Warren Buffett, in a now well known New York Times Op Ed Piece believes that he and other high net worth people like him, should pay more tax than current laws require. He says that his 15% tax rate is lower than his secretary’s tax rate.

At the 2012 State of the Union address President Obama invited Buffett’s secretary to the speech where he again mentioned the Buffett rule which he now calls the Millionaire Tax. He laid out some bold plans for making the nation’s wealthiest Americans pay more in taxes.

The Details

The Millionaire tax would set a flat 30% tax rate for anybody making more than $1 million annually. He also called for an end to deductions for millionaires on health care, retirement, child care, and home expenses in order to keep the 30% tax rate more difficult to circumvent. With nearly 25% of all millionaires not paying enough to satisfy the proposed Millionaire Tax, this is surely not going to sit well with some of the nation’s wealthy although some, like hedge fund manager George Soros believe the plan to be fair.

Alternative Minimum Tax

The Alternative Minimum Tax or AMT was supposed to be the answer to this problem. When it was originally enacted, it was designed to force high income households to pay a minimum tax rate but as time went on and the law was not adjusted for inflation, an increasing amount of middle class households were forced to pay the tax. More than 4% of individual taxpayers now pay the AMT with 27% of those having gross incomes under $200,000.

Congress has enacted numerous short term fixes for the AMT but they haven’t taken up a permanent fix. In this Huffington Post article, the author believes that the reason Congress doesn’t permanently fix the law is because it would make deficit projections look a lot larger when a large portion of the AMT revenue were taken away.

Obama’s new Millionaire Tax isn’t new. It would modernize the AMT tax rules and allow Congress to permanently fix the problems with the current alternative minimum tax although there has been no mention of taking up a permanent fix of this law in conjunction with the new Millionaire Tax.

Pushback

Because the AMT has been talked about in conjunction with the Millionaire Tax, some tax experts believe that it will add further confusion to the already complicated tax code. Currently, millionaires, and many middle income earners have to figure their taxes two different ways but if the Millionaire Tax were to go in to effect, this could require those making more than $1 million to complete their taxes three different ways. This, according to Roberton Williams, a senior fellow at the Tax Policy Center, is just further complication.

Warren Buffett has found a surprisingly large amount of support for his ideas but for every one high net worth individual in support of the idea, there are others, who aren’t as wealthy as Warren Buffett who don’t support the rule. Some believe that Obama is waging class warfare but for the majority of Americans who earn far less than $1 million annually applaud the proposed Millionaire Tax.

(Photo: johnnyvulkan)

The Millionaire Tax Explained from personal finance blog Bargaineering.com.

Most local currencies are based on service. Just like traditional dollars, you can earn local currency by performing a service or selling goods in your local community. By setting up a type of bartering system, a local currency serves as a type of trade barrier. This not only allows for compensation to those who may have otherwise not had a traditional job, it also keeps more local economic activity in the community since the currency is worthless outside of the local area. Still don’t understand? Here are a few of the local currencies in circulation right now.

Life Dollars

Life Dollars is a local currency based in the Seattle, Washington area. The exchange rate is based on the local hourly living wage making one Life Dollar worth between $10 and $12. This currency is almost completely exchanged in digital format to prevent fraud and to date more than $1 million in Life Dollars has changed hands.

Downtown Dollars

When weather wiped out one of the most important shopping days for local retailers, Philadelphia resident John Durso took action. Durso ran a non-profit, taxpayer funded organization and when the storm hit in 2010, he created Downtown Dollars. Residents can purchase 200 Downtown Dollars for $100 and use them at retailers in Philadelphia. Retailers take the dollars to Durso’s organization where they are paid $2 for every Downtown Dollar they exchange.

Potomacs

This currency was founded by Ecolocity, an organization focusing on urban development. Their goal was to shield Washington DC from any of the negative effects of the struggling economy. Although only a few merchants accept the currency, Ecolocity believes that this three year old way to pay will eventually take off. It as a 1 to 1 exchange rate if you are using it to make purchases but if you cash it out, you only receive 95 cents for every Potomacs dollar you submit. This incentivizes the holder of the currency to continue using it which stimulates economic growth.

Ithaca Hours

Ithaca Hours is one of the longest running local currencies and has served as a model for others including Life Dollars. Like most currencies, Ithaca Honors was created to provide an informal bartering system where community members support the economy by buying and selling locally. Ithaca Hours, like Life Dollars, are priced based an hourly wage of $10 per hour.

Although local currencies serve a valuable community service, their use isn’t widespread. In the United States there are only a few hundred local currencies in circulation and of those, a relative few community members and businesses participate. But as local economies struggle to balance their budgets, community members will find ways to prop up their local economies and one of those ways may be the use of local currencies. Want to read about other currencies in circulation? Check out this article.

Four Local Currencies You’ve Probably Never Heard Of from personal finance blog Bargaineering.com.

The current price is 45 cents.

This is the price of a first-class letter weighing no more than 1 ounce. If the weight is no more than 2 ounces, the price is 65 cents. No more than 3 ounces and we’re talking eight five cents. Postcards cost 32 cents. If you purchased a First Class Forever stamp, you don’t have to worry about the current stamp price because that will always cover letters weighing no more than 1 ounce.

The last postage rate increase was on January 22nd, 2012.

(Photo: queen_of_subtle)

Current Stamp Price – 45 Cents from personal finance blog Bargaineering.com.

However, it becomes necessary for many to interact with some sort of financial services provider, since many of the unbanked still have paychecks to cash. Some of the options available to the unbanked, though, are not very palatable.

Unbanked: Still Paying Fees

Many major retailers now offer check cashing services. You can have a paycheck cashed at Wal-Mart or Best Buy, usually for a fee. (Although Wal-Mart’s flat fee of $3 is definitely among the most generous.) Additionally, there are check cashing places that will also help the unbanked get cash for their paychecks. However, the transaction costs can be between 2% and 4% of the check, eroding how much is taken home.

On top of that, these services don’t offer the option to save some of the money, or to borrow money at a reasonable rate. The unbanked are often forced to go to payday lenders and car title lenders in order to get financing when they need it. That can be problematic, due to the high interest rates. It’s very difficult to make financial progress when you’re unbanked, unable to effectively save, and paying very high rates of interest on your loans. This type of existence will never allow the unbanked to move forward financially.

Prepaid Debit Cards

One of the options that is rising in popularity for the unbanked is the prepaid debit card. A prepaid debit card comes with a host of fees as well, but it is a little more flexible in some ways. It is accepted like a credit card, so there’s no carrying around large amounts of cash. Additionally, many prepaid debit cards allow direct deposits, so there is no check cashing needed.

Indeed, prepaid cards like those offered by Green Dot and American Express carry relatively low fees. And, even though the Suze Orman card has received a lot of flack, it is to be commended for offering an “emergency fund” option, allowing users to save some of their money (even though they won’t earn a yield). For someone who can’t qualify for a bank account, and is unbanked in this way, a prepaid debit card can bridge the gap. However, prepaid debit as banking is a last resort — not something that the “banked” should switch to because they’re unhappy with their bank fees.

Credit Unions

One way the unbanked can take some power, and get access to a host of financial services without paying a lot in fees is to consider credit unions. Low account minimums, and low fees mean that it is sometimes possible for the unbanked to transition to a financial institution. Additionally, it is worth looking into community development credit unions. These are credit unions that have the aim to specifically seek out the unbanked — especially those with low incomes — and help them find a home for their money. Many of these types of credit unions also offer financial counseling and helpful money management classes.

When you are unbanked, you do have options. Unfortunately, few of them are ideal. If you look around, though, it’s possible to limit your costs, and possibly find help for your situation.

(Photo: Steve Rhode)

Financial Options for the Unbanked from personal finance blog Bargaineering.com.

Although not a hard and fast rule, it’s best to save $5,000 or more before putting it in the stock market. This allows you to diversify your portfolio without the broker commissions eating away a large portion of your gains. If you don’t have that much money ready to deploy, keep reading but start saving. We aren’t going to head to the market just yet, there are a few more steps to take before putting real money to work.

Learn About the Markets

Learn about the stock markets and how they work. Know what it means to own a share of a company and what causes the price of a stock to go up and down. The short version is that owning stock means you own a company and prices go up and down based on supply and demand. After you gain a basic understanding of the markets, learn how to evaluate the health of a company. Learn how to read a balance sheet, income statement, and their annual report. Understand what the P/E ratio, beta, and PEG rates mean? Finally, learn some basic chart reading skills.

Seem a little overwhelming? It will take time to learn everything you need to know but isn’t that true of everything? If you want to do it right you have to put in the time.

Fake Money!

There’s no reason that you can’t put some money to work in the stock market today. In fact, give yourself a $10,000 loan and trade on paper. Sites like Yahoo! and Google allow you to set up virtual accounts where you use virtual funds to invest. If you make a mistake, (and you will) you only lose fake money, not real money. What you gain is an education and experience that is every bit as valuable as all of the reading you’ve been doing to learn about the markets.

Ideally, trade virtual money for one year before putting real money to work. Markets and each individual stock have a personality of their own. As you spend time buying and selling stocks, you’ll learn to find these behaviors. Don’t be in a rush to use real money, you can afford to wait a year.

Other Tips

Avoid the weekend seminars that will show you how to make big money because it’s probably a scam. They’ll charge you a “reasonable” price of sometimes more than $1,000. If it worked, everybody would do it and there would be a seminar about it. You can’t be a top producer in anything after one weekend of schooling, unless you’re the one teaching the classes and collecting the fee.

Avoid penny stocks. As a new investor, avoid any stock under $5 and always stay far away from stocks under $1. There’s no doubt that there are some penny stocks that will one day become big companies but your chances of finding them are slim. It’s better to buy fewer shares of a proven, high quality company than to buy hundreds of shares in a penny stock.

Don’t use the investment markets as a casino. If you want to gamble in the hopes of a big payout, go to Vegas. Although a lot of people try to use the investments markets as a way for quick money, it doesn’t work for long term capital growth. Invest with the idea that your money will grow relatively slowly over a long period of time.

Use ETFs along with individual stocks in your portfolio. Studies show that it is nearly impossible to beat the market so purchasing an ETF that tracks the performance of the overall stock market is a great investing strategy.

Try to have a minimum of five types of investment products in your portfolio. Your positions could be two stocks and three ETFs (Learn more about ETFs here) or three stocks and two ETFs or another combination but never put the majority of your money in one product.

Finally

Don’t be in a rush to put your money to work. Wait until you not only feel comfortable evaluating companies but your virtual account shows more successes than failures. Make highly conservative choices at the beginning of your journey.

(Photo: safari_vacation)

How to Start Investing from personal finance blog Bargaineering.com.

This was right after winning a few bucks that Kelly Clarkson’s singing of the national anthem lasted a hair under one minute and thirty five seconds. Oh, he rolled that over into a bet that the final scoring touchdown would be made by Ahmad Bradshaw (I bet the little hesitation made him nervous… but at that point he was playing with house money). So while I didn’t make a single bet… sitting by him, and winning vicariously, was awesome. Oh… and he is a Giants fan, so his team also won the Super Bowl. Not a shabby Sunday!

So now the real question remains… does he owe taxes on those gambling winnings? Yep.

Form W2-G

If you win:

1. $1,200 or more in gambling winnings from bingo or slot machines;
2. $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
3. More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
4. $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
5. Any other gambling winnings subject to federal income tax withholding.

then you will receive a Form W2-G from the payer. In my friend’s case, none of his bets had a payout of 300x the wager so had he made the bet with a sports book at a casino, he would get cash and no Form W2-G. He made his bet with an online outfit, likely located offshore, and they surely won’t send him a Form W2-G.

No Form, Still Owe Taxes

Even if you don’t receive an official Form W2-G, you are responsible for declaring those winnings on line 21 of your Form 1040, labeled Other Income. At this point, you would also be able to deduct any gambling losses under Line 28 of your Schedule A, but that would require you to itemize your deductions. As for supporting documentation of your losses, you can just keep a record of your gambling wins and losses in a log. Plenty of poker professionals do this, as a matter of record keeping anyway, but it’s important if you want to be able to reduce your tax liability by offsetting your wins from your losses. Unfortunately, if you lose more than you win, you can’t offset other non-gambling related income.

Now that you’ve heard the official word and what you should do, the reality is that the Form W2-G was created for those crazy long shot winnings on progressive slot machines and keno games. You won’t get one for playing the money line on a game and few people expect you to claim the $20 you won betting your sucker New England Patriots’ fan friend. While my friend should claim it on his taxes, I doubt few people would fault him for omitting it. (that said, I don’t know if he’d be ahead if he kept a log!)

(Photo: cpardue)

Paying Taxes on Gambling Winnings (Like Crazy Super Bowl Bets) from personal finance blog Bargaineering.com.

And before you start laughing, remember that given what our tax rates our, it’s no surprise people are trying to reduce their liability – but claiming one of these ridiculous tax writeoffs is the wrong way to go about that!

The Condo

A lot of people have second homes, right? Especially if you’re one of those who likes Florida in the winter and northern states in the summer, two homes isn’t that odd. Bankrate tells the story of the tax professional who was meeting with a couple and ask the gentlemen about the mortgage interest for the condo in Utah. Judging by the wife’s face, she didn’t know that they owned a condo in Utah. You can fill in the blanks as far as who lived there.

DVDs?

We would all like to think that our hobbies are write offs but in most cases, they aren’t but that doesn’t stop people from trying. A New York CPA was working with a client who was a Hollywood set designer and naturally a big movie buff. According to him, buy and renting movies was research that related to his line of work. NOPE!

Depletion Allowance for That?

Unless you’re a mine, oil, or other business owner who loses money as more product is removed and sold, you probably don’t have any use for the depletion allowance. One man believed that he was entitled to the depletion allowance for one of his sources of income. He was a sperm donor.

The Livestock Deduction

A Texas rancher was audited by the IRS for expenses relating to 20 animals he had listed as breeding stock. The auditor asked him, “I assume you breed these animals yourself?” The old rancher answered, “No, I’ve got a bull for that.”

The Amish?

If you’re Amish, claiming your buggy as a work expense is far from out of the ordinary and in fact quite common. But what if the buggy got a pimp-my-ride style makeover? The Amish way of pimping a buggy may not include pinstripping, a few subs in the back seat, and an Xbox but this buggy had a velvet interior, tinted windows, kick plates, and like the pimped cars of today, some sweet hydraulics. Hydraulic brakes! The standard cost of the buggy was a writeoff but not the “extras.”

The Home Office

Home office deductions are complicated because you can only deduct the expenses that occur in the office. If the office is 10% of the total size of your home, you can only deduct 10% of the expenses. One person who worked from home wanted to deduct the cost of the toilet paper he used for his home as a home office expense. “You could do it”, said the person’s CPA, “ but you’ll need to know what percentage of each roll was an expense relating to your business”.

How about You?

Are you a tax professional? Post your funniest tax stories below. We can all use a good laugh at tax time.

6 Ridiculous Tax Writeoffs (That Didn’t Work) from personal finance blog Bargaineering.com.

Your role in the recovery effort will be to deal primarily with your auto insurance company. How you handle each step of the process determines how much of a financial impact you’ll take from the theft. Here’s what you need to do to gain the best result.

Prepare

Just like your homeowners insurance, the amount of documentation you keep determines how much you get in the end. If you “pimped out” your car with custom wheels, neon, chrome, and other upgrades, take pictures and save your receipts. If you keep a laptop in the car for business, take a picture of the computer and the identification sticker that matches the receipt. Anything you expect your insurance company to reimburse has to have an overwhelming amount of documentation.

The Theft

As soon as you find that your car was stolen, contact the police. No insurance company will reimburse you for any loss that doesn’t have a police report. After that, contact your insurance company immediately. Some companies allow you to report the theft online or you may have to call and speak to an agent. Document the date, time, and name of the person you speak to regarding your claim. Anybody, you speak to throughout the entire claims process should be included on your call log. Save all e-mails and phone messages until the dispute is resolved.

Documentation

Insurance company Geico recommends compiling the following documentation: The title if you have one, the location of all keys both now and prior to the theft, and the names of anybody who has access to the vehicle. Additionally, now is the time to find all of the documents that you have saved through the life of the vehicle. This might include mileage and service records, receipts for upgrades, and a list of all personal property stolen from your vehicle.

Other Insurance

Each state has different laws that govern the recovery of personal items that were lost due to an auto theft. Sometimes homeowners insurance will cover property stolen from your car. Some insurance professional advise against contacting your homeowners insurance company until you know if your auto policy will cover the loss of the items inside your car.

What if you Lease?

If you lease or finance your car, contact the company holding the loan or lease and tell them about the auto theft. Give them your insurance company’s information and advise them to speak directly to the insurance company regarding the payoff of the loan or lease.

What if the Vehicle is Recovered?

If the police later recover your vehicle, alert your insurance company. They will determine if the car is repairable or a total loss. At that point, you can start making decisions about what you want to do next.

Finally…

Being pleasant and respectable to the claims adjuster will help you to get a better result in the end but understand that the insurance company wants to pay the least amount possible where you want to be paid the most. If an offer sounds unfair, present them with reasons why it is wrong and ask them to reconsider. Remind them of the documentation you sent and how it supports the amount you feel is reasonable.

In the end, you will most likely not be made fully whole. You may have to purchase a new car that will cost more than the money you received from the insurance company and many of your personal belongings in the car may not be reimbursed. You shouldn’t have to pay a large amount of money out of pocket but being reasonable and getting the process finished quickly so you can move on is worth the compromise.

(Photo: alinssite),/em>