John J. Bowman Jr Accountant, John J. Bowman Jr. Accountant, personal finance

Safest Investments For 2022

Investing is not a straightforward process. It’s hard to know how to make the right decisions when you don’t know the difference between one asset class and another. There are so many factors that need to be considered when investing to do it well, factors such as risk-taking, diversification, market volatility, and economic trends.

Investing in Cryptocurrency

In 2021, the financial world changed dramatically, Cryptocurrency was hailed as the new way to build wealth. It is now used in a growing number of financial transactions. For instance, it’s even possible to buy a Tesla car using Bitcoin.

Cryptocurrency is a type of digital currency that uses encryption to regulate its creation and transactions. It’s a decentralized, peer-to-peer system that allows for transferring assets securely without an intermediary. It’s become increasingly common for people to use cryptocurrency to invest, trade or even pay for goods and services online.

Unfortunately, cryptocurrency may not be a safe investment. The IRS is expecting to seize cryptocurrency in 2022, billions of dollars’ worth of it. This is because the anonymous nature of cryptocurrency transactions makes it useful for criminals to commit various financial crimes, from money laundering to tax fraud.

Stay Safe with Traditional Investments in 2022

Treasuries are one of the most stable investments available. They are also the safest option because of government backing. Since they are supported by the money of U.S. taxpayers, people feel more confident with Treasuries than any other type of investment.

Bonds are another safe investment. They provide a predictable income stream. They are usually issued by governments, corporations, municipalities, and other entities that are looking for an alternative to bank loans. Investing in bonds is a safer bet most other financial markets because the issuer is responsible for the interest payments.

Investing in stocks or mutual funds can be a risky venture if you are not prepared. However, if you know how to invest and what you are investing in, the risk is manageable. The advantage of stocks is that you can get a good return on your investment.

When Investing Avoid Market Hype

Market hype can lead to making all the wrong investments for all the right reasons. To avoid getting hoodwinked by clever marketing promotions, there are a few basic rules for investing that you should learn. They can help you avoid investing when it is not worth it. You can discover these rules by educating yourself on how to make sound investment decisions.

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A Beginner’s Guide to Mutual Funds

Mutual funds are types of investments that can be very useful for investors. If you’re already investing in things like the stock market and real estate, then you might be looking for something a bit different. There are many reasons why mutual funds might be the perfect next investment choice for you. Read this short beginner’s guide to mutual funds so that you can get the information that you need. 

There Are Usually Minimum Investment Requirements

Typically, mutual funds are going to have minimum investment requirements that you will need to meet. For instance, a mutual fund might have a $4,000 minimum investment, but some might have lower minimum requirements like $2,500. The amount that you will be required to invest at minimum to get started will differ depending on the mutual fund that you’re looking into. It’s always worth considering the terms of the mutual fund before moving forward. 

Mutual Funds Can Be Very Hands-Off

One great thing about mutual funds is that they can be very hands-off investments. You can set it up so that investments will be made automatically. This allows you to just sit back and watch your investment fund work to grow your wealth over time. If you’re looking for an easy type of investment that won’t take up a lot of your time, then mutual funds will be very appealing to you. 

There Are Different Types of Mutual Funds

The first thing that you should know is that there are different types of mutual funds out there that you can choose to invest in. Many of the most popular mutual funds are known as bond funds, and these funds are mostly invested in stocks. Bond funds are also widely utilized, and they are focused primarily on bond investments. Money market funds are also available as a low-risk investment in short-term securities. 

Mutual Funds Work Well with Your IRA

Of course, you need to consider the taxes on your earnings from the mutual fund investment. Knowing this, it’s good to consider using an IRA along with your mutual fund since you can enjoy certain tax advantages. If you wish to keep as much of your profits as possible, then it’s worth setting up an IRA before you go through with mutual fund investment. If you’re serious about investing, then you likely already have an IRA.

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IRS Sees Billions in Crypto Seizures

One of the major issues that have been plaguing cryptocurrency traders and holders is the ever-growing number of government seizures. From Japan to the United States, there have been many instances where law enforcement agencies have seized cryptocurrency holdings – whether it be from individuals or businesses. One agency in particular that has seen a significant amount of success in these endeavors is IRS agents who have made billions by seizing crypto assets. In this post, we will outline 5 potential reasons why IRS sees billions in crypto seizures.

Cracking Down on Illegal Transactions and Money Laundering

One of the main reasons why the IRS is cracking down on what it sees as illegal transactions and money laundering is because most cryptocurrencies were designed to bypass third-party influence, thus making them ideal for criminal activities such as tax evasion and money laundering. When we look at Bitcoin in particular – the most popular cryptocurrency today – it was created in 2008 in order to eliminate the need for any bank or government involvement during transactions.

Lack of Paper Trails

Another motivator behind IRS seizing cryptocurrencies is the absence of a paper trail. Unlike when dealing with fiat currencies (dollars, euros, pounds, etc.), there is no physical proof of your ownership of the cryptocurrency. This means that when you sell or trade your digital currency, there is no seller or buyer information to prove that the transaction actually happened. Essentially, this provides an opportunity for anyone to sell their coins without it being associated with them.

Lack of Transparency

There’s also a lack of transparency involved in Bitcoin transactions. Since Bitcoin was designed for anonymity, it’s virtually impossible to determine the identity of the sender and receiver just by looking at wallets. This makes it extremely tough to prove that cryptocurrency was received illegally or involved in criminal activity.

Fear of Losing Out

Another important aspect is that Bitcoin has become incredibly popular recently, which means there is more and more competition among traders and investors to sell their Bitcoins. This has led some people to avoid reporting their cryptocurrency activity, while others have even resorted to illegal measures in order to avoid losing out on huge profits.

Fear of Doing the Wrong Thing

Finally, another reason why IRS is seeing so much success with seizing cryptocurrencies is that most people don’t know whether they should report their cryptocurrency transactions to the IRS or not. This is one of the main reasons why we’ve seen a significant increase in tax evasion and money laundering recently.

The Future of Cryptocurrency

Even with all these obstacles, there’s no doubt that cryptocurrencies like Bitcoin and Ripple will continue to grow and even replace fiat currencies in the near future. Many European countries such as Sweden and Russia have started embracing digital currency payments, which shows that many governments are willing to explore new technologies like cryptocurrency.

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Improve Your Results with These Investment Tips

Investing money is something that you need to focus on if you want to get good results. You can’t expect to turn a profit if you just make moves without thinking them through. Look at these investment tips that can help you to improve your results over time. You should be able to put yourself in a much better financial position if you follow the advice well. 

Invest in Stocks That You Know

Investing in stocks that you know is generally going to be better than taking a gamble on an unknown entity. If you invest in companies that you know nothing about, then you’ll have no way of knowing whether you’re making a good move. Also, it’s important to know about the types of stocks that you’re investing in. If you have no knowledge of a specific industry, then you might want to learn about it before you start investing money. 

Try to Diversify

Diversifying isn’t just some fancy term that people throw around in the investment world. You should try to diversify your investments so that you can lower the risk of having your investments wiped out. If all of your eggs are in one basket, then a market crash or dip in that area could ruin you financially. Having a diverse portfolio spreads things out so that you won’t be hurt so bad by market problems in a specific area. 

Learn When to Sell a Stock

Knowing when to sell a stock is a skill that you will want to hone over time. Sometimes getting greedy and hanging onto a stock for too long can lead to ample amounts of regret. You don’t want to hang onto a stock so long that it will start to lose value again. If you see a good opportunity to make some money on your investment, then it might be wise to take it. 

Avoid Emotional Attachment

Emotional attachment is something that will hold you back in the investment world. This is true whether you’re investing in stocks or real estate. Don’t let your emotions sway your judgment when you’re trying to make investment decisions. You should invest money based on data and trying to turn a profit rather than being emotionally invested in something.

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Winter Home Maintenance Tips

With colder weather on the way, it’s imperative for homeowners to ensure their homes are in tip-top shape before the worst of winter hits. Here are some of the top 3 winter home maintenance tips.

1. Clean Up Your Foliage

The number one issues with having trees or shrubbery growing on a property are their potential for damage during harsh weather or if they become weighed down by things like snow. To mitigate the damage to a home or property, it’s a good idea to trim back the dead or overgrown trees and shrubs. Making these things more manageable will clean up the area around a home that could pose a danger.

Additionally, cleaning up the fallen leaves or branches from a home’s gutters or downspouts is equally as essential as trimming the source of the cloggers.

2. Check Your Home for Weatherproofing

Performing a routine check on a home’s roof or windows could end up saving a homeowner some of the cost of keeping a house warm. Whether a homeowner employs the help of a roofing company to do an inspection or they climb up a ladder to do it themselves, checking a home’s roof for broken or missing shingles could mean the difference between a frozen puddle in the kitchen and a warm household.

In addition to the roof, checking or re-sealing the windows will assist in keeping the cold out and the heat in once those frozen winter months settle in.

3. Pumps & Pipes

Testing and unclogging a sump pump if a home has one could prevent a flooding disaster before it happens. Every homeowner with a sump pump would be wise to check it before the frozen months set in.

Additionally, freeze-proofing pipes could mean the difference between burst pipes and warm running water during the coldest weather. Whether a homeowner treats this by running a trickle of water overnight or installing insulation around the pipes is largely subjective but highly recommended.

Keeping a Home Safe

Winter is coming, and with it, homeowners need to gear up to maintain their homes and ensure the safety of everything inside. Some of the best winter home maintenance tips are everyday things that make a big difference.

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California and Tennessee to Receive Tax Relief Following Disasters

California and Tennessee have been plagued by natural disasters in recent weeks. Californians have been affected by massive wildfires, while Tennesseeans have struggled with storm damage. In light of this, the federal government is offering affected citizens some tax relief options.

California wildfire victims residing in the counties of Lassen, Placer, Plumas, or Nevada, have until November 15th, 2021 to file individual and business returns or payments. This includes quarterly tax payments, excise tax returns, and quarterly payroll. November 15th will also serve as the new deadline for those who had received an extension on their 2020 returns.

Penalties on payments that were due between July 14th and July 29th of 2021 will also be forgiven if the payments were made by July 29.

Tennessee residents or business owners who were impacted by storm damage in Houston, Dickson, Humphreys, or Hickman county also qualify for tax relief. Those who had received an extension to their 2020 returns will now have until January 3rd, 2022 to file. That is also the new deadline for the quarterly tax payments that would’ve normally been due in September of 2021.

Penalties on payments that were due between August 21st and September 7th of 2021 will be dropped if the payments were made by September 7th of 2021.

If you’re a victim of the California fires or Tennessee storms and you receive a notice from the IRS that you’re being penalized for late filing or late payment but you believe you qualify for the tax extensions, you can contact the number on the notice. Explain your situation and they’ll be able to help you determine if you are eligible and if you are, they can remove the penalty from your file.

The IRS is making every attempt to automatically identify taxpayers who reside in the areas covered by the disaster extensions. When they identify these people, they apply the filing and payment relief options to their accounts. This means, that if you live in the affected areas mentioned, you shouldn’t need to contact the IRS to receive your tax extension.

If however, you are a victim of the fires or storm damage that lives outside of the mentioned counties, you will need to contact the IRS at (866) 562-5227 to request the tax relief.

This article was originally published on JBowmanAccountant.net

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Tax Breaks for Homeowners

While there are many opportunities to create financial wealth and safety in America, few are as powerful as owning a home. Even with decades of mortgage payments, the relative size of those payments usually declines over time as wages rise but the payments stay flat. Also, home values tend to go up over time, representing another way to secure wealth in a home.

Once a mortgage is paid off, families own their own homes and just have to pay taxes and maintenance, seriously freeing their regular income from one of life’s biggest expenses. The advantages don’t stop there. Multiple law enforcement agencies and municipal governments have learned that crime goes way down in communities where at least a third of the residents own their homes as compared to renting.

Buying a home isn’t cheap. In fact, it’s often the biggest single expense most families will make in their lifetimes. Fortunately, there are many tax breaks homeowners can use to make things more affordable.

While there are many opportunities to create financial wealth and safety in America, few are as powerful as owning a home. Even with decades of mortgage payments, the relative size of those payments usually declines over time as wages rise but the payments stay flat. Also, home values tend to go up over time, representing another way to secure wealth in a home.

Once a mortgage is paid off, families own their own homes and just have to pay taxes and maintenance, seriously freeing their regular income from one of life’s biggest expenses. The advantages don’t stop there. Multiple law enforcement agencies and municipal governments have learned that crime goes way down in communities where at least a third of the residents own their homes as compared to renting.

Buying a home isn’t cheap. In fact, it’s often the biggest single expense most families will make in their lifetimes. Fortunately, there are many tax breaks homeowners can use to make things more affordable.

  1. Capital Gains: If you sell your home and profit from it, then capital gains taxes might apply. However, if it was your primary residence, you might be able to keep capital gains without them getting taxed.
  2. Discount Points: When you get a mortgage, you might get to buy discount points that lower the interest rate applied to the loan. Points you buy to lower the interest rate are tax-deductible.
  3. Home Equity Loan Interest: This is just like having a second mortgage. You can deduct the interest you pay on a home equity loan if you took the funds for home improvements.
  4. Home Office Costs: The actual details are up to the IRS on this one, but home office space might get you tax breaks.
  5. Mortgage Insurance: Also known as PMI or private mortgage insurance, it’s there to give your lender protection if you can’t keep up with mortgage payments. You can itemize the cost of this insurance.
  6. Mortgage Interest: The mortgage interest deduction lets you lower taxable income if you do an itemized deduction.
  7. Necessary Improvements: The scope of what is ‘necessary’ is up to the IRS, unfortunately, but certain improvements can qualify as tax deductions.
  8. Property Taxes: These are often applied at the state and municipal levels. Depending on how you file, you can deduct $5,000 to $10,000 from your federal taxes.

This article was originally published on JBowmanAccountant.net

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John J. Bowman Jr. Accountant, personal finance, Uncategorized

What To Know About Financing A Car

One of the first large purchases a person typically makes is a car. Although the process can seem a bit daunting, it is far less complicated than it seems. Once you have a basic understanding of what financing a car means, you will be far more capable of choosing the right option for you.

To get started, take a look at what financing a car means: put simply, you want to be a car, but you don’t have the money to pay for it in full. So instead, you finance the vehicle or pay the car off over time with either a loan or a lease. The most important thing to understand about financing is that along with the loan or lease comes interest rates, fees, and other costs, so although financing happens more often than not, it is more expensive to do so than to purchase the car outright.

Once you have determined that financing a car is your best option, it is time to look at whether you want to finance through a loan or a lease.

Loan v. Lease

There is a distinct difference between loaning and leasing: when you are financing a car with a loan, you are paying to own the vehicle, whereas if you are financing a car with a lease, you’re paying to use the car, not to own.

Financing a car through a loan consists of 3 factors: the loan amount, the annual percentage rate (APR) and the length of the loan. Use a calculator like THIS one to determine how various loan amounts, APRs and loan periods will affect your monthly payment. Other essential components to remember:

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4 Ways to Wisely Use Your Tax Refund

Now that tax season is fully underway, you may be thinking about what you want to do with your tax return when it comes in.  For some, it might go right into a savings account.  For others, it might be an opportunity to splurge on different items you’ve had your eye on.  A healthy balance between the two, is looking into some wiser ways you can utilize your refund.  If you’re waiting on your refund to come in, consider some of these great options to put it towards:

Contribute to Your Emergency Fund

You may have one already, and if you don’t, it might be a good time to consider starting one.  An emergency fund is a great tool to have in case you encounter an unfortunate major expense that you wouldn’t regularly have the funding for.  You can contribute to your emergency fund on a regular basis depending on your pay schedule. However, when your tax refund comes in, depending on the amount, you may be able to make a large contribution, and give yourself a better financial cushion in the event of an unexpected expense.

Invest in a Down Payment

You may be in the process of looking for a new home, or even a car.  Both of these purchases are likely to require some sort of down payment, especially if you want your monthly payments reduced as much as possible…

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Common Financial Mistakes Many People Make

Rarely, does someone have a perfect financial history.  Mistakes in finance are common and it’s likely that most people have experienced them at one point or another.  The important thing is to figure out how to correct them, as they can tend to pile up and create somewhat of financial hardship.  However, don’t panic; with the right tools, you can easily change your financial habits. The following tips are a great guide and provide insight into the many financial mistakes people tend to make.

Too Many Monthly Payments

You may not realize it, but your monthly payments tend to add up, quickly.  Many people are seeking the “better” things in life, so they’re willing to tack on monthly finance payments to acquire the things they desire.  And while the monthly payments may not seem like a big hit at the time, the more you have, the more they tend to add up. Additionally, it’s not uncommon for people to have monthly payments that are more on the unnecessary side.  Consider the gym, for example. While for some, a gym membership is a great investment, for others, it may just be a monthly bill that isn’t regularly utilized.  Consider where your bills each month are going, and see which ones are actually necessary.

High Credit Balances

While credit cards may seem like a great way to get what you need, without having to see your bank account take an immediate hit, they can do more harm than good if they aren’t used properly.  Think of a credit card as borrowed money; money that needs to be paid back, and should be paid back in full to avoid any further charges like interest and late fees. The days of cash only are gone for many people, as credit cards are a regular part of today’s society.  Utilize your credit cards to purchases that you know you’ll be able to pay in full and avoid using them for everyday purchases that will increase your balance quickly…

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