Friday, May 22, 2015

Dollar Gain

The dollar recorded its first weekly gain against the euro in five weeks on Friday, finishing the week up 3.4% against the shared currency.
However, it remains about 5% below a more-than 12-year-high against the euro reached in mid-March.
The dollar started the week off slightly stronger against its rivals, but its gains accelerated Tuesday after official data showed that housing starts surged 20% in April. The strong data supported the dollar through Wednesday, but it began to unwind its gains after minutes from the April meeting of Fed policy makers showed that policy makers are unlikely to raise rates at their June meeting.
Its weakness was short-lived. The buck bounced back Friday after a report showedthat core consumer prices rose 0.3% in April, the fastest rate since January 2013, a sign that inflation in the U.S. may finally be on track to meet the Federal Reserve’s target level of just below 2%. Economists surveyed by MarketWatch had expected a 0.1% gain.
The euro EURUSD, -0.8549%  fell to $1.1000 after the consumer-price data, its lowest level in about three weeks, from $1.1110 late Thursday in New York. It traded at $1.1005 late Friday in New York. The dollar USDJPY, +0.40%  strengthened to 121.58 yen, its highest level since mid-March, from ¥121.05 late Thursday. The pound GBPUSD, -1.0791%  weakened to $1.5477, from $1.5662.
Federal Reserve Chairwoman Janet Yellen, speaking Friday afternoon in Providence, R.I., said the central bank will likely raise interest rates this year if the economy improves as expected. It’s been widely expected that the Fed would act in the second half of this year, and the dollar was little changed in the wake of her comments.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said the CPI report was a “surprise” for the market, causing Treasurys, which were up ahead of the data, to turn lower, an early rally in gold to fade, and the dollar to move sharply higher.
“There’s symmetry in all those readings,” Luschini said. “That’s a number that was somewhat Fed-friendly, giving the Fed ammunition if they want to raise interest rates this year.”
Strong economic data typically strengthens the dollar because it increases the likelihood that Federal Reserve policy makers will raise rates earlier. Higher interest rates typically lead currencies to strengthen, because they increase the return on deposits held in that currency.

Wednesday, April 22, 2015

House prices and rent continue to sizzle as inflation stays muted.

Published: Apr 17, 2015

WASHINGTON (MarketWatch) — The price to buy or rent a home continues to climb even as there’s faint price pressure elsewhere.
The latest report on consumer prices showed that the year-over-year change in rent stayed at 3.5%. While not in the March CPI report, data from CoreLogic show house prices have grown nearly 6% year-over-year.
While prices on the housing side are strong, there’s scant inflation elsewhere. The CPI ex-shelter gauge has dropped 1.5% over 12 months.
The drivers for house prices have been low mortgage rates, job gains and low inventories, while rent has nearly kept up, as tougher credit conditions after the housing bust have pushed some by choice or necessity into rental properties.
There are signs however that rental price growth may have reached a peak after strong growth in apartment construction. Rental price growth over 12 months has stayed between 3.4% and 3.5% for the past five months, after climbing from zero growth five years ago.

Meanwhile, the drop in energy prices and a stronger dollar is holding CPI down, even as some other prices pick up, including clothing, medical care and used cars and trucks.

Friday, April 17, 2015

Financial advice from an NFL player whose mom demanded he give her $1 million

Former NFL player Phillip Buchanon has written a book that’s getting a lot of attention because in it he says that after he got his first contract in the NFL, his mom demanded that he give her $1 million.
The book, “New Money: Staying Rich,” has a lot of funny and sad anecdotes like that, but it also has a lot of good financial advice — for both newfound millionaires and anyone with a little extra money.
After leaving the University of Miami following his junior year in 2002, Buchanon was picked 17th in the NFL draft by the Oakland Raiders, and received a $4 million signing bonus. Anyone who has seen the 30 for 30 documentary “Broke” knows about many of the financial pitfalls for rookies making seven figures after living without a lot of money their whole lives. The movie talks about athletes who trusted family members to handle their money — only to lose it all. And tells stories about players who know very little about bank accounts or credit cards and, for example, take their first huge paycheck to a check-cashing place.
Buchanon, who in his first few years in the league gave away the majority of his money to family and friends and spent much of it on poor investments as well as trips to places like Las Vegas and the Caribbean, had an epiphany after seeing the 30 for 30 documentary.
“You talk about hitting home. When I saw that documentary, I thought, ‘I need to get my stuff together. My career could be over with at any time.’ It motivated me. I could watch that right now and be motivated,” he says.
Buchanon, who’s now 34, played in the NFL from 2002 to 2011 — for the Oakland Raiders, Houston Texans, Washington Redskins, Tampa Bay Buccaneers and Detroit Lions — and made about $20 million. He stopped playing because of a hip injury, and in 2013 he went back to the University of Miami to finish his Bachelor’s degree. He says his aunt and some friends had been telling him for years to write a book to share all of the experiences he had — good and bad — after he became a millionaire. When he went back to the University of Miami, two of his professors also urged him to write the book. Buchanon wanted to try to help young players avoid the mistakes he had made, so he finally agreed to write it.
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One of those mistakes was hanging out with people he thought were friends, but who detracted from his life more than added to it. One night he was robbed at gunpoint in his house by several men soon after a friend had left. A man even put a gun in Buchanan’s mouth and threatened to kill him. Luckily no one was killed, but the thieves took nearly everything of value from his 5,000 square foot home outside of Atlanta. Since he suspected that the friend who had left his house earlier might have set him up, he decided to stop hanging around with some of his shadier acquaintances.
”On the night of the robbery, the old me died and the new me was born,” he writes in the book.
That “new me” is the one who started to take control of his money by having a budget and learning to say “no” to many of the people who were asking for handouts.
How to deal with family and friends and acquaintances asking for money is something Buchanon learned after years of giving away houses and cars and cash. And it’s one of the three key pieces of advice he offers in the book to current and future “new millionaires,” his term for rookies in the NFL and NBA and anyone who comes into a lot of money for the first time.
1. Know the difference between ‘need’ and ‘want’ when people ask you for money.
“This is very important,” he says. “A lot of guys feel like they need to do everything. You don’t. Just do things that make sense and are needed. Don’t overextend yourself.” He says this is especially tough to do because players feel guilty when they have to say no and stop giving. And, he adds, “family makes us feel guilty.” In the book, he says he started to feel like he was getting conned by people asking him for money for specific things they said they needed to fix or get done. “I finally learned how to cope with this type of request. I paid the bills directly to the company or handyman doing the work. It was amazing to see how my family responded when I told them I would take care of it.”
2. Have a budget.
After four years in the NFL, Buchanon was in the red. He had $400,000 in his bank account, and $800,000 in loans for 3 homes. And that was after receiving a $4 million signing bonus four years earlier. “Just as quickly as an opportunity is given, it can be taken away. If only for this reason alone, it’s a good idea to consider a signing bonus or even a first contract as nothing more than Head-Start Money,” he writes in the book. As he tried to get his financial life in order, he decided to be better about keeping a budget. “You have to budget, especially in the area of recreational spending. Withdraw the amount of cash you plan to spend for the night earlier that day and leave your debit or credit card home. Have a cash-spending limit on that vacation with your friends. This takes the temptation out of the equation and assures you remain in control. Once the cash is gone, it’s time to leave, either the club or Anguilla. And if you’re real smart, you may even consider leaving before it’s gone,” he writes in the book.
3. Have a mentor.
Buchanon spends a lot of time in the book talking about the importance of mentors — and how to seek them out. “This is the most important tip of all,” he says. “And you can have more than one. One for marriage. One for money. One for coaching. Good mentors can save you from a lot of trouble. The right mentor — oh man, they save you from so much drama and headaches,” he says.
The key is to find a mentor who is financially stable and doesn’t need to make money off you. In his rookie season, Buchanon used a financial adviser he knew from college — and who was endorsed by the NFL. But the relationship only lasted six months. Buchanon severed ties with him when he found out that he’d sold Buchanon an insurance policy that provided catastrophic injury insurance from a company that he was part owner of — a conflict of interest. He was also making unsuitable investment recommendations to several NFL players. In the book, Buchanon says he should have seen signs that the adviser was shady earlier. “He’d been out of school and in the business for less than five years, and yet he was living better than any of his NFL clients.”
Regarding “new millionaires” in the sports world who have done things in a smart way, Buchanon admires the NBA’s LeBron James. Like many professional athletes, he has his family and friends manage his money. But it has worked well. As Buchanon says in the book, “LeBron made them all seek training. He made sure they were properly prepared, on a schedule where they became experts in their newly allotted roles. He figured out which friends and family members were willing to take the hard route by learning and growing.”
When talking about James, Buchanon says, “I wish I could have had guys like that around me. I like that approach. In my mind, I feel like LeBron had a mentor. Kudos to him.”
And regarding the infamous story of his mom saying he owed her a million dollars? Buchanon says, “I told my mom it would be in the book. She was a little upset. But this is the truth from my perspective. I love my mother just as much as Kevin Durant loves his mom — as he expressed during his NBA MVP speech last year. Honestly, so many people were asking me for money. It was crazy.”

Saturday, April 4, 2015

Where's My Tax Refund? Use I.R.S. Where's My Refund.

Where's My Tax Refund? 

Get up-to-date refund information using I.R.S. Where's My Refund? or the IRS2Go mobile app.

Time to Send Out 1099s: What to Know

Time to Send Out 1099s: What to Know

The 1099 can be mysterious. Business owners guess at its rules and requirements. Tracking changes to the procedures (some as recent as last February) can be so exasperating, some entrepreneurs just give up and file nothing at all. This can be dangerous as penalties can add up quickly. But the 1099 doesn't need to be complicated. To help simplify things, here are the basics.

To whom are you required to send a Form 1099? As a general rule, you must issue a Form 1099-MISC to each person to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or other income payments. You don't need to issue 1099s for payments made for personal purposes. You are required to issue 1099 MISC reports only for payments you made in the course of your trade or business. You'll send this form to any individual, partnership, Limited Liability Company, Limited Partnership or Estate.

What are the penalities? The penalties for not doing so can vary from $30 to $100 per form ($1.5 million for the year), depending on how long past the deadline the company issues the form. If a business intentionally disregards the requirement to provide a correct payee statement, it is subject to a minimum penalty of $250 per statement, with no maximum.

What are the exceptions? The list is fairly lengthy, but the most common is that you don't need to send a 1099 to corporations or for payments of rent to real estate agents (typically property managers -- yet they are required to send them to the property owners). Additionally, you don't need to send 1099s to sellers of merchandise, freight, storage or similar items.
Lawyers get the short end of the stick. Ironically, the government doesn't trust that lawyers will report all of their income, so even if your lawyer is 'incorporated,' you are still required to send them a Form 1099 if you paid them more than $600.

The W-9 is your "best friend." One of the smartest procedures a business owner can implement is to request a W-9 from any vendor you expect to pay more than $600 before you pay them. Using this as a normal business practice will give you the vendor's mailing information, Tax ID number, and also require the vendor indicate if it is a corporation or not (saving you the headache of sending them a 1099 next year). You can download a W-9 here.

The procedure. Regrettably, you simply can't go to and download a bunch of 1099 Forms and send them out to your vendors before the deadline. The form is "pre-printed" in triplicate by the IRS. Thus, you have to order the Forms from the IRS, pick them up at an IRS service center, or hopefully grab them while supplies last from the post office or some other outlet. Next, don't forget you have to compile all of your 1099s and submit them to the IRS with a 1096 by the following month. Sounds like fun...right?

The deadlines. Finally, you are required to issue and essentially mail out all of your Form 1099s to your vendors by January 31. Then you have to send in the transmittal Form 1096 to the IRS before February 28. For those of you that 'outsource' this service, your accountant with the proper system can actually submit the 1096 and stack of 1099s electronically by March 31. Don't forget as well, that depending on state law, you may also have to file the 1099-MISC with the state.

What about foreign workers? Also, if you hire a non-U.S. citizen who performs any work inside the United States, you would need to file the 1099. It is your responsibility to verify that the worker is indeed a non-U.S. citizen, and performed all work outside the United States. For that purpose, in the future you might want to have that foreign worker fill out, sign and return to you Form W-8BEN.
Don't ignore the 1099 or the process and even if you miss the first deadline of January 31, get with your CPA and make sure to finish up the process before the end of March. This could save you major penalties if you get caught not filing the Forms and you can show reasonable cause for your delays.
Moving forward in 2014, make sure to get a Form W-9 from all your vendors before they can get paid. This will save you a lot of headaches next January so you don't have to track down their mailing addresses or EINs.

If there is any good news, most accountants will provide this service affordably and efficiently for you during the month of January so you can stay focused on your New Year's Resolutions and making money rather than filling out paperwork.

Friday, April 3, 2015

The latest IRS Health Care and Tax information

The latest IRS Health Care and Tax information

When it comes to the health care law – also known as the Affordable Care Act or ACA – and how it may affect your taxes, there are many questions you might have.  This “What’s Trending” webpage offers news on trending topics and answers to questions we are hearing.