Let's being with a thought that I have expressed at many of my speaking engagements and seminars around the country: "Make your money work for you as hard as you have worked for it." Maybe that would be a good slogan for you to adopt.
In 1948 the median income family in the United States paid two percent of its income in United States taxes. In 1990, the same family paid 24 percent of its income in income taxes and an additional 6-9 percent in state and local taxes.
Henry Ford failed in business five times before he started Ford Motor Company.
Do you use credit cards? Here's a thought for you to ponder. Let's start with a $2,000 charge on a credit card that charges 19.8 percent interest and a $40.00 annual fee. If you make only minimum payments each and every month, how long will it take you to pay off the $2,000? Take a guess. Wrong! It will take over 31 years to pay off that $2,000 and your total payout will exceed $10,000!
By the way, if you took that same $2,000 and invested it at 10.6 percent for 31 years, you would end up with a total of $45,540.
How about it? Would you like a $1,000,000? That's easy. Just save $1,000 per year for 40 years at 12.5 percent interest and you've got your million. Inflation will cut into that million and turn it into only $306,000 in today's spending power in 40 years at just a three percent inflation rate.
If you had to pay taxes on the interest your earned at just a 30 percent rate excluding inflation, you would end up with $344,000. Maybe it's time to consider using plans that allow your dollars to grow sheltered from current taxes.
I have received a lot of letters concerning putting your kids on the payroll. If you run your practice and are not incorporated, you do not have to pay for Social Security or Medicare for your kids. If you are incorporated, you do. Make sure that the income is "reasonable." In other words, I think the IRS would have a lot of trouble with you paying a three-year-old $25,000 per year to lick stamps!
You can pay your kids $3,700 and deduct it and they pay no taxes. That equates to a cost to you of around $2,200. Make sure that your kids fill out a W-4 form and write "exempt" on line #7.
While they are at it, why not pay them an additional $2,000 if they work for it and let them fund their own IRA. There are no minimum age requirements for IRAs. When they are ready for college, they take the money and pay taxes at "their" bracket and a 10 percent penalty. I dare say that will still be less than your bracket. If it isn't, you can't afford this idea.
Did you know that less than 20 percent of attorneys have a will? Over half of them do not own disability income insurance. Accountants are not out of the picture either. They have savings of less than four percent each year, and only 11 percent have made gifts or investments to minimize estate taxes, and these are the people you are asking for financial advice?
Good news! The number of individual audits of tax returns will increase by 45 percent this year. Isn't that wonderful?
Brides in the United States devote 180 hours and over $16,000 to planning a wedding, while less than 30 percent of all U.S. women have never determined how much money they will need to cover their retirement.
Did you know that Michael Jordan was cut from his high school basketball team?
When Eisenhower was president, the federal income tax rate for incomes over $400,000 was 91 percent.
Did you celebrate on May 15th? You should have. As of that date, you are now earning money for yourself. Prior to that you were earning money to pay the taxes that will be due for this year. Isn't that sick?
By the way, if you filed an extension in April, you need to file your tax return by August 15th.
Would you like to see a plan that would allow you to put away as much money as you would like for your retirement without putting away money for your employees, and that would be totally deductible and have the full blessing from IRS? Well, just keep reading this column because I will be talking about such a plan in the very near future. You say you can't wait? Well, just pick up the phone and give me a call some evening at my home and I'll tell you all about it. The number is (301) 279-9036. You will love it!
Need those telephone numbers for "cheap" checks? Current is at 1-800-533-3973, and Check in the Mail is at 1-800-733-4443.
Why not give your employees a raise of up to $428.00 compliments of the IRS. It's the earned income credit. Call IRS at 1-800-TAX-FORM and ask for the free booklet.
Would you like a tax deduction for something you never considered before? Computer software can be donated and you get a tax deduction for the gift. Contact Gifts in Kind America at (703) 836-2121, or Software Publishers Association at (202) 452-1600.
What?! You still have not gotten on the information superhighway? Did you know that there are networks out there designed just for the chiropractic community? Did you you that you can leave me messages on the network and I will answer them via the computer? You say you don't have a computer? No excuse. Here is a list to get one at a bargain: Gateway 1-800-846-2410; IBM 1-800-426-7015; NEC 1-800-623-4636; Compac will take only walk-in business in Houston, Texas. See you on the highway.
Your comments and inquiries may be directed to:
Stanley Greenfield, RHU
125 Crofton Hill Ln.
Rockville, Maryland 20850
Please include a self-addressed, stamped envelope.
Click here for previous articles by Stanley Greenfield, RHU.