Category: Blog

Hanging Flags, Awarding Geniuses, Supporting Hong Kong Protestors and Criminalizing Animal Cruelty

4 min read

Hanging Flags, Awarding Geniuses, Supporting Hong Kong Protestors and Criminalizing Animal CrueltyNational POW/MIA Flag Act (S 693) – This bill amended title 36 of the United States Code to require that the POW/MIA flag be displayed on all days that the flag of the United States is displayed on certain federal properties. Previously, the POW/MIA flag was displayed only on Armed Forces Day, Memorial Day, Flag Day, Independence Day, National POW/MIA Recognition Day and Veterans Day. The legislation was introduced by Sen. Elizbeth Warren (D-MA) on March 7. It was passed in the Senate on May 2, passed in the House on Oct. 22 and signed into law by the president on Nov. 7.

Hidden Figures Congressional Gold Medal Act (HR 1396) – This legislation awards Congressional Gold Medals to Katherine Johnson and Dr. Christine Darden, and posthumously to Dorothy Vaughan and Mary Jackson, as well as all of the women who contributed to the success of the National Aeronautics and Space Administration during the Space Race. The legislation was sponsored by Rep. Eddie Johnson (D-TX). It was introduced on Feb. 27, passed in the House on Sept. 19, in the Senate on Oct. 17 and then signed into law by the president on Nov. 8.

Rebuilding Small Businesses After Disasters Act (S 862) – Introduced on March 25 by Sen. John Kennedy (R-LA), this bill makes permanent the increased collateral requirements for major-disaster loans issued by the Small Business Administration. It passed the Senate on Aug. 1, the House on Nov. 20, and is currently awaiting signature by the president to enact into law.

Hong Kong Human Rights and Democracy Act of 2019 (S 1838) – In response to the millions of Hong Kong citizens who have protested and demonstrated for government reform since last June, this bill authorizes three actions. 1) Requires the State Department to recertify Hong Kong’s autonomous status each year in order to continue receiving special treatment by the United States; 2) mandates the U.S. government identify anyone involved in abductions or extraditions of Hong Kong protesters or citizens to mainland China, plus freezes any U.S.-based assets and denies them entry into the United States; and 3) clarifies under federal law that no one should be denied a visa to the United States on the basis of participating in Hong Kong protests. The bill was introduced on June 13 by Sen. Marco Rubio (R-FL) and passed both Houses of Congress in November. It is currently with the president, who may sign or veto the bill.

A bill to prohibit the commercial export of covered munitions items to the Hong Kong Police Force (S 2710) – This legislation prohibits the issuance of licenses to export certain munition items to the Hong Kong Police Force and the Hong Kong Auxiliary Police Force, such as tear gas, rubber bullets and handcuffs. The bill does allow for the president to make an exception upon certifying to Congress how such exports would be advantageous to U.S. national interests and foreign policy goals. This prohibition would expire one year after enactment. The bill was introduced on Oct. 24 by Sen. Jeff Merkley (D-OR) and passed in Congress on Nov. 20. It is currently awaiting signature by the president.

Preventing Animal Cruelty and Torture Act or the PACT Act (HR 724) – This bill expands criminal provisions with respect to animal crushing (torture by stepping on an animal). It subjects violators to criminal prosecution for intentionally crushing an animal, or knowingly creating or distributing an animal crush video using interstate commerce. Criminal penalties include a fine, a prison term of up to seven years, or both. The bill was introduced by Rep. Theodore Deutch (D-FL) on Jan. 23, passed the two Houses of Congress in October and November, and is currently awaiting to be signed into law.

Furniture, Fixtures and Equipment – and Depreciation

4 min read

Furniture, Fixtures and Equipment - and DepreciationWhen it comes to determining depreciation for Furniture, Fixtures and Equipment (FF&E), there are many considerations that exist for accountants and business owners.

Defining Furniture, Fixtures and Equipment

FF&E refers to expenses for business items that are not affixed to the building where that business operates. Real-world examples of depreciable assets include chairs, desks, phones, tables, cabinets, etc., which are used to perform business-related tasks, directly or indirectly. These types of items are associated with long-term use, generally more than 12 months, according to the Internal Revenue Service.

Understanding How It Works

When it comes to accounting for the expense of the item, it can be depreciated equally and discreetly over its useful life. According to the IRS’ General Depreciation System (GDS), these office items, such as safes, desks, and files, are expected to have a seven-year life.

While there are different approaches to calculating depreciation, a common way to do so is through straight-line depreciation. This method is used by many organizations, including The Federal Reserve, and it works by starting with how much the item costs to acquire or its adjusted basis. From there, the item’s cost is reduced by the salvage value or the asset’s value after its useful life. The resulting figure is divided by the number of months of the asset’s useful life. Once the asset has exhausted this amount of time, it remains on the books as its salvage value until it’s sold or removed from service.

Using the straight-line method, a company might find the monthly depreciation charge for a truck purchase like this. The company purchases a new truck for $40,000; assuming a 60-month useful life allowable by the IRS and a 20 percent salvage value, the formula would be as follows:

  1. $40,000 – (20 percent x $40,000) / 60 months
  2. $40,000 – ($8,000) / 60 months
  3. $32,000 / 60 = $533.33 per month for monthly depreciation

Special Considerations

In addition to tangible property, some intangible property also can be depreciated under the right circumstances. Examples of the IRS cites of this primarily intellectual property include copyrights, patents, and software. Conditions for depreciation of this type of intangible property include that it must be owned by the business owner, used within the business or for profit-related activities, have a useful life, and can be used by the business for more than a year.

The IRS gives an example of an individual buying a patent for $5,100. Using the straight-line method, the IRS permits this type of non-section 197 intangible property to be depreciated under certain conditions. The owner then must reduce any salvage value from the non-section 197 intangible property’s adjusted basis and depreciate it over the patent’s useful life, prorating terms less than a year, if applicable.  

Eligible Intangible Property Example

Assume the individual bought a patent in May to be used starting June 1 of the same year. The patent was bought for $5,100, has a 17-year useful life and won’t have any salvage value.

The first year of depreciation must be prorated for six months since it will be used from June to December of the first year. Taking these circumstances and rules from the IRS, the first year’s depreciation available is $150. Each subsequent year, the remaining 16 will be $300.

While there are many intricacies for depreciation, understanding how it applies to each business’ operations will help give a fair assessment of an equipment’s value.

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Depreciation

Sources

https://www.irs.gov/pub/irs-pdf/p946.pdf

How to Stay Safe with Business Email Compromise on the Rise

4 min read

Email Compromise, hacked emailAccording to a report by the Financial Crimes Enforcement Network (FinCEN) released in July, financial institutions have incurred more than $9 billion in losses due to Business Email Compromise (BEC) schemes since 2016. With such staggering losses, businesses and even individuals can’t afford to ignore BEC attacks.

What is BEC?

BEC fraud involves cyber thieves posing as company executives or a business contact with the intention to commit wire transfer fraud or obtain sensitive information. The main targets are businesses working with foreign suppliers or a business that carries out regular wire-transfer payments.

To carry out this attack, criminals might pretend to be the company CEO and request that a junior staff member perform a task for them, such as transferring funds. Attackers take advantage of the fact that most organizations don’t have a set procedure to verify instructions received from the top management.

How Attackers Collect Data from their Targets

Cyber criminals use various techniques to carry out BEC fraud, with the main aim of stealing funds from the victims. The techniques used include:

  • Imposter techniques – this can be carried out in various ways. Attackers use a look-alike domain, display-name deception and spoofed emails that appear to come from legitimate addresses.
  • Social engineering – when a target has not set appropriate privacy settings on social media accounts, an attacker can easily collect information that will make their requests sound legitimate.
  • Malware – this enables attackers to have access to sensitive information that makes the fake request sound legitimate.
  • Mining from the Dark Web – here attackers can obtain stolen credentials.

How to Avoid BEC Attacks

It is difficult for conventional security systems to detect BEC schemes. Consider a case in which a transaction is initiated willingly by a legitimate user in response to a request from a legitimate source. Such an email has no payloads such as malicious attachments that can be blocked.

Here are some methods to help reduce the possibility of these attacks:

  • Raising awareness of common attack scenarios or tactics used by the cyber criminals, such as a false domain name that looks almost like the original one, impersonation of a vendor, false sense of urgency or a request for secrecy.
  • Training employees on cyber security risks and implications.
  • Implementing email authentication protocols like Domain-Based Message  Authentication, Reporting and Conformance (DMARC) and email authentication, such as DomainKeys Identified Mail (DKIM).
  • Using layered defense, such as encryption, and virtual private networks.
  • Implementing a multifactor authentication that will introduce a secondary authorization control. This will help stop attackers even when they have access to the target’s credentials.
  • Establishing communication protocols that will allow for a follow-up. For instance, if the person is requesting financial transactions, an employee should call to ascertain the request.
  • Scrutinizing all emails that request for fund transfer.
  • Monitoring incoming email, especially those that use VIP names.
  • Optimizing accounting systems and controls.

Final Thoughts

Apart from taking precautionary measures, businesses also should make sure that their insurance specifically covers BEC attacks, as courts might have different interpretations of policies. Consider the case of Apache Corporation, which lost $7million due to a BEC attack. The judge ruled that since the money was sent to pay a legitimate invoice to the wrong bank, it was not covered by their insurance policy.

Note that a majority of these criminals are from countries that might not have strict laws on cybercrime, making it difficult to have them prosecuted.

So, whether you run a small, medium or large business, or even a personal account, it’s vital that you take precautionary measures against the increasing BEC schemes.

5 Ways to Save on Holiday Gifting

4 min read

Save on Holiday Gifting, Save GiftBelieve it or not, the holidays are right around the corner. And try as you might, overspending is real – whether you plan ahead or wait until the last minute. With this in mind, here are a few ways to get a handle on spending and save money on gifting.

Set Limits. Decide how much you’re going to spend overall on holiday gifts and how many people you’re buying for. Then do the math. For instance, you might want to spend $250 for 10 people. That’s $25 per person. However, there might be those you want to spend more on, which is perfectly understandable. But you can get into trouble when you buy your sister an expensive sweater and then feel like you need spend just as much your brother, mother or aunt. Spending sprawl sets in and it’s a runaway train. One way to avoid this situation is deciding before you shop how you’ll divvy up the amount you’ve set aside. While the holidays are special, remember that your family and friends also have birthdays, which means you don’t have to throw down a big chunk of change in one fell swoop during this time of year.

Shop Thanksgiving Weekend. Believe it or not, Thanksgiving Day has historically been the best time to find bargains. And you don’t have to leave your turkey dinner and run to the mall, unless you want to (read: uncomfortable family dynamic). The good news is that, on this day of carb overload, you can also find great deals online. If you miss the sales on Thanksgiving, you can always hit Black Friday and Cyber Monday. Black Friday, if you can stand the crowds, yields serious savings. And the beauty of Cyber Monday is you can shop from your favorite chair in your PJs, if you want.

Buy Gifts for Kids at Cheaper Stores. While adults might appreciate a brand name gift from, say, Neiman Marcus, kids really don’t care. Look online at Hollar.com for some great deals, as well as at discount stores like Walmart and Kmart, where you’ll find some big markdowns on popular gifts. The truth is, you don’t have to pay full retail prices from fancy stores for gifts that will surprise and delight the little ones.

Make Your Own Gifts. If you’re a craftsperson, handmade gifts always touch the heart: quilts, paintings, photographs, jewelry, bath and body products and so on. If you’re not so crafty, then going to holiday fairs are a good way to select handmade gifts. Etsy is another great place to find handcrafted items. Food is also a heartfelt gift to make and give, especially for the person who has everything. No matter what you choose to make, chances are you’ll save big time.

Give Secondhand Gifts. The key to giving this sort of gift is knowing where to shop. Good places to check are thrift stores and used bookstores, where you can find gently used clothing, board games, jewelry, books and even CDs and DVDs. Just make sure to check for rips or tears that might be unsightly. If you don’t want to make the trek, eBay is great for people who are collectors. Amazon even has items that are used. Just check to see if there’s a link that says “used and new offers” on the page of the product you’re looking for. All of the aforementioned resources can be treasure troves for terrific, affordable finds.

While it’s the spirit of giving that the holidays are all about, saving when you’re gifting might be one of the best gifts of all.

Sources

https://www.simple.com/blog/how-to-save-money-on-holiday-presents

https://www.moneycrashers.com/ways-save-money-holiday-gifts-friends-family/

https://www.dealnews.com/features/Thanksgiving-Day-Will-Top-Black-Friday-for-the-Best-Deals/857586.html

What to Expect and How to Prepare for a Recession

5 min read

Prepare for a RecessionEconomists generally determine that the country has fallen into a recession after two consecutive quarters of negative gross domestic product (GDP) growth. Since 1967, the United States has experienced seven recessions.

The thing is, predicting a recession is a little like predicting a tornado. Experts are never exactly sure if or when one will occur, but they can cite when conditions a ripe for one based past experience. The good news for predictors is that the economy follows a similar pattern of indicators in the months leading up to a recession.

The bad news is that many those indicators have recently emerged. For example:

  • Inverted Yield Curve – This is when the yield on longer-term Treasury bonds is lower than the yield on shorter-term Treasury bonds, which happened recently for the first time since 2007. On average, an inverted yield curve has occurred 14 months in advance of every recession in the past 50 years.
  • Corporate Profits – Estimates for corporate earnings growth have dropped substantially since last year, from 7.6 percent to 2.3 percent.
  • Global Trade – The ongoing U.S. trade war with China has resulted in weakness in the manufacturing and farming industries. Moreover, global trade volume is also down, which further reduces the market for U.S.-manufactured goods.

What to Expect in a Recession

The worst recession in U.S. history was the most recent one, between 2007 and 2009. Dubbed the Great Recession, it was short (compared to the Great Depression of 1929-1939) but it took a powerful toll on a large chunk of the population. For example, close to half of U.S. households lost at least 25 percent of their net worth; one out of every four households lost at least 75 percent of their net worth.

About one-third of households experienced one or more of the following:

  • Fell more than two months behind on their mortgage
  • Had their home foreclosed
  • Had their home equity drop into negative territory
  • Lost a job

That was a bad recession. Fortunately, while economists are seeing signs of another one on the horizon, as of now (absent any significant shocks) they do not expect it to be as severe.

Tips to Prepare for a Recession

With multiple warning signs evident, it appears we do have some time before a recession potentially hits. It’s a good idea to use this time to protect your financial situation to help minimize any impact that a recession can have on you personally. The following are some tips to consider.

Shore Up Your Finances

Start by reducing your debt as much as possible, particularly any accounts exposed to a variable interest rate. The interest on credit cards and home equity lines of credit have a habit of increasing when you can least afford it. If you have a variable rate mortgage you might want to refinance at today’s low fixed mortgage rates so your monthly payments do not increase. One way to generate a robust savings fund is to temporarily suspend contributions to a retirement plan and save that money in a readily available account.

Minimize Household Expenses

Most people have to cut back on household expenses during a recession, so you might as well start now to help you prepare. For example, consider trading in a gas-guzzling car for one with better gas mileage and lower monthly payments, or pull the plug on cable TV and switch to a streaming service. Deploying these cost-reduction strategies now not only reduces your expenses during a recession but will also help contribute to your savings fund.

In many areas of the country, real estate prices are at the top of the market. It might be worth considering selling your house now while you can get a good price. This will give you a pot of cash to sit on during the recession, which is especially helpful if you lose your job. In fact, after the sale you may consider renting until real estate prices drop and you can purchase another home at a good price – and maintain a healthy cache of savings. This strategy could also save you from raiding your investment portfolio for money – helping protect your future financial security.

Protect Your Investment Portfolio

Take a good look at your portfolio and give it a recession stress test. Consider reallocating some funds to options that tend to perform reliably during an economic decline, such as:

  • Government bonds
  • Treasury Inflation-Protected Securities (TIPS)
  • Corporate Inflation-Protected Securities (CIPS)
  • Consumer staples stocks
  • Well-established dividend stocks
  • Fixed Income Annuity (FIA)

Recognize that it is generally not a good idea to completely cash out of the market. The best way to accumulate wealth over time is to stay invested regardless of temporary economic declines. In fact, investors who maintained their market positions between 2007 and 2017 experienced an average 240 percent growth rate.

Once the recession has ended, think about rebalancing your portfolio to realign its strategic asset allocation with your investment objectives and timeline. This allows you to cash in on outperforming assets and buy into depressed securities that could be poised for post-recession growth.

LIFO Versus FIFO and How Each Method Values Inventory

3 min read

LIFO Versus FIFOAs the name implies, First-In, First-Out (FIFO) is a way for companies to value their inventory. The first items put into inventory or produced by the company are accordingly the first taken out of inventory or transferred to customers and therefore expensed. When it comes to accounting for acquisition and/or production costs, initial and earlier costs are the first to be expensed, with more recent costs staying on the balance sheet to be expensed later.

Assume a company already has 200 widgets costing $4/widget. From there, the company increased its inventory at three more times during a selected accounting period. Three hypothetical, additional purchases include:

200 widgets @ $6/widget

200 widgets @ $7/widget

200 widgets @ $8/widget

If the company had 500 widgets purchased, there would be different considerations be it FIFO or LIFO. First, we’ll discuss FIFO.

For the 500 widgets sold to customers, the FIFO’s Cost of Goods Sold (COGS) (assuming there are no additional inputs that would increase the COGS for simplicity sake) would be $2,700.

This calculation will look at how COGS works for FIFO:

200 initial widgets costing $4/widget = $800 in COGS  

200 widgets from the first additional purchase, costing $6/widget = $1,200 in COGS

100 widgets from the second additional purchase, costing $7/widget = $700 in COGS

For a total of $2,700 in COGS

Assuming there were no purchases during the selected accounting period, there would be 300 widgets remaining in inventory, or $3,000 in inventory costs. The inventory would show up on the balance sheet, according to the following calculation:

200 widgets @ $7/widget = $1,400 in inventory

200 widgets @ $8/widget = $1,600 in inventory

Now this is compared to LIFO, or Last-In, First-Out, which accounts for expenses by looking at most recent costs first. With the same company selling the same 500 widgets in the same accounting time-frame, but expensing their most recent 500 widgets first, here is the rundown:

200 widgets @ $8/widget = $1,600 in COGS

200 widgets @ $7/widget = $1,400 in COGS

100 widgets @ $6/widget = $600 in COGS

For a total of $3,600 expensed

The inventory would be left as the following:

100 widgets @ $6/widget = $600

200 widgets @ $4/widget = $800

For a total of $1,400 in remaining inventory.

Considerations Between LIFO and FIFO

One important consideration when choosing between LIFO or FIFO is that more likely than not input costs rise over time. Therefore, valuations can change based on the type of method.

Looking at the LIFO method, taking out inventory that’s been produced most recently does not always reflect market prices of the remaining inventory, especially if remaining stock is a few years old. Along with Costs of Goods Sold lowering net income, if older inventory is obsolete and it can’t be sold, it’ll render the inventory’s value far below market prices.

When it comes to the FIFO method, you get a better indication of the remaining inventory’s value. However, using this method increases a business’ net income since remaining inventory can be older and is valued by the Cost of Goods Sold. Similarly, if net income increases, there’s also a good chance of greater tax obligations for the company.

These scenarios account for rising prices. However, if prices are falling, then these scenarios would be reversed.

Fighting Foreign Terrorism on Homeland Soil, Increased Protections for Clean Water and Low-Income Veterans, and New Appropriations for FY2020

4 min read

Fighting Foreign Terrorism on Homeland Soil, Increased Protections for Clean Water and Low-Income Veterans, and New Appropriations for FY2020Terrorist and Foreign Fighter Travel Exercise Act of 2019 (HR 1590) – This bill promotes the identification and determent of terrorist activity from reaching the homeland, and enhances the United States government’s ability to respond to terrorism, including emerging threats. Specifically, the legislation requires the Department of Homeland Security to develop and conduct exercises related to foreign terrorism, including the National Incident Management System, National Response Plan, and other related plans and strategies. The legislation was introduced on March 7 by Rep. Michael Guest (R-MS). The president signed the bill into law on Oct. 9.

Alaska Remote Generator Reliability and Protection Act (S 163) – This bill is designed to prevent catastrophic failure or shutdown of remote diesel power engines due to emission control devices in remote areas of Alaska. It instructs the Environmental Protection Agency (EPA) to revise particulate matter emissions standards for nonemergency stationary diesel engines, and to report on methods for assisting these areas in meeting specified energy needs. The legislation was introduced by Rep. Dan Sullivan (R-AK) on Jan. 16 and signed into law by the president on Oct. 4.

A bill to permit States to transfer certain funds from the clean water revolving fund of a State to the drinking water revolving fund of the State in certain circumstances, and for other purposes (S 1689) – Introduced on May 23 by Rep. Cory Booker (D-NJ), this legislation was enacted on Oct. 4. The bill empowers states with the ability to transfer up to 5 percent of federal grant funds from its clean water fund to its drinking water fund to help address any threats to public health resulting from increased exposure to lead in drinking water. This reallocation is available for only one year.

Autism Collaboration, Accountability, Research, Education and Support Act of 2019 (HR 1058) – This legislation reauthorizes the previous Autism CARES Act of 2014 to expand government programs to include older people with autism who are often misdiagnosed and underdiagnosed. The bill allocates $1.8 billion in funding for autism programs to the Centers for Disease Control and Prevention, National Institutes of Health and the Health Resources & Services Administration. The legislation was sponsored by Rep. Chris Smith (R-NJ). It was introduced on Feb. 7 and signed into law by the president on Sept. 30.

Department of Veterans Affairs Expiring Authorities Act of 2019 (HR 4285) – This legislation reauthorizes funding for programs and services at the Veterans Administration, which were set to expire at the end of the fiscal year on Sept. 30. The bill extends funding for two specific programs. 1.) Keeping Our Commitment to Overseas Veterans Act of 2019, to keep the VA Regional Office and Outpatient Clinic in Manila, Philippines, open for business through Sept. 30, 2020. This clinic provides healthcare, benefits and services to thousands of U.S. veterans living in the Philippines. 2.) Supportive Services for Veteran Families program (through Sept. 30, 2021), which provides grants for supportive services to assist very low-income veterans and their families who are either residing in permanent housing or transitioning from homelessness. The bill was introduced on Sept. 11 by Rep. Anthony Brindisi (D-NY) and was signed into law by the president on Sept. 30.

Continuing Appropriations Act, 2020, and Health Extenders Act of 2019 (HR 4378) – Known as a continuing resolution (CR), this bill prevents a government shutdown by continuing fiscal year 2020 appropriations to federal agencies through Nov. 21. The bill was introduced by Rep. Nita Lowey (D-NY) on Sept. 18 and signed into law on Sept. 27.

National Defense Authorization Act for Fiscal Year 2020 (S 1790) – Introduced on June 11 by Rep. Jim Inhofe (R-OK), this is an original bill that authorizes U.S. Military appropriations for fiscal year 2020 for the Department of Defense, military construction and Department of Energy defense activities. The legislation both authorizes appropriations and sets forth policies, requirements and limitations for how funds are used. The legislation was passed by Congress on Sept. 17 and is currently awaiting signature by the president.

Tax Changes 2019

4 min read

Tax Changes 2019With the start of the fourth quarter of 2019 underway, it’s time to see what the Internal Revenue Service (IRS) will expect of filers for their 2019 taxes. The following are a list of major changes that filers need to be aware of:

1. Removal of the Affordable Care Act’s (ACA) Individual Mandate Penalty

With the passage of the Tax Cuts and Jobs Act (TCJA), filers and households who failed to carry adequate health insurance according to the ACA’s minimum coverage requirements will no longer have to pay the penalty on their 2019 taxes. This is because the TCJA lowered the penalty to zero dollars permanently. In previous years, households not meeting ACA health insurance requirements were mandated to pay either 2.5 percent of household income or $347.50 per child and $695 per adult, up to $2,085.

2. Greater Medical Expense Deduction Requirements

2019 filers are only able to deduct out-of-pocket medical expenses that exceed 10 percent of their adjusted gross income (AGI). The threshold was lowered to 7.5 percent for the 2017 and 2018 tax years by the TCJA, but will revert to the original 10 percent threshold in 2019.  

3. Changes to Treatment of Alimony

The TCJA removed the ability for those paying alimony to their former spouse to deduct these payments for the 2019 tax year. The IRS also removed deductibility for alimony or separate maintenance payments for divorce or separation agreements signed off after Dec. 31, 2018. If a divorce or separation agreement that provides for alimony or separate maintenance payments was agreed to before Dec. 31, 2018, and is then modified after Dec. 31, 2018, such payments lose deductibility. Former spouses receiving alimony or separate maintenance payments from an agreement created or modified after Dec. 31, 2018, are not required to report such payments on their tax return.  

4. Contribution Limits Raised for Retirement Accounts

Those with 401(k), almost all 457 plans, the federal government’s Thrift Savings Plan and 403(b) account plans can contribute $19,000 in 2019, an increase of $500 from 2018’s $18,500 limit. Taxpayers 50 and older can still contribute another $6,000 for 2019, a catch-up contribution. Taxpayers with Individual Retirement Accounts (IRAs) can contribute $6,000 in 2019, $500 more than 2018’s $5,500 limit. Those 50 years or older can add another $1,000 to their IRA accounts in 2019. The increase in IRA contribution limits is the first increase since 2013.     

5. Increased HSA Contribution Limits

Health Savings Accounts’ contribution limits for 2019 have increased, according to the IRS. For an individual or a self-only High Deductible Health Plan, 2019’s contribution limit is raised to $3,500, or $50 more than 2018’s contribution limit of $3,450. For a family high deductible health plan, 2019’s contribution limit is raised to $7,000, $100 more than 2018’s contribution limit of $6,900. The catch-up contribution is an extra $1,000 for account holders age 55 or older.

6. Increasing Standard Deduction Allowances

For those choosing not to itemize their deductions in 2019, the IRS has increased standard deduction amounts for filers. For single filers and those filing as married filing separately, the standard deduction increased by $200, to $12,200. For those filing as head of household, the standard deduction increased by $350, to $18,350. For those choosing to file married filing jointly, there’s an increased allowance of $400, to $24,400.

7. 2019 Income Brackets

With the new tax year comes higher income tax brackets. Depending on how much taxpayers made in 2019, the following are the new income level brackets:

  • 37 percent: Individual single taxpayers making more than $510,300 or married couples filing jointly making $612,350.
  • 35 percent: Individuals making more than $204,100, or $408,200 for married couples filing jointly.
  • 32 percent: Individuals making more than $160,725, or $321,450 for married couples filing jointly.
  • 24 percent: Individuals making more than $84,200, or $168,400 for married couples filing jointly.
  • 22 percent: Individuals making more than $39,475, or $78,950 for married couples filing jointly.
  • 12 percent: Individuals making more than $9,700, or $19,400 for married couples filing jointly.
  • 10 percent: Individuals making up to $9,700, or $19,400 for married couples filing jointly.

What is VPN and Why Do You Need It?

5 min read

What is VPN and Why Do You Need It?The rise in the number of data breaches reported every other day has become a major concern – even to the ordinary internet user. As a result, we have all become aware of the need to maintain privacy while online. One of the measures promising to keep you safe on the internet is the use of a virtual private network (VPN). But before rushing to install one of the many VPNs available, it’s important to understand what a VPN is, why you need it, if it is foolproof and other ways to stay safe on the internet.

What is a VPN?

The VPN service lets you browse the internet privately by masking your IP address – the unique address identifying your device on the web. It also encrypts your internet traffic as it passes through a secure tunnel created from your device to a remote server. Your data appears to be coming from the remote server. This means that a VPN can hide your geographical location, personal data, web browsing history, spending habits and mobile phone activities.

Initially, VPNs were built for business environments to help a business operate a secure network connection. But with today’s cyber security concerns, they have become popular and more widespread.

Why Would You Need to Use a VPN?

There are numerous reasons why a person would need to enlist the services of a VPN company. Here are some situations that require the use of a VPN:

  • Since Congress cleared the way for ISPs to sell users’ browsing history without their consent, privacy is a thing of the past. This means that an internet service provider can sell your browsing data to third parties. A VPN can mask your IP address from your service provider.
  • The encryption offered by VPNs guards against digital threats, hacking, malware attacks and identify theft.
  • VPNs help keep hackers and marketers from tracking your movement online.
  • If you travel to a country where you can’t access some sites, for instance in China where Facebook is not allowed, a VPN will help you stay in touch on any of these blocked sites.
  • When using public Wi-Fi in airports or any other place that offers free Wi-Fi, a VPN comes in handy.
  • Employers who have workers going out for field work or working remotely can set up a VPN to help access company networks securely.
  • Used by whistleblowers, law enforcement agencies, investigative journalists and others who want to shield their identities or location.
  • For user with Voice over IP (VOIP) for making calls, a VPN will help prevent your phone conversations from being tracked or intercepted.
  • When you need to visit questionable websites but want to be safe. For instance, when your identity is stolen and you want to find the website selling your data.

The Bad Side of Using a VPN

Although a VPN service may sound perfect for internet security, it also has some disadvantages. Keep in mind that your internet service provider may no longer have your data, but the VPN provider now has access to it.

A VPN is not 100 percent guaranteed. The VPN provider could be disconnected or there could be a Domain Name Server (DNS) leak. Even with advanced features such as kill switch, VPN data can still leak through software, hardware or other means.

If you fail to use the right VPN, you’ll be in more problems than you are running from. Some VPNs (especially the free services) keep log files. There is no telling where your private data will end up. They could end up selling your data to third parties or supplying your information to the government.

These services also slow down your internet access speed due to the process of data encryption and tunneling network traffic to a remote server that is used to connect you to the internet.

It is not possible to know if the VPN provider commits to what they promise. The only way to find out is when things go wrong. They may promise not to keep logs, but if you fail to read the privacy policy of a VPN company, you will not know if they retain customer data.

A VPN doesn’t protect you from viruses and malware.

Other Security Measures

Since a VPN is not foolproof, it is important that you also observe other security measures to protect your privacy.

It is crucial that you practice digital privacy hygiene. In other words, when online you should limit the amount of personal information that you share. This will help minimize your digital footprint.

Investing in quality antivirus software will protect your device from malware and viruses.

Regularly check if your data has been compromised. Check for strange activity in your emails, social media accounts and even in your bank account.

Use strong passwords or other security features such as biometrics to secure your accounts.

Final Word

You may come across many different types of products and services that promise to keep you safe on the internet. The bottom line is, it’s up to you to protect yourself. A combination of several security measures is a good starting point – the use of a VPN, strong passwords and antivirus programs.

How Parents Can Save Money for College-Bound Kids

4 min read

How Parents Can Save Money for College-Bound Kids, College SavingsNo matter how old your children are, it’s always a good idea to start saving for college as soon as possible. (Yes, even when they’re still in diapers.) This might sound overwhelming, especially if you haven’t started, but take heart, it’s never too late. Here are a few things to do before you start saving, as well as smart ways to gather the resources you’ll need.

Figure Out How Much College Will Cost

Is your child interested in a state school? A small private university? Or a trade school? Create a list of schools, do the math and figure out a ballpark number of how much you’ll need. When you do this, you can calculate how much per month or year you need to set aside. The truth is that state schools are generally a lot less expensive. However, because private universities rely heavily on private donations, they also have a healthy number of scholarships available. If your child is more interested in a trade school, these can be even more affordable, depending on what they want to study.

Create a Long-Term Spreadsheet for All Your Expenses

You may want your children to go to college, but that’s not the only goal for a family. There’s saving for your own retirement, paying your mortgage and credit card bills. You’ll also want to save for emergencies. A good rule of thumb is to save up for three to six months of expenses. All of this might sound tough, but if you create a priority list, it’s absolutely possible.

Start an Education Savings Account (ESA)

Also known as an Education IRA, this fund allows you to save $2,000 (after taxes) per child, per year. And here’s the best part: it grows tax-free! You’ll also most likely earn a higher rate of return than you would with a regular savings account. But know this: you must be within the income limit to qualify; contributions are limited to $2,000 a year; and the money must be used by the time your child is 30.

Consider a 529 Plan

If the ESA sounds too limiting or you don’t meet the income limits, then a 529 Plan is a great option. You can contribute up to $300,000, but this varies by state. What’s more, most of the time there aren’t any income limits or restrictions based on age. And again, the cherry on top: it grows tax-free. But something to be mindful of when you’re shopping for a plan is whether you want to choose the funds you invest in through the account. Some 529s offer preselected funds or automatically change your investments based on the age of your child. Also, restrictions may apply if you choose to transfer your 529 Plan to another child.

Look into a UTMA or UGMA

Otherwise known as Uniform Transfer/Gift to Minors Act, this option is different because it is not created just for college savings. The account will be set up in your child’s name, but it will be controlled by a custodian, which is usually a parent or grandparent. When your child turns 21, the control of the account transfers to the child. While there are tax advantages for you, a significant downside is that your child can use the funds any way she wants. (College or trip to Vegas?)

Saving for college, especially these days, might seem daunting. But it’s not impossible. In fact, if you chart a course and stick to it, you’ll be in good shape when those little ones of yours become all grown up.

SOURCES

https://www.daveramsey.com/blog/saving-for-college-is-easier-than-you-think

https://www.daveramsey.com/dave-ramsey-7-baby-steps?int_cmpgn=no_campaign&int_dept=dr_blog_bu&int_lctn=Blog-Text_Link&int_fmt=text&int_dscpn=saving_for_college_blog-inline_link_baby_step_5#baby_step_5