Friday Financial Five – March 25, 2016

Friday, March 25, 2016

 

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Tax tips for delayed tax day

Tax filing for personal returns is extended beyond the traditional April 15th deadline to April 18th. It’s important to review 1099 forms issued for non-retirement accounts to identify missing cost basis. If the custodian doesn’t have all of the information to report, capital gains for the tax year may be overestimated leading to unnecessary or incorrect tax payments. Those within the income limits to make traditional and Roth contributions might consider splitting the $5,500 maximum contribution in half to take some tax benefit now while reserving some tax benefit for retirement.

TRID has increased mortgage loan costs

Housing numbers have remained strong thanks to low rates, but the latest regulatory changes may be increasing costs to lenders. The TILA-RESPA Integrated Disclosure (TRID) has resulted in an estimated increase per loan of over $200. That comes from STRATMOR, who calculates that less than 20% of that cost can be passed along to the consumer through additional fees. Banks surveyed were meeting more headwinds adhering to the new guidelines. Generally, the regulations have resulted in a longer period of time from application to closing, but with more informed and satisfied customers. 

Suggested merger of Fannie and Freddie

A most pressing mortgage issue is what to do with Fannie Mae and Freddie Mac, which are currently held in federal conservatorship. A group of experts have suggested merging the two into a single government corporation in the report: “A More Promising Road to GSE Reform." The new corporation (named the National Mortgage Reinsurance Corporation in the report) would have more flexibility, would be required to lend to underserved communities, and wouldn’t be motivated by profit. Ideally, competition would increase and the gap between large and small lenders would close. In the proposal, the Federal Housing Finance Agency (FHFA) would still retain oversight authority.

Yale endowment tax

When times are tough, the logical solution to generate tax revenue would dictate going where the money is. That’s lead to the discussion of a national wealth tax, where those above a certain net worth would face a single payment to plug the gap in entitlement spending. In Connecticut, Yale may face an “endowment tax” to help plug the $266 million shortfall for fiscal year 2016. A proposed bill would tax schools in Connecticut with over $10 billion, with Yale the sole representative in that category. The school currently gives over $8 million per year as a voluntary payment while holding an endowment of almost $26 billion.

Another professional athlete awarded financial justice

Athletes continue to be magnets for financial wrongdoing. Famous second banana, Scottie Pippen, was awarded restitution in a fraud case against a Chicago investment advisor. The advisor obtained fraudulent loans and a line of credit in the name of Pippen from Leaders Bank in Illinois. He then used the loan for his own purposes. The court ordered the advisor to pay Pippen $400,000 and Leaders Bank $1.16 million, while also slapping a three-year prison sentence on the perpetrator. 

Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected] 

 

Related Slideshow: RI Business Rankings in US

See how Rhode Island stacked up.

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WalletHub

Rhode Island has 2015's eighth highest insurance premium penalties for high risk drivers, according to a WalletHub report. 

Rhode Island ranks fifth overall in the category of speeding over 20 mph annual premium increase at $482. While ranking third overall  in the category of 2 accidents annual premium increase at $2,721.

Rhode Island ranks ninth overall under the reckless driving annual premium increase at $749. 

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WalletHub

Rhode Island has been ranked as the 8th most eco-friendly state in the country, according to a recent study by WalletHub.

Rhode Island ranks third in environmental quality and 16th in Eco-Friendly Behaviors Ran landing them in 8th overall.

RI is behind Washington and New Hampshire who are in the six and seven spots respectively, and in front of Connecticut and Hawaii who come in at the nine and ten spot. 

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WalletHub

Rhode Island is 2015's 4th Worst State to be a taxpayer, according to a recent WalletHub report. 

Rhode Island ranks 48th of 51 with an average state and local tax price of $7,159 which is good for a 27% difference from the national average. 

The states that are directly behind Rhode Island are Wisconsin at $7,159, Nebraska at $7,298 and Illinois at $7,719 for a 37% difference from the national average.

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WalletHub

Rhode Island has the highest vehicle property taxes in the country, paying an average of $1,133 according to a report from WalletHub.

Virginia and Kansas are the two states just ahead of Rhode Island in the 49 and 50 spots, paying $962 and $905 respectively. 

RI also ranks 42nd in average real estate tax, paying an average of $2,779, according to the WalletHub report.

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WalletHub

WalletHub has ranked Rhode Island as the 7th worst state to be rich in in a recent in depth analysis of 2015's Best States to be Rich or Poor From a Tax Perspective

On a scale with 1 being the best, and 25 being average, Rhode Island ranks 37th in low income earners, 42 in middle income earners and 45th in high income earners. 

To see the full report, click here. 

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Gallup

Providence-metro ranks at the bottom for job creation in 2014  

Rhode Island has been ranked amongst the worst in job creation, according to a recent survey done by Gallup. 

Gallup gives the Prov-metro area an index score of 23, the lowest score is the New York- New Jersey area with 20. 

Salt Lake City, Utah and Austin-round Rock, Texas rank the highest with a score of 37. 

See the rest of the rankings here. 

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Forbes

The 2014 state rankings by Forbes has just been released and Rhode Island moved up two spots from #48 in 2013 to #46 in 2014.

What does Forbes say about RI's business environment"

After Michigan and Illinois, Rhode Island has experienced the third worst net migration out of its state in the country over the past five years. With a recent unemployment rate of 7.6%—lower than only Georgia and Mississippi—residents are leaving the state in search of jobs. Rhode Island has been stuck in the bottom five overall for six straight years. One plus: labor costs are 5% below the national average, which stands out in the expensive Northeast.

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Tax Foundation

Findings from The State Business Tax Climate Index were released this morning by Tax Foundation which found Rhode Island to have the 45th best tax climate for businesses for 2015. The state's rank has not changed since last year after The Index analyzed 100 different tax variables in multiple categories. 

Read more about the report here

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WalletHub

After conducting an online suvery consisting of 1,050 individuals from both parties across the nation, WalletHub ranked Rhode Island as having America's 33rd fairest tax system.

Click here to view the poll's entire findings

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Thumbtack/Kauffman

Providence is the second worst city in America for small business, according to a new survey conducted by Thumbtack.com and the Kauffman Foundation.

More than 12,000 small businesses in 82 cities across the country participate in the survey. Providence received an overall "F" grade for small business friendliness.

Full Survey Results Here.

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The Economist

Small Business Friendliness Grade: F

The Economist grades states on an A+ to F grading scale for its small business climate.  Rhode Island is one of just 6 states to earn an "F" grade.

Overbearing bureaucracy and excessive licensing is stifling small business in America. 

Read More About The Economist Grade Here

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CNBC

CNBC ranks each state in cost of doing business, economy, technology and innovation.

Rhode Island's unemployment rate as of May 2014 was 8.2 percent. This is RI's lowest unemployment rate since August 2008.

Read More About CNBC Ranking Here

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Forbes

Forbes ranks each state in business costs, economic climate, and growth prospects. RI is third worst in 2013.

The most damning in the commentary:

After Michigan, Rhode Island has experienced the second worst net migration in the country over the past five years.

Read More About Forbes Ranking Here

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ChiefExecutive.net

#39 ChiefExecutive.net

ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.

The most damning in the commentary:

Sky-high unemployment rate bespeaks continuing terrible business climate.

Read More About ChiefExecutive.net Ranking Here

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Tax Foundation

#46 Tax Foundation

Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.

Rhode Island and the other states in the bottom ten suffer from the same afflictions: complex, non-neutral taxes with comparatively high rates.

Read More About Tax Foundation Ranking Here

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Wallet Hub

#24 Wallet Hub

Wallet Hub ranks each state in ROI rank, state tax rank, and overall government services.

Rhode Island ranked #50 for worst roads and bridges, but ranked #4 in safety.

Read More About Wallet Hub Ranking Here

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ALEC

#47 ALEC

ALEC ranks each state in economic performance and outlook.

Although Rhode Island ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.

Read More About ALEC Ranking Here

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Kauffman Foundation

#50 Kauffman Foundation

Kauffman Foundation ranks each state in entrepreneurship.

Entrepreneurial activity generally is highest in Western and Southern states
and lowest in Midwestern and Northeastern states.

Read More About Kauffman Ranking Here

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Free Enterprise

#47 Free Enterprise

Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.

Rhode Island has continued to feel the direct impact and ripples from the recent recession—it ranks 47th overall in economic performance. However, positive rankings of 15th in talent pipeline and 16th in innovation and entrepreneurship suggest the existence of a foundation on which to build the future.

Read More About Free Enterprise Ranking Here

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The Pew Charitable Trusts

#40 The Pew Charitable Trusts

The Pew Charitable Trusts ranks each state in job growth and job creation.

Rhode Island added 6,223 jobs in 2014.

Read More About The Pew Charitable Trusts Ranking Here

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Gallup

10th Worst in Gallup's Annual Ranking of State Job Markets 2014

Rhode Island has been ranked 10th worst for job creation in Gallup's annual ranking of state job markets in 2014 with a job creation index number of 21

Rhode Island is one of two (Connecticut) states to rank in the bottom ten each year since 2008.

The 2014 State level findings have were drawn from 201,254 interviews with employed adults across the nation. 

See the full list of rankings here. 

 
 

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