Monday, January 28, 2013

Important Updates on Payroll and Taxable Earnings







by Willie Thomas Butler



With the expiration of the Bush Era Tax Laws and the more recent Payroll Tax Holiday, everyone subject to Social Security payroll tax (or FICA), including most self-employed,  will return to the higher withholding  rate this week.   So here are some things to consider if you are paying this tax:

Payroll tax cut ends… And a New Rate begins. 

Workers who paid 4.2 percent of their income into the Social Security system in 2011 and 2012 will now resume contributing 6.2 percent of their earnings in 2013, up to the earnings tax cap of $113,700.  This means the average family with a $50,000 annual income will get around $960 less in take-home pay in 2013, unless the tax relief is extended.   However, that seems highly unlikely with Congress.

The payroll tax cap will also increase by $3,600, from $110,100 in 2012 to $113,700 in 2013. Once income exceeds this threshold, the mandatory payroll and self-employment tax imposition ceases. 
How this might affect your paycheck or estimated tax obligations?   You can find out using this tool:

Change in Social Security procedures… Including a higher earnings limit.
 
On March 1, 2013, Social Security recipients will no longer receive benefit checks by mail.  Instead, retirees will be required to have their Social Security payments deposited into a bank or credit union account or loaded onto a prepaid Direct Express Debit MasterCard.  Having a bank account is encouraged…

Some positive news is that Social Security beneficiaries began receiving payments that were 1.7 percent larger in January 2013.  Accordingly, the average monthly benefit in January increased from $1,240 to $1,261 as a cost-of-living adjustment.

Beware of Withholding's on Older Workers

Workers between ages 62 and 65 can earn up to $15,120 in 2013, before being subject to a much higher tax withholding.   Specifically, after reaching the $15,120 threshold, $1 in benefits will be withheld for every $2 of income above the earnings limit.    That means 50% of what you make above $15,120 may be withheld and subject to permanent taxation in 2013.   Beware beneficiaries with part-time jobs.

For individuals turning 66 this year, you can earn up to $40,080, and then $1 of benefits will be withheld for every $3 earned above the limit.  However, once you turn age 66, the earnings limit no longer applies. And benefits may be recalculated at age 66 to reflect the withheld benefits and continued earnings.

Let us know if we can help you!..



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Saturday, January 19, 2013

What Factors Will Most Affect Your Giving, Spending and Saving in 2013?

by Willie Thomas Butler

If you are like most Americans who make resolutions each year, you've probably made one involving your finances. You may have committed to save more and spend less, or better yet, give even more to charity than you have done in the past. On the other hand, if you made no such resolutions, how do you determine your financial priorities? 



At the top of any list should be those financial obligations for which you have little to no control. These consist of your federal, state and local income taxes, additional payroll (such as Social Security and Medicare) taxes and varying local property, excise or special utility taxes. Of course, some individuals will also have to consider estate taxes, sales taxes and other revenue taxes incurred for other specific reasons throughout the past year. 



Combined, these can diminish as much as 40% off some taxpayers’ annual income, leaving them with only 60% to actually budget for the year. Add to this your anticipated gasoline, food and other retail spending activity for the year coupled with additional taxes and fees for annual memberships, online shopping, and a myriad of other activity, and another 10%-15% of your income could easily be consumed in taxes. 



Sobering news, I hope. Imagine having more than 50% of your annual income redirected towards taxes, and having little to no control over the choice to pay it. And, to the charitable-minded, particularly the Christian, just how much might this impact your giving to your church or to others in need? 



Statistically speaking, the median income of Americans in 2011 still hovers around $50,000 annually. In that range, the average American may end up paying anywhere from 0% - 30% in just federal and state income taxes this year. Fortunately, with most of our legislated tax deductions and credits still in place, this average will likely result in a majority of taxpayers incurring no more than a 10% - 14% liability. 



However, remember the many ways that taxes are incurred. A major consumer type will still incur significant tax obligations on just about all of their regular and daily purchases, including food, restaurant dining, entertainment, phone service contracts, and clothing and appliance purchases. 


Because of these facts, I have a suggestion. Why not apply this simple yet powerful formula called I + P = V.™ In short, this formula will enable anyone using it to quickly assess the best way to manage their personal finances more purposefully. The acronym stands for Imposed Monetary Obligations + Pursuit-of-Purpose = Voluntary Obligations, or I+P=V™. Though simple to remember, this financial concept will help you immensely in learning how and why to set goals that truly matter. 

Your Plans and Priorities Are Important For Many Reasons 

This financial planning formula provides a guaranteed way for a truly committed Christians to become an effective steward and to strategically exercise control over today's spending-craze encouraged through the world’s economic system. Why is this important? Because in the eyes of God, you are His earthly steward with whom He has deposited certain of His treasure. 

“The earth is the Lord’s and everything in it, the world, and all who live in it…” (Psalm 24:1) NIV. Accordingly, He expects that we acknowledge His ownership and our possession of the many good treasures, which include our time, our talent and our finances; and that we should manage what has been entrusted to us according to His expectation. This principle is best reflected in the story Jesus shared with His disciples called the Parable of the Talents, found in Matthew 24. 

You can learn more about this formula in my book The Kingdom Life Approach: A Purpose-Driven Strategy for Living Your Best Life Ever. You can read free excerpts online via Google Books,  Amazon Books, or Barnes and Noble.com, and through my publisher Xulon Press. Or, you can also visit the LifePlanning Institute’s website to obtain additional information about our programs, courses and other books and materials. 

Welcome to Kingdom Living! 

In the Kingdom of God—which, as a Christian you are a citizen—the principle of love expressed through giving is at the core of God’s, therefore, our true nature—being made in His image and likeness. This is what we read in John 3:16: “God so loved the world that He gave His only begotten Son…” Sound familiar?  Well, if it does, is giving at the top of your priorities in 2013? 

The Bible also teaches us that God has a plan for each of us. Therefore, will knowing this have any effect on your giving, spending and saving plans this year?   In Jeremiah 29:11, the prophet wrote as God declared to him, “For I know the plans I have for you…, plans to prosper you and not to harm you, plans to give you hope and a future." 

Sounds to me that the wise steward would benefit from first knowing Gods’ plan before venturing out to spend or even save what is within their possession to manage. If so, then it leads to one last question? Are you going to serve God as one of His wise and faithful stewards in 2013? 

If your answer is yes and you’d like help to accomplish this, the LifePlanning Institute can assist you.  We offer a training course and workbook titled The Kingdom Life Approach.



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Wednesday, January 16, 2013

Live Your Best Life Ever in 2013!..





by Willie Thomas Butler


Want to achieve the best life you could ever live?  Then commit yourself to make the following changes in your day-to-day planning:

1.  Seek first the Kingdom of God ... (Matthew 6:33)

Show your commitment and determination to pursue God above all else on 2013, and He will not fail you. Remember, He is the only Source who really knows who you are and what you should do with your life.

2. Seek to Know Your PurposeThough our natural tendency is to devise our own plans and strategies to get ahead, it is God's purpose that prevails.  (Proverbs 19:21)

3.  Redirect Your Goals, Priorities and Strategies to Achieve His Purpose

Trust God to show you His will and plan for your life, and the re-prioritize your resources:  your time, talent and treasure, to achieve it.  Your act of submission shows that you are willing to "Entrust your efforts to the Lord, and (as a result) your plans will success" (Proverbs 16:3 - God's Word).

If you really desire to change your life, then you need to commit yourself to this approach.  It is what I lovingly refer to to as the Kingdom Life Approach.  And if you would like help in implementing this approach to living, please know that the LifePlanning Institute stand ready to assist you.

To speak with a LifePlanning Advisor, contact the LifePlanning Institute via the following link: www.MyLPI.org or by email at: Info@Life-Planning-Institute.org or by phone: (757) 447-3260.



ENDING THOUGHTS:

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