Tax rates in turmoil

As 2010 ends and you prepare your tax returns, some taxpayers are confronted with the reality that scheduled increases in individual income tax rates, significant reductions in many popular tax help incentives and more changes will occur when the calendar reads 2011. One year ago, it appeared highly unlikely that taxpayers would be faced with such uncertainty. Today, that uncertainty is generating many questions and few answers about tax relief. Get in touch with your tax help service representative if you have any questions.

Temporary tax cuts may require tax help

Nearly 10 years ago, Congress enacted the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), which set in motion a gradual reduction in the individual income tax rates. In 2003, Congress passed the Jobs and Growth Tax Relief Act, which gradually reduced capital gains and dividend tax rates. When these laws were enacted, many lawmakers, tax help service professionals, businesses, and individuals assumed that Congress would either further extend the tax relief incentives or make them permanent before their expiration after 2010. To date, Congress has not acted; causing great uncertainty for tax help preparations and tax returns.

Impact on individuals in Fremont CA, Union City CA and Hayward CA who need tax help

The current individual tax rates of 10, 15, 25, 28, 33, and 35 percent are scheduled to expire after December 31, 2010. In their place, the pre-EGTRRA individual tax filing rates of 15, 28, 31, 36, and 39.6 percent will apply to tax filing years beginning after December 31, 2010, unless Congress acts to change this result that is otherwise required under the Tax Code. On top of these increases, the Making Work Pay credit, which further reduced income tax withholding for wage earners in 2009 and 2010, will expire after 2010.

Fremont, Union City and Hayward residents or any individuals with capital gains and dividend income will also see significant changes after 2010. If you require tax help, have your tax services representative or tax relief service go over these changes with you. The maximum rate of tax on the adjusted gain of an individual will revert to 20 percent (except 18 percent for gains on assets held over five years). Qualified dividends received by an individual for tax filing years beginning after December 31, 2010 will be taxed at ordinary income tax filing rates. Additionally, the current zero percent rate for capital gains for taxpayers in 10 and 15 percent tax brackets will expire to be replaced with a 10 percent rate (except eight percent for gains on assets held over five years). Consult with your tax services representative if you need tax help.

Individuals liable for the alternative minimum tax (AMT) will also be hit with some surprises. Have your tax help preparer go over these surprises with you. Higher exemption amounts as part of an AMT “patch,” routinely enacted in past years, have languished in Congress. Under current law, the exemption amounts for 2010 and again for 2011 are ,750 for unmarried individuals, ,000 for married couples filing a joint taxes returns and surviving spouses, and ,500 for married individuals filing a separate return. Comparing these amounts to higher exemption amounts for 2009 shows how drastic the reductions are. Married couples may need tax help from their tax services professional. For 2009, the exemption amounts were ,700 for single individuals, ,950 for married couples filing joint taxes returns and surviving spouses, and ,475 for married couples filing a separate tax return.

Further down the road, a new 0.9 percent Medicare tax on earned income above 0,000 (0,000 for married couples filing a joint return) and a 3.8 percent Medicare tax on the lesser of an individual’s net investment income for the tax year or modified adjusted gross income in excess of 0,000 (0,000 for married couples filing a joint return) are effective for taxes returns years beginning after December 31, 2012. All of these events will, unless altered by Congress, will significantly change the dynamic for many taxpayers.

Expiring incentives

After December 31, 2010, many popular but temporary tax breaks for individuals will revert to their pre-EGTRRA levels, unless Congress acts to prevent this result. One of the incentives taking the hardest hit is the child tax credit. Have your tax services preparer help you with this. For the 2010 tax filing year, the child tax credit is ,000 for each eligible child. After December 31, 2010, the child tax credit is scheduled to plummet to 0 per qualified child. Other enhancements to the child tax credit also will expire after 2010.

Impact on businesses who need tax help

Business owners who are taxed on their business income at the individual rates, such as sole proprietors, will also be hit with a tax increase if the scheduled pre-EGTRRA rates return. The top rate will increase from 35 percent to 39.6 percent for tax filing years beginning after December 31, 2010.

Many wealthy people we read about seem to have a certain skill for creating large amounts of money. Many in this group of wealth builders follow a few simple rules in their wealth development strategy, and I have listed some here.

Learn to work with people

The biggest fortunes are made when people work with a group talented people. Knowing which group to work with and how to work with people is one of the most important tools in your wealth building strategy.

Persistence

Often the difference in creating wealth is a few more hours, days or weeks of work. Those in the wealth creation group never give up easily. They pursue their wealth creation strategy until they achieve it! Don’t give up!

Make decisions quickly

“He who hesitates is lost!” Sort through the facts and make a list of pros and cons and evaluate that list. Speed every decision you make and then you will be training yourself to take advantage of wealth creation situations before somebody else can.

Seek new ideas

Utilise every task you perform to seeking new wealth development strategies. Study financial pages for hints that may lead you to create wealth. Jot down these ideas and review them regularly. Opportunities to create wealth will suddenly appear from everywhere.

Take risks

The more risks you take as part of your wealth creation strategy, the greater the chances of you building your wealth. Look at speculative ventures and invest a portion of your funds. Risk taking is an integral part of a wealth building strategy and will put you far in front from those playing it safe.

Borrow money

The largest fortunes are built on borrowed money. Understand how to use credit and other people’s capital to expand your profits and leverage your investments in your wealth development strategy.

Time is money

Be conscious of your time in your wealth building strategy. Evaluate your time in terms of the financial return to you and don’t procrastinate or spend large amounts of time on non wealth creating tasks.

Learn to be creative

Developing your creative powers is an excellent strategy to create wealth. Start doing activities which may be outside of what you usually do, learn some creative skill, like learning how to paint or sketch. This will give you ideas to think outside the square in which you can develop to create wealth.

Having a good credit score rating means everything in today’s world. It is something that you should have in order to live life comfortable and as easily as possible. This is why many people work hard in order to have good credit rating score and prevent them from plunging in to a bad credit rating score.

You now ask what kind of things that you can benefit from by having a good credit score. First of all, a good credit score can increase your chances of getting the loan you apply for and secondly, it will help you get certain jobs and programs that will require good credit score. These are the two main reasons why you need good credit score.

However, if you are plagued with bad credit score in the past, you now ask how you can get good credit score again or how you can repair your credit score. It is important to realize the fact that if you have a bad credit score, you will need to repair it as soon as possible before your credit score becomes much worse.

Repairing bad credit score will require you to have patience and also a little luck. It is something that you should do in order for you to live life comfortably and also a little easier for you and your family. By repairing your bad credit score as soon as possible, you will never miss out on any more great opportunities that will cross your path in the future.

Before you go on and start repairing your bad credit score, you first need to understand what credit is all about. You have to know how it can affect you life. For example, if you are in need of a loan, lenders will take a look at your credit rating to determine if you can be approved for the loan. A good credit rating will ensure the lenders that you pay your loans on or before the deadline and thus, will ensure them that you will be able to pay the loan you will apply for. The same applies when you are applying for a credit card.

Now that you know what it means to have a good credit rating, the next thing you need to do is to determine if you have a good credit rating or not. Surprisingly, not many people know if they have a good credit rating or if they have a bad credit rating. To know about your credit score, you can simply ask for it in several credit reporting agencies. They will be able to provide you with a numerical indicator of how much your credit rating rates and how much credit risk you are.

If the indicator says that you have a high score, this means that you have a good credit score, if you have a lower score, then it will indicate that you have a bad credit score and will be far more risky to get approved of for loans.

So, if you have a bad credit rating, the first thing you need to do to improve your credit rating is to take care of old debts. By paying all your old debts, this will stop the creditors to stop making negative reports to credit reporting agencies.

This is the first thing you have to do in order to stop your credit score from getting much worse than it already is. By cutting the source of negative credit reports, you will be well on your way to get a good credit score.

However, paying all your debts doesn’t necessarily mean that you will instantly get good credit rating. You have to remember that this will just stop it from getting any more worse. Your old bad credit score will still be there. So, obviously the next step would be to start looking for ways to make some positive reports on your credit rating.

You can do this by applying for a credit card that is designed for people who have bad credit rating, such as a secured credit card. You should also start opening a new savings account or checking account. Always remember that you should pay your balance on time in order for you to establish a positive credit report.

Eventually, your old bad credit score will expire in time. Always keep paying your debts on time and your credit history will look better than in the past. However, it will usually take around 5 to 7 years for your old credit report with negative reports to expire. This is why patience is very important.

With patience, you will see that in time, your credit score will rise and get rid of those negative reports that you had in the past. Always remember to keep paying your debts on time in order to continue have a good credit score.