Is a Roth Account Right for You?

Over the last decade, the total number of households with Roth IRAs has increased by 47%. This rapid growth clearly shows the value of these plans. But why exactly are people so thrilled about Roth accounts?

The most prominent difference between Roth IRAs and traditional plans is that Roth contributions are made post tax. With traditional retirement accounts, savers contribute pretax dollars and pay normal tax rates upon withdrawal of the funds. With Roth plans however, individuals pay normal tax rates before contributing.

Because of the relatively flexible rules surrounding Roth accounts, they have a variety of uses. Though it is most common to use the funds for retirement, some people utilize the accounts to fund college or as emergency funds. This is possible because of IRS rules stating that any contributions that you have made to your account can be withdrawn with no tax liabilities at any time. [After age … Read More

Break-Even Basics:

Break-even, (the point at which your business will achieve zero gain or loss) is a foundational topic in finance and accounting. This point can be expressed in dollars or units. Break-even analysis is the process of identifying these numbers. There are five different components that are generally used to identify a break-even point.

The first component of break-even is the selling price (SP). The selling price is simply the dollar amount that is charged per unit.

The second piece of break-even is variable costs (VC), which is expressed per unit. These costs are the expenses that vary with the number of units that are produced. They generally include direct materials, direct labor and manufacturing overhead.

Contribution margin is the third concept of break-even. It is equal to the selling price less variable costs. Contribution margin tells how much profit you are making per additional item produced.

Fixed costs are the fourth … Read More

Who’s Who When Dealing with the IRS.

When dealing with the IRS, it can seem challenging to determine who you are corresponding with and what powers they have. However, for the normal taxpayer, it is remarkably simple. Taxpayers will usually correspond with three different players within the IRS. These include revenue officers, revenue agents and special agents.

Revenue officers help the IRS by collecting taxes that have already been assigned. Their civil responsibility is to collect unpaid taxes before they fall further into arrears. This process often involves calling or meeting with taxpayers directly. If taxpayers do not pay, revenue officers have the ability to file liens and levies against property, wages or bank accounts.

Revenue agents serve the IRS by auditing tax returns. They examine returns for unreported income and to search for deductions that cannot be substantiated by taxpayers. If taxpayers cannot support the numbers which they reported, they will be required to pay the full … Read More