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What is Publication 504, Divorced and Separated individuals?
IRS Link to Publication — Found Here Divorce can be a hard thing on a personal level, and the tax returns can become more difficult to sort through as well. Publication 504 walks through the various choices available to those who are divorced or separated and who may need to adjust how their dependents are claimed, how property is divided up or sold, and who pays the taxes due at the time of divorce. Publication 504 gives detailed instructions concerning how to correctly report and file the proceeds of divorce. Continue reading...
How are Social Security Benefits Computed?
Social Security retirement benefits are computed by finding the average monthly income of a worker during the highest-earning 35 years of employment, and then it plugs that amount into a formula for to determine their full benefit at Normal Retirement Age (NRA). A person may then choose to take benefits before or after NRA, with applicable reductions or additions. There are different equations for spousal benefits, survivor’s benefits, and maximum family benefits. Continue reading...
What is Publication 503, Child and Dependent Care Expenses?
IRS Link to Publication — Found Here Publication 503 covers tax deductions and filing guides for individuals who pay for childcare. It does not address the employer side of things, for those who provide childcare as a fringe benefit, which is covered in IRS 15-b. Tax deductions are available for parents who have to pay for child-care so that they can work at a job and earn income. Publication 503 describes the circumstances under which this type of deduction is allowed and the filing requirements for it. Continue reading...
Will My Spouse and Children Receive Social Security Benefits if I Die?
Spouses and children can and do receive social security benefits upon the death of a person who paid into the system. A spouse who is older than 60 will always be able to receive either a majority of the benefit that was (or would have been) paid to you, using their own age against the full benefit amount that was part of your benefit equation. Children, including dependent grandchildren, can receive a payment equal to 75% of your full benefit amount until they are about 18. Continue reading...
What is Form 1045: Application for a Tentative Refund?
IRS Link to Form — Found Here Form 1045 can be used to apply for a refund that might carry-back of up to 5 years, if an individual or trust has overpaid on their taxes, finds Net Operating Losses (NOL), or has section 1256 losses to carry-back. The 1045 is meant to be the quickest way to get a carry-back refund. Net Operating Losses from a pass-through entity or business can be carried back up to 5 years now, according to updates to IRC 172(h). Section 1256, which applies to futures contract investing, will allow a carry-back of losses in a 3-year time frame. For such carry-backs, the standard filing is IRS Form 1045. Continue reading...
What is IRS Publication 502 on Medical and Dental Expenses?
IRS Link to Publication — Found Here Publication 502 outlines which types of medical and dental expenses are deductible, who can be included in your considerations, what the limits are on deductions, and more. This publication is primarily meant for individuals but businesses might find it useful as well. Publication 502 is a source of information for all tax information regarding deductions stemming from medical and dental expenses and insurance. Continue reading...
What is Demand?
Demand is a measure of consumer’s desire to purchase goods and services. High demand for a product typically puts upward pressure on price, and vice versa. Demand is a key metric in reading price trends and a company’s ability to set price point. Weaker demand on a global macro level implies that countries are investing less, developing less, and therefore focused less on growth. Sustained downtrends in demand will generally lead to recessionary conditions. Often times, central banks will try to step-in and stoke demand by lowering the cost of money (interest rates). Continue reading...
What does hypothesis testing mean?
A theory about what will happen and why is a hypothesis, and to prove the hypothesis has some relevancy it will have to be compared to the probability of getting those results by pure chance. A hypothesis is a testable prediction of results that should be observed due to the effects of an independent variable. Such predictions must be tested against the probability of the resulting observations happening due to complete chance instead of the influence of the independent variable. Continue reading...
What is the Law of Demand?
The Law of Demand states that as prices increase, demand will decrease, and vice versa. That is to say, price and quantity are inversely related. There are some things which have an inelastic demand, meaning the quantity demanded will remain constant no matter the price. Medicine is a good example. Vices to which people are addicted are as well, so some degree, and tobacco stocks are considered fairly safe and defensive in bad economic times. Continue reading...
What is the Descending Triangle (Bullish) Pattern?
The Descending Triangle pattern is formed when the price of a security establishes a support level (1, 3, 5) and bounces off that level to a declining resistance level, creating a down-sloping top line (2, 4). The breakout can either be up or down, depending if the resistance or highest support level is broken first. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. Continue reading...
What is the Descending Triangle (Bearish) Pattern?
The Descending Triangle pattern has a horizontal bottom (1, 3, 5) which represents the support level, and a down-sloping top line (2, 4). The breakout can be either up or down and the direction of the breakout determines which corresponding price level is the target. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. When the price of a security consolidates in a somewhat volatile fashion, it may indicate growing investor concern that the price is set to break out. Continue reading...
Should I pay for financial planning services?
Any professional that you work with for financial planning is going to be compensated for the work they do, but there are different ways they earn their pay. Whether it’s worth it to you is another question. If you have enough knowledge and time on your hands, and your investment portfolio is not very complicated, you may be able to manage it on your own. This can save you some money on financial advisor fees. Continue reading...
What is the Broadening Wedge Descending (Bearish) Pattern?
The Broadening Wedge Descending pattern forms when a security price makes lower lows (1, 3, 5) and lower highs (2, 4), forming two downward sloping lines that expand over time (kind of like a pointed down megaphone shape). This pattern may form when large investors spread out their selling over a period of time, and the Breakout can occur in either direction. When the initial selling occurs, other market participants react to falling price and jump on the bandwagon to participate. Then the value investors begin to sell, believing the price has not fallen enough, which spurs the original large investor to resume selling again. Continue reading...
What is market equilibrium?
Market Equilibrium occurs when fluctuations between supply and demand balance out, keeping prices relatively stable. This trend appears relatively horizontal or sideways when charted. Both price equilibrium and quantity equilibrium should meet at the same point where the supply and demand curves meet on a chart. According to the Law of Supply, with all factors being equal, if the price of a good or service increases, the supply of that good or service will increase. If demand doesn't meet it, the price of that good or service must come down; this increases demand but might cause a shortage in supply, which might drive prices back up, and so on. Continue reading...
What is the random walk hypothesis?
The Random Walk Hypothesis states that in an efficient market, prices will correlate around the intrinsic value of securities, but there will always be a randomization and unpredictability to it. The Random Walk Hypothesis suggests that technical analysis and the efforts of chartists cannot beat the market over time, because the market will move randomly and unpredictably, and past results cannot predict future returns. Continue reading...
How to use the Broadening Wedge Descending (Bullish) Pattern in trading
Once the price breaks out from the top pattern boundary, day traders and swing traders should trade with an UP trend. Consider buying a security or a call option at the upward breakout price level. To identify an exit, compute the target price for by adding the height of the pattern to the upward Breakout level. Pattern height is the difference between the highest high and the lowest low. The upward Breakout level is the highest high. Continue reading...
Can Blockchains Reduce Fraud and Failed Payments?
Blockchains can validate, clear, and document transfers of value much faster and more securely than traditional methods. Blockchains offer an extremely efficient and reliable means of processing transactions of any size in a way that reduced the likelihood of fraud and failed payments. If a cryptocurrency wallet says that there is a specific balance present in a specific wallet, then that balance is there; it can be validated using the transaction record held on the thousands of computers on a b... Continue reading...
What is market disequilibrium?
Market Disequilibrium occurs when market and external forces combine to unbalance a market, creating inefficiency in the market in the process. A disequilibrium produces what’s called a “deadweight loss,” “welfare loss,” “excess burden,” or “allocative inefficiency.” As described by efficient market theory, the price fluctuations we see in market behavior are the market trying to find its truly efficient price and quantity – the theoretical point of equilibrium. Investors attempt to locate it using moving averages and other means of technical analysis. Continue reading...
What are Fully Diluted Shares?
Fully Diluted Shares are a calculation used to show how much the existing shares of common stock could potentially be diluted if all the convertible securities and employee stock options, were exercised. Fully Diluted Shares is a calculation used to show the potential number of shares that could hypothetically be called into existence instantaneously by the holders of convertible securities, warrants, employee stock options and so forth. Continue reading...
What is Required Rate of Return?
Required Rate of Return is the return that investors will expect to earn on their money, given the risk and costs involved. Required Rate of Return is determined by the market for a particular security or asset at a given time. Issuers of fixed or variable coupon bonds must look at the rates offered by their peer institutions with similar credit ratings. Investors will require a certain rate of return if they are going to invest their money, and this is where the RRR gets its name. The calculations which help an issuer to arrive at the RRR will include the current risk-free rate (10 year treasury bond rate), liquidity, inflation, and so on. Continue reading...