My Personal Finance Blog

For 2011 Federal tax return for unemployed, there are a lot tax rebates that are available to lower tax liability.

Here are 3 of the important ones available, so as to help you getting a good value of tax refund from the 2011 Federal taxes:

1. COBRA insurance – It allows unemployed individuals and their families to receive health insurance for up to 18 months after employment is terminated. Before the act, individuals had to pay the full premium, which was generally pretty expensive. With the new act, individuals are only responsible for 35 percent of the premium in 2011 for up to nine months, and the employer is responsible for the other 65 percent.

The employer is then entitled to a payroll income tax credit for that 65 percent. That reduces the tax liability for 2011 Federal income return.

2. Retirement account distributions – Support for many unemployed taxpayers in 2011 is their retirement account. Many of these plans are subject to a 10% penalty on early withdrawals, as well as the distribution being taxable when received. However there are some exceptions, one of them is -

2011 IRA Federal income that are used to pay qualified higher education expenses of the taxpayer, the spouse, or any child or grandchild of the taxpayer or the taxpayer’s spouse.

3. 2011 Job Hunting Expenses – Several Job-hunting expenses like Employment agency fees, job counseling and referral services,classified ads,travel for interviews,costs of resumes,telephone/Internet costs are deductible to the extent they exceed 2% of adjusted gross 2011 Federal income.

These are top 3 tax breaks that should be utilized when filing 2011 Federal Tax return for unemployed.

The best investment strategies for 2011 and beyond will reflect the new realities in the world of investments: better safe than sorry. Diversification is the key to good investment strategies, but as the future unfolds finding the best alternatives in each investment class could get a bit tricky. Here’s a basic guide geared to making life easier for average investors, which includes most of us.

The challenge facing investors today: how to put together the best investment strategies to make your money can grow without too much risk. Stock funds and bond funds are always part of the mix for most folks, and so are good safe investments. Looking down the road, there could be more trouble in the world’s debt markets; and America’s plans to stimulate a luke-warm economy by lowering interest rates to new lows might not have the intended effect. So, let’s look at how to stay out of harm’s way in 2011 and beyond in case another shoe drops, starting with what are and what are not safe investments.

Going into 2011, bonds and bond funds were like magnets for people who wanted higher interest income in relatively safe investments. Compared to other alternatives investors got higher interest income, but many people don’t understand the safety issue. Truly safe investments are fixed in nature, pay interest, and do not fluctuate in value. Bonds have a fixed interest rate but fluctuate in value as they trade in the open market. Bond funds have worked well for average investors over the years as interest rates have fallen to historical lows. Don’t push your luck here.

The flip side: when interest rates and/or inflation heat up bond funds holding long term bonds in their portfolios will be anything but safe. They will lose significant value. Your best investment strategy here is to go with intermediate and short-term bond funds. You will make less in interest income, but these funds are definitely safer than long term funds. Money market funds are safe and will pay higher interest income as rates rise. There’s only one problem with them for 2011. Unless or until interest rates take off, they are paying next to nothing.

The real challenge until rates move up is in finding good safe investments that pay a respectable rate of interest… without locking in a rate for too long. No one could have predicted mortgage rates at less than 5% or 5-yr CDs at less than 2%, but it happened. Your best safe investments might not be found in mutual funds in 2011, but you may be overlooking some options elsewhere. If you are in a retirement plan (like 401k) you may have a fixed or stable account available. If you own a retirement annuity or universal life policy it may have a guaranteed minimum interest rate. In either case the interest rate could be quite attractive relative to other options.

Stocks and bonds are still the cornerstones of a good investment strategy. And for the vast majority of people mutual funds are the best way to invest in both. We’ve discussed how to move toward a safe investment strategy in bond funds. With stock funds we can do this in two different ways: by increasing diversification and by favoring conservative funds with a good history of paying dividends. We’ll start with the latter.

When the economy and/or optimism are growing, growth and small-company stock funds are often the best investment. These funds can grow dramatically in value as stock prices run up, but they rarely pay much in the form of dividends. In times of high uncertainty equity-income funds that invest in high-quality dividend paying stocks can be a step in the safe direction. If the market goes south they should be less volatile on the down side, and the dividends they pay can cushion the blow somewhat.

The best investment strategies for stock (equity) funds in 2011 and beyond will focus on increasing your scope of diversification. Too many Americans own general diversified equity funds that only invest in U.S. stocks, and ignore the rest. One of the best ways to get more diversification is with international and global equity funds. Another way is to add specialty stock funds to your portfolio. Gold funds have been one of the best investments for several years, but history shows that gold can get real cold real quick. Don’t put more than 5% of your investment dollars in gold funds. Consider natural resources, real estate, and basic materials specialty funds as well to add even more diversification.

The best safe investment strategies going forward will focus on reducing risk in the stocks and bonds department, while getting the best rates available on the truly safe investments in your portfolio. With increased diversification you can lower your overall risk and still make your money grow over the longer term. If another financial crisis rears its ugly head… you now have investment strategies geared to the safe side to keep you out of major trouble in 2011 and beyond.

The profession of being a retirement income specialist is a rewarding and steady job. There are many advantages to becoming a retirement income specialist; helping others and finding challenges and enjoyment in your work are some of the main positives. To become a retirement income specialist, one must usually enroll in a courses or programs to meet certain requirements and to learn the ins and outs of the field. One specific topic that a course might cover is Roth IRAs, and in particular: Conversions.

Roth IRAs are flexible investments (usually with more options than other traditional IRAs). There are many laws governing the implementation of these Roth IRAs, so a retirement income specialist must always stay up to date with the current laws. Starting January 1st, 2010, an income limit that previously prevented many Americans from converting their traditional IRAs into Roth IRAs disappeared. If your client’s household income is more than $100,000 (the previous limit), converting to a Roth will be an option for the first time. Married couples filing separate tax returns also will now be able to convert. Listed below are strategies for the advisor’s consideration.

Pay taxes on converted amount

You have to pay income taxes when you convert. For example, a client in the 28% tax bracket will owe $28,000 (plus state income taxes) on a $100,000 conversion. Converting may benefit the client in the long run–if a higher tax rate is expected during retirement. If, like most people, the client is not sure about his future tax rate, consider converting just part of his traditional IRA to a Roth. Doing so gives “tax diversification” because some money would be in a Roth and some still in a traditional IRA.

Consider source used for taxes

Stick with the traditional IRA if the client does not have money available outside of the IRA to pay conversion taxes. Pulling money out of an IRA to cover taxes can defeat the purpose of making the switch in the first place. By reducing retirement savings, clients reduce the ability to generate future tax-free earnings on money invested in the Roth. If under age 59½, amounts pulled out of a traditional IRA to cover taxes may be subject to a 10% IRS penalty.

Two conversion strategies

If the client does not have enough money to pay taxes on all converted assets, or if doing so would push her into a higher tax bracket, consider converting just part of the traditional IRA assets. A special option applies only to 2010 conversions; the taxpayer can elect to evenly divide the tax liability over 2011 and 2012. If tax rates go up in 2011, this split-year strategy may not be a good idea.

Longer time horizons are better

A conversion may not be wise for clients who expect to withdraw money within five years. Generally speaking, the client will only be able to withdraw earnings from the account without taxes and penalties if age 59½ or older and a Roth IRA has been held for at least five years. Withdrawals of the original conversion amount are always tax-free; however a 10% early penalty may still apply. The client must be either at least age 59½ or wait at five years after the conversion to make the withdrawal in order to avoid the 10% penalty.

Heirs can benefit

During lifetime, the Roth IRA client is not subject to RMDs, meaning the entire amount can be left to someone else. A beneficiary who inherits a Roth IRA may be subject to RMDs, but withdraw the original conversion tax-free. Earnings are also tax-free, provided the Roth IRA meets the five-year holding requirement.

It’s difficult to tell what we’re going to be satisfied with after our days of work have finished.
Have you ever actually sat and pondered retirement? What will you do on a day-to-day basis once you’re finally finished with your career? Will you go sailing on that dream yacht it took you twenty years to pay off? Will you venture all over the United States in search of quaint towns and antique shops? Or maybe you’re more interested in just kicking back at the old homestead and reading the paper. This routine certainly varies from person to person.
Fortunately if we can’t seem to come up with any wonderful ideas, there are always crafts for the elderly available.

I often wondered why my grandfather had retired in his sixties. Oh, don’t get me wrong; I know that most individuals tend to retire around age sixty two or so, but he just seemed too rambunctious. He was always so full of energy. I couldn’t really see him just hanging around the house all day. I knew that he would need some entertaining crafts for the elderly to keep him busy. In no time at all, he was painting like a mad man. I was amazed at how divine his technique became over the next few months. Anything with wildlife or outdoor settings was his forte. Now, this is definitely more healthy that those retired folks who mow their lawns on a daily basis. I often wonder about their level of sanity.
Have you ever come across crafts for the elderly? Now, keep in mind that these can range from any variety of things. It all truly depends on what you’re interested in. Do you like building bird houses or possible sketching and painting? These are fascinating crafts for the elderly.

Do you have a home computer available?

Are you searching high and low for decent crafts for the elderly? Hey, it’s time to get in the know, people. All that you can imagine regarding crafts for the elderly can be spotted in cyberspace. Not only can you find out what all is available online, but you can actually learn how to do several crafts for the elderly just by sitting at your computer. Sort through a number of web pages that specialize in crafts for the elderly. Find that ideal hobby for your grandparents, parents, or even yourself. The World-Wide-Web makes it a synch.

It can be a very overwhelming experience for many people to retire from their jobs. Although, they do not have to shoulder the official responsibilities any more, they will continue to need money for their survival. While most people can take retirement as part and parcel with life itself, many people sulk at the idea of retiring. For them, retirement marks the end of an important phase in their life. They may resent the idea of losing their power and taking a backseat in their life.
Generally, it is customary in most organizations to give a farewell party to the retirees. It provides a platform for the retirees to deliver a retirement speech. Typically, the retirees recall all their unforgettable memories and experiences within the organization.

The retirees usually thank all the people in the organization for their invaluable support and assistance. They may also particularly mention names of individuals who have played a significant role in guiding them and shaping their careers. The retirees may also use this opportunity to apologize and make up with people to whom they might have been rather harsh during their tenure. They may clarify that they may have been strict with certain people only to maintain the discipline in the organization and to keep up its image and not due to any personal grudge or rivalry. Their acts were not directed towards hurting or insulting anybody. Retirees may also add how badly they are going to miss their colleagues and long to be there with them.

Not many people are blessed with the art of conveying their emotions effectively. Such people can look up for a suitable retirement speech on various websites on the Internet. Various service providers can generate instant speeches that are apt for a particular post or profession. Individuals can provide the necessary details to them and receive a customized speech. They may add their own experiences to it to give it a personal touch.

Other colleagues can also give retirement speech in honor of the retiring person. They may also include special instances and fond memories in their speech to emphasize how they the retiree touched their lives.