government

These 14 Major Employers Offer Part-Time Jobs With Benefits

Think you need to work long hours to qualify for company-backed retirement plans, tuition reimbursements and affordable health insurance? Actually, you don’t have to have to be a full-time employee to get those perks. There are many companies that offer generous benefit packages for their hourly part-time employees. These 14 companies lead the way in […]

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

How Taxes Impact Your Wealth Gap

Imagine you’re standing on the bank of a river. The bank you’re standing on represents your current financial status, and the opposite bank is the amount of wealth you need for retirement. The river itself is the difference between how much wealth you currently have and what must be accumulated to reach your retirement goals.

When we look at bridging this wealth gap, it’s important to factor in anything that could get in the way of reaching our goals. That’s why taxes are so important. You can’t have an accurate calculation without understanding how taxes impact your wealth gap. You see, taxation plays a significant role in our ability to accumulate wealth. If you went through your whole life without utilizing any of the tax breaks available to you, you would have built substantially less wealth than someone who understood the Internal Revenue Code (IRC) and took advantage of its many tax-saving benefits.

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In fact, one of my colleagues often calls the Internal Revenue Code “the greatest wealth creation tool in the United States.” He’s not wrong. The IRC is a tool for wealth creation. As such, it can be the difference in whether taxes impact your wealth gap in a negative way. You see, much of the IRC is pages and pages of information on how you can legally minimize taxes. 

Let me be absolutely clear, I am not offering tax advice. Nor am I advocating for illegal or unethical means of avoiding the payment of taxes. You should always consult a professional before employing any of the strategies found within the IRC to ensure that you are compliant with the law.

By the Numbers

The top marginal income tax rate of 37% affects taxpayers with a taxable income of $539,900 or more for single filers. Likewise, it impacts married couples filing jointly, with a taxable income of $647,850 and above. But what does that mean for you? Will taxes increase? Will tax brackets expand, or decrease? The only way to truly opine the answers to these questions is to look back at historical tax brackets. 

In 1984, the lowest bracket was up to $3,400 for married couples. The highest tax bracket began at $162,400 (the 1984 values are the base upon which inflation indexing began). However, the brackets began to spread in the 1990s. In fact, the highest bracket floor in 1994 rose to $250,000 while the lowest bracket ceiling remained around $38,000. So, there began to be a “spread” between the tax rates of high-income earners and those with less income. That spread has become an albatross in the modern era.

Historical Tax Data

To better put into context how taxes impact your wealth gap, let’s look at some of these numbers through a tax rate calculator. Using this calculator, if you were making $50,000 (in today’s dollars) in 1913 you would have paid around 1% in taxes. However, that same $50,000 earnings in 1942 would have landed you in a 20% tax bracket. So, what happened? Well, that would have been about the time that the government needed to fund the war effort for WWII. Since that time, there hasn’t really been a whole lot of movement. If you’re a single filer earning $50K today, you’re going to be taxed at about 22%.

  • SEE MORE Tax Changes and Key Amounts for the 2022 Tax Year

However, most of the clients I work with earn much more taxable income than $50K. So, let’s go with a more realistic figure. We will enter $500K into the calculator. Keep in mind, the effective tax rate made a considerable change between 1937 and 1942. In 1944, a person earning $500K (in today’s dollars) would be taxed at the bracket rate of 51%. That number rose to as high as 58.9% in the early 1980s.

What History Tells Us

Famed historian and co-documentarian of the PBS series Prohibition, Lynn Novick attributes the creation of the federal income tax to Prohibition in the United States. Novick states, “I had no idea how important liquor was to the federal government. It started in the Civil War with the levy on beer and whiskey to help fund the war, and it never really went away. Some 30% to 40% of the government’s income came from the tax on alcohol. So, Prohibitionists realized that the only way they’re going to have a ban was through income tax, which was a progressive cause and was really supposed to distribute wealth and to make things equitable during the robber baron era, where the wealth was being accumulated in a very small segment of the population.”

In 1913, the top tax bracket was 7% on any income over $500,000 ($11 million in today’s dollars). The lowest tax bracket was 1%. But so much has happened since then. We’ve experienced WWI, WWII, the Great Depression and so much more. Each of these events has played a major role in how we are taxed. For instance, the New Deal carried an inflation-adjusted price tag of $856.1 billion in 1933. Then from 1943 to 1982, the average tax bracket for the taxpayer earning $500,000 jumped from 14% to an average of 50% +/-.

Similarly, the Great Recession saw an economic stimulus that totaled $1.8 trillion. As a result, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 maintained the 35% tax rate through 2012. And recently, we saw the largest stimulus package in our nation’s history, with the CARES Act, which checked in at a staggering $3.6 trillion. As we have seen in the past, we could reasonably anticipate another increase in federal income taxes because of this.

Putting It All Together: How Taxes Impact Your Wealth Gap

According to the old adage, there are two certainties in this life: death and taxes. With that in mind, I wanted to get you thinking about how taxes will likely impact your wealth gap. I want you to be confident in your personal plans and direction. You know what you want out of retirement and how long you have to build the wealth that will fund it. Don’t let something like taxes throw off your calculation. 

To ensure that you’re not overpaying on taxes, you should have a CPA helping with your annual tax filings. But that’s not all. You should also be meeting with your CPA and CFP® about proactive strategies to mitigate your tax burden. The less you pay in taxes, the more you can save for retirement. Both will help you to close your retirement wealth gap sooner than later.

  • SEE MORE How Your Retirement Savings and Income Are Taxed

Best Jobs for Military Spouses and Where to Find Them

Military life is not always career-friendly if you’re married to someone on active duty. Here’s our guide to the best jobs for military spouses.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Will Gas Prices Ever Go Down?

As it becomes increasingly painful to fill up your gas tank, you might well be wondering: Will gas prices go down at some point?

Fuel prices feel like they’ve been on a never-ending ride higher of late. A year ago, the national average price of regular unleaded was $2.96 per gallon, according to travel website AAA. A month ago, it was $4.12. Today, it’s $4.33. And it’s probably heading higher still this spring.

  • SEE MORE The 25 Cheapest U.S. Cities to Live In

We recently looked at the reasons why gas prices are so high: global oil demand rebounding from the pandemic faster than production. The war in Ukraine. Efforts in the U.S. to transition the economy away from reliance on fossil fuels. Energy companies’ reluctance to invest in more oil production.

Now, we’ll try to answer the question undoubtedly on many drivers’ minds: Will gas prices go down soon – and if so, what will do the pushing?

Fuel Tax Relief?

A few states have tried to ease the financial burden on their residents by suspending their state fuel taxes for a short period. But are gas prices doing down because of those moves?

Not really.

For instance, Connecticut suspended its 25-cent-per gallon state levy on fuel for April, May and June. But according to AAA, the average price of regular unleaded in the Nutmeg State today is $4.32, up from $4.13 a week ago. Increases in crude oil prices can swamp the effect of suspending a state’s gas tax. And when those state taxes are paused, the savings don’t all go in the driver’s pocket. Fuel sellers keep some portion of them.

Could the federal government give drivers nationwide a tax cut by suspending the 18.3-cent-per-gallon federal tax on gas? Unlikely, report my colleagues at The Kiplinger Letter, who regularly speak with lawmakers on Capitol Hill to assess which bills have a chance of passing.

In the case of a proposed suspension of the federal gas tax, Democrats, the majority party, can’t agree among themselves to do it.

More Oil on the Way

Here’s a little good news: More crude oil should be reaching the global market later this year, which means more gasoline and other refined fuels. Eventually, that should help push gas prices down, or at least keep them from rising so fast.

  • SEE MORE Calculating Taxes on Social Security Benefits

In the U.S., energy companies are slowly putting more rigs to work drilling new wells, even as they prioritize returning cash to investors via share buybacks and dividends. Oilfield services company Baker Hughes reports on the number of working rigs in the U.S. each week, and most weeks lately, the tally has risen a bit. Meanwhile, OPEC announced last week that it will continue with its plan to gradually restore the oil exports it cut in 2020 when prices plunged, which means adding about 400,000 barrels of daily exports each month.

The bad news: Neither domestic oil output nor OPEC’s sales are rising fast enough to push oil prices down now. And that means gas prices are unlikely to take a breather soon, either.

So, when can we expect gas prices to go down?

Gas Prices Could Go Down During Autumn

A good bet for when gas prices will go down is the fall, if seasonal patterns hold up this year.

Before COVID-19 scrambled those patterns, gas prices would typically rise in spring, peak sometime around Memorial Day, ease a bit but stay high during the summer, then pull back sometime after Labor Day.

As post-pandemic life gets back to normal, that pattern could return this year. Heavy summer travel and the resulting heavy demand for gas are likely to ebb by late summer or early fall as kids go back to school. By then, the Federal Reserve’s interest rate hikes will have had some time to slow the overall economy, which should weigh on oil demand, too. OPEC should be pumping more oil then, as will the U.S., continuing the slow rebound in production from the pandemic-induced slump.

That might not be much comfort to motorists as they pay for expensive fill-ups this spring and summer. But unless an economic recession comes along soon and crimps demand for fuel in painful fashion, high gas prices probably won’t go down anytime soon.

  • SEE MORE The 22 Best Stocks to Buy for 2022

How to Get Teacher Loan Forgiveness

Looking for teacher loan forgiveness? You have multiple options as an educator. Our guide will help you decide which will be most beneficial for you.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

How to Invest in Agriculture

Many people think of investing in agriculture as owning farmland and operating a farm. Many investors overlook this business area when deciding where to put their money because they don’t see themselves toiling the land. But there are various options to invest in agriculture without being a farmer. Farmland investing is just one way to […]

The post How to Invest in Agriculture appeared first on SoFi.

Margin Trading vs Futures: Compared and Explained

Trading crypto on margin in the spot market is different from using futures to control crypto positions. Margin trading involves using money borrowed from a broker to go long or short crypto. With futures, traders can post margin as collateral to take on large long or short positions on contracts with a specific delivery date. […]

The post Margin Trading vs Futures: Compared and Explained appeared first on SoFi.

What Is a Trust Fund – How It Works, Types & How to Set One Up

Think trust funds are only for the wealthy? Trusts can actually benefit many different people. Learn about the different types, structures & benefits here.