Monthly Archives: April 2009

2009 IRS Federal Income Tax Schedules – Tax Brackets

A few weeks ago, as I was searching the IRS website (for an unrelated publication), I stumbled across this PDF File, outlining the 2009 IRS Federal Income Tax Rate Schedules.  These rate schedules define various tax brackets.  It’s always good to have an idea of which tax bracket you are in, so that you can figure your effective tax rate.  Remember, your tax bracket and your effective tax rate are two entirely different things!

Single Filing

10% on income between $0 and $8,350
15% on income between $8,350 and $33,950; + $835
25% on income between $33,950 and $82,250; +$4,675
28% on income between $82,250 and $171,550; + $16,750
33% on income between $171,550 and $372,950; + $41,754
35% on income over $372,950; + $108,216

Head of Household Filing

10% on income between $0 and $11,950
15% on income between $11,950 and $45,500; + $1,195
25% on income between $45,500 and $117,450; + $6,227.50
28% on income between $117,450 and $190,200; + $24,215
33% on income between $190,200 and $372,950; + $44,585
35% on income over $372,950; + $104,892.50

Married Filing Jointly

10% on income between $0 and $16,700
15% on income between $16,700 and $67,900; + $1,670
25% on income between $67,900 and $137,050; + $9,350
28% on income between $137,050 and $208,850; + $26,637.50
33% on income between $208,850 and $372,950; + $46,741.50
35% on income over $372,950; + $100,894.50

Married Filing Separately

10% on income between $0 and $8,350
15% on income between $8,350 and $33,950; + $835
25% on income between $33,950 and $68,525; + $4,675
28% on income between $68,525 and $104,425; + $13,318.75
33% on income between $104,425 and $186,475; + $23,370.75
35% on income over $186,475; + $50,447.25

These rate schedules may come in handy, especially considering this news from Yahoo that millions of couples and retirees might have higher-than-expected tax bills come next April. Keep your tax rate in mind as you plan your retirement contributions and other tax-related financial decisions.

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Visa Debit Cards More Popular Than Visa Credit Cards

Are people falling in love with their debit cards?

During the quarter ending December 31, 2008, people made $203 billion in purchases using their Visa credit cards.  During that same period, people made $206 billion in purchases using their Visa debit cards.  (You can read more by viewing Visa’s latest SEC Filing.  These figures are for U.S. purchases only.)

Also, during the year 2008, the number of credit cards in use rose 2%, from 706 million to 813 million, as compared to the year 2007.  Over that same time, the number of credit cards in use rose 14%, from 795 million to 905 million.  (These figures appear to be for world-wide use.)

Either way you look at it, debit cards are becoming more popular.  I stopped using my credit card four years ago, and I do not miss it.  I’ve managed to reserve hotel rooms with my debit card, and I’ve even researched how to rent a car with a debit card.  My current bank treats debit card transactions with the same security as credit card transactions.

As debit cards become more popular, I’m sure that debit card-related fraud will increase, as well.  Such is the nature of how the world works.  No matter the system, or mechanism for transferring money from one party to another, there are those who will find ways to manipulate that system or exploit that mechanism.  Keep this in mind when you use your debit card.  Be careful.  Be mindful.  Be smart.

I am not sure if this move towards debit cards is short term – driven by the recent downturn in the economy – or long term – signaling a move away from credit and towards paying with cash-on-hand.  It will be very interesting to take a look at Visa’s next SEC filing, to see if this is a trend, or a one-time blip.

What about you?  Are you using your debit card more than you used to use it, as compared to your debit card?  What are you worries when you use your debit card?  Do you use your debit card for online purchases, and if you do, do you feel comfortable when doing so?  Do you know your bank’s debit card security policies?

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12 Months To A Fully-Funded Roth IRA

Are you a procrastinator?  Good news.  Even if you missed the first four months of 2009,  you still have a full “year” to make contributions!  That’s right.  The contribution time-table runs from January 1, 2009 until April 15, 2010.

For most folks, the annual contribution limit for a Roth IRA is $5000.  (See IRS Publication 590 for complete information about contribution and income limits.)  If you start making contributions May 1st, at a rate of $416.67 per month, and make contributions each month until April 1st, you will have fully-funded (made maximum contributions to) your Roth IRA.

Even if you can’t fully-fund your Roth IRA, you might want to consider making contributions, even small ones.  Remember, after April 15, 2010, you can no longer make “2009″ contributions.  The opportunity to make those “2009″ contributions will be gone forever.

These same rules apply to the Traditional IRA and to the ESA (Educational Savings Account)

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The Negotiator

I hate face-to-face negotiations.  So, in the past, I’ve paid full price for items that I’m sure I could have gotten for less, simply because I don’t like asking for discounts.  Recently, however, I managed to to make two rather significant purchases, and I negotiated lower prices for both of them.  Here’s how.

Purchase #1 – A new grass trimmer.

I purchased a new grass trimmer from a large retail store.  After deciding on the model that I wanted, I asked to speak to the head of the outdoor power equipment section.  (I’m not sure what his official title is, I just know he works with the outdoor power equipment.)  I told him exactly which model I wanted to purchase, and I told him that I was ready to by, that day, but that I didn’t want to pay full price.  At first, he mentioned that I could get a 10% discount, if I would only apply for a store-branded credit card.  (Click here to read about an interesting conversation I once had with a salesperson about store-branded credit cards.)  I explained to him that I had cash, and that I do not use credit cards.  I then stopped talking and just waited to see what he might say.

At first, he didn’t say anything, and then he decided to speak to his manager.  I assured him that I would wait for him to return, and he headed off to have a conversation.  A few minutes later, he returned, and offered me a 10% discount, no credit application necessary.   At this point, I almost went forward with the purchase, but I really wanted to test my negotiation skills.  So, I simply asked, “Is that the very best you can do?”  (This is an old negotiating tip, and one that many others have been using for years.  For me, this was a first.  Seriously, I do not like face-to-face negotiations.)  He found his manager again, returned, and told me that the absolute best he could do would be a 15% discount.  Not wanting to push things further, I accepted his offer, made my purchase, and now I’m  enjoying my new grass trimmer.

Now, I’m sure that some of you out there are much better at negotiating discounts than I am.  I’ll freely admit, I’m usually a pushover.  So, the 15% discount, while nothing spectacular, was pretty major for a guy like me, who usually avoids the negotiation process all together.

Purchase #2 – The Vacation

This one happened just a few minutes ago.  Last year, we found a really awesome, affordable place for our annual family vacation.  It’s on the beach, it’s secluded, and it’s perfect for our young kids.  This year, while booking our stay, I decided to see if I could get a discount.  I emailed the property manager, mentioned how much we loved our stay last year, and asked for the lowest rate she could give us for an eight-night stay.  A few hours later, she emailed back, with a total that was 10% less than what the property’s website was stating.  Again, instead of jumping on the first offer, I emailed back, and mentioned that we really loved the site, but that we wanted to be sure that we were getting the best possible rate.  A few minutes later, she emailed back, and gave us a 25% discount on the cost of renting the condo.  Not bad, I’d say, for a few clicks on the old keyboard!

There you go.  Two tales of negotiating success.   What about you?  Do you like to negotiate?  (I know lots of guys who do.  I know guys who will negotiate the price of anything!  Me?  I think I’ll save it for major purchases.)  Would you like to become a better negotiator?  With the current economic climate, do you think we’ll see more people negotiating prices?

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