Thursday, February 27, 2014
Thank you, loyal readers, for sticking around and waiting for us to reappear in your inbox. For now, we'll only pop in monthly to keep you abreast of conversion developments as we fully integrate into the Investors Bank family. And continue to bring you news you can use so you won't miss us too badly while we retool to our new format.
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Your 1040 Need-To-Knows
By now, you should have received all the forms necessary to file your 2013 taxes. Some of you may have already done so, anxious to put the dreaded task behind you.
Others may be scratching their head, apprehensive about what has changed from 2012. Relax. We'll explain it to you right here.
Married folks earning less than $250,000, $200,000 if you're single, won't see as many changes as higher income earners. So we'll start with what's important to you.
Married same-sex couples may now file using married filing joint status as long as you were married in a state that recognizes such marriages. Even if the state you live in doesn't. This doesn't apply to civil unions.
The Affordable Care Act raised the medical deduction threshold to 10% of your adjusted gross income. Previously, amounts over 7.5% were deductible for those who itemize on Schedule A, Form 1040. If either you or your spouse is age 65 or older, the 7.5% threshold still applies.
The IRS ruled last year that theft loss resulting from home repair fraud is allowable as a casualty/theft loss. You may also be able to deduct a loss from a Ponzi scheme or other types of fraud.
Standard mileage rate for 2013 is 56.5 cents. You can deduct 24 cents per mile for medical travel and moving. Charitable travel is 14 cents. The rates decrease for 2014 to 56 cents and 23.5 cents respectively. But charitable remains the same as it's regulated by statute.
Work from home? You no longer have to track actual expenses by using the new optional method to calculate the home office deduction. The maximum deduction using this method is $1,500 based on a 300 square foot office space. Tracking actual expenses will likely result in a higher deduction for most filers.
Now for those considered high income earners:
Several changes apply to married couples filing jointly who earn $250,000 or more, $125,000 if married filing separately, or $200,000 filing any other status.
Consult your tax professional to learn how these changes affect your personal situation.
It was only a matter of time.
With our reliance on the cyberworld, it was only natural that one day our currency would no longer be a physical entity. Transactions would be conducted in a purely electronic entity.
We've been moving that way for some time now; first with the emergence of credit cards, then online banking, shopping and bill pay.
Google tried introducing digital currency with Google Wallet, but acceptance was slow. Where they failed, Bitcoin may have hit a home run.
Bitcoin is peer-to-peer technology that manages transactions with no central authority or banks. Read into this what you may. Its anonymity and lack of regulatory structure opens risks we'll introduce later on in this article. But first we'll discuss the basics.
Users send and receive bitcoins using wallet software on a computer or mobile device. The software is open source, users need only comply with the same rules to stay compatible with each other.
Users send payments via digitally signed messages to the network, transferring ownership from one Bitcoin address to another. Transactions do not identify the payer and payee by name.
A bundle of transactions, called a block, is confirmed to a public record about every 10 minutes. This is known as mining. Those who maintain the records, or block chain, receive 25 bitcoins per block added to the chain. And thereby enter new bitcoins into circulation.
The coin generating system isn't endless. In an effort to create a currency whose value can't be devalued by a central authority, the system will stop when it reaches 21 million. This is designed to happen around the year 2140. The supply will stop expanding, but the value of each bitcoin will rise as demand rises.
As of this writing, a single bitcoin is valued at $558.01 USD. But they can be broken down into smaller components of various denominations. The trade volume of currency in circulation is $11,471,700.04.
If you own some bitcoins, you own a private cryptography key associated with an Internet address with a balance in the ledger. This address and the private key allow you to conduct transactions. You'll need your address and the recipient's to send a bitcoin to someone, along with your private key. This makes for a more secure environment than providing a credit card number.
Setting up the system can be quite involved. You'll first need to get a wallet, the actual software you'll download to your phone or PC to conduct the transactions. Then you'll need some bitcoins.
Both require a little research. Several websites offer these services. Take the time to check out your options online to learn which works best for you.
Bitcoin may one day make us a true global society. It provides a standard unit of currency that transcends countries and governments. Every day, more and more online merchants are accepting bitcoins as a form of payment. Local merchants aren't far behind.
Yet its anonymity also makes it attractive for those conducting illegal activity. To combat the risk, the U.S. Treasury Department has enacted rules similar to those regulating traditional money order services like PayPal and Western Union. Businesses are required to keep detailed records of all transactions, and report those over $10,000.
There is risk involved with using bitcoins. Systems can be hacked. So far, the block chain database has been impenetrable. But individual exchanges haven't fared as well. Certain exchanges have suffered due to lack of adequate security.
Tokyo-based Mt. Gox, the largest bitcoin exchange, was facing intense regulatory scrutiny. Investors were asked to provide bank account numbers and other information not typical in setting up this type of account. Their worst fears were realized when the Mt. Gox website was taken down earlier this week. The exchange closed its doors after facing a catastrophic loss blamed on mismanagement. Investors who flew to Tokyo to personally withdraw their funds learned that Mt. Gox had left the building. Along with their money.
Brokerage firms allow a framework to buy and sell bitcoins. But not all brokers are legitimate. Investors have to perform diligent research to avoid scam artists.
In other words, they carry the same risks as anything else on the Internet.
Yet where we would be today without the Internet? And will we be saying the same thing about bitcoins a few years down the road?
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