes you a refund, April 15 isn't much of a deadline. I suppose the real deadline is April 15, three years later - that's when the IRS keeps your refund and it becomes property of the Treasury. Of course, there's little reason to wait that long. Don't let the Treasury get all your interest. |
Share your insights or perspective on the financial matter presented in the input. | How to handle missing W2 from failed direct deposit only company? | Yes, there's a way. I actually wrote a blog post about it. Its a new service from the IRS which allows you pulling your account online. IRS also has an instruction page just for this case here. |
Share your insights or perspective on the financial matter presented in the input. | When a publicly traded company splits into two how are common shares fairly valued, distributed? | How are shareholders sure to receive a fair percentage of each company? At the time the split occurs, each investor owns the same proportion of each new company that they owned in the first. What the investor does with it after that (selling one, for example) is irrelevant from a fairness perspective. Suppose company A splits into companies B and C. You own enough stock to have 1% of A. It splits. Now you have a bunch of shares of B and C. How much? Well, you have 1% of B and 1% of C. What if all the profitable projects are in B? Then shares of B will be worth more than those of C. But it should be the case that the value of your shares of B plus the value of your shares of C are equal to the original value of your shares of A. Completely fair. In fact, if the split was economically justified, then B + C > A. And the gains are realized proportionally by all equityholders. Remember, when a stock splits, every share splits so that everyone owns both companies in the same proportion as everyone else. Executives don't determine what the prices of the resulting companies are...that is determined by the market. A fair market will value the child companies such that together they are worth what the original was. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | VAT and duties payable when importing personal goods from Switzerland and the Channel Islands to the EU? | "http://www.hmrc.gov.uk/customs/tax-and-duty.htm#3 explains the Import VAT situation quite well. As for who enforces and collects it, if you're talking about buying online and having it shipped to you then you'll notice on the parcel a Customs sticker declaring the contents and value. It is the responsibility of the courier company to collect any duty due from you and pass it on to HMRC. In practice what this means is that you receive a card or note from the courier saying ""we're impounding your package until you pay the import duty"" and they usually charge a fee on top of the duty itself. Of course you can always go out there yourself and bring something back, but then it is your responsibility to declare it at the customs checkpoint when you enter the country." |
Share your insights or perspective on the financial matter presented in the input. | When is the right time to buy a car and/or a house? | Buy a house when you can, but keep driving your current car until it dies. In ten years' time, a house should be worth more than you paid for it, while a new car will be worth next to nothing. And research shows that buying possessions like cars doesn't actually make you happier, even though you think it will. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | When to register for a bank account for a C-Corp with no official money | Technically, it's only when you need to pass money through. However consider that the length the account has been open builds history with the financial institution, so I'd open ASAP. Longer history with the bank can help with getting approved for things like business credit lines, business cards, and other perks, though if you're not making money with that business, seek out a bank that does not charge money to have a business account open with them. |
Share your insights or perspective on the financial matter presented in the input. | S-Corp partnership startup. How to pay owners with minimal profit? | "If you're really interested in the long-term success of your business, and you can get by in your personal finances without taking anything from the business for the time being, then don't. There is no ""legal requirement"" to pay yourself a prevailing wage if doing so would put the company out of business. it is common for a company's principals not to draw wages from the business until it is viable enough to sustain payroll. I was in that situation when I first began my business, so the notion that somehow I'm violating a law by being fiscally responsible for my own company is nonsense. Be wise with your new business. You didn't state why you feel the need to take some kind of payment out, but this can be a crucial mistake if it imperils your business or if that money could be better spent on marketing or some other areas which improve revenues. You can always create a salary deferral agreement between yourself and your own company which basically states that the company owes you wages but you are, for the time being, willing to defer accepting them until such time that the company has sufficient revenues to pay you. That's one solution, but the simplest answer is, if you don't need the money you're thinking of paying yourself, don't do it. Let that money work for you in the business so that it pays off better in the long run. Good luck!" |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | When are payroll taxes due in the US? | It depends on the size of the payroll, not on the number of employees. Probably you need to file Form 941 quarterly under this scenario. You may or may not need to deposit taxes more frequently. If you must deposit, then you need to do it electronically. I excerpted this from the instructions for Form 941: If your total taxes (line 10) are less than $2,500 for the current quarter or the preceding quarter, and you did not incur a $100,000 next-day deposit obligation during the current quarter. You do not have to make a deposit. To avoid a penalty, you must pay the amount in full with a timely filed return or you must deposit the amount timely. ... If you are not sure your total tax liability for the current quarter will be less than $2,500 (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. If your total taxes (line 10) are $2,500 or more for the current quarter and the preceding quarter. You must make deposits according to your deposit schedule. See section 11 of Pub. 15 (Circular E) for information and rules about federal tax deposits. I would say that probably for two employees, you need to deposit by the 15th of each month for the prior month, but you really need to check the limits above and the deposit schedule in Pub 15 (as referenced above) based on your actual payroll size. Note that if you have a requirement to deposit, that must be done either through EFTPS or by wire-transfer. The former is free but requires registration in advance of your first payment (they snail-mail you a PIN that you need to log-in) and it requires that you get your payment in by the night before. The latter does not incur a charge from the IRS, but your bank will likely charge you a fee. You can do the wire-transfer on the due date, however, so it's handy if don't get into ETFPS in time. This is all for federal. You may also need to deposit for your state, and then you'll need to check the state's rules. |
Share your insights or perspective on the financial matter presented in the input. | Risks associated with investing in dividend paying stocks for short term income. Alternatives? | Your back of the envelope calculation shows an income of about 5.5% per year, which is much better than a bank. The risk of course is that in a few years when you want to sell the stock, the price may not be at the level you want. The question is what are you giving up with this plan. You have 80K in cash, will cutting it to 30K in cash make it harder for your business to survive? If your income from the business starts slowly, having that 50K in cash may be better. Selling the stock when the business is desperate for money may lock in losses. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Can I negotiate a credit card settlement by stopping payments? | "This would be on your credit for ~8 years. If it goes according to your plan, it will take 6 months to a year to do the settlement by getting behind enough to let it go to collections and then settling. The write-off will then be on your credit record for 7 years before it ""falls off"". Your cash out refinance would have to cover you for at least the next 8 years to be valuable. And you have a lot of assumptions to get there: In short, there's one way (or only a few ways) this works out well in your favor. There are many ways that this has the chance to hurt you. I don't like ""investments"" with those kind of odds." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Assessing risk, and Identifying scams in Alternative Investments | "I have personally invested $5,000 in a YieldStreet offering (a loan being used by a company looking to expand a ridesharing fleet), and would certainly recommend taking a closer look if they fit your investment goals and risk profile. (Here's a more detailed review I wrote on my website.) YieldStreet is among a growing crop of companies launched as a result of legislative and regulatory changes that began with the JOBS Act in 2012 (that's a summary from my website that I wrote after my own efforts to parse the new rules) but didn't fully go into effect until last year. Most of them are in Real Estate or Angel/Venture, so YieldStreet is clearly looking to carve out a niche by assembling a rather diverse collection of offerings (including Real Estate, but also other many other categories). Unlike angel/venture platforms (and more like the Real Estate platforms), YieldStreet only offers secured (asset-backed) investments, so in theory there's less risk of loss of principal (though in practice, these platforms haven't been through a serious stress test). So far I've stuck with relatively short-term investments on the debt crowdfunding platforms (including YieldStreet), and at least for the one I chose, it includes monthly payments of both principal and interest, so you're ""taking money off the table"" right away (though presumably then are faced with how to redeploy, which is another matter altogether!) My advice is to start small while you acclimate to the various platforms and investment options. I know I was overwhelmed when I first decided to try one out, and the way I got over that was to decide on the maximum I was willing to lose entirely, and then focus on finding the first opportunity that looked reasonable and would maximize what I could learn (in my case it was a $1,000 in a fix-and-flip loan deal via PeerStreet)." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Safe method of paying for a Gym Membership? | "Shady isn't quite the right word. They know that most of their customers are going to quit soon after they begin -- as in ""before the end of January"" -- so they lock you in while you're motivated. And of course they're going to make it difficult for you to quit. No choice but to read their contract, understand it completely, follow their rules, and meet their deadlines. There's lots of freedom for them and lots of restrictions for you. It's like this if you're not the one writing up the contract. However ... do you have a YMCA around? Our YMCA has an initiation fee, but beyond that it's month to month. Most flexible gym membership I've heard of. If you lapse for too long they'll make you pay another initiation fee to rejoin, but there's no penalty for canceling. Not all Y's are like that, but check around to see." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How do cashier's checks work and why are they good for scams? | "There are two different issues at play here, and they are completely separate from each other: A bank or cashier's check is ""safer"" than a regular personal or business check because it avoids problem #1. Problem #2 exists with all kinds of paper checks. I assume the reason the warnings are about cashier's check moreso than personal checks, is simply because people already know to wait for personal checks to clear before handing over merchandise to the buyer. People are less likely to do that when receiving cashier's checks, but perhaps they still should if there is any doubt about the validity of the check. One could argue that a cashier's check actually provides a false sense of security due to this (to the receiver). On the flip side, if you are the payer, then a cashier's check could be thought of as more secure than a personal check because you don't have to reveal your bank account information to a stranger." |
Share your insights or perspective on the financial matter presented in the input. | Repairs to a house in order to rent it that were paid by the beneficiary, but is still owned by a Trust | "The Trustee has allowed me to act as his ""agent"", continuing to pay bills, and take care of much of the administrative affairs for my mother's estate since I did all of it for years before she passed away. I was not paid for any of this work. ... The expenses were more than $30K last year, and there is still a punch list to go this year. The trust should reimburse your expenses and deduct them on the trust tax return. Since the Trust owned the property in 2015, and I will receive ownership this month, can last year's expenses incurred for the Trust be deducted again future income for my property this year? Not exactly. The trust will file its own tax return and will report the income/loss attributed to the beneficiaries per the trust rules. What is attributed to you will flow to your Schedule E. From there you own it and if it is a passive activity where the loss is limited - you can carry it forward and offset with future gain. The trustee will have to deal with all the paperwork. Do 1099-misc forms need to be filed for the contractors who worked to get it ready for rental? It is my understanding that since 2010 (and before 2010) landlords who are not in real-estate trade or business are not required to send out 1099. But it won't hurt if you do, also. In any case - for all of these issues you should talk to a tax adviser (EA/CPA licensed in your State)." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Economics of buy-to-let (investment) flats | Surely the yield should be Yield = (Rent - Costs) / Downpayment ? As you want the yield relative to your capital not to the property value. As for the opportunity cost part you could look at the risk free rate of return you could obtain, either through government bonds or bank accounts with some sort of government guarantee (not sure what practical terms are for this in Finland). The management fee is almost 30% of your rent, what does this cover? Is it possible to manage the property yourself, as this would give you a much larger cushion between rent and expenses. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Work as a contractor for my current employer rather than become a full time employee after my graduation for health insurance continued coverage | There are several assumptions you made, that don't match the current laws: Costs: COBRA: |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | fastest way to move USD to EUR | You're asking three different things: What is the fastest way, what is the cheapest way and what is the easiest way. You will not find one method that is all three at once. The fastest way is a wire transfer. The cheapest way that I've encountered is a foreign exchange service like XE. The easiest way is probably Paypal since the money is already in Paypal. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How to minimize damage from sale of savings account | "Bank of America has been selling off their local branches to smaller banks in recent years. Here are a few news stories related to this: Along with the branch buildings, the local customers' savings and checking accounts are sold to the new bank. It is interesting that you were told that your savings account is being sold, but that your checking account will remain with BofA. I guess it depends on the terms of the particular sale. Here are your options, as I see it: Let the savings account move to the new bank, and see what the new terms are like. You might actually like the new bank. If you don't, you can shop around and close your account at the new bank after it has been created. Close your account now, before the move. If you have a different bank you'd like to move to, there is no need to wait. Since your checking account is apparently staying with BofA, you could move all your money from your savings account to your checking account, closing your savings account. Then after ""mid August"" when the local branch switches to the new bank and everyone else's savings account has moved, you can call up BofA and tell them you want to move some of the money from your checking account into a new savings account. If you really have your heart set on staying with BofA, option 3 looks like a good, easy choice. To address your other concerns: Bank of America is a big credit card company, so I doubt that your credit card is being sold off. Your credit card account should stay as-is. Even if your savings account and checking account are at a different bank, there is no need to switch credit cards. Your savings and checking accounts have nothing to do with your credit report or score, so there is no concern there. If you end up wanting to switch to a new credit card with a different bank, there are minor hits to your credit score involved with applying for a new card and closing your current card, but if I were you I would not worry about your credit score in this. Switch credit cards if you want a change, and keep your credit card if you don't." |
Share your insights or perspective on the financial matter presented in the input. | Old Cancelled Cards | "FICO 08, a newer fico formula that many lenders are simultaneously switching to now, ignores artificially lengthened credit history/score by piggybacking. So don't feel left out in that regard. Average age of accounts is affected when closed accounts fall off your credit report, which can take 7 years, not just by closing them. But I'm not familiar with the latest ""weightings"" of these things, so its tough to say how significant it will be when that happens. There are also newer FICO formulas, that may become relevant 7 years from now, so it is definitely something to be conscious of but they aren't immediately consequential, since you can do other things to improve your credit worthiness in the near term." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How to avoid tax when taking a windfall in small chunks? | "How can I avoid this, so we are taxed as if we are making the $60k/yr that we want to receive? You can't. In the US the income is taxed when received, not when used. If you receive 1M this year, taking out 60K doesn't mean the other 940K ""weren't received"". They were, and are taxable. Create a pension fund in the corporation, feed it all profits, and pay out $60k/yr of ""pension"". I doubt that the corporation could deduct a million a year in pension funding. You cannot do that. You can only deposit to a pension plan up to 100% of your salary, and no more than $50K total (maybe a little more this year, its adjusted to inflation). Buy a million dollars in ""business equipment"" of some sort each year to get a deduction, then sell it over time to fund a $60k/yr salary. I doubt such a vehicle exists. If there's no real business purpose, it will be disallowed and you'll be penalized. Your only purpose is tax avoidance, meaning you're trying to shift income using your business to avoid paying taxes - that's illegal. Do crazy Section 79 life insurance schemes to tax-defer the income. The law caps this so I can only deduct < $100k of the $1 million annually, and there are other problems with this approach.\ Yes. Wouldn't go there. Added: From what I understand, this is a term life insurance plan sponsored by the employer for the employee. This is not a deferral of income, but rather a deduction: instead of paying your term life insurance with your own after tax money, your employer pays with their pre-tax. It has a limit of $50K per employee, and is only available for employees. There are non-discrimination limitations that may affect your ability to use it, but I don't see how it is at all helpful for you. It gives you a deduction, but its money spent, not money in your pocket. End added. Do some tax avoidance like Facebook does with its Double Irish trick, storing the income in some foreign subsidiary and drawing $60k/yr in salary to be taxed at $60k/yr rates. This is probably cost-prohibitive for a $1MM/yr company. You're not Facebook. What works with a billion, will not work with a million. Keep in mind that you're a one-man business, things that huge corporations like Google or Facebook can get away with are a no-no for a sole-proprietor (even if incorporated). Bottom line you'll probably have to pay the taxes. Get a good tax professional to help you identify as much deductions as possible, and if you can plan income ahead - plan it better." |
Share your insights or perspective on the financial matter presented in the input. | Reconciling transactions reimbursing myself for expenses as self-employed (UK) | "For anyone that's curious, I had a number of chats with Quickbooks who recommended I import only the relevant business transactions from my personal account & personal credit card in order to lower the tax liability. This way money ""paid"" from the business account to myself rightly shows up as a transfer and not as income. This means when generating a tax report, it calculates the correct rate of tax to be paid based on income minus allowable expenses, regardless which account they came from." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Is being a landlord a good idea? Is there a lot of risk? | "Risk is the capital you have staked in pursuit of profit. The danger is that you lose what you have risked. For some bets (risks), you can get insurance to cover for losses. Now the ""game"" of Landlord and Tenant requires you to play fully by the rules set forth by your legislators. In your case, that is the legislators of the State of Texas. Without knowing those rules, you could be liable (open to civil prosecution) for violating those rules. Tenants could be savvy to those rules or savvy enough to hire someone, a lawyer, who knows those rules. As well, in the game of Landlord and Tenant, you must ascertain the creditworthiness of your would-be tenant. If the tenant fails to pay rent, that tenant can detain the residence. You will incur additional outlays to gain possession of your property (ownership in your rental). Now the game of Landlord vs Landlord is different. You can't pick up houses easily enough and even if you could, likely the expense of doing so could wipe out any would profits from having the house as a rental. So, in Landlord vs Landlord, you get constrained by where your rental sits. Thus you must forecast what will the neighborhood look like in five, ten, fifteen years." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Are account holders with a bank better able to receive a loan from that bank? | "Banks are businesses, and as such should have the right to refuse service, so they should probably be able to choose one customer over another at will. [I say ""should"" because business owners protecting themselves against litigation related to discrimination could restrict their freedom as business owners.] However, banks are businesses and if the customers are identical, both will be approved (or not) according to credit records. Does not make sense to approve one person with a given credit record and refuse someone with a similar record. Unless they barely qualify. Since no two credit histories are identical, there are surely edge cases. Finally, if a customer is a long term customer with large deposits and/or significant amounts of business with the bank, the bankers will likely be inclined to do more business." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What is your effective tax rate if you work from home in Montreal for a company in Toronto? | Assuming that you don't own the business, it would seem to apply. The CRA says: If you were a resident of Quebec on December 31, 2016, and you did not have a business with a permanent establishment outside Quebec, your refundable Quebec abatement is 16.5% of the basic federal tax on line 55 of Schedule 1. If you had income from a business (including income you received as a limited or non-active partner) and the business has a permanent establishment outside Quebec, or you were not a resident of Quebec on December 31, 2016, and the business has a permanent establishment in Quebec, use Form T2203, Provincial and Territorial Taxes for 2016 - Multiple Jurisdictions, to calculate your abatement. For people whose income isn't coming from businesses they own, this seems quite clear. |
Share your insights or perspective on the financial matter presented in the input. | Germany: Employee and Entrepreneur at same time (for getting AppStore payments) | "(Selling apps is AFAIK business, not freelancing - unless the type of app you produce is considered a freelancing subject. The tax office will give you a questionnaire and then decide). As Einzelunternehmer, you can receive the payments for the apps to the same account where your wages go. However, there are lots of online accounts that do not cost fees, so consider to receive them on a separate account so you have the business and private kind of separate (for small Einzelunternehmer, there is no legal separation between business and private money - you have full liability with your private money for the business). The local chamber of commerce can tell you everything about setting up such a business, ask them (you'll probably have to become a member there anyways). They have information as well on VAT (Umsatzsteuer, USt) which you need to declare unless you get an exemption (probably possible), and about Gewerbesteuer (the income tax of the business) etc. For the tax, you have ""subforms"" for the income tax e.g. for wages and for business income, so you just submit both with the main form. You'll get an appropriate tax number when registering the business. Social security/insurance: as long as the app selling is only a side business, the social insurance payments for your main job completely cover the side job as well. You need to make sure that your employment contract is compatible with the app business, though. A quick search indicates that there is a tax treaty between Germany and the Ukraine, Wikipedia says there are no contracts about social insurance in effect (yet)." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | A friend wants to use my account for a wire transfer. Is this a scam or is it legitimate? | "This is another version of an old scam -- ""let me have a check deposited in your account because I can't open one for some reason, and I'll share some of the money with you."" Here the scammer is promising to ""start a business"" with you as a way to gain your confidence and trust. The first danger sign is that you only know this person from online. They are not someone you are friends with in the ""real"" world. They could be anybody. They used the name of a big company as a way to make what they're doing sound legitimate, but it's all a fraud. They could be depositing a faked Exxon check into your account, which could land YOU in huge trouble. Here's the thing -- The only way Exxon (or any other company) can deposit money in a bank under someone's name is if that person provides the account and routing numbers to an account that already exists. No company can just create an account in another person's name. That's Hollywood movie stuff, but it's not how banking works. To open an account, the bank would need identification on the account holder, so your ""friend"" already has an account if Exxon has allegedly deposited money. Further, Exxon isn't going to take back money that has already been deposited. In fact, they can't take it back. If the account is in his name, they can't do anything to the account or with the account. This is a situation you should run away from and never look back. Nothing about this story sounds right or legitimate, but this is one of the oldest scams out there since the beginning of the Internet. You would be well advised to stay VERY far away from your supposed friend, because they're anything but your friend. You are being SCAMMED. Don't be a victim. Stop communicating with this person immediately, and DON'T give them any personal information of any kind. They're crooks! I hope this helps. Good luck!" |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Avoid Capital Gains on Rental | Don't let the tax tail wag the investment dog. There is risk in exchanging this (known) property for another (unknown) property. That risk may be more than $9000 worth of risk. Tax considerations are important, but most important is that your investments make money. If you intend to continue as a landlord, you had better be sure you are finding a better deal elsewhere if you are going to trade this property up. I should also mention that you have a 5 year window in which you need to have lived in the home for 2 years. You have time and might be able to sell for a higher price if you wait a little longer. |
Share your insights or perspective on the financial matter presented in the input. | Official Bank Check | The legal department at the Bank left me a message telling me that the bank check was paid & the recipient got the funds. Call up the bank and find out who the recipient was. Generally it can only be cashed by the person whose name is on it - the original business partner to whom it was intended. It is unlikely to be cashed by the attorney, unless he misrepresented the facts to the bank and got the funds. My question is how could he have cashed it without the original bank check? The other possibility is your mom lost this check, went to the bank and requested them to cancel this and reissue a fresh banker's check and give it to the business partner - in which case the check you had was worthless. You would need to work with the bank and ask them for details. However without the details of the original bank check that you found, it would be difficult for the bank to help you. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Economics: negative consumer sentiment following failure to upsell | There are several different participants in the transaction, and you may not be aware of all the issues: In some business (fast food) they are required to ask if you want to super size, they are expected to do this at every transaction, but aren't paid more if you buy more. The employee can also decide that too much pressure to up-sell may push you to purchase the item online. That will cost them a commission, the store location a sale, and maybe drive you to a different company. It is also possible they don't have the training to be able to explain the difference between the items. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Investing in a offshore bank account | when investing in index funds Index fund as the name suggests invests in the same proportion of the stocks that make up the index. You can choose a Index Fund that tracks NYSE or S&P etc. You cannot select individual companies. Generally these are passively managed, i.e. just follow the index composition via automated algorithms resulting in lower Fund Manager costs. is it possible to establish an offshore company Yes it is possible and most large organization or High Net-worth individuals do this. Its expensive and complicated for ordinary individuals. One needs and army of International Tax Consultants / International Lawyers / etc but do I have to pay taxes from the capital gains at the end of the year? Yes Canada taxes on world wide income and you would have to pay taxes on gains in Canada. Note depending on your tax residency status in US, you may have to pay tax in US as well. |
Share your insights or perspective on the financial matter presented in the input. | Should I finance rental property or own outright? | To answer some parts of the question which are answerable as-is: Yes, mortgage interest is deductible. So is depreciation. See this question and others. It would be a good idea to put some money away for tax season, just as you should save some money to cover unexpected property expenses. But as @JoeTaxpayer says, this is a good problem to have, assuming you own the property, it's low-maintenance, your tenant is good, and your rent is at market levels. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | How to start personal finances? | I'm assuming you're in Germany or Europe based on your question, but here's an American's perspective that should pertain you you as well: Once you have a steady income and an emergency fund large enough to keep you from going bankrupt, then start learning about retirement and investment options. |
Share your insights or perspective on the financial matter presented in the input. | What options exist to make money in the US on a work-restricted visa? | "Income generated from online sales is not considered ""passive income"", so you need to be authorized to work in the U.S. Those without work authorization can acquire passive income (through investments, lending, competition/contest earnings, etc.) In order to sell products on eBay (the description you've given leads me to believe that this is operated as a business), you need to be authorized to work in the U.S., and register a business. See:" |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Is threatening to close the account a good way to negotiate with the bank? | If this matters to you a lot, I agree you should leave. My primary bank account raised chequing account and transaction fees. I left. When I was closing my account the teller asked for the reason (they needed to fill out a form) and I explained it was the monthly fees. Eventually, if a bank gets enough of these, they will change. I want to get back those features for the same price it cost when I opened it They are in their rights to cancel features or raise prices. Just as you are in your rights to withdraw if they don't give you a deal. The reason why I mention this is that this approach is comical in some instances. A grocery store may raise the price of carrots. Typically you either deal with it or change stores. Prices rise occasionally. thus they will lose a lot of money from my savings From my understanding, a bank makes a large chunk of their money from fees. Very little is from the floating kitty they can have because of your savings. If you have an investment account with your bank (not recommended) or your mortgage, that would matter more. I've had friends who have left banks (and moved their mortgages) because of the bank not giving them a better rate. Does the manager have any pressure into keeping the account to the point of giving away free products to keep the costumer or they don't really care? Depends. I've probably say no. One data point is an anecdote; it is expected in a client base of thousands that a few will leave for seemingly random reasons. Only if mass amounts of clients leave or complain will the manager or company care. A note: some banks waive monthly account or service fees if you keep a minimal account balance. I have one friend who keeps X thousand in his bank account to save the account fee; he budgets a month ahead of time and savings account rates are 0% so this costs him nothing. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How to keep control of shared expenses inside marriage? | "JoeTaxpayer's answer mentions using a third ""house"" account. In my comment on his answer, I mentioned that you could simply use a bookkeeping account to track this instead of the overhead of an extra real bank account. Here's the detail of what I think will work for you. If you use a tool like gnucash (probably also possible in quicken, or if you use paper tracking, etc), create an account called ""Shared Expenses"". Create two sub accounts under that called ""his"" and ""hers"". (I'm assuming you'll have your other accounts tracked in the software as well.) I haven't fully tested this approach, so you may have to tweak it a little bit to get exactly what you want. When she pays the rent, record two transactions: When you pay the electric bill, record two transactions: Then you can see at a glance whether the balances on ""his"" and ""hers"" match." |
Share your insights or perspective on the financial matter presented in the input. | Is it usual for a tradesperson not to charge VAT? | Assuming this to be in the UK, and I suspect the rules are similar elsewhere, this indeed may be true. There is a threshold beneath which a business does not have to register for VAT - currently a turnover of £81,000. A non VAT registered business does not charge VAT but also cannot reclaim the VAT on their business expenses. For some businesses below the threshold it is worthwhile registering because the amount they can reclaim is significant. However, there are also many small businesses that do a lot of cash only jobs so as to not put the money through the books and therefore avoid any tax liability. There are also many who will get the the customer to buy materials direct to avoid including these in their turnover. Like every type of tax rule there is a grey area between people trying to avoid paying more tax than is needed and dodgy deals to avoid paying their fair share of tax. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What tax year does my income get assigned to if my client sends the payment in December but I receive it in January? | Confused? see your CPA |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Does being on the board of a bankruptcy-declaring company affect my credit rating? | The answer to your question is governed by the structure of the company and your ownership or lack thereof in the business. Australian business can be structured the same way U.S. ones are, as a sole proprietorship, partnership, LLC, or company. If you are only on the board and have no equity, you cannot be affected. You must have some amount of equity in the business to have any chance of being affected. If the business is a sole proprietorship, then the single individual running the business is personally responsible for all debt and the inability to pay obligations would result in personal bankruptcy which would in all likelihood affect your credit score (it would in the U.S.). If it is a partnership, then anyone holding stock in the company is likewise personally responsible for a portion of the debt, and can be subject to bankruptcy and credit score implications. If the business is structured as a limited liability company or a corporation, a stakeholder's personal finances are separate from the business's and their credit score cannot be affected. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Prize Money, Taxes and Foreign / International Students | The committee folks told us Did they also give you advice on your medication? Maybe if they told you to take this medicine or that you'd do that? What is it with people taking tax advice from random people? The committee told you that one person should take income belonging to others because they don't know how to explain to you which form to fill. Essentially, they told you to commit a fraud because forms are hard. I now think about the tax implications, that makes me pretty nervous. Rightly so. Am I going to have to pay tax on $3000 of income, even though my actual winning is only $1000? From the IRS standpoint - yes. Can I take in the $3000 as income with $2000 out as expenses to independent contractors somehow? That's the only solution. You'll have to get their W8's, and issue 1099 to each of them for the amounts you're going to pay them. Essentially you volunteered to do what the award committee was supposed to be doing, on your own dime. Note that if you already got the $3K but haven't paid them yet - you'll pay taxes on $3K for the year 2015, but the expense will be for the year 2016. Except guess what: it may land your international students friends in trouble. They're allowed to win prizes. But they're not allowed to work. Being independent contractor is considered work. While I'm sure if USCIS comes knocking, you'll be kind enough to testify on their behalf, the problem might be that the USCIS won't come knocking. They'll just look at their tax returns and deny their visas/extensions. Bottom line, next time ask a professional (EA/CPA licensed in your State) before taking advice from random people who just want the headache of figuring out new forms to go away. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What factors go into choosing residency? | A couple of thoughts. Tax benefits are the usual reasons to decide on one residency or another. International tax law is complex, and it's probably best to consult a professional. Certainly without knowing which the other country is I would not want to hazard a guess. If he is really not going to be taxed on the other country, residing there would seem sensible. But... In Canada residency for tax purposes is established for an entire year. If you are resident for more than six months your salary for the year is taxable. Conversely if you are present for less than six months you are not taxable. (This may have changed - it's been twenty years since I did this.) The other issue is healthcare. If you are not resident in Ontario you are not eligible for free healthcare, I believe. He might have to purchase supplemental insurance if he returns occasionally. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Back of Check Images are Blank and not Endorsed | "In general, a lack of endorsement (meaning nothing written by the receiver on the back of the check) is equivalent to it being endorsed ""as deposit only"" to a bank that the depositor has an account with. (See Uniform Commercial Code §4-205.) That is, the bank that receives a deposit without any endorsement promises to the banks that process the check along the line all the way back to your bank, that they properly deposited the money into the account of the entity that the check was made out to. With checks being processed with more and more automation, it's getting fairly common for there to be little writing needed on the check itself, as the digital copy gets submitted to the banking system for clearing. If you're concerned about there being some sort of fraud, that perhaps the entity that you're sending money to isn't the ones that should be getting it, or that they're not actually getting the money, or something like that, that's really an entirely different concern. I would expect that if you were saying that you paid something, and the payee said that you hadn't, that you would dispute the transaction with your bank. They should be able to follow the electronic trail to where the money went, but I suspect they only do so as part of an investigation (and possibly only in an investigation that involved law enforcement of some type). If you're just curious about what bank account number your deposit went into, then it just looks like you're the one trying to commit some sort of fraud (even if you're just being curious), and they don't have much incentive to try to help you out there." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | UK Limited Company paying third party medical costs | According to HMRC's manual BIM42105, you can't deduct expenses of this kind when calculating your profits for corporation tax: No deduction is allowed for expenditure not incurred wholly and exclusively for trade purposes So at the least, the company will have to pay corporation tax on this donation at some point, assuming it ever makes any profits. There's also the risk that HMRC would say that what is really happening is that you are making a personal donation to this person and the company is giving you income to allow you to do it. In that case, you'd be liable to income tax and employees national insurance, and the company liable to employers national insurance. It should then be deductible from corporation tax, though. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | State tax issues for NJ resident with DC tax withheld, and likely refunded | If you already filed the DC return, you can try and wait with filing the NJ return until you get the answer from DC. You can file an extension request with the NJ division of taxation here. Or, you can file without claiming the credit, and worst case amend later and claim it if DC refuse to refund. I find it highly unlikely that DC will decide that a person staying for a couple of months over the year in hotels will count as a resident. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | U.S. nonresident alien: Is my state tax refund taxable? | Federal income tax refunds received during 2016 are not taxable income for 2016 (or any other year) on either the Federal or the State tax return. The State income tax refund for 2015 received during 2016 is not taxable income on the State tax return for 2016. It is taxable income on the Federal tax return for 2016 only to the extent that you received a tax benefit (reduction in Federal income tax due) from deducting State income tax as an Itemized Deduction on your 2015 Federal return. If you didn't deduct State income tax because you deducted State sales tax instead, then the State income tax refund is not taxable income on the Federal tax return. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Roth IRA - Vanguard or Fidelity? If a college student had to pick one? | The minimum at Schwab to open an IRA is $1000. Why don't you check the two you listed to see what their minimum opening balance is? If you plan to go with ETFs, you want to ask them what their commission is for a minimum trade. In Is investing in an ETF generally your best option after establishing a Roth IRA? sheegaon points out that for the smaller investor, index mutual funds are cheaper than the ETFs, part due to commission, part the bid/ask spread. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Insurance, healthcare provider, apparent abuse, lack of transparency | "Just as with any other service provider - vote with your wallet. Do not go back to that doctor's office, and make sure they know why. It's unheard of that a service provider will not disclose the anticipated charges ahead of time. A service provider saying ""we won't tell you how much we charge"" is a huge red flag, and you shouldn't have been dealing with them to begin with. Now you know. how can we ever get health care costs under control if there's so little transparency? I'm assuming you're in the US. This is not going to change, since there's no profit in not screwing the customers. As long as health-care is a for-profit industry, you should expect everyone in it being busy figuring out a way for money to move from your wallet to their. That's what capitalism is about." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Is it safer to send credit card number via unsecured website form or by e-mail? What safer options are there? | Buy a prepaid gift card, such as a MasterCard or Visa gift card. You can find them at the grocery store, a pharmacy, or your local bank. Provide this on their online form. If anyone steals your gift card information, you will have already used the funds for your purchase and there is no further risk to you. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | As a shareholder, what are the pros and cons of a Share Consolidation and Return of Capital? | "The basic theoretical reason for a company to return money to shareholders is that the company doesn't need the money for its own purposes (e.g. investment or working capital). So instead of the company just keeping it in the bank, it hands it back so that shareholders can do what they think fit, e.g. investing it elsewhere. In some cases, particularly ""private equity"" deals, you see companies actively borrowing money to payout to shareholders, on the grounds that they can do so cheaply enough that it will improve overall shareholder returns. The trade-off with this kind of ""leveraging up"" is that it usually makes the business more risky and every so often you see it go wrong, e.g. after an economic downturn. It may still be a rational thing to do, but I'd look at that kind of proposal very carefully. In this case I think things are quite different: the company has sold a valuable asset and has spare cash. It's already going to use some of the money to reduce debt so it doesn't seem like the company is becoming more risky. Overall if the management is recommending it, I would support it. As you say, the share consolidation seems like just a technical measure and you might as well also support that. I think they want to make their share price seem stable over time to people who are looking at it casually and won't be aware of the payout - otherwise it'd suddenly drop by 60p and might give the impression the company had some bad news. The plan is to essentially cancel one share worth ~960p for every payout they make on 16 shares - since 16x60p = 960p payout this should leave the share price broadly unchanged." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Does this sound like a great idea regarding being a landlord and starting a real estate empire? | The idea you present is not uncommon, many have tried it before. It would be a great step to find landlords in your area and talk to them about lessons learned. It might cost you a lunch or cup of coffee but it could be the best investment you make. rent it out for a small profit (hopefully make around 3 - 5k a year in profit) Given the median price of a home is ~220K, and you are investing 44K, you are looking to make between a 6 and 11% profit. I would not classify this as small in the current interest rate environment. One aspect you are overlooking is risk. What happens if a furnace breaks, or someone does not pay their rent? While some may advocate borrowing money to buy rental real estate all reasonable advisers advocate having sufficient reserves to cover emergencies. Keep in mind that 33% of homes in the US do not have a mortgage and some investment experts advocate only buying rentals with cash. Currently owning rental property is a really good deal for the owners for a variety of reasons. Markets are cyclical and I bet things will not be as attractive in 10 years or so. Keep in mind you are borrowing ~220K or whatever you intend to pay. You are on the hook for that. A bank may not lend you the money, and even if they do a couple of false steps could leave you in a deep hole. That should at least give you pause. All that being said, I really like your gumption. I like your desire and perhaps you should set a goal of owning your first rental property for 5 years from now. In the mean time study and become educated in the business. Perhaps get your real estate license. Perhaps go to work for a property management company to learn the ins and outs of their business. I would do this even if I had a better paying full time job. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Pros/cons of drawing income in retirement from sole-owner corporation vs. sole-proprietorship? | "Not really, no. The assumption you're making—withdrawals from a corporation are subject to ""[ordinary] income tax""—is simplistic. ""Income tax"" encompasses many taxes, some more benign than others, owing to credits and exemptions based on the kind of income. Moreover, the choices you listed as benefits in the sole-proprietor case—the RRSP, the TFSA, and capital gains treatment for non-registered investments—all remain open to the owner of a small corporation ... the RRSP to the extent that the owner has received salary to create contribution room. A corporation can even, at some expense, establish a defined benefit (DB) pension plan and exceed individual RRSP contribution limits. Yes, there is a more tax-efficient way for small business owners to benefit when it comes time to retirement. Here is an outline of two things I'm aware of: If your retirement withdrawals from your Canadian small business corporation would constitute withdrawal from the corporation's retained earnings (profits), i.e. income to the corporation that had already been subject to corporate income tax in prior years, then the corporation is able to declare such distributions as dividends and issue you a T5 slip (Statement of Investment Income) instead of a T4 slip (Statement of Remuneration Paid). Dividends received by Canadian residents from Canadian corporations benefit from the Dividend Tax Credit (DTC), which substantially increases the amount of income you can receive without incurring income tax. See TaxTips.ca - Non-eligible (small business) dividend tax credit (DTC). Quote: For a single individual with no income other than taxable Canadian dividends which are eligible for the small business dividend tax credit, in 2014 approximately $35,551 [...] could be earned before any federal* taxes were payable. * Provincial DTCs vary, and so combined federal/provincial maximums vary. See here. If you're wondering about ""non-eligible"" vs. ""eligible"": private small business corporation dividends are generally considered non-eligible for the best DTC benefit—but they get some benefit—while a large public corporation's dividends would generally be considered eligible. Eligible/non-eligible has to do with the corporation's own income tax rates; since Canadian small businesses already get a big tax break that large companies don't enjoy, the DTC for small businesses isn't as good as the DTC for public company dividends. Finally, even if there is hardly any same-year income tax advantage in taking dividends over salary from an active small business corporation (when you factor in both the income tax paid by the corporation and the individual), dividends still allow a business owner to smooth his income over time, which can result in a lower lifetime average tax rate. So you can use your business as a retained earnings piggy bank to spin off dividends that attract less tax than ordinary income. But! ... if you can convince somebody to buy your business from you, then you can benefit from the lifetime capital gains exemption of up to $800,000 on qualifying small business shares. i.e. you can receive up to $800K tax-free on the sale of your small business shares. This lifetime capital gains exemption is a big carrot—designed, I believe, to incentivize Canadian entrepreneurs to develop going-concern businesses that have value beyond their own time in the business. This means building things that would make your business worth buying, e.g. a valued brand or product, a customer base, intellectual property, etc. Of course, there are details and conditions with all of what I described, and I am not an accountant, so please consult a qualified, conflict-free professional if you need advice specific to your situation." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | First time consultant, doubts on Taxation | 1.If the compensation that I receive is over 10 lakhs, how much would be deducted as tax No tax will be deducted by the company. You have to calculate the tax and pay in Advance by yourself. There are quite a few Banks that give you online facility to pay your tax. There is no service tax. Otherwise the tax slabs are right. The current budget has slightly revised the tax brackets. 2.So are these the right taxes and % that Need to be paid? If not do let me know the correct deductions. Yes. Revised brackets for financial year 2014-2015 are NIL for first 2.5 lakhs. Other brackets are unchanged. 4.What others legal options I have to decrease the tax liability? As an employee of my ex company I had once taken an FD (that reduced my tax) The options are same as salaried, i.e. you can claim exemption under 80C or on interest of housing loan, etc. As a consultant certain expenses can also be deducted. You should also talk to a CA who can help you with this as there will be some paperwork involved. |
Share your insights or perspective on the financial matter presented in the input. | Free “Rich Dad” education, with “free gift”: Is it legitimate, or is it a sales ploy? | "Robert Kiyosaki's is basically a get-rich quick author. But to answer your question: It is a sales pitch in disguise. See Marketplace's report on a Kiyosaki seminar, which reveals that the free work shop is a sales pitch for a 3-day work shop which costs several hundred dollars. And the 3-day workshop is a sales pitch for ""advanced"" training which can cost as much as $45,000 (presumably in Canadian dollars, as the report was done in Canada). He does touch on some basic sound principles, but it's mixed with a lot of really bad (and in some cases illegal) advice. You'll do much better to invest your time and money in reading materials that aren't advertised via infomercials. Kiyosaki may well be rich, but it's from selling his Rich Dad-branded material, not from investing in real estate, or any other investment portfolio See also John T. Reed's guru rating, and his review of Kiyosaki's book, Rich Dad, Poor Dad." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Is the MBA an overrated degree/qualification? | "For some situations, an MBA can be overrated in the sense that given the cost of time and money, it isn't going to be a great return in some cases. There can be tens of thousands of dollars and a couple of years to get an MBA that some people believes should automatically make them worth $x more in their salary and life should be simple. I'd likely inquire as to what expectations do you have for what an MBA will do for you. Are you expecting to make connections in getting the degree? Are you expecting to learn about how to run a business from the coursework? Are you expecting something else? Depending on what you are expecting, I could see MBA as being anything from a great choice to a lousy choice for people. As noted by Pete Belford's comment, an MBA from a ""degree mill"" would be all but worthless. Where you go can reflect the value of the education as some universities are known for their program about this such as Ivy League schools." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Self employed as IT consultant and as massage therapist: Do I need 2 HST numbers? | Given your clarifying points, it sounds like you are running both businesses as one combined business. As such, you should be able to get just a single HST number and use that. However, let me please urge you to contact a professional accountant and possibly a lawyer, as it is very unusual to be performing these services without a business license, and you may be exposing yourself to civil penalties and placing your personal assets (e.g. your house) at risk. Additionally, it may be beneficial for you to run these as businesses as you can likely write off (more of) your expenses. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Taxable Website Ad Revenue | I'm not a tax advisor, but I've done freelance work, so... If any of your side-business revenue is reported on a 1099, you're now a business owner, which is why Schedule C must be filled out. As a business owner, minimum wage doesn't apply to you. All revenue is income to you, and you owe taxes on the profit, after subtracting legitimate (verifiable) business expenses. You'll want to talk to a real tax advisor if you're going to start expensing mileage, part of your house (if you use a home office), etc. Don't forget that you'll owe self-employment tax (the employer's half of your payroll tax). You can't save money on business taxes by paying yourself a wage and then counting it as an expense to the business. You'll definitely want to talk to a tax expert if you start playing around with finances as an (the) owner of the business. Income that is not reported on a 1099 should be reported as hobby income. |
Share your insights or perspective on the financial matter presented in the input. | UK - reclaim VAT on purchases for freelance work | If you mostly do work for businesses/individuals who are VAT registered it's a no-brainer to become VAT registered yourself... Although you will have to charge your customers VAT (and pass this on to HMRC) because they are VAT-registered they will reclaim the amount so it won't actually 'cost' them anything. At the same time, you can reclaim all the VAT you're currently being charged on your business expenditure (business equipment, tickets to business events, business software, accountancy/other business services you pay for, web hosting etc etc etc) However, if most of your clients are not VAT-registered it's not worth you registering. You would have to charge your customers an extra 20% (and they wouldn't be able to claim it back!) and you would have to pass this on to HMRC. Although you could still claim for goods and services you purchase for business use, essentially you'd just be another tax collector for HMRC. That said, at the end of the day it's up to you! VAT returns are quarterly and dead simple. Just keep a spreadsheet with your invoices (output tax) and receipts (input tax) and then do some basic maths to submit the final numbers to HMRC. No accountant required! |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | What gives non-dividend stocks value to purchasers? [duplicate] | Dividends are not fixed. A profitable company which is rapidly expanding, and thus cash-strapped may very well skip dividends, yet that same fast growth makes it valuable. When markets saturate, and expansion stops, the same company may now have a large free cash flow so it can pay dividends. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Does the stock market create any sort of value? | "You are correct that a share of stock in a company has zero intrinsic value. Even if the company typically pays dividends, there's no guarantee that it will continue to do so. A share's only worth comes from: So that's one step better than a Ponzi scheme, because in a Ponzi scheme there's not actually any value present behind the scenes, making option (2) literally impossible. In this way company stock is similar to paper money. It's only worth something because people believe it's worth something. Slightly better than company stock is company bonds. Since a bond is a contract between you and the company, if the company should go out of business then bondholders at least get to stand near the front of the line when the company's assets are liquidated. I work in finance, and the vast majority of my colleagues agree that the secondary stock market (what the average citizen simply calls ""the stock market"") is a giant confidence game. And yet it's so profitable to believe in the value of equities the way everyone else does, that we all happily pretend these ones and zeroes we move around have actual value." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Market Hours and Valuations | "Company values (and thus stock prices) rely on a much larger time frame than ""a weekend"". First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks). They look at performance over quarters and years to determine the ""value"" of a company. They also look forward, not backwards to determine value. Prior performance only gives a hint of what future performance may be. If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Borrowing 100k and paying it to someone then declaring bankruptcy | This is fraud and could lead to jail time. The vast majority of people cannot obtain such loans without collateral and one would have to have a healthy income and good credit to obtain that kind of loan to purchase something secured by a valuable asset, such as a home. Has this been done before? Yes, despite it being the US, you may find this article interesting. Hopefully, you see how the intent of this hypothetical situation is stealing. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Does getting a 1099 from another state count as working in another state if I was physically in my home state? | This depends on the state law. In case of the State of New York - these are the criteria for sourcing the NY income: As a sole proprietor or partnership, your New York source income includes: Business activities As a nonresident sole proprietor or partnership, you carry on a business, trade, profession, or occupation within New York State if you (or your business): As you can see, the qualification depends on the way you do business, and the amount of business transactions you have in New York. If it is not clear to you - talk to a CPA/EA licensed to practice in the State of New York to give you an advice. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | American taxes if living outside the US and get paid by US company on a US bank account | I agree with Joe, having the money deposited to the US bank account may land you in trouble. Technically, a US business paying a foreigner must withhold 30% of the payment, unless a tax treaty says otherwise. The US business should do that based on your W8-BEN/W8-ECI form that you should have given to the business before being paid. I'm guessing, that by paying to your US bank account, you (and your American counterpart) are trying to avoid this withholding. That may cause trouble for both of you. I would suggest you talking to a professional (EA/CPA licensed in the State where the business is located) and having the situation resolved ASAP. You may not be liable for the US taxes at all, but because of incorrectly reporting the income/expense - you and the US business may end up paying way more than the $0 you otherwise would have, in penalties. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | What does HMRC (the UK tax agency) view as valid expenses for travel? | Food is almost never a valid expense. Reason for it is simple - if you were not conducting business you would have to eat too. Ad 1. I don't see why travel in that case would not be a valid expense, as the only reason for you to travel there is for business reasons. Ad 2. Unlikely as there is a duality of purpose. So while part of it may be business, you are also getting personal benefit from the visit (coffee/cakes etc) so that generally is a no. Ad 3. No, while you can claim for entertainment of employees (to sensible extends), that doesn't work when entertaining clients. Ad 4. If any part of the trip is for leisure then you cannot claim it as business expense, sorry! If there is any duality of use then it's not a business expense. And food, as always, is a no go. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? | You can receive money directly into your savings bank account. It is perfectly legal. FYI the Bank as part of regulation would report this to RBI. As the funds are received for the services you have rendered, You are liable to pay tax on the income. The income is taxed as professional income similar to the income of Doctors, Lawyers, Accountants etc. If you are paying your colleagues, it would be treated as expense. Not only this, you can also treat any phone calls you make, or equipment your purchase [laptop, desk etc] as expense. The difference become your actual income and you would be taxed as per the rate for individuals. It's advisable you contact an accountant who would advise you better for a nominal fee [few thousand rupees] and help you pay the tax and file the returns. With or without accountant It is very important for you to record all payments and expenses in a book of accounts. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Additional credit card with different limit on same account? | You can look into getting a business credit card. When I had my Chase business credit card, I could add authorized users to the main account and set a spending limit on each card. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Strategies for paying off my Student loans | My advice is that if you've got the money now to pay off your student loans, do so. You've saved up all of that money in one year's time. If you pay it off now, you'll eliminate all of those monthly payments, you'll be done paying interest, and you should be able to save even more toward your business over the next year. Over the next year, you can get started on your business part time, while still working full time to pile up cash toward your business. Neither you nor your business will be paying interest on anything, and you'll start out in a very strong position. The interest on your student loans might be tax deductible, depending on your situation. However, this doesn't really matter a whole lot, in my opinion. You've got about $22k in debt, and the interest will cost you roughly $1k over the next year. Why pay $1k to the bank to gain maybe $250 in tax savings? Starting a business is stressful. There will be good times and bad. How long will it take you to pay off your debt at $250 a month? 5 or 6 years, probably. By eliminating the debt now, you'll be able to save up capital for your business even faster. And when you experience some slow times in your business, your monthly expenses will be less. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Is there a White-list of Trusted Online Vendors? | "I'm going to go with ""ridiculous notion."" :) The vast majority of businesses are legitimate, run by honest people trying to earn a living for themselves and their employees. These days, almost all of them accept credit cards. Crooked businesses are a very small minority. When a bad business over charges you, you dispute the charge, and you get your money back. But that's not all that happens. The bad merchant pays penalties for this, and if it happens more than a couple of times, the merchant loses their merchant account with their bank, which means that they lose their ability to accept credit card payments anymore. A crooked business is not able to rob people via credit card for very long at all. A whitelist would certainly not be able to include every legitimate business. And a blacklist would never be able to be kept up-to-date, as bad businesses come and go continuously; as soon as a business was added to the blacklist, they would lose their merchant account and would no longer need to be on the list. What you are describing is very rare. My brother once had a bad experience with a tech support company where they were repeatedly charging him for a service they never performed. But a credit card chargeback took care of it. If that company made a habit of that, I'm sure that they got in trouble with their bank. Instead, the most common credit card fraud happens when crooks use your credit card at perfectly legitimate businesses. But your whitelist/blacklist wouldn't help you with that at all." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Using a cash account can someone trade all day on it? | No, you cannot. The cash settlement period will lock up your cash depending on the product you trade. Three business days for stocks, 1 business day for options, and you would need waaaaaay more than $5,000 to trade futures. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Why doesn't change in accounts receivable on balance sheet match cash flow statement? | "I'm not an expert, but here is my best hypothesis. On Microsoft's (and most other company's) cash flow statements, they use the so-called ""indirect method"" of accounting for cash flow from operations. How that works, is they start with net income at the top, and then adjust it with line items for the various non-cash activities that contributed to net income. The key phrase is that these are accounting for the non-cash activities that contribute to net income. If the accounts receivable amount changes from something other than operating activity (e.g., if they have to write off some receivables because they won't be paid), the change didn't contribute to net income in the first place, so doesn't need to be reconciled on the cash flow statement." |
Share your insights or perspective on the financial matter presented in the input. | When does Ontario's HST come into effect? | "It looks like the HST will be in effect in Ontario on July 1st, 2010. As to whether it will replace GST with HST for all services, it looks like some sectors may get special treatment: Ontario may exempt mutual funds from HST (National Post). But it doesn't look final yet. However, I would suggest that most service-based businesses in Ontario need to prepare to start charging 13% HST instead of 5% GST. It will be the law. On the ""goods"" side of the new harmonized tax, it looks like certain goods will still be exempt from the provincial portion. Here's a quote from the Ontario Budget 2009 News Release: ""Books, diapers, children's clothing and footwear, children's car seats and car booster seats, and feminine hygiene products would be exempt from the provincial portion of the single sales tax."" Here's some additional information on the introduction of the HST, from the province: General Transitional Rules for Ontario HST. And finally, another interesting article from the Ottawa Business Journal: Preparing For Ontario Sales Tax Harmonization – It's Not Too Early UPDATE: I just received an insert from Canada Revenue Agency included with my quarterly GST statement. Titled ""Harmonization of the Sales Tax in Ontario and British Columbia"", it contains a section titled ""What this means for you"" (as in, you the business owner). Here's an excerpt: [...] All Ontario and B.C. registrants would need to update their accounting and point-of-sale systems to accomodate the change in rate and new point-of-sale rebates for the implementation date of July 1, 2010. The harmonization of the sales tax in Ontario and B.C. may affect the filing requirements of registrants outside of these two provinces. Registrants will report their HST according to their current GST filing frequency. As a result of the harmonization, there will be changes to the rebates for housing and public service bodies. More information will be released as it becomes available. Visit the CRA web site often, at www.cra.gc.ca/harmonization, for the most up-to-date information on the harmonization of the sales tax and how it may affect you. [...] Last, I found some very detailed information on the HST here: NOTICE247 - Harmonized Sales Tax for Ontario and British Columbia - Questions and Answers on General Transitional Rules for Personal Property and Services. Chances are anything you want to know is in there." |
Share your insights or perspective on the financial matter presented in the input. | When does a low PE ratio not indicate a good stock? | "Yes, there are situations where a stock is a bad buy in spite of a low PE. PE ratio tells you the current share price divided by the prior 4 quarters earnings per share. It does not consider: Imagine someone walked up to you and said, ""Do you want to buy a piece of my business? I'll sell you 1% of it for $1000. Last year the business earned $25000."" A quick calculation shows a PE of 4 [$1000/($25000 *.01)]. Even though this PE is comparatively low, you wouldn't buy in without a lot more info. What kinds of things might you ask? PE is one tiny component of an informed investment decision." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | Are in-kind donations from my S-Corp tax-deductible in any way? | "You should probably have a tax professional help you with that (generally advisable when doing corporation returns, even if its a small S corp with a single shareholder). Some of it may be deductible, depending on the tax-exemption status of the recipients. Some may be deductible as business expenses. To address Chris's comment: Generally you can deduct as a business on your 1120S anything that is necessary and ordinary for your business. Charitable deductions flow through to your personal 1040, so Colin's reference to pub 526 is the right place to look at (if it was a C-corp, it might be different). Advertisement costs is a necessary and ordinary expense for any business, but you need to look at the essence of the transaction. Did you expect the sponsorship to provide you any new clients? Did you anticipate additional exposure to the potential customers? Was the investment (80 hours of your work) similar to the costs of paid advertisement for the same audience? If so - it is probably a business expense. While you can't deduct the time on its own, you can deduct the salary you paid yourself for working on this, materials, attributed depreciation, etc. If you can't justify it as advertisement, then its a donation, and then you cannot deduct it (because you did receive something in return). It might not be allowed as a business expense, and you might be required to consider it as ""personal use"", i.e.: salary." |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | What does the settlement date of short interest mean? | At the bottom of the page you linked to, NASDAQ provides a link to this page on nasdaqtrader.com, which states Each FINRA member firm is required to report its “total” short interest positions in all customer and proprietary accounts in NASDAQ-listed securities twice a month. These reports are used to calculate short interest in NASDAQ stocks. FINRA member firms are required to report their short positions as of settlement on (1) the 15th of each month, or the preceding business day if the 15th is not a business day, and (2) as of settlement on the last business day of the month.* The reports must be filed by the second business day after the reporting settlement date. FINRA compiles the short interest data and provides it for publication on the 8th business day after the reporting settlement date. The dates you are seeing are the dates the member firms settled their trades. In general (also from nasdaq.com), the settlement date is The date on which payment is made to settle a trade. For stocks traded on US exchanges, settlement is currently three business days after the trade. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | How to explain an income discrepancy to the IRS? | "The IRS doesn't tax ""increased wealth"" They tax Revenue -- income. If this money or property came to you as a gift, you would owe no tax on it but the giver probably would owe gift tax. If it came to you as a loan, you would owe no tax on it but the lender would owe tax on any interest you pay (and must charge at least minimal interest, though they could give that to you as a gift and possibly not have it be taxable). But if came as payment for goods or services or investment or anything of that sort, and you aren't demonstrably tax-exempt, it is income and you are responsible for declaring it as such and paying tax on it." |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | How do I look for private limited partnership investment opportunities? (Or should I?) | "Investing in an existing company is almost like buying a house, or even becoming an ""Angel investor"" in a start-up. Before you start the process, decide how much you want to be involved in the day-to-day and which industries you would feel most comfortable in. The latter is an important consideration since you would have to know sufficient about the industry in order to evaluate the quality of your prospective investment. Searching for a suitable business is a time-consuming process: The guidance for evaluating any company has been answered in another question, so I'll simply link. Most business owners are looking to their businesses to provide them a pension, so they often look to sell around retirement age. Buying such a business is tricky - you may be assisting the next generation to finance the purchase which can have it's own struggles. Ideally you'll be looking for a young(ish) company with proven sales and which is looking to finance growth in an optimal way. Such a company may have many options for raising capital so you'll be competing to invest. As to whether or not it's a good idea... KFC only became a household name and global franchise after Pete Harman joined Harland Sanders as a partner. Richard and Maurice McDonald may have founded McDonald's but it was Ray Kroc who made it a success. New partners bring in new ideas and fresh energy which the original entrepreneurs may have lost during the difficulties of starting out. But that goes back to my first query; just how much do you want to get involved?" |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | If earning as freelancer, is it better to be a Sole Trader or Limited Company? | As I understand it (please correct me if i'm wrong, i've looked at this before and i've been a sole trader briefly but I've never formed a LTD company) there are pros and cons to forming a limited company. Pros Cons |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Can I register for VAT to claim back VAT without selling VAT applicable goods? (UK) | "As far as I know any business can register for VAT regardless of the nature of the business. If all the goods you sell (or services you provide) are VAT-exempt or zero-rated then you will get refunds from HMRC on VAT your business pays. Any business whose non-VAT exempt turnover (which would include zero-rated goods and services provided) exceeds the registration threshold must register, again even if that means they are ""forced"" to claim refunds. So the only question would be whether your rather nebulous activities were enough to qualify you as a business or organisation to which the VAT regime applies at all. The one-liner answer to that is generally, if goods or services are provided in return for a charge, there’s a business activity for VAT purposes Inevitably there's a much bigger body of statute and case law and it won't always be obvious whether the one-liner answer applies or not to a particular activity so it may be necessary to seek specialist advice." |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Automatic transaction on credit card to stay active | Put one of your monthly bills on it. (Utility bill, Netflix, monthly donation to charity, etc.) I have several automatic, recurring monthly charges on my credit card. If you don't have any current monthly bills that you want to switch, contact the Red Cross, or a charity of your choice. They would be very happy to charge your credit card once a month. Alternatively, it might be okay to let it close. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Are stores that offer military discounts compensated by the government? | Company X located outside a military base offer discounts to military as a form of marketing. They want to encourage a group of potential customers to use their store/service. In some cases they are competing with subsidized store on the base. In other cases their only competition is other stores outside the base. The smart ones also understand the pay structure of military pay to make it easier for enlisted to stretch their money for the entire month. The government doesn't offer compensation to the business near bases. The businesses see their offer and discount as advertising expenses, and are figured into the prices they have to charge all customers. You will also see these types of discounts offered by some businesses in college towns. They are competing with the services on the campus and with other off-campus businesses. Some also allow the use of campus dollars to make it easier for the student to spend money. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Can I claim a tax deduction for working from home as an employee? I work there 90% of the time | The short answer is yes you probably can take the deduction for a home office because the space is used exclusively and you are working there for the convenience of your employer if you don't have a desk at your employers office. The long answer is that it may not be worth it to take the home office deduction as an employee. You're deduction is subject to a 2% AGI floor. You can only deduct a percentage of your rent or the depreciation on your home. A quick and dirty example if you make $75k/year, rent a 1200 sqft 2 bedroom apartment for $1000/month and use one bedroom (120 sqft) regularly and exclusively for your employer. You can deduct 10% (120sqft/1200sqft) of the $12000 ($1000*12 months (assumes your situation didn't change)) in rent or $1200. However because you are an employee you are subject to the 2% AGI floor so you can deduct $1200-$1500 (75000*.02 (salary * 2% floor)) = -300 so in order to deduct the first dollar you need an additional $300 worth of deductible expenses. Depending on your situation it may or may not be worth it to take the home office deduction even if you qualify for it. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Do I need to pay Income Tax if i am running a escrow service in India | "This may be closed as not quite PF, but really ""startup"" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Do I need to pay quarterly 1040 ES and 941 (payroll)? | Don't overthink it. As an employee, whether of your own corporation or of someone else, you get a salary and there are deductions taken out. As the owner of a business you get (hopefully) business profits as well. And, in general, you often have other sources of income from investments, etc. Your estimated tax payments are based on the difference between what was withheld from your salary and what you will owe, based on salary, business income, and other sources. So, in essence, you just add up all the income you expect, estimate what the tax bill will be, and subtract what's been withheld. That's your estimated tax payment. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Theoretically, if I bought more than 50% of a company's stocks, will I own the company? | You'll own whatever fraction you bought. To own the company (as in, boolean - yes or no) you need to buy 100% of the outstanding stock. RE controlling the company, in general the answer is yes - although the mechanism for this might not be so straight forward (ie. you may have to appoint board members and may only be able to do so at pre-set intervals) and there may be conditions in the company charter designed to stop this happening. Depending on your jurisdiction certain ownership percentages can also trigger the need to do certain things so you may not be able to just buy 50% - in Australia when you reach 20% ownership you have to launch a formal takeover bid. |
Share your insights or perspective on the financial matter presented in the input. | Using a self-directed IRA to buy vacation condo, rent it out to an LLC for $1 | "Self directed IRAs have rules to prevent self-dealing of this sort called ""prohibited transactions"". You can't buy or sell or lease assets or obtain services from anyone closely linked to you or any beneficiaries of the IRA. You can't loan yourself money from the IRA, and you can't deliberately take the proceeds that should be going to your self directed IRA and give them to another account that you own." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Will I have to pay taxes for Australia if I have an Australian bank account? | Because you actually reside in New Zealand, your income taxes will be paid in New Zealand. However, as a non-resident of Australia you will have tax withholding on all of the interest you earn in an Australian bank account. Obviously, because that tax is paid to Australia, that will not be counted against your New Zealand income taxes due to the taxation agreement between those countries. You should still discuss this with an accountant in New Zealand and consider acting as a sole trader. Since you are doing freelance work, that seems like the most logical setup anyway. |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Are PINs always needed for paying with card? | There generally isn't much in the way of real identity verification, at least in the US and online. The protection you get is that with most credit cards you can report your card stolen (within some amount of time) and the fraudulent charges dropped. The merchant is the one that usually ends up paying for it if it gets charged back so it's usually in the merchant's best interest to do verification. However the cost of doing so (inconvenience to the customer, or if it's an impulse buy, giving them more time to change their mind, etc) is often greater than the occasional fraudulent charge so they usually don't do too much about it unless they're in a business where it's a frequent problem. |
Offer your thoughts or opinion on the input financial query or topic using your financial background. | Do I make money in the stock market from other people losing money? | "Do I make money in the stock market from other people losing money? Not normally.* The stock market as a whole, on average, increases in value over time. So if we make the claim that the market is a zero-sum game, and you only make money if other people lose money, that idea is not sustainable. There aren't that many people that would keep investing in something only to continue to lose money to the ""winners."" The stock market, and the companies inside it, grow in value as the economy grows. And the economy grows as workers add value with their work. Here's an analogy: I can buy a tree seed for very little and plant it in the ground. If I do nothing more, it probably won't grow, and it will be worth nothing. However, by taking the time to water it, fertilize it, weed it, prune it, and harvest it, I can sell the produce for much more than I purchased that seed for. No one lost money when I sell it; I increased the value by adding my effort. If I sell that tree to a sawmill, they can cut the tree into usable lumber, and sell that lumber at a profit. They added their efforts and increased the value. A carpenter can increase the value even further by making something useful (a door, for example). A retail store can make that door more useful by transporting it to a location with a buyer, and a builder can make it even more useful by installing it on a house. No one lost any money in any of these transactions. They bought something valuable, and made it more valuable by adding their effort. Companies in the stock market grow in value the same way. A company will grow in value as its employees produce things. An investor provides capital that the company uses to be able to produce things**, and as the company grows, it increases in value. As the population increases and more workers and customers are born, and as more useful things are invented, the economy will continue to grow as a whole. * Certainly, it is possible, even common, to profit from someone else's loss. People lose money in the stock market all the time. But it doesn't have to be this way. The stock market goes up, on average, over the long term, and so long term investors can continue to make money in the market even without profiting from others' failures. ** An investor that purchases a share from another investor does not directly provide capital to the company. However, this second investor is rewarding the first investor who did provide capital to the company. This is the reason that the first investor purchased in the first place; without the second investor, the first would have had no reason to invest and provide the capital. Relating it to our tree analogy: Did the builder who installed the door help out the tree farmer? After all, the tree farmer already sold the tree to the sawmill and doesn't care what happens to it after that. However, if the builder had not needed a door, the sawmill would have had no reason to buy the tree." |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Joining a company being acquired | "Is there anything I need to ask or consider during my negotiation process based on the fact that they probably will soon be own by another company? Very tricky situation. You are being hired by one company, and one hiring manager. But you already know that there are big changes ahead. What you don't know is how all those changes will actually play out. You will at least end up working for a different company. I've worked for several companies in the past that were acquired, and some that acquired other companies. After each acquisition, the nature of the company changed significantly. Some teams were let go completely (often ""overhead"" departments like accounting, marketing, etc, that were handled at the corporate level), some teams were moved to a different location, others stayed the same. Sometimes management changed. In one case I was working for a new boss who worked out of the home office in another state. The time frame for these changes ranged from immediately, to several years after the acquisition. For me at least, some of the things that made the job appealing earlier typically were gone. Try as best you can to ask questions about the acquisition, and about the nature of the acquiring company. If they are allowed to tell you the name of the company that is acquiring them, do some searching. See if you can find out how the company typically deals with acquisitions - do they immediately let almost everyone go (keeping only the ""essential"" few), or do they run new acquisitions as separate divisions and leave them alone for at least a while? Try to find out from your hiring manager what their expectations are for your specific team post-acquisition. Try to find out if anything within your offer is subject to change, post-acquisition. Are you being hired under the old, pre-acquisition rules? Or under the new, post-acquisition rules? The fact that you even know the company is being acquired is good. Often, companies cannot even divulge that fact until very near the end. On the other hand your use of the phrase ""probably will soon"", makes me wonder how much is definite here. Here's something you might wish to read: https://workplace.stackexchange.com/questions/20357/a-coworker-beat-me-to-resignation-how-can-i-resign-in-a-professional-manner" |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | How should I record invoices in foreign currency in GNUCash? | "The solution I've come up with is to keep income in CAD, and Accounts Receivable in USD. Every time I post an invoice it prompts for the exchange rate. I don't know if this is ""correct"" but it seems to be preserving all of the information about the transactions and it makes sense to me. I'm a programmer, not an accountant though so I'd still appreciate an answer from someone more familiar with this topic." |
Share your insights or perspective on the financial matter presented in the input. | Any tax advantage for registering a residential house as a business? (I want to apply legal pressure to my landlord) | "To the best of my knowledge, in California there's no such thing as registering a place as a business. There's zoning (residential/commercial/mixed/etc), and there's ""a business registered at a place"". But there's no ""place registered as a business"". So you better clarify what it is that you think your landlord did. It may be that the place is used for short term rentals, in which case the landlord may have to have registered a business of short term rentals there, depending on the local municipal or county rules. Specifically regarding the deposit, however, there's a very clear treatment in the California law. The landlord must provide itemized receipt for the amounts out of the deposit that were used, and the prices should be reasonable and based on the actual charges by the actual vendors. If you didn't get such a receipt, or the amounts are bogus and unsubstantiated - you have protection under the CA law." |
Share your insights or perspective on the financial matter presented in the input. | Difference between a mortgage and buy-to-let in UK | "Residential mortgages normally explicitly state that the property cannot be let without explicit permission, whereas BTL mortgages typically require that the property be let. There are other differences. Residential mortgages are regulated, which means that consumers have a degree of protection from mis-selling; most BTLs are not, as landlords are expected to know what they're doing. Affordability of residential mortgages are based on your income, since that is how you are going to pay for them. BTLs are (mostly) assessed based on the property's rental income, since it's that that will fund the mortgage. Finally, residential mortgages are typically done on a repayment basis, so that at the end of the term, you've paid off the entire loan, whereas BTLs are typically interest-only, on the assumption that you'll either sell the property, or remortgage, at the end of the term. (I've used words like ""typically"" a lot to give an overall picture of the differences. Obviously it's a bit more complicated than that, and there are exceptions to a lot of the above descriptions.)" |
Utilize your financial knowledge, give your answer or opinion to the input question or subject. | Could someone place an independent film on the stock market? | "When we say ""stock market,"" we are usually thinking of the publicly traded stocks, such as the New York Stock Exchange or the NASDAQ. Shares of individual products do not go on these exchanges, only large corporations. You won't see a stock ticker symbol for The Force Awakens or for the iPhone 6s Plus. The reason for this is that when investors buy a stock, they are looking for something that will grow in value theoretically forever. Individual products usually have a limited lifespan. Your movie will (hopefully) generate revenue when it comes out, but after a while sales will slow down after people have seen it. If someone bought a share of stock in a movie on the stock market, they have to realize that eventually the movie will stop making money, and their share of stock won't be worth anything anymore. Instead, people invest in companies that have the potential to make new products, such as Disney or Apple. So if you were envisioning seeing the ticker symbol of your movie going across the screen on CNBC, sorry, that's not going to happen. However, you could theoretically sell shares to individual investors for a percentage of the profit. You figure out how much money you need to create the movie, and estimate how much profit you think the movie will earn. Then you find an investor (or group of investors) that is willing to give you the money you need in exchange for a percentage of the profit. Unlike a stock market investor, these investors won't be looking for the long-term growth potential of the resale value of the stock, but simply a share of the profit." |
Share your insights or perspective on the financial matter presented in the input. | Company requires me to use my personal cell phone to work. Writeoff? | Not authoritative, but according to TurboTax: If your new cell phone acts as both your business and personal phone, you are only allowed to deduct the portion used for business from your taxable income. It’s important for you to hang on to your itemized phone bill and receipts to ensure that you’re deducting the right amounts and to keep records of your deduction. Since the usage you're describing sounds like a very small amount of the overall usage, it will probably be difficult to justify a business expense deduction. |
Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. | Is an analyst's “price target” assumed to be for 12 months out? | I wouldn't put too much stock in the guidance generically... it's more a measure of confidence in the company. When you listen to the earnings calls and start following a particular analyst, you'll understand where they come from when they kick out a number. |
Share your insights or perspective on the financial matter presented in the input. | A merchant requests that checks be made out to “Cash”. Should I be suspicious? | There are legitimate reasons: I wouldn't jump the gun and assume that this person is avoiding taxes, etc. Barbers are usually licensed professions. Since it's generally a cash business, they tend to get audited more often by the tax authorities. That said, I wouldn't pay her with a check -- you have no idea who is actually cashing the check, and you could run into issues with unknown third parties misusing your account information. |
Offer your insights or judgment on the input financial query or topic using your financial expertise. | What threshold to move from SEP to Solo401k? | I think this article explains it pretty well: Contributions to a SEP are limited to 20% of your business income (which is business income minus half of your self-employment tax), up to a maximum of $45,000. With a solo 401(k), on the other hand, you can contribute up to $15,500 plus 20% of your business income (defined the same way as above), with a maximum contribution of $45,000 in 2007. You can make an extra $5,000 catch-up contribution if you're 50 or older |
Share your insights or perspective on the financial matter presented in the input. | Can a shareholder be liable in case of bankruptcy of one of the companies he invested in? | "No. One of the key ideas behind a corporation is that an investor's liability is limited to the amount he invests, i.e. the amount of stock he buys. This is the primary reason why small businesses become corporations, even though one person owns 100% of the stock. Then if the business goes broke, he won't lose his house, retiretment fund, etc. He'll lose everything he had in the business, but at least there's a limit to it. (In some countries there are other ways to achieve the same results, like creating a ""limited liabililty company"", but that's another story.)" |
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