Greetings!
What is another wonderful thing about living in Colorado? I can always find something to do besides watch football and bemoan the Broncos. All this sunshine made for fantastic skiing this weekend. Have you been up to enjoy it? Hope for snow!
Payroll taxes just rose in 2013. Did you notice your paycheck was a little smaller, perhaps? Workers now pay an extra 2% of their salaries in Payroll Taxes. One of the least understood of any tax, the Payroll Tax is one you might like to learn a little more about. Here is a 2-minute Payroll Tax Drill.
First, look at several important definitions: * Payroll taxes include the Income Tax and FICA. They are paid with every paycheck by employees. * FICA: the Federally Insured Contributions Act, which means Social Security and Medicare taxes. * Social Security is "OASDI: Old Age, Survivors and Disability Insurance". This tax affects the first $113,700 of income earned in year 2013. Employers pay 6.2% and employees pay 6.2% * Medicare Tax is 2.9%. Employers pay half, employees pay half. This affects all income; it does NOT have a cap like OASDI. Thus, the self-employed see 15.3% of their income disappear before they even see their income tax. Employees, on the other hand, see 7.65% withheld and do not see the other half that the employer pays on their behalf.
Income Tax is a progressive tax that grows from between 10% to 35%. These taxes are paid in addition to the Payroll Taxes.
Additionally, employers pay another tax called FUTA: Federal Unemployed Tax Act, to pay for the unemployed. Employers pay approximately 6% on the first $7,000 of wages earned for their employees. Certain types of labor are exempt. A self-employed person does not pay FUTA unless and until he or she hires employees.
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| Weekly Economic Update | |
WILL THE DEBT LIMIT BE LIFTED SHORTLY? Friday, House GOP leaders announced a new proposal to authorize a three-month extension of federal government borrowing authority. House Majority Leader Eric Cantor (R-VA) summed up the plan in four words: "No budget, no pay." Under the terms of the proposed legislation, members of Congress would end up working for free if they failed to approve a federal budget by April 15. The GOP still wants major spending cuts as a condition of any long-term debt limit increase.1
NO MONTHLY CHANGE IN CONSUMER PRICE INDEX
December's CPI was flat, with core CPI rising only 0.1%. A 2.3% dip in gas prices helped, even as food prices rose 0.2%. The overall Producer Price Index posted a 0.2% decline for a third straight month. Inflation was tame in 2012: the CPI advanced only 1.7% last year compared to 3.0% for 2011, while the PPI rose just 1.3% for its smallest annual increase since 2008.2,3
RETAIL SALES STRONG IN DECEMBER
The Census Bureau notes that they increased 0.5% last month, bringing the yearly advance to 4.7%. Purchases made through non-store retailers rose 12.6% in 2012.3,4
CONSUMER SENTIMENT DECLINES
The University of Michigan's preliminary January consumer sentiment index came in at 71.3 Friday, well under the 75.0 consensus forecast of economists surveyed by Reuters. This represents a 13-month low.5
STOCKS REACH A 5-YEAR PEAK
After a 0.95% weekly advance, the S&P 500 settled at 1,485.98 Friday. The DJIA (+1.20% to 13,649.70) and NASDAQ (+0.29% to 3,134.71) also extended their win streaks. On the COMEX Friday, gold settled at $1,687.00, oil at $95.56.5,6 |
| Market Summary |
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% Change |
Y-T-D |
1Yr Chg |
5-Year Avg | |
DJIA |
+4.16 |
+8.51 |
+2.56 | |
NASDAQ |
+3.82 |
+13.18 |
+6.79 | |
S&P 500 |
+4.19 |
+13.60 |
+2.43 |
(Source: cnbc.com, usatoday.com, treasury.gov, treasurydirect.gov -01/18/13). Past performance is no guarantee of future results. Indices are unmanaged, and investors cannot invest in them directly. |
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Create a beautiful week!
Karl Frank, MBA, MSF
Certified Financial Planner (R)
A & I Financial Services LLC
303.690.5070
Citations:
1 - www.reuters.com/article/2013/01/18/us-usa-fiscal-
budget-idUSBRE90H11H20130118 [1/18/13]
2 - www.usatoday.com/story/money/business/2013/01/16/c
onsumer-price-index-december/1838907/ [1/16/13]
3 - news.morningstar.com/articlenet/article.aspx?id=
581091 [1/15/13]
4 - www.census.gov/retail/marts/www/marts_current.pdf
[1/15/13]
5 - www.cnbc.com/id/100390628 [1/18/13]
6 - www.bloomberg.com/news/2013-01-18/natural-gas-rises-on-cold-weather-forecast-commodities-at-close.html [1/18/13]
7 - montoyaregistry.com/Financial-Market.aspx?financial-market=retirement-investment-funds&category=3 [1/18/13]
Securities offered through Geneos Wealth Management, Inc., member FINRA/SIPC. Investment advisory services offered through A & I Financial Services LLC, registered investment advisor.
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| Words for Thought |
"Never mistake a clear view for a short distance."
Paul Saffo |
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Riddle of the Week
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You can rearrange the letters in insatiable to make another ten-letter word that starts with the letter b. What is this ten-letter word?
Last week's riddle:
It has avenues, rivers and parks - but no grass, water or asphalt. What is it?
Last week's answer:
A map |
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