WORLD'S TOTAL WEALTH

What Could You Buy With $241 Trillion?

By Tim Urban

What would happen if you sold everything you own, liquidated any investments you have, paid off all of your debts, and withdrew whatever cash you have in bank accounts?
You’d be standing on the street naked, with nowhere to go, holding a bunch of cash, and people would be looking at you.

And whatever cash you were holding would be your net worth.
Okay now, imagine that everyone else in the world does that too (just pretend that makes sense), and all the people of the world, naked and holding their wealth in cash, come together and throw their wealth into a big pile together. How much money would be in that pile?
$241,000,000,000,000.

The combined wealth of all the people of the world is $241 trillion.¹
So at this point, the whole human race would be standing there together, all naked, all broke, looking at a massive pile of cash.

Okay, so we’re all in a bit of an odd situation here. Let’s start by organizing the pile, converting it all into $100 bills and making a huge stack of them.


One hundred $100 bills ($10,000) makes a 1.09cm-thick stack, so a million dollars stacked is a little over a meter, a billion dollars is a little over a kilometer, and $241 trillion makes a 262,000km-high stack, which reaches 68% of the way to the moon.

Now let’s spread all those bills out on the ground in a single layer. The area of a bill is 103cm², so 2.41 trillion of them would just about cover Vermont.

And converting them all to $1 bills, 241 trillion $1 bills would cover Algeria.

Okay enough bills. Let’s try gold. If you took all the gold ever mined in the world and melted it down into a cube, it would have a side of 20.7 meters (and be worth $8.6 trillion).²

Kind of surprisingly small, right? Well how big would the gold cube be if we had enough gold to represent all $241 trillion of the world’s wealth?
It would be a cube with sides of about 63 meters.

So that cube is what we’re all working with here. And if the world’s wealth were distributed completely evenly and every adult human had an even share, everyone would have $51,600, or this much gold:

But wealth isn’t evenly distributed. Let’s look at what the world’s wealthiest 1% of people have versus the other 99% of people?

How about the top 10%?

To further demonstrate just how uneven wealth distribution actually is, let’s bring out some of the world’s richest billionaires.³



Who the hell is Amancio Ortega? I don’t know who you are, please leave.

So Credit Suisse came out with a report recently that revealed that the bottom half of humanity—3.5 billion people—has less than 1% of the world’s total wealth. And starting from the top, it only takes the combined wealth of the richest 85 people to equal the wealth of the bottom 3.5 billion people.


To put that in perspective, 85 is 1/84 millionth of the world population. So if one jellybean represents 85 people, the human race could be represented with 84 million jellybeans, which would just about fill 2 five-meter-high cubes:

So the richest jellybean in the rich-half box has the same wealth as the entire poor-half box combined:

To further explore the kind of wealth these 85 people have, let’s take Mark Zuckerberg, the youngest of this group of 85 people that makes up the richest jellybean.

Mark is worth just about $30 billion. 1,074 cubic cm is about $1 million of gold. This amount of gold can be made into a big gold coin with a diameter of 26cm (about a foot) and a thickness of 2cm (about an inch). Mark Zuckerberg’s $30 billion can be converted into 30,000 of these million-dollar gold coins:

To help us appreciate how much money that is, think about this: the tallest building in the world, the Burj Khalifa, cost $1.5 billion to build. That’s what Mark Zuckerberg makes each year off the interest on his wealth (if he made 5% in interest)—enough to build a new Burj Khalifa each year without denting into his wealth.
Another way to look at it is by understanding how vastly richer a billionaire is than a millionaire. To help demonstrate this point, let’s bring Alex Rodriguez into the discussion, who is worth $300 million—right around the same level as the richest movie stars. And A-Rod’s wealth amounts to only 1% of Mark Zuckerberg’s.

How about someone lower down in the wealthiest 1% group—a lesser millionaire? A rich lawyer might have a net worth of $3 million, which is 1% of what A-Rod has.

The rich lawyer is rich by almost anyone’s standards, but he has nothing compared to A-Rod (1/100th) or Mark Zuckerberg (1/10,000th). Still, because he’s part of the wealthiest 1% of both the world and the US⁵, we routinely group these three people together in the “1%” category. Categorizing Zuckerberg with the lawyer is as crazy as grouping the lawyer together with someone who has 1/10,000th of what he has—a high school kid who has $300 to his name.
Moving on from the one percenters, let’s bring in an ordinary American. In fact, let’s bring in the ordinary American—the one with the exact median net worth, $44,911.¹

While the mean US net income, at $301,140,¹ is one of the world’s highest, the median US net income is far lower and only the 27th highest in the world. It’s a mistake to say that the mean, $301,140, represents the average American’s net worth—that’s just what the wealth of each American would be if all American wealth were divided evenly. For example, in a country of ten people, where nine of them hovered around $30,000 net worth and the tenth was worth $10 million, the mean ($1.027 million) would suggest that the average person was a millionaire. The median wealth would be around $30,000 and a much more accurate representation of how the average person was actually doing.
Likewise, our ordinary American above having the median US net worth means that half of Americans are richer than he is and half are poorer. He’s the average American, and with a net worth of just under $45,000, he’s doing worse than the average member of 26 other countries, including not-so-wealthy countries like Greece and Slovenia.¹ The US’s mean wealth / median wealth ratio of 6.7 is one of the highest in the world and suggests that wealth inequality is particularly high in the US.
And how about an average human? How much wealth does the median adult in the world have?
About $4,000.¹

Even if you adjust for the cost of living in poorer countries, this is pretty low. And this is the median human wealth, meaning that half of all adults have less than $4,000 to their name.



Sure. What seems to be the problem?


Okay annoying, but I guess also fair. Let’s fix this by converting the gold into a big potato of equal value.
How big a potato could you buy with all the world’s wealth? If a typical potato sells in the US for $.33 and a potato is about 15 cubic inches, or 246 cubic cm, so $241 trillion would buy you 179 cubic km of potato, or a potato about 60km long.

Enjoy!



Ungrateful.
Fine. How big a pizza could we buy for $241 trillion?
A Domino’s 14″ pizza goes for $19 (at least in New York), which comes out to 52.3cm² per dollar. Using that rate, we can convert all human wealth to a pizza with area 1.26 million km², which is just about the area of Niger.



Okay yeah, you need water I guess. At Poland Spring’s rate of $1 for a 16.9oz bottle, I can convert the world’s wealth into a 31.8 trillion-gallon bottle with a height of 11.6km, just above where airplanes fly.

I’m sorry you’re in this situation, but there’s nothing more I can really do to help. Instead, I’ll wrap up by converting all $241 trillion of the world’s wealth into tortoise.
To assist with my calculations, I’ve called upon my pet tortoise and close friend of nine years, Winston.
To Winston’s displeasure, I used a tape measure to determine his proportions—he’s roughly 25cm long, 15cm wide, and 13cm high. His original price tag was $200, making the going tortoise rate $.20/cubic cm.
Using that rate, we can convert all the worl

d’s wealth to tortoise and buy ourselves a 2.7km long tortoise.

Related Wait But Why Posts
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From 1 to 1,000,000
From 1,000,000 to Graham’s Number
Sources
1. Global Wealth Report, Credit Suisse, October 2013.
2. Thomas Reuters GFMS Release – Gold Survey 2013.
3. Forbes Billionaires: Full List of the World’s 500 Richest People.
4. http://www.census.gov/compendia/statab/2012/tables/12s0717.pdf
5. http://www.joshuakennon.com/how-much-money-does-it-take-to-be-in-the-top-1-of-wealth-and-net-worth-in-the-united-states/
6. Oxfam Briefing Paper – Working for the Few
7. United Nations – The World Distribution of Household Wealth
8. Unicef – Global Inequality: Beyond the Bottom Billion
9. http://data.worldbank.org/indicator/PA.NUS.PPP

'Starsuckers' film tax scheme sees tax adviser jailed

A TRIO of City traders and their accountant have been convicted of conspiring to cheat the tax authorities by investing in a film finance scheme.
James Hyde, Hamish Maclellan, and Phillip Jenkins all worked for US investment bank Bear Stearns, before moving to Jefferies International, where they earned more than £1m a year each in 2009/10.

Further reading

• Ingenious film tax scheme investors win appeal right against HMRC

• EU approves further tax breaks to British film industry

• HSBC advised on film schemes designed to avoid tax

Terence Potter, a Monaco-based former tax partner at EY, pleaded guilty to the charge of conspiring to cheat HMRC, reports New Model Adviser.
The three Jeffries International traders were convicted in September after claiming to be "active members" of a film finance partnership that invested in the film Starsuckers - a picture purporting to examine the cult of celebrity.
The case can now be reported after a second interlinked trial culminated with acquittals for three former RBS bankers and a financial broker, the Financial Times reports. In the second case, defendants were cleared by a jury at Southwark Crown Court of one count of conspiring to cheat HM Revenue & Customs by investing in a film scheme.
In the second trial, three former RBS bankers Vincent Walsh, Jason Edinburgh, and ex-RBS global head of listed execution Assad Amin, along with Michael Elsom - a senior broker at brokers Marex Spectron - were all cleared by a jury of one charge of conspiracy to cheat the HMRC through investing in a film finance scheme.
In their trial, they denied any wrongdoing and claimed they were unaware of their "active member" status, which required them to do ten hours' work per week toward the film's production in order to qualify for their tax reliefs.
Financial adviser Neil Williams-Denton introduced the RBS bankers to the scheme and was found guilty on this week of one count of conspiring to cheat the revenue. He had also been convicted in the earlier trial.
The prosecution alleged the bankers submitted "hundreds of pages" of false diaries detailing the hours they supposedly worked on a film called Mercedes the Movie in order to claim sideways tax relief from their tax bills. The film was never made.
The acquitted RBS traders all denied wrongdoing and conspiring to cheat the Revenue. They said accountant Potter, who helped set up the film scheme, had sent them the records, which they forwarded on to HMRC, but they had been too busy to check what was being sent on their behalf.
Film schemes have become a common method of attempting to deprive the public purse of tax, with HMRC treating such cases extremely aggressively. Often, those seeking to set up film schemes attempt to take advantage of tax incentives put in place by the government in order to stimulate the British TV and film industries.

Top 50+50 Firms 2015

http://www.accountancyage.com/static/top50-this-year

WORLDS BEST ACCOUNTANTS

http://www.ranker.com/list/notable-accountant_s%29/reference?page=2

BEST ACCOUNTING SOFTWARES

http://www.capterra.com/accounting-software/

List of Tax free countries in the world

http://www.saharasamay.com/nation-news/676545986/list-of-tax-free-countries-in-the-world.html

The 5 Countries Without Income Taxes

Some of the most popular countries that offer the financial benefit of having no income tax are Bermuda, Monaco, the Bahamas, Andorra and the United Arab Emirates (UAE). There are a number of countries without the burden of income taxes, and many of them are very pleasant countries in which to live. However, taking advantage of living in a no-income tax country is not as easy as packing a suitcase and buying a plane ticket. Citizens of the United States cannot escape paying U.S. income taxes just by moving to another country. All U.S. citizens, regardless of where they choose to reside, are still legally obligated to file U.S. income taxes in the same way as if they were living in the U.S. The only small exception is in some instances, it is possible to exclude a limited amount of foreign-earned income from U.S. taxation.
The only way to get out from under the tax thumb of the IRS and enjoy living free of income taxes is for an individual to renounce his U.S. citizenship and become a citizen or legal resident of a country with no income tax. Neither of those two requirements is usually easy to fulfill. First of all, many countries do not offer easy access to citizenship. In most instances, the process is lengthy and expensive. Secondly, U.S. tax authorities, hit hard by the loss of dozens of multimillionaires and billionaires who have chosen to obtain citizenship in more tax-friendly countries, have made it increasingly difficult and expensive to renounce U.S. citizenship. Renouncing U.S. citizenship used to be as easy as walking into a U.S. embassy and signing a document attesting to the fact a person was renouncing his U.S. citizenship. But as of 2013, the U.S. imposes a stiff expatriation tax. For example, for individuals with net worths of more than $2 million, to renounce U.S. citizenship, they must pay income tax on all capital gains of all their assets as if all the assets were sold at the time of renouncing their citizenship.
Still, the continuously increasing rate of U.S. citizens choosing to do exactly that indicates many consider it worth the one-time expense. A record number of people renounced their U.S. citizenship in 2014. Many low income tax or income tax-free countries have economies that are largely driven by oil or financial services.

1) United Arab Emirates

There are a number of oil countries in the Middle East that have no income tax, and the UAE is considered one of the most attractive, with a relatively stable government and economy. The UAE has a thriving economy and a more multicultural environment than the majority of countries in the Middle East. This translates into excellent dining and entertainment options. There are also very good educational facilities available. Government corruption is still a concern, but the rule of law is followed relatively well.

2) The Bahamas

Enjoying the benefit of not having to pay income taxes in the Bahamas depends on residence, not on actually obtaining citizenship, making it one of the easier countries in which to access an income tax-free life. An individual can satisfy the residency requirement by paying for an Annual Residence Permit or obtain permanent resident status by virtue of purchasing real estate in the Bahamas. As Caribbean islands go, the Bahamas is one of the relatively less-expensive ones in which to live. Overall, the country has good infrastructure and services. The one area where services are considered a bit below par is the area of medicine. Many U.S. expatriates who have chosen to make the Bahamas home still travel back to the U.S. for significant medical care. And Nassau, like many tourist areas, has a somewhat high crime rate. However, overall the Bahamas is a very pleasant place to live.

3) Bermuda

Bermuda is an even more attractive Caribbean income tax-free destination than the Bahamas; however, it is also a much more expensive country in which to live. Its relatively isolated location makes Bermuda one of the most expensive cost of living spots in the Western world. A gallon of milk costs between $10 and $15, and even a modestly nice apartment can run as high as $2,000 a month or more. Bermuda is much more developed than most Caribbean islands, with excellent roads and public transportation. And beyond that, from its famous pink sand beaches to its upscale restaurants, Bermuda is considered one of the most scenic and pleasant countries in the Caribbean. The majority of U.S. expatriates living in Bermuda are employed in the extensive financial sector that exists in the country.

4) Andorra

Located in the Pyrenees mountains between France and Spain, Andorra is facing pressure from the European Union (EU) to institute an income tax, but for the moment it remains income tax-free. Even in the event an income tax system is put in place, it will likely be just a token intended to satisfy the EU, with a very low tax rate. Andorra's mountain location makes it a very scenic spot. Other than skiing tourists, life in Andorra is relatively quiet and easygoing. Andorra is renowned for not only being tax-free, but also for being value-added tax (VAT)-free as well, a fact that brings many Europeans driving in for the day to purchase cigarettes, liquor, apparel or electronics. In keeping with its tax-friendly attitude, Andorra is noted for having one of the most well-developed offshore banking industries in the world. The path to Andorra citizenship is one of the lengthiest, with naturalization taking more than 10 years.

5) Monaco

Well-known as a perennial vacation playground for ultra-high-net-worth individuals, Monaco has long been considered one of the most beautiful and desirable places to live in the whole of Europe. Located on the French Riviera, Monaco has extensive, well-developed marinas that are usually occupied by a selection of yachts from around the world. Monaco is a city-state that is not much larger than the Vatican. It has one of the lowest crime rates of any country in the world. However, one drawback is Monaco is also one of the most expensive places in the world to live. Housing prices are roughly double, or more, that of anywhere else in Europe. Accessing Monaco's income tax-free financial environment is quick but not cheap. A legal residence permit can be obtained in less than three months but requires depositing approximately half a million dollars in a Monaco bank.

12 Countries With The Highest & Lowest Tax Rates

http://www.businesspundit.com/12-countries-with-the-highest-lowest-tax-rates/3/

The Countries With The Highest Income Tax Rates [Infographic]

Income tax rates vary hugely between countries and depend highly on other factors like earnings, marital status and so on. Where in the world do people pay the highest slice of their earnings to the tax man? According to the OECD,  a single person on an average salary without children will have the highest income tax rate in Belgium – some 42.8 percent of his or her earnings.
Germany isn’t too far behind – single workers in Europe’s economic powerhouse will have to hand over just under 40 percent of their wages to the tax man. Neighboring Denmark comes in third with 38.9 percent. In the United States, income tax and social security contributions are far lower for a single worker without kids – just 22.7 percent.

*Click below to enlarge (charted by Statista)

WORLDS HIGHEST TAX PAYER COUNTRY

Tax rates keep on increasing annually, and are purposed to indirectly benefit the citizens of a country. Here is the list of top 10 highest tax paying countries in 2015:

Aruba (island in Southern Caribbean Sea): Tax rate: 58.95% There is no payroll tax and none on capital duty either. Employers are supposed to pay for the social security taxes of their employees. Standard VAT is set at 15%.

Sweden: Tax rate: 56.6% People receive free education and subsidised healthcare support ..

Read more at:

http://economictimes.indiatimes.com/articleshow/48216892.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

FINANCIAL STATUS OF WORLD COUNTRIES

http://www.worldbank.org/en/country

WORLD BANK LOAN ON COUNTRIES

http://data.worldbank.org/indicator/DT.DOD.MWBG.CD

How Much Americans Really Pay in Taxes It's more — and less — than you think

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Photographer: Andrew Harre

How Much Americans Really Pay in Taxes

It's more — and less — than you think

Ben Steverman bsteverman

April 10, 2015 — 10:22 PM IST

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Some $1.4 trillion in individual income taxes are due to the IRS on April 15. But for many Americans, that’s only the half of it. A new report from the U.S. Congress’s Joint Committee on Taxation shows that looking only at income taxes misses most of what we pay to the federal government each year.
The average American pays an income tax rate of 10.1 percent, the Joint Committee shows, although that varies quite a bit depending on income:

Ten percent seems low, doesn't it? The official income tax rates start at 10 percent and go all the way to 39.6 percent. The Joint Committee is also accounting for lots of income that never gets taxed, such as Medicare and Social Security benefits, employer-paid insurance, and the employer portion of payroll taxes. Also, taxpayers pay the highest rates, above 28 percent, only on earned income above $200,000 or so. The IRS takes far less from the first $200,000 earned, especially after deductions, and from investment income. Finally, as the chart shows, many poor Americans pay zero taxes and even get money back: About 32 million people benefit from that Earned Income Tax Credit.
Just looking at income taxes can be misleading, however. All salaried workers also pay a 7.65 percent payroll tax to cover Social Security and Medicare, and higher earners owe another Medicare tax. Their employers also must pay the same amount in payroll taxes for each worker. The government collected $1 trillion from payroll taxes last year:

Wealthy Americans end up paying taxes at a lower rate than poor and middle-class Americans, because the government collects Social Security tax only on annual wages up to $118,500.
On top of individual income and payroll taxes, the federal government collects $93.4 billion in excise taxes on such things as fuel, cigarettes, alcohol, and plane tickets. The feds take 7.5 percent of every airline fare, plus $4, for example; the gas tax is currently 18.4¢ per gallon.
Add up all the categories of taxes paid by individuals—income, payroll, and excise—and this is what each income group will end up paying this year, the Joint Committee estimates:

The tax burden rises progressively with income, with the wealthiest paying a third of their income to the federal government. One exception to the tax rate's steady rise through the income brackets: Americans who earn less than $10,000 per year, who don’t get enough from their earned income tax credits at tax time to make up for the payroll and excise taxes they pay all year.

Before it's here, it's on the Bloomberg Terminal.

• Taxes
• Payroll Tax

Oil Traders Aren't Dancing the Crude Contango This Time Around

Naomi Christie NChristie

Rakteem Katakey rakteem

December 11, 2015 — 5:31 AM IST Updated on December 11, 2015 — 9:30 PM IST

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A Topsy-Turvy Year for Crude Oil Spreads

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• Few tankers storing barrels at sea to profit from price curve
• Rout driven by ever-expanding glut, not 2008-09 demand shock

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Back when the global recession trashed oil demand and prices, the likes of BP Plc and Vitol Group found a novel way to profit: They stashed crude on tankers. With a slump of similar magnitude now, traders are seldom finding the same opportunities.
Here’s why. What defined both periods is something the industry calls contango, meaning oil for next month is cheaper than, say, for April. There were moments in the depths of the 2008-09 recession when a standard 2 million barrel cargo might fetch $14 million more for later delivery than it did in the spot market. That made for an easy trade: Find a ship for less than that. The same economics have seldom worked this year.

“These are very different market conditions,” said Paul Horsnell, London-based head of commodities research at Standard Chartered Plc. “Traders certainly are not getting much from floating storage plays.”
The main difference now is what people expect for the future of the oil market. The financial crisis was seen as a short, sharp shock to oil demand that wouldn’t endure, according to Eugene Lindell, an analyst at JBC Energy GmbH, a consultant in Vienna. That meant later prices far exceeded immediate ones. Now, the most enduring glut in decades leaves traders believing the market’s recovery could be much slower.

Less Potential

That means the cost of storing would wipe out potential profit from doing so. In mid-November, the three-month contango was about $2.50 a barrel, or about $5 million for one of the industry’s biggest cargoes, according ICE Futures Europe exchange data. It has since diminished, offering even smaller rewards for holding onto supplies. Keeping such crude on tankers for the same duration cost about $4.65 a barrel, figures from E.A. Gibson Shipbrokers Ltd. show. Spot rates for the vessels have subsequently soared to fresh seven-year highs, making it even less viable to horde than it was.
The oil curve back then correctly priced in the idea that demand would recover and that OPEC would curb supplies to clear a glut, according to Lindell. This time, demand has kept growing and an oversupply that’s been years in the making is showing little sign of abating. Meanwhile, the Organization of Petroleum Exporting Countries is insisting, most recently on Dec. 4, that it won’t tackle an excess without help from non-members.

Falling Prices

Even so, it’s possible the incentive to store will expand to the point where vessels will do so in the first quarter, Lindell said. So-called “supercontango” levels witnessed in 2008-09 may still be reached as oil refineries shut for regular maintenance and demand growth slows. This may drive down spot oil prices to as low as $30 a barrel and widen the contango in the process, he said. Onshore storage space may also be exhausted in the period, PIRA Energy Group, a consulting company, said in a report this week.
Brent crude, the international benchmark, dropped 2.9 percent to $38.58 a barrel on the London-based ICE Futures Europe exchange as of 3:57 p.m. local time. Prices dropped for a sixth day as the International Energy Agency forecast the global oil glut would last at least until late 2016.
While there’s still the oversupply of crude this year, meaning ships are waiting longer to unload than normal, the carriers are doing so because they have to. Some on-land storage depots are filling up to such an extent that vessels can’t discharge their cargoes until space has been cleared, according to shipbrokers and tanker-tracking data compiled by Bloomberg.
Tankers able to hold more than 100 million barrels waited for days or weeks at a time off the coasts of crude-consuming countries in the middle of November, little changed from six months earlier, according to ship-tracking data. They normally arrive and depart within 48 hours.
Just as it did during the recession, an increase in on-land supply has boosted rates for tankers. Very large crude carriers, each hauling 2 million barrels, earned an average of $57,766 a day so far this year, according to Clarkson Plc, the world’s biggest shipbroker. That will be the highest since 2008. When ships have to wait to unload, it diminishes the number that compete to haul cargoes, boosting rates.
“Shipowners are the ones who gain here,” Erik Nikolai Stavseth, a shipping analyst for Arctic Securities ASA in Oslo, said by phone. “Whether tankers are storing out of necessity or because traders can turn a profit, the bottom line is that it means these vessels aren’t competing for cargoes. And that means diminished fleet supply and better rates.”

2015 Federal Tax Rates, Personal Exemptions, and Standard Deductions IRS Tax Brackets and Deduction Amounts for Tax Year 2015

This article gives you the tax rates and related numbers that you will need to prepare your 2015 income tax return. In general, 2015 individual tax returns are due by April 15, 2016.
If you are looking for 2014 tax rates, you can find them here.

2015 Income Tax Brackets

The Federal income tax has 7 tax brackets: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%. The amount of tax you owe depends on your filing status and income level.
It’s important to realize that moving into a higher tax bracket does not mean that all of your income will be taxed at a higher rate. Instead, only the money that you earn within a particular tax bracket is subject to that particular tax rate.
Single:

Taxable Income	Tax Rate
$0 to $9,225	10%
$9,226 to $37,450	$922.50 plus 15% of the amount over $9,225
$37,451 to $90,750	$5,156.25 plus 25% of the amount over $37,450
$90,751 to $189,300	$18,481.25 plus 28% of the amount over $90,750
$189,301 to $411,500	$46,075.25 plus 33% of the amount over $189,300
$411,501 to $413,200	$119,401.25 plus 35% of the amount over $411,500
$413,201 or more	$119,996.25 plus 39.6% of the amount over $413,200

Married Filing Jointly or Qualifying Widow(er):

Taxable Income	Tax Rate
$0 to $18,450	10%
$18,451 to $74,900	$1,845.00 plus 15% of the amount over $18,450
$74,901 to $151,200	$10,312.50 plus 25% of the amount over $74,900
$151,201 to $230,450	$29,387.50 plus 28% of the amount over $151,200
$230,451 to $411,500	$51,577.50 plus 33% of the amount over $230,450
$411,501 to $464,850	$111,324.00 plus 35% of the amount over $411,500
$464,851 or more	$129,996.50 plus 39.6% of the amount over $464,850

Married Filing Separately:

Taxable Income	Tax Rate
$0 to $9,225	10%
$9,226 to $37,450	$922.50 plus 15% of the amount over $9,225
$37,451 to $75,600	$5,156.25 plus 25% of the amount over $37,450
$75,601 to $115,225	$14,693.75 plus 28% of the amount over $75,600
$115,226 to $205,750	$25,788.75 plus 33% of the amount over $115,225
$205,751 to $232,425	$55,662.00 plus 35% of the amount over $205,750
$232,426 or more	$64,998.25 plus 39.6% of the amount over $232,425

Head of Household:

Taxable Income	Tax Rate
$0 to $13,150	10%
$13,151 to $50,200	$1,315.00 plus 15% of the amount over $13,150
$50,201 to $129,600	$6,872.50 plus 25% of the amount over $50,200
$129,601 to $209,850	$26,772.50 plus 28% of the amount over $129,600
$209,851 to $411,500	$49,192.50 plus 33% of the amount over $209,850
$411,501 to $439,000	$115,737.00 plus 35% of the amount over $411,500
$439,001 or more	$125,362.00 plus 39.6% of the amount over $439,000

2015 Personal Exemption Amounts

You are allowed to claim one personal exemption for yourself and one for your spouse (if married). However, if somebody else can list you as a dependent on their tax return, you are not permitted to claim a personal exemption for yourself.
For tax year 2015, the personal exemption amount is $4,000 (up from $3,950 in 2014).
The personal exemption amount “phases out” for taxpayers with higher incomes. The Personal Exemption Phaseout (PEP) thresholds are as follows:

Filing Status	PEP Threshold Starts	PEP Threshold Ends
Single	$258,250	$380,750
Married Filing Jointly	$309,900	$432,400
Married Filing Separately	$154,950	$216,200
Head of Hosuehold	$284,050	$406,550

2015 Standard Deduction Amounts

There are two main types of tax deductions: the standard deduction and itemized deductions. You can claim one type of deduction on your tax return, but not both. For example, if you claim the standard deduction, you cannot itemize deductions – and vice versa (if you itemize deductions, you cannot claim the standard deduction). You are allowed to use whichever type of deduction results in the lowest tax.
The standard deduction is subtracted from your Adjusted Gross Income (AGI), thereby reducing your taxable income. For tax year 2015, the standard deduction amounts are as follows:

Filing Status	Standard Deduction
Single	$6,300
Married Filing Jointly	$12,600
Married Filing Separately	$6,300
Head of Household	$9,250
Qualifying Widow(er)	$12,600

RELATED: Projected U.S. Tax Rates for 2016

Tax Preparation

• Fix Errors on Your Tax Return
• Owe IRS? Resolve it
• Need Copies of Past Tax Returns?
• Apply for Your EIN Number

What to Do if You Owe Back Taxes

• Make a Back Taxes Payment Plan
• Learn about IRS Tax Liens
• Get Help with an IRS Levy

Related Topics

• Tax News
• Past Tax Returns
• Tax Strategies
• Federal Tax Returns
• State Tax Returns
• Tax Credits
• Tax Deductions
• Tax Extensions
• Tax Refunds
• Paying Taxes

State Taxes and Retirement: What You Should Know and Plan For

There are many financial challenges retirees must face. Some of these challenges include having to squeeze their nest egg to fund their retirement, having to optimize Social Security benefits, and having to make important lifestyle decisions that affect their wallets. The number of issues retirees have to deal with during their latter years seem incalculable.
This plethora of difficulties may cause important focus points such as state taxes to be swept under the rug. They should be warned: state taxes play a critical role in the quality of life of retirees. This issue must be addressed for any retiree serious about keeping costs down and enjoyment up. (For more, see: Finding a Retirement-Friendly State.)

Retirement Income Taxes

There are a number of different ways states treat pensions and retirement income. Some only tax interest and dividends, others offer specific exclusions, and still others get their money through a flat tax that applies to all residents. When it comes to pensions, there are also sometimes specific rules. In fact, the details are so unique with each state that it's best to consult a tax professional. For example, California charges 2.5% for retirees looking to withdraw from their retirement account before the age of 59½. Keep in mind that this is in addition to the federal penalty. (For more, see: 5 Tax(ing) Retirement Mistakes.)
Many retirees don't have a clue as to how retirement income is taxed and may fall into the trap of thinking that the rules are similar to other types of income — or worse, that retirement income isn't taxed at all. This is why it is critical to sit down with a tax preparer and a financial advisor to come up with a strategy for optimizing the tax efficiency of retirement accounts. (For more, see: 9 Factors That Affect When You Retire.)

Estate and Inheritance Taxes

While estate and inheritance taxes might not directly affect retirees, they do affect those whom retirees love. Heirs of an estate or those who receive an inheritance might be surprised to find that their newfound money will be taxed. Thankfully, the majority of states do not require payment of estate or inheritance taxes. However, there are still quite a few states that do. Even still, some of the states that do impose estate and inheritance taxes have large exemptions — in one case an exemption is over $2 million. Additionally, the vast majority of states do not have gift taxes. But don't forget to check at the federal level for gift taxes. (For more, see: 5 Estate Planning Tips.)

Social Security Benefits

Most states do not include Social Security benefits as taxable under their income tax rules. That's really good news, but it's important to note that the federal government may tax Social Security benefits depending on your situation. For the states that do tax Social Security benefits, the benefits are taxed to a certain extent and not necessarily exactly as the federal government does. Here again, it's important to meet with a tax preparer to discuss how this works in your state. (For more, see: Top Tips for Minimizing Taxes on Social Security.)

The Bottom Line

With a little research, some retirees may discover that moving to another state would significantly decrease their tax liability. However, retirees should consider every factor when it comes to living in a particular state so they can enjoy the retirement they've sought after — and deserve — after all those years of hard work. It is critical to consult with a tax preparer and a financial advisor to come up with a strategy. (For more, see: The Worst States for Taxes During Retirement.)

How Long Should I Keep My Tax Records?

A: The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records.
As the IRS puts it, the duration of your tax record keeping depends on the “action, expense, or event” impacting those records.
Those actions, and those timelines, are important, as they impact the statute of limitations on any amendments to your tax return, or the federal government’s ability to demand additional tax payments from you.
To comply with IRS documentation mandates, keep the following tax records for the following time periods:

Document	Duration of Record Keeping
Federal tax returns	At least three years
Reason: Uncle Sam only has three years to assess additional tax payments. On the flip side, taxpayers only have three years to make a claim they were entitled to, but did not receive. One exception: You need to keep page 1 of Form 1040, 1040A, 1040NR or 1040-T if you ever made nondeductible contributions to a traditional IRA and filed Form 8606, until all distributions are made.
Investment forms	At least seven years
Reason: The IRS wants taxpayers to hold on to individual retirement account (IRA) documents, home sales paperwork and other key investments for seven years. The agency may need to go back that far to ascertain accurate payment on taxes owed on investment accounts.
Bank statements	Two years
Reason: In general, bank statements and employment paycheck stubs need only be kept for two years.

If you have under-reported any federal taxes, keep your tax documents from the past six years, starting with the year the taxes were under-reported. If you have failed to file a form, or filed a fraudulent form, don’t toss tax records away. The IRS has a legal right to review them.
The period of limitations is the time in which you can amend your tax return to claim a credit or refund, or the time in which the IRS can assess additional tax.
The following information contains the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.

Note: Keep copies of your filed tax returns. They help in preparing future tax returns and making calculations if you file an amended return.

1. You owe additional tax and situations (2), (3), and (4), below, do not apply to you: Keep records for three years.

2. You do not report income that you should report, and it is more than 25% of the gross income shown on your return: Keep records for six years.

3. You file a fraudulent return: Keep records indefinitely.

4. You do not file a return: Keep records indefinitely.

5. You file a claim for credit or refund after you file your return: Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later.

6. You file a claim for a loss from worthless securities or bad debt deduction: Keep records for seven years.

7. Keep all employment tax records for at least four years after the date that the tax becomes due or is paid, whichever is later.

Important Questions

The following questions should be applied to each record as you decide whether to keep a document or throw it away:
Are the records connected to assets?
Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to determine any depreciation, amortization or depletion deduction, and to find the gain or loss when you sell or otherwise dispose of the property.
Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property in a taxable disposition.
Did you make nondeductible contributions to an IRA?
Then, as discussed above, you need to keep the following papers to verify the nontaxable part of distributions from your traditional and Roth IRAs. Here, from the IRS website, is a list of the forms and records you need to keep until all distributions are made:

• Page 1 of Forms 1040 (or Forms 1040A, 1040NR, or 1040-T) filed for each year you made a nondeductible contribution to a traditional IRA.
  
• Forms 8606 and any supporting statements, attachments, and worksheets for all applicable years.
  
• Forms 5498, IRA Contribution Information, or similar statements you received each year showing contributions you made to a traditional IRA or Roth IRA.
  
• Forms 5498 or similar statements you received showing the value of your traditional IRAs
  

What should I do with my records for nontax purposes?

When your records are no longer needed for tax purposes, do not discard them until you are certain you won’t need them for other purposes. For example, your insurance company or creditors may require you to keep records longer than the IRS does. When in doubt, play it safe and keep the records.

Your Property Taxes: 4 Little-Known Ways to Reduce

Many homeowners will attest to how expensive owning a home can be. Planned or unplanned, there always seems to be an expense. One of the most frustrating costs is the annual property tax bill. We know it comes every year, but may not realize we could be paying less. That is because many homeowners don’t understand how property taxes are calculated. They only know their tax funds the local government and that it’s based on the value of their home. What many don’t realize is that there are reasonable ways to lower your property taxes. Here are four of those overlooked ways.

Appeal Your Tax Bill

Believe it or not, appealing your tax property bill is one of the best ways to lower your taxes. If you believe your home is overvalued when you receive your bill, don’t wait to appeal. “You have between 30 and 90 days to appeal your tax bill. Contact your local assessor's office and ask what the appeals process is. It is better to begin this step immediately upon receiving your tax bill,” says Arvin Sahakian, Vice President of BeSmartee. Various factors can be used to justify an appeal, such as: (For more, see: How Property Taxes Are Calculated.)

• Overvaluation by the assessor.
• Misrepresentation of property size.

If your assessment has some inaccuracies it will pay to quickly seek out an appeal.

Get Special Deductions

There are various instances where you may be able to have the value of your home reduced in the eyes of the local government. These deductions protect certain individuals from having to pay the full-expected tax bill. “It's important to check for any special tax deductions in your area and for your specific circumstances. For example, seniors, veterans, people living with disabilities, farmers and low-income households qualify for property tax exemptions, deductions or credits in many states,” says AJ Smith, vice president of Content for SmartAsset. (For more, see: 5 Tricks for Lowering Your Property Tax.)
The key to remember here is deductions vary by state. Contact your local government to find out if you qualify for such a deduction.

Don’t Add On

Many homeowners, especially first-time ones, don’t realize their property tax bill is directly related to the value of their home. As you add on to your house, the value will arguably increase. The property tax responsibility will likewise increase. Such additions can include:

• A new bedroom
• Adding a deck or porch
• Building a pool

Any new construction that will add something permanent to your home will increase the amount of property taxes you owe. (For more, see: What You Should Know About Real Estate Valuation.)

Look at Similar Properties

Researching a handful of homes in your neighborhood or subdivision is one of the best ways to reduce your property tax liability. You want to find homes of comparable size and value to help give a fuller picture of what you should pay. Make sure to do full research when looking at other properties. You want to provide specific properties to find discrepancies. Those discrepancies will help build a case for lowering your property tax bill. There are even online tools to build such a case. According to Sahakian, “Use online sources to estimate property values based on sales, such as Realtor.com. Filter results by bedroom, bathroom and square footage. If values have gone down and your property is overvalued, you can request a review by the assessor.”

The Bottom Line

Paying a property tax bill is never fun. While it’s part of the cost of owning a home, in certain circumstances it’s quite possible to lower your payment and save some money.

Your Income Tax: 3 Little-Known Ways to Reduce It

 Income tax is a burden that almost everyone shares. Most of us also share the desire to lessen that burden. You don’t have to commit tax fraud to do so. In fact, there are several lesser known ways to reduce your income tax legally of which you may not be aware. Below are three.

Paying Fees Smartly

Thankfully, there are plenty of methods you can use to decrease how much you pay in income tax. Many of them involve planning ahead, moving things around and being aware of timing. “If you have both an individual retirement account (IRA) and a non-IRA account that are both being charged investment fees, consider paying all those fees from the non-IRA account. The IRA fees are not tax deductible whereas the non-IRA fees are,” certified financial planner (CFP) Daniel Zajac of Simone Zajac Wealth Management Group says. This is a simple way to pay fewer taxes without changing your investment habits. (For more, see: 7 Most Overlooked Tax Deductions.)

Deductions Can Help

If you itemize your taxes, there are probably areas you can deduct. State sales tax is a common deduction many people fail to include on their itemized list. Mileage driven for charitable reasons or going to a doctor's appointment are also deductible. You can deduct business expenses that are not reimbursed if they exceed 2% of your adjusted gross income (AGI). You can also deduct investment fees, which are part of miscellaneous itemized deductions. This can be especially helpful for professional investors or anyone who invests heavily over the course of the year. (For more, see: An Overview of Itemized Deductions.)

Even if you don't itemize your deductions on form 1040, you can take what are known as above-the-line tax deductions, or adjustments to your gross income. Two examples: Teachers can deduct up to $250 for out-of-pocket expenses for classroom supplies. And if you have a Health Savings Account (HSA), you can claim an above-the-line deduction for contributions to your HSA.

Think Ahead for Retirement

If you’re thinking about how much money you’ll owe in taxes once you retire, start planning now. If you make contributions to a Roth 401(k) or Roth IRA account, you can avoid paying taxes on that amount when you withdraw that money at retirement. Unlike traditional 401(k) and IRA accounts, with Roth 401(k)s and Roth IRAs you don’t have you pay taxes when you withdraw. You can also roll over a Roth 401(k) to a Roth IRA once you retire. If you have that option through your employer, consider opening a Roth 401(k) instead of a traditional 401(k). You will have to pay taxes if you roll over your traditional account to a Roth, so do the match before you convert those accounts.
Another method is to decrease the expenses you’ll have in retirement. The less you have to withdraw, the fewer taxes you’ll pay on it if you have a traditional retirement account.
Think about your current lifestyle and consider any changes, large or small, you could make to decrease your cost of living in retirement. Most people can probably cut their expenses somewhere without feeling a significant negative effect. If you pay off your mortgage before retirement, for example, this could be a simple way to lower your retirement expenses. (For more, see: 10 Most Overlooked Tax Deductions.)

The Bottom Line

Taxes cannot be avoided, but a needlessly high tax bill can be. There are probably lots of ways you can decrease your own tax bill this year. You don’t have to be a professional to find information about decreasing your taxes – you only need time and patience. If you have further questions, consider consulting a certified public accountant (CPA) or other tax professional for more advice. They'll be able to give you more customized help and support.