Future of shopping – Why does it matter to the consumers? is a post from: Wealth Informatics if you enjoy it, please visit us and subscribe to the Feed.

As I mentioned in my post on Wednesday – Do you think this is possible?, I have been researching improvements retailers have been making. They seem to be making an extra effort to get my business.

Don’t they all do that already? That is why we have a spending problem, right? Retailers have always researched consumers and made improvements to sell as much as possible.

The improvements fall under two categories

• Manipulation
• Providing value

I have talked quite a bit about manipulation. Identifying consumers’ weakness better than the consumers themselves and using the weaknesses to sell as much as possible. This time, though, more than just manipulation, a lot of changes I saw provided more value to me as well.

(Click on each section header to expand)

Mobile Checkout

Smartphone enabled product demonstrations

Shopping getting more personal

Bring the store to consumers

Fitting rooms getting a makeover

Omnichannel marketing

Electronic Receipts

Samples, classes and free stuff

Why does it matter to the consumer?

All the changes stores make are to make us spend more right? So why does it matter what changes are happening in the retail world? Several reasons -

1. Value for money : It matters because for me value for my money is more important than the cheapest price. I think that goes for a lot of my readers too. By making use of all the resources we have available we are getting the most value for our money. If I shop in William Sonoma the extra cost the store spent on arranging these classes are factored in the product price anyway. So I might as well use the resources available for me, right?

2. Time : Also, if several of these changes are adopted widely, they will save me a lot of time. If there is a way for me to get my chores done quickly I want to know about it.

3. Privacy : If you are already using Foursquare, Twitter and other social media, you could as well look for these coupons to save money. On the other hand, you should know what information you are sharing and if it is worth the money you are saving. Which brings us to -

4. Conscious decision : This is the whole idea of this blog. Every decision we make should be a conscious decision. I have bought stuff from Costco even if the price is higher because I know I get a good warranty. To make an informed decision, you need to know more than the price. You need to know what value a store provides.

Why does it matter to an entrepreneur?

Business 101, competing just on price is always a losing proposition. Whether you are an entrepreneur or an employee, to succeed you have to constantly improve what you offer. There is nothing in the world that cannot be made better. And the improvements should not be one sided. A business should see how its clients are changing, work with them, provide them value and constantly improve.

Finally this is not really related to this post, but did you know that Amazon filed a patent for a gift conversion system? It is not in use yet, but when it goes live, you will be able to automatically convert all gifts from Aunt Mildred to gift cards or whenever  someone orders you another toaster, you will get a gift card instead. I found it very interesting!

So what do you think? Do you think we are headed in the right direction? Or is it too dangerous for our consumerist society?

Do you think this is possible? is a post from: Wealth Informatics if you enjoy it, please visit us and subscribe to the Feed.

You are planning a romantic getaway for Valentine’s Day. You have recently lost a lot of weight so the dresses you already have no longer look very flattering on you. You are in the market for a new dress.

This is what you would have done…

5-10 years ago : Drag your husband or another friend to tell you how you look when you try on a dress. Go to the shopping district or a mall with a lot of fashion/designer stores. Pick a few dresses you think would be good, try it on, realize they suck, pick a few more, they make you look fat, throw them away, try some more. All the while your companion is getting frustrated. After a few hours of shopping, you finally find something you like, complain how expensive the dress is for sometime and then of course, buy it. Now comes the part about getting accessories or worse, another dress. Before you know it, you have spent the whole day shopping, spent a whole bunch on meals and snacks, not including the expensive dress.

1 – 2 years ago : You go to the store to find the sizes that fit you well. Visit a few online stores and order a few. You try them on at home, some fit but donn’t look as good as the online photo, some are misfits and some are ok. If you are lucky, you get it right the first time or send them back and do it all over again (that is really how one of my friends shops!). Or go the old fashioned route and spend a day at the mall. You still spend a lot of time, but at least most of it is from your own home and the price of the dress is cheaper than buying it from a mall.

Now, picture this : You browse the store website for dresses, you pick a few you like. You also click on the chat window to talk to a fashion expert, he/she will ask you a few questions about your taste, size and the occasion and suggest a few dresses that will be a good fit. In another browser window you google the reviews for some of the dresses you chose. People will be talking about whether it runs smaller or bigger, how much it wears down after washing, how comfortable/uncomfortable they felt and whether they got a good deal somewhere.

You make note of all this and finalize a few dresses. You drive to the local branch of the online store. When you enter the store, you “check in” to the store via a social media site. The sales person welcomes you and greets you by name. She has set aside the dresses you picked online for you to try. She has also gone ahead and picked a few others to try based on the ones you selected. She guides you to the magic mirror, which is essentially a camera. The mirror takes a picture of you, the sales person selects the dress from the computer and simulates the dress on you. You can see how the dress will look on you without even touching the dress. Within a minute you have “tried” all the dresses and picked the final few to actually wear and try.

Before you head to the dressing room, the magic mirror suggests a few accessories to go along with your picks. You try the dress on with the complete accessories you will be wearing to see the final “look”. You click a picture of you in your new dress(es) and send it via Twitter or text it to your friends/spouse to get their opinion. They give you a “yay” or “nay” for each dress. Based on their opinion and what you see in the mirror you pick your best dress.

Remember, you checked in to the store when you came in? You just got a message from that social media site saying that there is a coupon waiting for you to use at this store.

You scan the coupon code from your phone while you are checking out and voila you saved 20% off the price. The entire process took 1 hr, depending on the driving time.

Do you think this is a good way to shop? What do you think are the advantages and disadvantages of this way of shopping? Privacy concerns? Do you even think this is possible? 

I went all journalistic and have a tour of the “future of shopping” post ready. Before I post the piece, I would like to hear from you to know where you think the future of shopping is headed. And don’t forget to drop in on Friday to see if this is really possible!

TurboTax 2012 Review and Giveaway is a post from: Wealth Informatics if you enjoy it, please visit us and subscribe to the Feed.

In this TurboTax 2012 review, I will discuss what TurboTax has to offer and the features of different versions : Free, Deluxe, Premier and Home & Business.

TurboTax doesn’t need any introduction. It is the best selling tax software program, comes in both offline (CD or download) and online versions. I have used it regularly for quite sometime now (except last year, where I tried H&R Block).

TurboTax 2012 review : Summary of different online versions

TurboTax Free Edition (Free for federal preparation, including e-file) : If you have a very simple tax situation and plan on filing a 1040EZ, 1040A or a simple 1040, then you might qualify for the free edition. There is no income restriction to use the free edition. But your return should really be very simple. You cannot itemize your return with the free edition. So if you have a mortgage deduction, charitable donations or child care expenses, you shouldn’t use this edition. The good thing about the free TurboTax edition is it comes with the same support and guarantees as the paid version. So if you are going to take standard deduction and don’t have a complicated return, this is for you.

TurboTax Deluxe ($29.95) : This edition will help with all your itemized deductions. It goes through a series of questions and situations to find all the eligible deductions and available credits for your situation. It, however, cannot handle investments and rental properties. It works seamlessly with ItsDeductible® and Mint.com.  It also allows you to import last year’s tax data, it doesn’t have to be TurboTax, even if you used a different tax software last year you can import the data to TurboTax. As with all the paid editions, this includes the Audit Risk Meter and Audit Support, in case you are audited.

TurboTax Premier ($49.95) : The premier version includes everything that Deluxe edition offers plus complete support for investments and rental properties. The software runs down a series of questions and situations to help find all the deductions you are eligible for that are related to investments and rental properties. One handy feature is it lets you import all the tax forms online from different investment firms. All the major investment/brokerage firms – Vanguard, Fidelity, Charles Schwab, are included in this import feature.

TurboTax Home & Business ($74.95) : This is the version I used. I used to use the Premier version, but this year I had self-employment income, so I upgraded to the Home & Business version. This version asks different sets of questions based on the business set up. Currently, I am a sole proprietor. I tried changing it to LLC and the questions differed. Basically, it tries to figure out all possible business deductions that you can take, like travel, office supplies, home office and other mileage. I have been keeping track of my business expenses well, but this reminded of a few things that I missed, like the money I spent on mailing the winner of my giveaway, if they won a book.  I didn’t have any depreciating assets, but it helps with handling that as well.

State filing is extra for all the versions. For filing your state taxes for free, check out this post for other options - Free State Tax filing online (all states)

What I like about TurboTax 2012?

• Their auto import feature. My W2, my husband’s W2, all our 1099-DIV and 1099-Bs were automatically imported from the respective institutions. I LOVED this convenience. I didn’t even have to wait until I got my W2 in the mail because it was already in the system. I won’t actually file the return until I get that and double check the numbers, but it was super convenient to not have to enter everything. The only other thing I wish I could import were my business income and expenses. Does anyone know if it can import entries from Quickbook?

• You can start all editions for free. You don’t have to pay until you file. So there really is no harm in trying them out to see how to like it and how much you are getting back.
• You don’t need to know much about the tax code. It takes you on a step by step process to figure out what is better for your own situation.

TurboTax 2012 Guarantees

They have an array of guarantees to give you the best value for money.

Maximum refund guarentee : If you get a larger refund or smaller tax due from another tax preparation method, they will refund the money you paid for the tax preparation.

100% Accurate Calculations guarantee :  If you pay an IRS or state penalty or interest because of a calculation error, they will pay you the penalty and interest.

Audit Support Guarantee : This is a new guarantee.  If you are audited by the IRS or State Department of Revenue relating to your 2011 TurboTax return, one of their tax professionals will be available year-round by phone or chat to provide guidance on what to expect, how to prepare, and help answer your questions. If you are not satisfied with how TurboTax responded to your inquiry, they’ll refund the applicable federal and/or state purchase price you paid.

TurboTax 2012 Customer support

If you want to talk to a paid professional and get thorough help from a professional tax preparer, nothing beats the service offered by a tax accountant/CPA. But TurboTax offers great customer service for a DIY tax software company. They have different channels to offer help. They even added a free “Ask a Tax Expert” feature this year. I tried their online chat, the wait time mentioned was 5 mins, but I could connect immediately.

I have been using TurboTax for quite a few years now. I really like what they offer and feel that it is easy to use, intuitive, faster to complete my return than other software and overall offers the best value for my money.

Turbotax 2012 Premier Giveaway

I am giving away 2 copies of TurboTax Premier Online. Enter the giveaway to win one of the copies (if you win, the code will be emailed to you).

a Rafflecopter giveaway

Disclaimer:  I paid for my own tax preparation and the giveaway copies are provided by TurboTax. That did not influence the content of this review. I have no other relationship with TurboTax and after I send the code, I am not responsible for anything.

Tax planning for 2012 : What changed, what stayed the same and what you should be aware of? is a post from: Wealth Informatics if you enjoy it, please visit us and subscribe to the Feed.

This post mostly deals with 2012 tax deductions, changes and exemptions for planning purposes, which means most of the changes described here will be effective for the 2012 tax year, for which you will file the return on April 15, 2013. The 2011 tax guide (a complete 2011 tax guide in pdf) will be released on Feb 12. For 2011 tax changes check this post – 2011 tax changes, deductions and exemptions.

2012 will be a year of guesses. There are several provisions that expire in 2011. The major one is the payroll tax holiday. After weeks of deliberation, back & forth between Senate & Congress, on December 22nd President Obama signed into law a two month extension of the payroll tax cut. The Payroll Tax Holiday was extended to February 29 and will revert back to 6.2% up to the 2012 FICA limit ($110,100 in 2012) unless extended again before that time.

This is not the only change that will affect us in 2012/2013. Ha! I wish taxes were that easy. As I mentioned there are several tax provisions that are expire for the 2012 tax year. If any of them are extended or anything changes retroactively I will write about it.

Several of the Bush tax cuts will also expire in the 2012 tax year. With 2012 being the election year, we can be sure that taxes will be an active participant.

But as for now, this is how it stands. (I am not a tax professional and I am not qualified to give tax advice. This post is based on what I understand. Please consult a tax professional if you have any questions.)

2012 Individual Income Tax Rates

• Tax brackets for 2012 : Based on the existing law, the federal income tax rates will remain unchanged for 2012.

• Standard Deduction for 2012 :
• $5,950 for unmarried taxpayers or married taxpayers filing separately
• $11,900 for married taxpayers filing jointly
• $8,700 for taxpayers filing as head of household.
• Personal Exemption for 2012: The personal exemption amount will be $3,800 ($150 increase from the 2011 amount $3,650). There is no phase-out for personal exemption, regardless of your income level. Last year’s legislation extended the repeal of phase-out through 2012. If it is not extended again, the phase out will return in 2013.
• Individual retirement plans and 401k contribution limits :

• 2012 Traditional IRA AGI Deduction Limits (If Covered by a Retirement Plan at Work)

• 2012 Traditional IRA AGI Deduction Limits (If NOT Covered by a Retirement Plan at Work) 

• 2012 ROTH IRA Income Limits 

General Income Tax Incentives

• Temporarily repeal the itemized deduction limitation: The amount of itemized deductions that a taxpayer may claim was reduced, to the extent the taxpayer’s AGI is above a certain amount. This limitation was repealed until 2012.
• Deduction of state and local sales tax (expiring for the 2012 tax year): For 2011 tax year, you can deduct state and local sales tax instead of the state and local income tax. This is one of the incentives whose fate is in limbo. If there is no new legislation, this incentive will expire in 2012.
• Deduction of private mortgage insurance premiums (expiring for the 2012 tax year) : You can deduct the homeowner’s private mortgage insurance premium for 2011, but this tax deduction expires in 2012 unless something changes.

Capital Gains and Dividends

Capital gains and qualified dividend rates (expiring for 2012 tax year) : For 2012, the long term capital gains rate and qualified dividends rate will be 0% for everyone in the 15% and lower tax bracket, 15% for everyone above the 15% tax bracket. If this is not extended, qualified dividends will be taxed as income and the long term capital gains rate will be 10% and 20% respectively for tax bracket 15% or lower and everyone else. I will have to check if it will be better to sell any appreciated stock this year if this tax rate is not extended for 2013.

New reporting of Capital gains

There are 2 changes that affect how capital gains are reported.

1. Brokers will be reporting cost basis along with the proceeds : This rule applies specifically to stocks purchased after Jan 1, 2011. Mutual funds and ETFs will be covered by this rule beginning on Jan 1, 2012, options & bonds will be covered beginning Jan 1, 2013. If you sold any stocks in 2011, expect to get this shiny new 1099-B sometime in Jan/Feb of 2012. The default accounting method is First In First Out (FIFO) method. Personally, I don’t sell stocks that way all the time. Make sure the reporting correctly reflects how you sold a stock. Otherwise you might end up with a larger tax bill or more than expected capital loss.
2. We (tax payers) will be using Form 8949 while filing taxes. This shouldn’t be a big problem as any software should be updated to automatically do this.

Education Incentives

These are mostly part of the tax cut deal that was passed at the end of 2010. The changes expire by the end of 2012 or for 2013 tax year unless otherwise noted.

• Temporarily extend expanded Coverdell accounts: The annual contribution limit until 2012 is $2,000 and the money can be used to pay for elementary and secondary school expenses as well.
• Temporarily extend the expanded exclusion for employer provided education assistance (expiring for the 2013 tax year) : Up to $5,250 provided by the employer as part of the education assistance program is exempt from income and employment taxes.
• Temporarily extend the expanded student loan interest deduction (expiring for the 2013 tax year)
• Temporarily extend the exclusion from income of amounts received under certain scholarship programs (expiring for the 2013 tax year).
• Temporarily extend the American Opportunity Tax Credit (expiring for the 2013 tax year): The tax credit of up to $2,500 of the cost of qualified tuition and related expenses including course material is extended until 2012.
• Above the line deductions for qualified education expenses (expiring for the 2012 tax year) : The ability to use above the line deductions for qualified tuition and related expenses was extended only through 2011.

Estate & Gift Tax limits

• Temporary Estate Tax Relief : Estate taxes were part of the Bush tax cut extension. $5 million per person and $10 million per couple was exempt from estate taxes in 2011. This will increase to $5.12 million per person in 2012.
• Portability of unused exemption : Unused exemption of a deceased spouse will transfer over to the surviving spouse.
• Gift tax limit : The limits for annual gift tax exclusion remains unchanged in 2012 – $13,000 per person and $26,000 per couple.

Other

• Temporary Individual Alternate Minimum Tax (AMT) Relief : The AMT is patched every single year, so I am hoping it will be patched this year as well. But, it is not patched yet, so it goes here. If the “AMT patch” amounts expire, the AMT exemption reverts to its statutory amount: $45,000 for married individuals filing jointly. The exemption amounts for 2010 are $47,450 (individuals) and $72,450 (married filing jointly) and for 2011, $48,450 (individuals) and $74,450 (married filing jointly).
• Payroll holiday : Prior to the payroll tax holiday, the employees paid 6.2% and employers paid 6.2% social security taxes on wages up to $106,800. Self-employed individuals pay the entire 12.4%. Payroll holiday tax deal cut the employee portion of the social security tax by 2% for 2011. So the employees with paid 4.2%, employers 6.2%. The self employed individuals paid 10.4% in social security taxes. This was extended for 2 months into 2012, but NOT for the entire 2012. Which means you pay will be slightly less when this provision expires after Feb 2012.
• Above the line deductions for school teachers (expiring for the 2012 tax year) : Elementary and Secondary school teachers can take up to $250 above the line deductions for professional expenses incurred, like books, office supplies, computer, etc. for 2011. This expires in 2012.
• Tax free IRA distributions for charitable purposes (expiring for the 2012 tax year): Individuals can make tax free distributions to charity up to $100,000 per taxpayer directly from their Individual Retirement Accounts (IRA).
• Mass Transit benefit : The employer provided transit and vanpool benefit is excluded from income tax. This exclusion will now extend to include employer provided parking benefits as well.
• Many business tax incentives are also scheduled to expire at the end of the year. The most significant of these are the expiration of the allowance for 100% first-year bonus depreciation and the expiration of the increased deduction amounts.

I will keep an eye on the new legislation and write a post explaining any new laws or extensions. But this is how it stands right now, so use it as a quick guide for planning ahead for 2012 and beyond. The 2011 tax guide with

• Tax organizer
• Easily overlooked deductions
• Dates to remember
• Places to get free tax help
• Money saving tips and more

will be available on Feb 12, 2012. I will also have a TurboTax premier giveaway.

Only stupid people give to charity is a post from: Wealth Informatics if you enjoy it, please visit us and subscribe to the Feed.