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Dear ,
Welcome to first issue of the Wealth Chronicle in the New Year! |
What we can learn from Romney's Tax Return
Mitt Romney made headlines this month with controversy created by releasing his 2010 tax return. While Mitt and his wife paid over $3 million in taxes for 2010 it amounted to less than 14% of the $22 million in income that Mitt made. Mitt's tax return offers a glimpse to how the ultra wealthy lower their effective tax rates. In last October's newsletter I wrote how Warren Buffet made public the low tax rate that he pays. Even if you are not ultra wealthy like Mitt and Warren, there are a couple of lessons to learn from their tax strategies.
- The powerful tax benefits of capital gains which are taxed at a top rate of just 15% if the underlying investment is held for more than a year. If you don't have any capital gains, get some.
- Get good tax help. The Romney's 1040 return is 203 pages long. Not the kind that is self-prepared. Even if your tax return seems simple it may make sense to have an experienced CPA help prepare it.
- Avoid salary and wages as much as possible. The Romney's reported no such compensation, which is taxable at rates up to 35%. In addition these types of pay are subject to payroll taxes: a 6.2% Social Security tax and 1.45% in Medicare tax. If anyone has read the Rich Dad, Poor Dad books, you will know his message is about how critical it is to generate Passive Income.
- Strive for qualified dividends. Romney's 2010 tax return reports $3.3 million of qualified dividends, which are taxed at the top rate of 15%. A dividend is qualified if it is from a stock held for at least two months and paid by any domestic corporation or most foreign corporations.
- Charitable donations. Romney donated over $7 million to charity. Most people do not have millions to donate every year, but charitable giving can be used as a tax strategy. This article details some of the tax strategies for charitable giving.
Mitt made a lot of money in 2010, but the strategies used to lower tax obligations can be used by anyone. | |
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Romney's Self Directed IRA | |
The other interesting information that came out from Mitt Romney this month was regarding his IRA and that it was worth over $101 million dollars. It is an eye opening amount when you take into consideration the maximum annual contribution limits to IRA's. So how did Mitt's IRA grow to be so large? Mitt does not have a traditional IRA like most people. He has a Self Directed IRA where he holds several private and alternative investments. Most notably in his portfolio are Bain Capital shares and membership interest.
The following is a document I created detailing some of the benefits of a Self Directed IRA. The IRS allows you to invest in almost any type of asset in a Self Directed IRA in addition to real estate.
http://www.bautisfinancial.com/SelfDirectedIRA.pdf
If you would like to discuss whether a Self Directed IRA makes sense for your portfolio, please let me know and I would be happy to talk with you.
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2012 Key Financial Data
I hope you and your family had a wonderful holiday and made many warm memories. I also hope 2012 will lead us to better places than we've seen in the last couple of years.
In an effort to start the New Year off on the best foot possible, I'm sending you a very handy reference card that I use. It's called the 2012 Key Financial Data card and it can be quite helpful whenever you need to make informed financial and investment decisions.
http://www.bautisfinancial.com/KeyFinancialData2012.pdf
The Key Data card gives you many of the numbers investors need on Social Security, taxes, health savings, Medicare, retirement, college planning and more. Of course, you can always call me when you have questions or concerns or want to dig deeper into the numbers, however the 2012 Key Financial Data card will serve as a quick reference can be very practical in checking an assumption or marshaling your facts.
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| Appealing your property taxes
There are few things that seem as unfair as declining home prices, yet rising property taxes. It is estimated that between 30% to 60% of properties are over-assessed and, because homeowners pay property taxes based on the amount their homes are valued, over-assessed properties essentially lead to over-paying on taxes. Fortunately, homeowners who believe they are paying more than necessary can take steps to have these costs reversed by appealing their taxes through the court system. The following is a brochure put out by the State of NJ Treasury explaining the Tax appeal process: http://www.state.nj.us/treasury/taxation/pdf/lpt/ptappeal.pdf
If you have any questions on Tax appeals or would like to see if it may be beneficial to start an appeal, I recommend contacting attorney Lawrence Lofaro. Lawrence specializes in tax appeals, please see his contact details below:
Lawrence Lofaro, Esq.
Lofaro & Headley, LLC
51 Newark Street, Suite 305
Hoboken, New Jersey 07030
(201) 659-1141
(201) 659-2272 (fax)
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March Seminars
Bautis Financial is pleased to offer FREE workshops to the public covering critical areas of Retirement Planning. Each of these workshops are designed for guests to come away with valuable tools to begin planning for the financial future.
Social Security: What Baby Boomers Need to Know to Maximize Retirement Income
The decisions baby boomers make now can have a tremendous impact on the total amount of benefits they stand to receive over their lifetime. After being told for years that Social Security is "going broke," baby boomers are realizing that it will soon be their turn to collect.
To help baby boomers better understand the Social Security system, this workshop will cover the following:
- 5 factors to consider when deciding when to apply for benefits
- When it makes sense to delay benefits -- and when it does not
- Why you should always check your earnings record for accuracy
- How to estimate your benefits
- How to coordinate benefits with your spouse
- How to minimize taxes on Social Security benefits
- How to coordinate Social Security with your other sources of retirement income
Date: Wednesday, March 7th, 2012
Time: 5:00PM
Location: Bautis Financial Office - 301 Route 17 North, Suite 800, Rutherford, NJ 07070
Register now for the Social Security workshop
Retirement Fitness Challenge
After a lifetime of saving, building a strategy for income in retirement is a whole new challenge. The Retirement Income Planning Workshop will help you determine if you are on track for retirement with your savings and how to convert your savings to an income stream that will cover your expenses during retirement.
Learn strategies to
- Prevent outliving your money
- Minimize your expenses during retirement
- Combat Inflation and Rising Health Care Expenses
- Tax advantaged strategies
- Manage market volatility
- Maximize your Social Security income
Date: Tuesday, March 13th, 2012
Time: 7:00PM
Location: Bautis Financial Office - 301 Route 17 North, Suite 800, Rutherford, NJ 07070
Register now for the Retirement Planning workshop
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Please contact me if you have any questions about the articles above or about your personal or business finances.
Sincerely,
Marc Bautis
Wealth Manager
office: 201-842-7655 cell: 201-221-6895 fax: 201-754-9760
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Disclaimer:The information contained in this newsletter is for information purposes only and may not be suitable for your specific financial situation. You should consult a financial advisor before making any investment decisions relating to the information contained in this newsletter
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 | | MEET MARC | |
Marc Bautis is a Wealth Manager specializing in working with young families as well as retirees and those nearing retirement. He understands that everyone wants to not only protect their principal, but also be sure that their money lasts. He is committed and proud to deliver independent advice, always in the interest of his clients.
Marc is the creator of the Retirement Fitness Challenge™, a program designed to be sure his clients enjoy the retirement years as they have always envisioned them. Marc's program is designed to prevent outliving your money but also to minimize expenses during retirement and find the best time to start taking Social Security benefits.
Marc is a graduate of Seton Hall University. He is a Bergen County native, from Lyndhurst, where much of his extended family still resides. He currently lives in Hasbrouck Heights with his wife Katie and Old English Bulldog, Winnie.
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