Just a reminder that the 3rd quarterly IRS payment for 2010 must be postmarked by Wed., 9/15 to avoid penalties.

Estimated Taxes

Estimated tax is the method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards. You also may have to pay estimated tax if the amount of income tax being withheld from your salary, pension, or other income is not enough.

Estimated tax is used to pay both income tax and self-employment tax, as well as other taxes and amounts reported on your tax return. If you do not pay enough through withholding or estimated tax payments, you may be charged a penalty. If you do not pay enough by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.

Who Must Pay Estimated Tax

If you had a tax liability for 2009, you may have to pay estimated tax for 2010.

General Rule

You must pay estimated tax for 2010 if both of the following apply.

1. You expect to owe at least $1000 in tax for 2010 after subtracting your withholding and credits.
2. You expect your withholding and credits to be less than the smaller of; 
   • 90% of the tax to be shown on your 2010 tax return, or
   • 100% of the tax shown on your 2009 tax return. Your 2009 tax return must cover all 12 months. 

Source: IRS Website Article

My good friend and Christian finance blogger, Jason Price, recently featured our conversation about "how to find an objective financial adviser" on his blog.

Here are a few excerpts:

How can you get objective advice when working with a financial adviser?

It’s unfortunate, but you really have to follow the money.  Commission-based advisers are unable to recommend the full universe of financial products and their compensation can vary depending on which product they sell.  Not good.  Advisers who are employed by Wall Street firms are paid by the firm, not by you, so it is ultimately their employer who they answer to.  Independent, fee-only advisers who are paid solely and directly by their clients and independently of the recommended product represent the most objective advice possible. 

Why is the financial advice delivery system diseased?

You have companies that manufacture, distribute, and advise on products of their own creation.  That’s like doctors getting paid based on the number of pills they prescribe you.  There’s a reason that people are fed up with the financial industry and why they are so skeptical of Wall Street firms, banks, and insurance companies...

Read the whole interview

I don't use a copy machine in my practice for several reasons:

1. Buying or leasing a copier is expensive and so are the man hours related to making, filing, storing, and retrieving those copies.
2. If I'm collecting that much hard copy information from someone, I'm doing something wrong (I use carefully constructed and encrypted online client forms to gather most of the information I need)
3. There's precious little "personally identifiable" information that I need from you (birthdate is one such piece of information but I don't want or need your social security number or account numbers)
4. Copiers represent a colossal security risk of your personal information as shown in this video

Think about these reasons next time your financial adviser says "I'll just make copies of these..."

"Those who seek my life set their traps, those who would harm me talk of my ruin; all day long they plot deception."
-- Psalm 38:12 

By allowing the estate tax to disappear in 2010 (only to reappear in 2011), the government is allowing the heirs of the richest of the rich (who are unlucky enough to die this year) to reap a windfall profit.

The most notable recent example is George Steinbrenner, who died earlier this year.  His heirs will pocket an estimated $500,000,000 (that's 1/2 of $1 billion if you're not used to seeing that many zeros) more than had Steinbrenner died in a year other than 2010.

Read the whole article

Please don't conclude from the above commentary that I support the estate and gift tax.

 I am adamantly opposed to any tax that:

1. Generates less revenue than it costs to collect
2. Taxes income that has already been taxed multiple times.

Sadly, the estate tax achieves both.

I am, however, getting a little tired of hearing politicians talking out of the side of their mouths about "taxing only the rich."

Last time I checked, most people consider billionaires to be rich.

This tired debate can be solved by scrapping our pitiful excuse for a tax code and replacing it with a consumption-based tax ala the Fair Tax.

More on the Fair tax:

Fair tax website

Fair tax FAQ

The case for the fair tax

Why democrats should love the fair tax

"Do not pervert justice; do not show partiality to the poor or favoritism to the great, but judge your neighbor fairly."

-- Leviticus 19:15

Stark Investments LP, among the oldest surviving hedge fund managers, whose flagship hedge fund saw its assets and performance plummet in the wake of the 2008 credit crisis has a deal for its investors:  agree to a lockup period of one year and have your fee discounted.

"...with esoteric, illiquid investments... Stark's assets plunged nearly 71%.. as of July 1 from a peak... Aug. 31, 2007."