Personal Financial Education

Build a Strong Financial Foundation

For you, your family, and your children who follow in your footsteps, building a strong financial foundation can be an important step to finding greater fulfillment in life. Leave behind the stress and worry that financial decisions often bring. Live within your means and find the best solution for you to track income and expenses so you can better reach your financial goals. Knowledge is power and financial knowledge is financial power. Whether it is saving for retirement, investing for your child's education, or simply finding a way to increase the emergency fund, knowing where you stand financially empowers you to make better financial decisions. With a little effort and a lot of discipline you can build a strong financial foundation that will last a lifetime and beyond.

American Taxpayer Relief Act of 2012

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The title may be a misnomer depending on which tax you are talking about and how large your income is. The bill signed by President Obama is fairly comprehensive in nature affecting income taxes, estate and gift taxes, and payroll taxes. You may have already seen the increase in the Social Security taxes on your paycheck, increasing from 4.2% to 6.2%. The payroll tax holiday is over with an obvious increase to taxes for the middle class as this tax is only on income up to $113,700.

What about income tax rates? The highest tax bracket moves from 35% to 39.6% and the capital gains rates increases from 15% to 20%, both for income over $400,000 ($450,000 joint filers).

Income tax credits: The child tax credit, child and dependent care credit, and the earned income tax credit are all extended.

Estate and gift taxes: The estate tax rate increases from 35% to 40% with the first $5 million still exempt per individual. The $5 million is indexed for inflation with the actual amount slightly larger. The gift tax annual exclusion has also increased to $14,000 per individual per year.

There are plenty of other provisions in the 153-page bill. Full legislation found here: American Taxpayer Relief Act of 2012.

Retirement may or may not be a long way off, but now is always the time to prepare.

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Do you have enough saved for when retirement comes knocking on your door? Whether the time is fast approaching or far off, the time to start saving is now. Learn more about Individual Retirement Accounts and the tax advantages. Read about the IRA Basics.

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