DQ1 Identify the four major tax categories.
Most people pay taxes in four major categories: taxes on purchases, taxes on property, taxes on wealth, and taxes on earnings.
Which of these taxes affect your personal cash flows?
A tax on one’s earnings has the most impact on cash flow. Even if you don’t own property or decide not to eat you still pay tax on the money you work for. The two main taxes on wages and salaries are Social Security and income taxes. The Federal Insurance Contributions Act (FICA) created the Social Security tax to fund the old-age, survivors, and disability insurance portion of the Social Security system and the hospital insurance portion (Medicare). Income tax is a major financial planning factor for most people. Some workers are subject to federal, state, and local income taxes.
Throughout the year, your employer will withhold income tax payments from your paycheck, or you may be required to make estimated tax payments if you own your own business. Both types of payments are only estimates; you may need to pay an additional amount, or you may get a tax refund. Ch3 pg.77-79

Consider whether you typically receive a tax refund or owe taxes each year. What adjustments could you make and what benefits could you take advantage of in improving your outcome?
The change I could make is to increase my itemized deductions. These are expenses taxpayers are allowed to deduct from adjusted gross income. Common itemized deductions I use include:
Medical and dental expenses, Taxes, charitable contributions, interest, and job related expenses.
I typically don’t receive any taxes back at the end of the year and end up paying between $200 and $300 back at the end of the year. I keep most of my earned income throughout the year to use in my investments and savings. This is a personal preference I have used since 2007. I used to run a business and learned that getting audit by the IRS wasn’t a bad thing. It can be very costly if they don’t catch it for years. You end up paying interest on the amount owed. Ch3 pg 81

DQ 2
Describe your current budgeting system. What factors influence your financial decisions? What are the benefits or concerns of your current budgeting system?
My current budgeting system consists of two saving accounts. The first is loaded with the family annual budget. This account is for paying rent, utilities, insurance (medical and car), maintenance and gas. We use credit cards to pay for everything. The cards carry a low APR which they never make off us because we pay in full every month. We earn point for every dollar we spend. So at the end of the year we get cash back in the form of visa card or flight. We usually use the money to buy Christmas gifts. This is the must have for us to live on throughout the year.
The second account is used for our vacationing, entertainment, kids recreational sports, etc. Since we plan most of the events we use this account for we buy certificates of deposits (CD) to make some interest for borrowing. In a previous class I just found out about Treasury bond you can buy that pay a lot more than CD’s.
In both accounts we have managed surplus by the end of the year due to less outings, kids only wanting to play one sport, and making adjustments to our cable and TV packages. I have been taking the train to work vs. driving which saves me time and money for gas and maintenance. We usually try to make all our budget money during the first quarter of the year. If business is slow then this could become a real concern for our budgeting systems where we may have to take loans from our investment plans to supplement the slow times.
Reply to the video
After watching part one of the video, I reflected on my experience with financial planners. I did some research in the past about personal financial planning and set with some counselors as well, but this is the first I have heard of the long term goal aligning with the career. It makes since though and interesting