Structured Settlements

Structured Settlements

Structured Settlements is an agreement through which an insurance company agrees to pay an individual a predetermined amount of cash for a fixed length of time if the individual meets an accident. Structured Settlements is designed to help the people to get the most money for their structured settlements and annuity payments by matching with the best possible choices of financial institutions.

Structured Settlements Documents

The documents for Structured Settlement include an agreement, a qualified assignment, an annuity application, a court order if a claim is made by a minor and an annuity policy. Structured Settlements is useful for the individuals who need money quickly for a financial emergency or lifestyle change. These reasons may include paying bills, the purchase of a home, children going to college or starting a new business.

With Structured Settlements one can have the control to proceed as they wish with their settlements. It only works with the finest direct funding sources, weeding out expensive brokers and fly-by-night companies.

Steps to get money by Structured Settlements:

• Firstly we need to evaluate what type of structured settlement or annuity we have.
• Secondly package all the information together in a way it will be pleasing to the investor. This deals with several outstanding investors both private and institutional which pay the best prices in the country. This will give more than 3 quotes and makes us decide which terms and financial offers best suit for our needs.
• Lastly if we would decide to accept an offer, it takes from 2 to 3 months due to the paperwork and court processes involved.

Structured Settlements also includes assisting with the paperwork when we sell annuity payments. The qualified representative will review the specific needs and match us with one of our select partners who can help us in giving much cash for your structured settlement. The information which we give must be confidential as it will not be shared by anyone outsiders. The funding company commences payment after acknowledging the assignment and receiving a court order. The payments starts after we receive the receipt from court orders.

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WHAT IS SHORT SELLING?

WHAT IS SHORT SELLING?

Short selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered. That may sound confusing, but it's actually a simple concept.


When you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later you must "close" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

Most of the time, you can hold a short for as long as you want. However, you can be forced to cover if the lender wants back the stock you borrowed. Brokerages can't sell what they don't have, and so yours will either have to come up with new shares to borrow, or you'll have to cover. This is known as being called away. It doesn't happen often, but is possible if many investors are selling a particular security short.

Since you don't own the stock (you borrowed and then sold it), you must pay the lender of the stock any dividends or rights declared during the course of the loan. If the stock splits during the course of your short, you'll owe twice the number of shares at half the price.

Also, because you are being loaned the stock, you are buying on margin. In fact, you have to open a margin account to short stocks.

EXAMPLE:

BORROWED 100 SHARES AT $10 EACH = $1000(SHORT SELL)
BOUGHT BACK 100 SHARES AT $7 EACH = $700(BUY TO COVER)
PROFIT = $300

BORROWED 100 SHARES AT $10 EACH = $1000(SHORT SELL)
BOUGHT BACK 100 SHARES AT $15 EACH = 1500(BUY TO COVER)
LOSS = $500

The credit for this article goes to www.investopedia.com

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WHAT IS THE BEST TIME FOR TAX PLANNING TO SAVE MONEY?

The best time for tax planning

Following some of these tax-savvy strategies can help you save money:

Tax planning involves far more than scrambling in April to defer income and boost deductions.

If you want to minimize what you pay in capital gains tax, reduce your year-end tax bill, and give less of your estate to Uncle Sam, you should be aware of the short- and long-term tax consequences of all your financial moves.

One tax-savvy strategy is to contribute regularly to tax-deferred savings plans, which let you defer your tax payments until you make withdrawals.

The benefits are two-fold: The more you contribute to a 401(k) or deductible IRA, for instance, the more you reduce your taxable income for that year. Plus, the money you invest grows at a much faster rate since it's not dragged down by taxes.

If you're looking to reduce your taxable estate, a quick way to do that is to make tax-free gifts up to $12,000 a year per person. (For more on estate planning strategies, including trusts that serve as tax shelters, visit the Money 101 lesson on estate planning.)

When you're investing outside of retirement plans, you have a number of tax-smart options. There are tax-managed mutual funds, which seek to minimize the turnover in holdings and hence limit the number of taxable gains distributions to shareholders.

There are also tax-free CDs, bonds and money market funds.

But a tax-free CD or money market fund may not always save you more than their taxable cousins. Here's how to tell which is best for you:

Compare your after-tax return on the taxable investment with the return on the tax-free investment. To figure out your after-tax return, you need to know your combined income tax bracket (federal plus state), since that determines how much of your investment income you can keep.

If you pay 28 percent in federal taxes and 6 percent in state taxes, your combined bracket is 34 percent, which means you keep 66 percent of the income the investment generates.

So if a taxable investment guarantees a 7 percent return, you'll only pocket 66 percent of that, or will net a return of 4.6 percent. If a tax-exempt instrument offers less than that, you'll pocket more with the taxable option.

Generally speaking, if you're in a top tax bracket, you will benefit more from tax-free investments since the yield on a taxable investment would have to be very high to match your return in a tax-exempt instrument.

Another tax-friendly savings strategy: If you have a taxable account of stocks and funds, take advantage of your capital losses to reduce your tax bill.

"Capital losses are allowed to the extent that you have capital gains plus an additional $3,000," said enrolled agent Cindy Hockenberry of the National Association of Tax Practitioners.

In other words, if you have $10,000 in capital losses and no capital gains this year, then you can claim only $3,000 in losses. But if you have $5,000 in gains, then you can claim $8,000 ($5,000 plus $3,000) in losses. Any unused losses may be carried over to future tax years.

The credit for this article goes to www.cnn.com

WHAT IS AMT?

Originally meant for the rich, the tax is increasingly afflicting the middle class.

Maybe you've managed to ignore the recent spate of tax-reform stories, but that doesn't mean you'll dodge the Alternative Minimum Tax or its higher tax bite.

The AMT system comes with a completely different set of rates and deduction rules. People pay it only if their AMT tax amount is higher than their traditional taxes. Translation: If you're paying the AMT, you are by definition paying higher taxes.

The system created to make sure the uber-rich didn't dodge the tax bullet is under fire because it's now affecting middle-class Americans. And reforming it could mean increased tax payments for everyone.

The problem? What defined uber-rich in 1969, when the AMT was first enacted, has never been adjusted for inflation. That means what made you affluent back then doesn't now - but you're still taxed like it does.

The Urban-Brookings Tax Policy Center says the AMT will hit 23.4 million taxpayers in 2007 and some 39 million could be affected by the end of 2010 if nothing is done.

To give you a sense of just who might get caught, almost half of the households with incomes between $75,000 and $100,000 will pay AMT by 2010 versus 0.7 percent in 2006.

A tale of two systems

Under the regular IRS rules, you start with your gross income and subtract deductions like state taxes you paid, and exemptions like child credits. Eventually, you arrive at your taxable income.

Under AMT rules, you still start with your gross income, but many of the usual deductions and exemptions are disallowed. Suddenly, your taxable income is a lot higher.

Even though some deductions still stand, including those for mortgage-interest and charitable donations, some key breaks are lost. They include: state and local income taxes and property taxes; child-tax credits; and home-equity loan interest.

Even though the highest tax rate under the AMT - 28 percent - is lower than that in the regular tax system - 35 percent - AMT victims are paying more because they're paying on a greater amount of taxable income.

Short of moving to a low-tax state like, say, Texas, said Len Burman, co-director of the Tax Policy Center, there's not a lot you can do to avoid AMT's clutches.

Exemptions and phase-outs

In trying to determine tax liability under AMT, you do get to exempt a certain amount of income from your calculations.

The problem is that the exemptions granted under the AMT have not kept pace with inflation - while the average paycheck has. For instance, in 1982, the exemption for married couples filing jointly was $40,000. Adjusted for inflation, that would be $82,000 today.

Currently, the exemptions are only $62,550 for married couples filing jointly and $42,500 for singles. And they would be even lower if Congress didn't vote through a "patch" every year.

Really high earners may not even get the full exemption since it is phased out above certain income levels.

The phase-out for married couples filing jointly begins at $150,000 (after the deductions that are allowable). The deduction shrinks by 25 cents for every dollar earned above that amount until finally, at $382,000, there is no exemption at all.

Who gets burned?

By law, everyone who files taxes is obligated to figure out whether they have to pay AMT, and they are prompted to do so on line 45 of Form 1040.

There, taxpayers are referred to the AMT worksheet. If the taxable income on the worksheet is higher than the taxable income on the 1040, you are subject to AMT and must fill out the special AMT Form 6251.

But the worksheet and Form 6251 can be daunting, and 75 percent of AMT payers hire a professional to do their returns, according to the President's Advisory Panel on Federal Tax Reform.

"The first time most people hear about the Alternative Minimum Tax is when they get a letter from the IRS saying that they still owe money," said the Tax Policy Center's Burman.

So how do you know if you'll be one of the unlucky?

If your total deductions and exemptions under the normal tax code come close to the AMT exemption, you want to be on the lookout for the AMT, said Tom Ochsenschlager, vice president of taxation with the American Institute of Certified Public Accountants.

The IRS also offers "AMT Assistant," an online tool that helps you determine whether you need to pay the AMT.

Also be on the lookout if your adjusted gross income changes dramatically because of: a lot of itemized deductions; high local and state tax deductions; child exemptions; or a mortgage deduction.

Then it may be time to get some professional help or some good tax software.

The credit for this article goes to www.cnn.com

WHAT IS FICA?

What's FICA ?

If you're a wage or salaried employee, your employer picks up half of this tax burden.

Under the Federal Insurance Contributions Act (FICA), 12.4 percent of your earned income up to an annual limit must be paid into Social Security, and an additional 2.9 percent must be paid into Medicare.

That limit is $94,200 for the 2006 tax year and rises to $97,500 for the 2007 tax year.

There are no earned income limits on Medicare taxes - so even if your salary is well above the cap for Social Security tax, you will still owe Medicare tax on your total earned income.

If you're a wage or salaried employee, you pay only half the FICA bill (6.2 percent for Social Security plus 1.45 percent for Medicare), and the tax is automatically withheld.

Your employer contributes the other half.

For most people that means 7.65 percent of their paycheck is withheld and their company pays another 7.65 percent on their behalf.

If you're self-employed, however, you're expected to cough up both the employee and the employer share of FICA. You are, however, permitted to deduct half of this self-employment tax as a business expense.