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What is the Difference between Rich vs Wealthy

Achugamonu Uzoma · September 20, 2023 · Leave a Comment

Many people’s personal financial goal is to become rich and wealthy- it is shared by the vast majority of the world’s population. Who doesn’t want to live in affluence and never have to worry about where to get the things they need on a daily basis? certainly no one!

For some reason, the words rich and wealthy are often used interchangeably to describe the same thing. These two words may appear to be synonyms, but they are not. Let’s look at the distinction between the two.

Table of Contents

  • Rich vs Wealthy meaning
  • What does it mean to be Rich?
  • What is wealth?
  • What’s the difference between the wealthy and the rich?
  • Difference between rich and wealthy quotes
  • How to Become Wealthy in 2023– Best Tips
    • #1. Avoiding (and Paying off) Debt
    • #2. Spend Intentionally and Minimize Costs
    • #3. Invest as much as you can in a diverse portfolio
    • #4. Work On Your Career
    • #5. Find an extra source of income
  • Conclusion
  • FAQs
  • What is considered rich in the world?
  • Where do the wealthy people take their money?
  • Who is the wealthiest person in the world?
  • We also Recommend

Rich vs Wealthy meaning

The state of being wealthy refers to having an abundance of valuable goods, resources, and other material possessions. It is when a person is able to provide his family and himself with everything they require while still having enough money for luxuries.

It is associated with wealth, abundance, and opulence. A person can become wealthy by working hard or by inheriting it from his parents.

A wealthy person possesses real estate, buildings, business holdings, and a more-than-adequate supply of money that he can spend in any way he sees fit.

What does it mean to be Rich?

Being rich simply refers to having a lot of money or income. It all comes down to the amount of money in your bank account. But just because you’re rich doesn’t mean you’re wealthy.

In fact, being rich can frequently imply that you spend a lot of money. It could also indicate that you are deeply in debt. It makes no difference how much money you have if your expenses exceed your income. Being in debt is not something to strive for!

Rich people may drive a fancy car or live in an amazing house in the best part of town, but it comes at a price. If you earn $200,000 per year but spend $225,000 per year on expenses, you may appear rich, but you’re on your way to bankruptcy.

What is wealth?

Wealth is the total value of assets accumulated by an individual, business, organization, or nation, including tangible, intangible, and financial assets. It refers to the possession of scarce economic resources, goods, money, or anything of value at any given time while excluding debts or liabilities.

Also known as net worth, it protects individuals and businesses from unforeseen economic events such as recessions. It also enables them to achieve financial independence and live the lifestyle they desire.

In contrast to income, which is a flow variable, net asset value is a stock variable. Assets can be used for any type of transaction, such as property or business ownership.

What’s the difference between the wealthy and the rich?

While the difference between rich and wealthy or wealthy vs rich is defined by the amount of money in your bank account, it extends beyond that. When you think of a rich person, you usually think of someone who has a large salary or income stream.

However, someone earning significantly less, even under six figures per year, can be in far better financial shape due to aggressive saving and investing.

Rich people will spend a lot of money and live a luxurious lifestyle. Instead, wealthy people prioritize saving and investing a significant portion of their income. And perhaps even living as if they only have a middle-class income.

Rich vs wealthy: See the difference

Rich

  • There is no or little financial planning centered on affordability and spending
  • High expenses compared to income
  • Money is limited and will eventually run out.
  • Riches are typically represented by cash or material assets.
  • Usually reliant on a high salary or income, with no long-term investing strategy.
  • Displays material possessions and frequently upgrades lifestyles.

Wealthy

  • Financial planning includes tax strategies, estate planning, and budgeting.
  • Low expenses in relation to income.
  • Money is long-lasting and sustainable.
  • Wealth is typically held in investments or long-term accounts.
  • Will generate multiple revenue streams in order to reduce risk and diversify income.
  • May buy things from time to time, but prefers to buy assets over things.

Difference between rich and wealthy quotes

  • “Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.”William A. Ward
  • “It is not the man who has too little, but the man who craves more, who is poor.” Seneca
  • “Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” Ayn Rand
  • “Only buy something that you’d be perfectly happy to hold if the market shuts down for ten years.”Warren Buffett
  • “Not he who has much is rich, but he who gives much.”Erich Fromm
  • “Time is more valuable than money. You can get more money, but you cannot get more time.”Jim Rohn
  • “It doesn’t matter about money; having it, not having it. Or having clothes, or not having them. You’re still left alone with yourself in the end.”Billy Idol
  • “Money does not buy you happiness, but a lack of money certainly buys you misery.”Daniel Kahneman

How to Become Wealthy in 2023– Best Tips

#1. Avoiding (and Paying off) Debt

Debt is not always a bad thing, but it should be avoided the majority of the time. Student loans, for example, can be advantageous if the principal and interest rates are not excessive and they allow you to pursue a lucrative career.

Avoiding debt necessitates the development of a sound financial plan and the avoidance of foolish whims that provide short-term satisfaction but long-term financial hardship.

#2. Spend Intentionally and Minimize Costs

If you want to become wealthy vs rich, you must cut costs and be more deliberate with your spending. This is the second step because it should be one of your first actions.

You will need to keep a budget if you want to spend wisely and save money. Your goal should be to cut costs as much as possible so that you can put that money towards wealth creation.

#3. Invest as much as you can in a diverse portfolio

While there are limits to how much you can put into an investment, they are so high that many people are unable to meet them. If you do, you can always increase your investment in a taxable brokerage account. Thus, if you want to become wealthy, you should invest as much as you possibly can.

There are numerous investment strategies, but most experts advise investing the majority of your money in the stock market. Some people advocate for a smaller percentage of real estate or even speculative investments. Burrow suggests a portfolio consisting of 65% stocks, 25% real estate, and 10% speculative assets of choice.

#4. Work On Your Career

There is no substitute for more money. There is, as they say, a limit to how much you can cut in terms of expenses, but there is no limit to how much your income can increase, at least theoretically.

“As you advance in your career/business/main occupation, make sure you always save more than you spend as you earn raises and increase your gross income,” Burrow advised. “Lifestyle cost creep will completely derail a plan to get rich quick.”

Increasing your income will, of course, be dependent on the job you have. Hourly workers, for example, may have little leverage to increase their income. However, moving up the corporate ladder can be a powerful way to become wealthy because you will be able to save and invest more.

#5. Find an extra source of income

A side hustle is not a new concept, but if you have some extra time and can pick up some extra work for a few hours a week, it can be a powerful way to supplement your income.

Finding a side hustle is sometimes easier said than done, but it can provide you with extra funds to invest in the future.

Conclusion

Being wealthy does not begin with a large wallet full of cash. It all starts with having the right mindset. Save a portion of your income, work towards debt elimination, and invest early and frequently.

If you want to be wealthy, you must always consider your long-term objectives. Do you want to retire sooner? Do you own a few properties? Travel? When considering being wealthy or rich, don’t just consider your income; instead, consider building up your investments and assets to last you several lifetimes.

FAQs

What is considered rich in the world?

To be rich means to have a lot of money or a lot of things, but also to have a high cost of living or a lot of expenses that make this money less sustainable.

Where do the wealthy people take their money?

High-net-worth individuals invest in a variety of financial and real assets, including stocks, mutual funds, retirement accounts, and real estate. The majority of the 20.27 million millionaires in the United States did not inherit their wealth; only about 20% did.

Who is the wealthiest person in the world?

Elon Musk is the world’s richest person, with a net worth of approximately $230.4 billion.

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How to Draft a Letter of Attornment Case Law

Achugamonu Uzoma · September 20, 2023 · Leave a Comment

Due to past obligations or unanticipated circumstances, there are times when it may be hard for us to complete some tasks and make wise judgments for ourselves. In such a situation, you would require a surrogate to manage your personal affairs or decide on critical healthcare matters. This is when the letter of attornment is useful. A letter of attornment gives the agent the authority to handle a variety of transactions.

Table of Contents

  • What Does Attornment Mean?
  • What is Attornment Agreement?
  • How to Write a Letter of Attornment Case Law
    • #1. Come up with a draft
    • #2. Make decisions about springing powers
    • #3. Choose your Agent and a Successor Agent
    • #4. Add the expiration date
    • #5. Finalize your letter
    • #6. Affix your signature
  • Letter of Attornment Example
    • Notary Stamps And Signatures
    • Individual Powers
    • Date
    • Sample 1
    • Sample 2
  • Conclusion
  • FAQs
  • What is a letter of attornment NJ?
  • What is a tenancy confirmation letter?
  • What is a letter of attorney?
  • Recommendations

What Does Attornment Mean?

When a tenant accepts a new property owner as their new landlord, attornment has taken place. When it comes to commercial properties that are in the process of changing hands, an attorney clause in a Subordination, Non-disturbance, and Attorney Arrangement (SNDA) enables the tenant to accept a new owner as their landlord and keep paying rent regardless of whether the properties are sold at a regular sale or through a foreclosure.

An attorney-client relationship may develop, for instance, if a tenant rents an apartment only to have the owner amend the lease later.

According to the SNDA provision, in the event of a change in ownership, the new owner shall replace the prior owner in the lease. Moreover, they must take on all of the prior owner’s duties and rights. Additionally, the condition mandates that tenants keep paying rent regardless of who owns the flat.

What is Attornment Agreement?

Real estate law is most frequently associated with attorney-client privilege. However, it is intended to recognize the connection between the parties to a transaction. If the occupant does not sign the rental agreement, it does not provide the owner with any new rights. However, the tenant’s unwillingness to sign could be used by the landlord as justification for eviction.

In a mortgage rental property, an Attornment Agreement aids in defining the rights of all parties. According to the agreement, the landlord’s lender, not the tenant, has the highest claim to the property. The occupant’s rights are thus subservient, which is why the agreement is also frequently referred to as a Subordination Agreement.

Even if the landlord violates the mortgage, the lender may choose to accept the terms of the lease. The occupant, however, is required to make timely rental payments. 

How to Write a Letter of Attornment Case Law

In a letter of attornment, the following are often the key components:

  • Your name, address, and signature as the principal.
  • The name, address, and signature of your Agent.
  • The activities and properties under the Agent’s authority.
  • The start and termination dates of the Agent’s powers.
  • Any compensation you will give to the Agent.
  • The name, address, and signature of the person who witnesses the signing.

A letter of attornment gives someone the ability to act in your place, but it does not interfere with your freedom to make decisions or take action. In fact, if there is a difference of opinion between you and your Agent, you still have the last say.

You should think about getting legal advice from a lawyer if you intend to draft a letter of attornment so that you can avoid wasting a lot of time and effort. You can also write the letter by yourself by doing the following:

  • Come up with a draft
  • Make decisions about springing powers
  • Choose your Agent and a Successor Agent
  • Add the expiration date
  • Finalize your letter
  • Affix your signature

#1. Come up with a draft

The first step is to create a list of the unique abilities you intend to give your Agent. You should precisely list the accounts, assets, and transactions that your Agent will have control over because such exceptional powers need to be very specific.

You may need the services of a Financial coach to come up with a detailed draft.

#2. Make decisions about springing powers

A conditional statement has springing power. These powers are not available for use by the agent unless a certain circumstance or condition has been met. Until the condition or event giving rise to the springing power happens, the agent cannot legally act on your behalf.

Without a provision, this form of power can still be used, and your letter will still be enforceable once you have signed it.

#3. Choose your Agent and a Successor Agent

The most crucial part of crafting this letter is probably designating your Agent. A person you can trust should be the Agent you select. Additionally, picking a Successor Agent is advised in case something happens to your first choice.

#4. Add the expiration date

Your letter should specifically state that your Agent’s authority is limited to a certain period of time. But you can create a Durable letter of attornment if you want the agreement to stand for as long as you are alive.

Even if you become unable to perform your duties, this still stands. No matter what kind of letter you choose, keep in mind that this authority expires with your passing.

#5. Finalize your letter

You can now complete your letter after assembling all the necessary data. When outlining the details in the text, use straightforward, unambiguous language. Your letter should include your full name, the full name of your agent, and the full name of your successor agent. Include the time and date you wrote the letter.

#6. Affix your signature

The principal must sign the legal document in front of a notary public for the letter of attornment to be enforceable. Additionally, the document must have all required signatures in order to be finished.

Letter of Attornment Example

Different laws exist in many places around the world regarding letters of attornment. It permits you to treat the money, property, health, and other rights of another individual as you would treat your own. It is possible to write documents for both private individuals and organizations. Documents can range in complexity from simple sheets to complex statements and rights.

Notary Stamps And Signatures

The notary stamp and signatures, which support its legal authority, make it different from a basic letter in most ways. It must also include personal information and the date on which it was signed. The person’s address who will have special powers granted by such a legal instrument must be included in the attorney letter.

Individual Powers

The scope of the powers granted to authorized individuals must also be specified in clear, concrete terms. These powers may be as extensive as your own, but they may also be limited to a few distinct abilities. For instance, you may be able to sell someone a car, but only once, with no further permission.

Date

The date on the letter of attornment may differ from the date on which the actual power will be exercised, which means that it may have been signed in the past but has a legal effect now. 

There must be a specific period of time when this legal document is in effect, according to legislation in many nations, as it is not possible for it to last forever. Another thing to note is that in order for an attorney letter to be effective, the conditions for which it was created must still be in effect when it becomes effective.

It is crucial to include information regarding the termination of the powers granted by this legal document, a letter of attorney, or else it would be insufficient. The letter of attornment makes it significant. It is just one sentence regarding the many rights that are signed by both parties and by two witnesses. The revocation of such a document does not require a justification in writing.

The following is an example of a letter of attornment:

Sample 1

To,
The Court of Law,
Business Legal Documentation,
Reno, Nevada, USA.

Subject: Letter of attornment

Respected Sir,

I wish you well and hope you receive my letter.

On July 1st, 2023, I will attend a performance in the theater. I still have to stay in bed for 90 days once I’m released so that the illness can properly heal.

Due to my inability to work at that time, I won’t be able to handle my regular business or make payments on my expenses.

As a result, for the 90 days beginning July 1 and ending October 1 of 2023, I ask that you act on my behalf.

Please accept my gratitude in advance for your assistance.

Truly yours,
Anderson Moore.

Sample 2

DATE: June 16, 2023
Robert Grant
State Bank
22 Richmond Street
California

Dear Robert Grant,

Along with this letter, please find a letter of attornment that Nina Henry has been given the authority to act in banking on our company’s behalf. Please keep this letter of attornment in your files, and make all internal preparations necessary to ensure that Nina Henry is acknowledged as having the right to handle bank formalities on the company’s behalf.

You can reach me at any moment at 987654321 if you have any questions.

Sincerely,

Brain Berry

Having gone through some of the examples of letters of attornment, you would agree that it requires some level of knowledge to make a better deal. You may want to start your journey by learning about the usefulness of financial literacy.

Conclusion

The format for writing a letter of attornment is quite straightforward and organized. It contains information like the agreement’s date, the names of the landlord, the tenant, and the new lender. Along with the address and signatures of all three parties, this notification typically includes a brief description of the property.

This agreement is primarily used to define the lease conditions associated with a mortgaged property. You may simply rent or sell your property now that you are familiar with the letter of attornment format.

FAQs

What is a letter of attornment NJ?

A letter of attachment informs a renter that the property has been sold and instructs them to pay the new owner the rent.

What is a tenancy confirmation letter?

A letter confirming tenancy may be used for a variety of reasons. It demonstrates where you reside and typically includes your length of residence. Additionally, it normally includes your monthly payment amount and some information on your regular and reliable rental payments.

What is a letter of attorney?

A letter of attorney is a written authorization to represent or act in another person’s name in the business, legal, or other private matters (which may include financial matters or matters pertaining to health and welfare). The principle, grantor, or donor is the individual giving another person permission to accomplish something (of the power). The agent, attorney, or, in some common law countries, the attorney-in-fact, is the one who has the power to act.

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Income Tax in California State 2023

Achugamonu Uzoma · August 16, 2023 · Leave a Comment

One of the most fascinating things about the California state tax system is that it takes into consideration the citizen’s income and taxes them based on how much they earn.

This is a practice of increasing the income tax rate in the state, and it entails that rates will be low for low-income earners and high for high-income earners.

Technically, tax brackets start at 1% and end at 12.3%. Though, there is an apportioned 1% tax on any personal income over $1 million. Putting the negligible tax rate at 13.3%

This 13.3% negligible rate in California, which is the highest rate in the United States of America allows that part of the income tax to be used to sponsor major health programs in the state. However, it is only for people with over $1 million in taxable income.

Table of Contents

  • About Tax in California?
    • Gasoline Tax
    • State Sales Tax
    • Personal Income Tax
    • Corporate Income Tax
    • Property Tax
  • Tax Rates in California Income
    • Single Filers
    • Married, Filing Jointly
    • Married, Filing Separately
    • Head of Household
  • Sales Tax in California on Cars
  • Car Sales Tax For Trade-Ins in California
    • Car Sales Tax For Private Sales in California
  • Tax on Rebates and Dealer Incentives
  • When Sales Tax is Exempt in California
  • How Much is Inheritance Tax in California
  • Tax For Food in California
  • Are Groceries Taxable in California?
  • Are Beverages Taxable in California?
  • Are Meals Taxable in California?
  • Conclusion
  • FAQs
  • Recommendations

About Tax in California?

The California Tax Foundation publication “California Tax Facts: An Overview of the Golden State’s Tax Structure,” gives a broad explanation of personal income taxes, sales, and use taxes, property taxes, business income taxes, and other major sources of revenue.

If one thinks of an expensive-tax state, California is one of them. It has some of the steepest sales tax, personal income tax, and corporate tax rates in the United States.

High tax payments can be a major barrier for industries that have the intention of creating jobs for Californians by indulging in the expansion of their industries in the state. Studies that provide federal rankings in the United States of America have shown that California has the second-worst state business tax conditions.

Gasoline Tax

California’s state tax on gasoline is 53.9 cents per gallon (this is on July 1, 2022).  California’s cap-and-trade auction raises the price of gasoline by an additional 23 cents per gallon. The federal excise tax on gasoline gives another 18.4 cents per gallon to the cost at the pump.

Californians also pay an additional 70.95 cents per gallon at the pump and this is together with the state and local taxes and fees.

State Sales Tax

California has a 7.25 percent state sales rate and in addition to this, local governments are allowed to impose extra sales and use taxes.  Though there’s a condition that the combined rate of the additional local taxes should not be more than 2 percent, however, some local governments are allowed to go above 2%.

Personal Income Tax

The income tax rate in California state is 13.3 percent (this includes the 1 percent rate which is meant for mental health programs, for all personal income taxpayers with taxable income exceeding $1 million).

Besides, The income tax rate in California state is known for its continuous nature and it also has the highest top rate. 

S Corporations, partnerships, or sole proprietorships type of business are found in California and they pay their business taxes at individual rates this in turn leads to the high rate of taxes on small businesses.

Corporate Income Tax

The corporate income tax rate in California state is 8.84 percent and this is very much on the high side. This may make business owners who wish to establish their businesses in California check other states. 

There are seven states which have a higher top corporate income tax rate than California and they are Alaska, Illinois, Iowa, Maine, Minnesota, New Jersey, and Pennsylvania.

Property Tax

The majority of California property owners are meant to pay exorbitant parcel taxes even when there is a 1978 voter-approved initiative that reduces property taxes. It is often said that California’s properties are very valuable, which is why it has high property taxes. 

The taxes given are annual property taxes that are levied by many school districts, special districts, and other jurisdictions.

Tax Rates in California Income

Gross income is the amount that remains after all necessary deductions have been made. In California, the income tax rate is based on the modified gross income rather than the exact income. 

In California, taxpayers may be qualified for a number of tax credits, for financial events and expenses including childcare, buying a new home, or electric vehicle, and installing solar panels on their house. It is worth noting that the usual deduction from income in California is $4,803 for single filers and $9,606 for joint filers.

Tax rates on various California incomes are explained below:

Single Filers

California Taxable Income                     Rate 
$0 – $9,3251.00%
$9,325 – $22,107 2.00%
$22,107 – $34,8924.00%
$34,892 – $48,435 6.00%
$48,435 – $61,214 8.00%
$61,214 – $312,6869.30%
$312,686 – $375,22110.30%
$375,221 – $625,36911.30%
$625,369 – $1,000,00012.30%
$1,000,000+13.30%

Married, Filing Jointly

Below is the breakdown of tax rates for married people filing jointly.

California Taxable Income                     Rate 
$0 – $18,6501.00%
$18,650 – $44,2142.00%
$44,214 – $69,784                          4.00%
$69,784 – $96,8706.00%
$96,870 – $122,4288.00%
$122,428 – $625,3729.30%
$625,372 – $750,44210.30%
$750,442 – $1,250,73811.30%
$1,250,738 – $2,000,00012.30%
$2,000,000+13.30%

Married, Filing Separately

Below is the breakdown of tax rates of married people filing separately.

California Taxable Income                     Rate 
$0 to $9,3251.00%
$9,325–$22,1072.00%
$22,107–$34,8924.00%
$34,892 – $48,4356.00%
$48,435–$61,2148.00%
$61,214-$312,6869.30%
$312,686–$375,22110.30%
$375,221–$625,36911.30%
$625,369–$1,000,00012.30%
$1,000,000+13.30%

Head of Household

Below is the breakdown of tax rates for heads of household.

California Taxable Income                     Rate 
$0–$18,6631.00%
$18,663-$44,2172.00%
$44,217–$56,9994.00%
$56,999–$70,5426.00%
$70,542 – $83,324 8.00%
$83,324–425,2519.30%
$425,251–$510,30310.30%
$510,303–850,50311.30%
$850,503–$1,000,00012.30%
$1,000,000+ 13.30%

Sales Tax in California on Cars

The general statewide car tax in California is 7.25%, though location is the determining factor of the tax. 1.25% out of the 7.25% is given to the county government, while the local government, cities, and districts take up to 2.5%. Note that the sales tax also includes a $50 emissions testing fee.

The California tax affects both used and new cars, so the state tax remains at 7.25% for used cars. Hence, purchasing used cars will really help out if you wish to save, but as earlier explained, it will not stop state taxes. It encourages saving in a way that you will pay less for sales tax because the price of the used cars will not be expensive.

Note that the total amount you pay for a car not only includes sales tax, but also registration and dealership fees. Remember that the minimum sales tax rate for cars is 7.25%, but if you want to calculate the sales tax on your car, you need to find the total sales tax fee for the city. Then, you multiply the vehicle price (before trade-in or incentives) by the sales tax fee.

Let’s use this example: Imagine you are purchasing a vehicle for $40,000 with a state sales tax of 7.25%. $40,000 X 0.0725 = $2,900. The sales tax for the car will be $2,900, regardless of whether it was used, purchased with a trade-in credit, or included as an incentive.

There are other states with incredible total sales taxes, such as Texas. You may want to compare Texas total sales tax rates to those of California.

Car Sales Tax For Trade-Ins in California

In California, the sales tax applies to the full price of the new car. In a nutshell, it does not consider if you traded in your car or not; hence, those who trade in a car will still have to pay sales tax.

For instance, if you traded in a car for $8,000 and applied that credit to a new car purchase of $18,000, you would pay sales tax on the full $18,000 purchase price.

Car Sales Tax For Private Sales in California

The person buying the car is charged with the responsibility of paying sales tax during a private car sale. The buyer must pay the sales tax to the California Department of Motor Vehicles when registering the car.

Tax on Rebates and Dealer Incentives

Dealer incentives are very popular as they motivate customers to choose certain models. Rebates and incentives do not change the sales tax for the car. 

For instance, a dealer may offer a $1,500 cash rebate on a $15,000 car, so the customer would only pay $13,500 out of pocket, but in California, the sales tax is calculated on the car’s original price before incentives are given. In the example above, the customer has to pay sales tax on the price of $15,000.

When Sales Tax is Exempt in California

Car buyers are so eager to find exemptions to the rule of sales tax, especially now that it is very high in price. Well, the California Department of Motor Vehicles has outlined some exemptions to the state tax code. They include:

  • Vehicles purchased by insurance companies
  • Court-ordered transfers
  • Dismantled Vehicles
  • Gifts
  • Inheritance
  • Transfer on Death Beneficiary
  • Family transfers
  • Federal Government sales

Therefore, any car obtained by the above-mentioned means will not remit any sales tax.

Besides, if you feel you were unjustly taxed and are not satisfied with how you were taxed, you may request a tax refund in California.

How Much is Inheritance Tax in California

California is one of those states that does not have an inheritance tax, so you don’t have to worry about an inheritance tax when transferring personal property.

Tax For Food in California

In the case of sales tax, California (as well as other states) treats certain foods, like groceries, more favorably than other items. Below is an explanation of the taxability of groceries, meals, and beverages in California.

Are Groceries Taxable in California?

In most scenarios, grocery items are excluded from sales tax. There’s a Tax Guide for Grocery Stores in California. An exemption from sales tax is “hot prepared food products,” which are taxable at California’s 7.25% state sales tax rate including the local district tax rate regardless of the fact that they’re sold to-go or for consumption on the store premises.

On the other hand, if hot baked goods, like hot baked pretzels or croissants, are sold together with hot prepared foods, they are taxable, but if they are sold separately, they are excluded from sales tax. Hot baked goods or any meals that are bought for consumption within your shop environment are taxable.

Are Beverages Taxable in California?

Carbonated or effervescent bottled waters, spirits, malt liquors, wine, and carbonated beverages are taxable under the entire state and local tax rate in the state of California.

However, sales tax is not levied on fruit juices, vegetable juices, and other beverages, be they liquid or frozen, including all beverages made up of fruit or vegetable juice and concentrates, powders, or other bases for such beverages, and noncarbonated and noneffervescent bottled water meant for human consumption, irrespective of the delivery method.

Are Meals Taxable in California?

There is a Tax Guide for restaurant owners in California. The sales of food and beverages for consumption at your business place are taxable at the combined state and local sales tax rate, except for cold food products like old sandwiches, milkshakes, smoothies, ice cream, and cold salads sold to-go. On the other hand, heated food is taxable whether or not it is sold to-go or for consumption at your restaurant.

Restaurateurs need to remember the 80/80 rule, which comes in when more than 80% of your sales are food and more than 80% of the food you sell is taxable. Hence, if the 80/80 rule is applied and you do not track sales of cold food products separately, you will be held accountable for tax on 100% of your sales. 

The 80/80 rule varies differently from location to location, so each location must be considered separately if you have several locations.

Also, if you give meals to your employees and place a particular charge for those meals, the meal charges are taxable. Furthermore, They should be reported on your sales tax return.

Related: Costa Mesa Tax Rate

Conclusion

California is among the highest tax-paying states in the nation. Its basic sales tax rate of 7.25% is higher than that of any other state. While the marginal income tax rate of 13.3% is the highest state income tax rate in the country.

Income tax rates are progressive and differ depending on each taxpayer’s individual finances. For instance, if your annual income is less than $61,214, your income tax rate in California will not be higher than 8%.

FAQs

Is state disability income taxable in California?

If you leave work because of a disability and receive disability benefits, those benefits are not taxable but if you are receiving unemployment benefits, then become ill and you receive disability benefits; those Disability benefits are taxable.

How much is sales tax in California Los Angeles?

The sales tax rate for Los Angeles, California is 9.5%. This includes state, county and city sales tax rates. 

How much is sales tax in California Orange County?

The sales tax rate for Orange County, California is 7.75% and it includes both state and county sales tax rates.

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Costa Mesa Tax Rate: Understanding Its Impact on Economic Growth and Public Services

Achugamonu Uzoma · August 16, 2023 · Leave a Comment

Over the decades, Costa Mesa’s tax rates have fluctuated in response to economic challenges, population growth, and changing community needs. These fluctuations have aimed to balance revenue generation and public satisfaction.

We can trace Costa Mesa’s early taxation back to its incorporation in 1953. During its early years, the city relied on modest tax rates to fund essential services and foster its initial development as a suburban community.

The historical tax rates have significantly shaped Costa Mesa’s development journey. The resources generated through taxation have contributed to the city’s transformation from a suburban town to a bustling community with diverse industries and a thriving population.

Today, the Costa Mesa sales Tax Rate is 7.75% which comprises 6% of sales tax in California.

Table of Contents

  • Current Taxation Policies in Costa Mesa
  • Pros and Cons of Costa Mesa Tax Rates
    • Advantages of Moderate Tax Rates
  • Challenges of High or Low Taxation
  • Comparing Costa Mesa Tax Rates with Other Cities
    • Tax Rate Comparison within Orange County
    • Costa Mesa vs. California State Average
  • The Future of Costa Mesa Tax Rates
    • Predictions and Expectations
    • Strategies for Maintaining a Balanced Tax System
  • Understanding Tax Rates and Their Impact on the Economy
    • What are Tax Rates?
    • Types of Taxes
  • The Importance of Tax Rates in Economic Growth
    • Factors Influencing Costa Mesa Tax Rates
  • Public Opinion and Perceptions on Taxation
    • Survey Results on Tax Rate Satisfaction
    • Factors Influencing Public Perception
  • Conclusion
  • FAQs
  • How are the most common types of taxes in Costa Mesa calculated?
  • How do tax rates impact economic growth, and what measures does Costa Mesa take to stimulate growth? 
  • Has Costa Mesa always maintained the same tax rates, or have they changed over time?
  • How does public opinion on taxation affect the city's tax rate decisions?
  • What steps can Costa Mesa take to ensure a balanced tax system amid economic fluctuations? 

Current Taxation Policies in Costa Mesa

Present-Day Tax Rates in Costa Mesa

Costa Mesa maintains a balanced tax structure, striving to strike a harmonious chord between revenue generation and citizen affordability. The present-day tax rates for each type of tax are carefully determined to meet the city’s financial needs.

Taxes Utilized for Public Services and Development

The tax income gathered in Costa Mesa goes on to different public administrations and improvement projects, guaranteeing the prosperity of its occupants and proceeding with the city’s development.

The types of taxes are as follows:

  • Income Tax: The annual income tax revenue is put into schooling, medical care, and social government assistance programs. This is aimed at supporting the general advancement of the local area.
  • Property Tax: The funds generated from property taxes are allocated to funding local schools and public safety agencies and maintaining essential infrastructure like roads and parks.
  • Sales Tax: The community, in general, gains advantages from the help of public administrations like transportation, sterilization, and sporting offices subsidized by sales tax income.
  • Corporate Tax: Corporate tax revenue stimulates economic growth through business incentives, attracting investments, and promoting entrepreneurship.

Pros and Cons of Costa Mesa Tax Rates

Advantages of Moderate Tax Rates

Maintaining moderate tax rates in Costa Mesa brings several benefits:

  • Economic Growth: Moderate tax rates encourage businesses to invest in the city, creating jobs and boosting economic growth.
  • Adequate Revenue: The revenue generated from moderate taxes ensures a stable funding source for public services and infrastructure development.
  • Public Satisfaction: Moderate taxes are more likely to be accepted by residents, leading to higher public satisfaction.

Challenges of High or Low Taxation

While there are advantages to moderate taxation, both high and low taxation can present challenges:

  • High Taxation: Excessive taxation can burden businesses and individuals, potentially reducing economic activity and capital flight.
  • Low Taxation: The general personal satisfaction in the city can be harmed by a deficiency in tax collection. This can lead to the absence of assets for fundamental public administration and foundation improvement.

Comparing Costa Mesa Tax Rates with Other Cities

Tax Rate Comparison within Orange County

Comparing Costa Mesa’s tax rates with those of other cities within Orange County offers valuable insights into the city’s competitiveness and attractiveness to residents and businesses.

Costa Mesa vs. California State Average

Analyzing Costa Mesa’s tax rates compared to the California state average helps assess the city’s fiscal standing and alignment with broader state economic policies.

The Future of Costa Mesa Tax Rates

Predictions and Expectations

Economic experts project potential scenarios for Costa Mesa’s tax rates based on changing economic dynamics and political landscapes. These predictions play a crucial role in future tax planning.

Strategies for Maintaining a Balanced Tax System

The city must adopt proactive measures to maintain a well-balanced tax system for continued economic growth and optimal public service provision, including continuous evaluation of budget requirements, citizen engagement, and responsive fiscal policies.

Understanding Tax Rates and Their Impact on the Economy

What are Tax Rates?

Tax rates allude to the level of a person’s or, alternately, a business’s pay that should be paid to the public authority as duties (taxes).
These taxes are imperative wellsprings of income for the city and should be used to support different public administrations and advancement projects.

Types of Taxes

Costa Mesa levies several types of taxes to meet its financial requirements:

  • Income Tax: This tax is imposed on the income earned by individuals and businesses within the city. It can be progressive, where higher payments are taxed at higher rates, or flat, with a consistent tax rate for all income levels.
  • Property Tax:  Property owners in Costa Mesa must expect to pay taxes given the calculated worth of their properties. These taxes significantly fund local schools, law enforcement, and infrastructure.
  • Sales Tax: Taxes gathered from labor and products bought inside the city. The revenue generated from sales tax is vital to funding public services and city maintenance.
  • Corporate Tax: Corporations operating in Costa Mesa are subject to corporate taxes on their profits. This revenue is essential for financing city-wide projects and initiatives.

The Importance of Tax Rates in Economic Growth

Tax rates profoundly influence the economic growth and development of a city. 

The right balance in tax policies can stimulate economic activities, attract investments, and create job opportunities, while excessive or poorly structured taxes can deter businesses and hinder overall economic progress.

Factors Influencing Costa Mesa Tax Rates

Various factors influence the determination of tax rates in Costa Mesa:

  • Budget Requirements: The city’s budget requirements dictate the need for revenue through taxation. A well-planned budget outlines the necessary expenses for public services, infrastructure, and other essential sectors, guiding the appropriate tax rate.
  • Citizen Preferences: The preferences of Costa Mesa residents regarding the level of public services and the tax burden they are willing to bear also impact the tax rate decisions.
  • Government Expenditure Plans: The city’s arrangements for different ventures and administrations, like training, medical services, transportation, and public security, are firmly connected to the expense rate set by the public authority.

Public Opinion and Perceptions on Taxation

Survey Results on Tax Rate Satisfaction

Public opinion plays a significant role in shaping tax policies in Costa Mesa, conducting surveys to gauge citizen satisfaction and identify areas for improvement in tax rate management.

Factors Influencing Public Perception

Several factors greatly influence public perceptions of taxation, including the efficiency of public services, transparency in government spending, and the perceived impact taxes have on individual well-being.

Conclusion

In conclusion, understanding the “Costa Mesa Tax Rate” is crucial for individuals, businesses, and property owners alike. Various factors, including government budgets, economic conditions, and voter-approved measures, shape the local tax landscape.

Costa Mesa’s tax rate is critical to shaping the city’s economic growth, citizen welfare, and overall development. Striking the right balance in taxation policies is essential to fostering a prosperous and thriving community for present and future generations.

FAQs

How are the most common types of taxes in Costa Mesa calculated?

  • The income tax is determined in view of a person’s or, alternately, a business’s available income, while the surveyed worth of the property entirely settles the property tax.
  • Sales tax is a rate added to the expense of labor and products, while corporate tax is determined by an organization’s benefits after derivations and exclusions.

How do tax rates impact economic growth, and what measures does Costa Mesa take to stimulate growth? 

Tax rates influence economic growth by affecting investment decisions, consumer spending, and overall business activity. Costa Mesa adopts measures like providing business incentives, streamlining regulatory processes, and investing in infrastructure to stimulate growth.

Has Costa Mesa always maintained the same tax rates, or have they changed over time?

No, Costa Mesa’s tax rates have undergone adjustments over the years to meet changing economic and social needs. The city’s tax policies are periodically reviewed and modified per evolving circumstances.

How does public opinion on taxation affect the city's tax rate decisions?

Public opinion helps policymakers understand citizen expectations and tailor tax policies accordingly. The city conducts surveys and seeks public input to consider the preferences and concerns of its residents.

What steps can Costa Mesa take to ensure a balanced tax system amid economic fluctuations? 

Costa Mesa can achieve a balanced tax system by carefully analyzing revenue needs and expenditure priorities while considering public sentiment and economic goals. It’s essential to remain adaptable to economic fluctuations and responsive to changing needs.

How to Find Outstanding Checks on a Bank Statement- Expert Guide

Achugamonu Uzoma · August 16, 2023 · Leave a Comment

At the end of each financial period, companies go through a bank statement reconciliation process to understand any differences between the company’s record of cash deposits and withdrawals and the account statement issued by the bank.

A company’s check may have been written and recorded in the general ledger, but not yet shown on the bank account statement.

If the cash balance in your checking account appears to be excessive, it could be due to outstanding checks. Outstanding checks can result in inaccurate accounting, overdraft issues, and other financial blunders.

Table of Contents

  • What is an Outstanding Check?
  • How to find Outstanding Checks on a Bank Statement
  • How to find Outstanding Checks on Bank Reconciliation
  • GAAP rules for outstanding checks
  • Why are outstanding checks subtracted from the bank?
  • Outstanding Checks Journal Entry
  • Outstanding checks vs unreleased checks 
  • How to write off outstanding checks
    • Here is the process by which you can write off outstanding checks
  • How to determine outstanding checks
  • How to Prevent Outstanding Checks
  • Reconciliation of bank statements with outstanding deposits
  • Conclusion
  • FAQs
  • Are outstanding checks considered cash?
  • What is an outstanding check quizlet?
  • Where are outstanding checks recorded?
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What is an Outstanding Check?

Outstanding checks refer to checks that have been cashed or deposited. Those checks that have been written by the payer but have not yet been cashed or deposited by the payee.

Until this occurs, the payer’s account balance from the cash flow will remain unchanged. Outstanding checks can cause a slew of issues in the bookkeeping, business accounting, and banking industries.

The time it takes for the postal service to deliver the check and the payee to deposit it results in a multi-day delay between when a check is created and when it is presented for payment. If the issuing entity delays mailing the check for any reason, the check may be delayed as well.

If a check has not yet cleared the bank by the end of the month, it does not appear on the month-end bank statement, nor does it appear as a reconciling item in the issuing entity’s month-end bank reconciliation.

An outstanding check is the payer’s liability until the payee presents the check for payment, at which point the liability is eliminated. If the payee never presents the check for payment, the payer can mark it as void in its accounting system.

How to find Outstanding Checks on a Bank Statement

Do you know how to find outstanding checks on a bank statement? Here’s how to look for outstanding checks on your bank statement.

  • Obtain a complimentary copy of your bank statement.
  • Make a list of all the cheque payments you must have made.
  • Call the people to whom you issued the check.
  • Total the money you spent on each.
  • Examine previous statements for any outstanding checks.

How to find Outstanding Checks on Bank Reconciliation

  • To identify uncleared checks and deposits in transit, compare the company’s list of issued checks and deposits to the checks shown on the bank statement.
  • Add any deposits in transit to the cash balance shown on the bank statement.
  • Deduct any unpaid checks.
  • This returns the adjusted bank cash balance.
  • Then, using the company’s ending cash balance, add any interest earned and the number of notes receivable.
  • Deduct any bank service fees, penalties, and non-sufficient funds checks. This results in an adjusted company cash balance.
  • The adjusted bank balance should match the company’s ending adjusted cash balance after reconciliation.

GAAP rules for outstanding checks

  • When a check has been outstanding for more than six (6) months, the payee must be notified in writing that the check was issued and is still outstanding. The notification must include the check number, check date, and outstanding check amount. The payee has 30 days to claim the unpaid check.
  • A listing of all checks that have been outstanding for more than six (6) months after notification was sent to the payee and the check was not claimed shall be prepared at least once per year. The funds will be deposited into the unclaimed liability account via a journal entry.
  • A listing of all outstanding checks that have been deposited into the unclaimed liability account is made once a year, in September, to determine which outstanding checks (checks dated three (3) years or older) will be sent to the State of Illinois, Unclaimed Property Division, per State Statute.

Why are outstanding checks subtracted from the bank?

Outstanding Checks should be deducted from the bank side of the reconciliation because they were deducted from the book balance at the time the checks were written.

These are checks that the company has written but have not yet been cleared by the bank. When you write a check, it takes a few days for it to clear. At the end of the month, most businesses have a number of outstanding checks.

Outstanding Checks Journal Entry

When an organization prepares a bank reconciliation, it subtracts the outstanding checks from the bank statement balance to determine the correct or adjusted bank balance.

The company does not need to write a journal entry because the checks were recorded in the general ledger account when they were written.

If, on the other hand, a company voids one of its outstanding checks, it must make an entry in its general ledger. Cash will be debited in order to increase the account balance.

The credit portion of the transaction will almost certainly go to the original debited account when the check is issued. The canceled check is also removed from the list of unpaid checks. In order to do this effectively, you must first understand how to prepare a cash flow statement.

Outstanding checks vs unreleased checks 

Outstanding checks vs unreleased checks  – Outstanding checks are that have been issued by the company but not yet presented for payment by the payee.

This commonly occurs when checks are written in the last few days of the month. Unreleased checks have not yet been issued to the payee but have been deducted from the cash account. Payments will not yet be reflected as withdrawn from the bank in either case.

How to write off outstanding checks

When you wrote a check to a vendor and they didn’t deposit it within 180 days, you could simply write off the check and debit the money back to your checking account.

It was a fairly simple procedure. You had a list of outstanding checks that hadn’t been cashed yet, and as the 180-day mark approached for each check, you’d simply void it.

Here is the process by which you can write off outstanding checks

  • Make a list of outstanding checks or obtain one from the bank.
  • Checks that are no longer redeemable should be voided.
  • Return the amount of the canceled check to your checkbook balance.
  • Make an adjusting journal entry, debiting your bank account for the amount of the voided check and crediting the expense account that was initially debited.
  • Delete the check from the list and move on.

How to determine outstanding checks

According to moneyzine.com, business Z had $200,000 in checks drawn from its general account in December. Business Z discovered a balance of $12,000 in outstanding checks during the November bank statement reconciliation process.

Business Z received a bank statement that showed $196,000 in checks paid in December. The outstanding checks for Company Z at the end of December would be calculated as follows:

Outstanding Checks (Starting Balance)$12,000
Add:  Checks Written$200,000
Total checks to be paid$212,000
Less:  Checks Paid (Per Bank Statement)$196,000
Outstanding Checks (Ending Balance)$16,000
Credit: Money-zine

With the above illustration, do you think we can now calculate our outstanding checks? Consider the example of outstanding checks.

How to Prevent Outstanding Checks

Outstanding checks are a common cause of bank overdrafts. Maintaining a balanced checkbook is one way to avoid this occurrence. If the payee decides to cash the check later, this can help avoid any unnecessary NSFs.

You can also call or write the payee to remind them that the check is still outstanding. This could persuade them to deposit or cash the check. If they haven’t received the payment, they may contact you to reissue the check.

With banking becoming progressively electronic, using the checking account’s online bill pay service is another way to avoid writing a check and forgetting about it. This will have to provide real-time data on the total dollar amount of checks outstanding as well as the total dollar balance in the account.

Reconciliation of bank statements with outstanding deposits

On January 31, you received a $500 check from a customer. You record $500 in earnings in your books. You put the money in your bank account on February 3rd. When you reconcile your January books, you will notice that $500 is missing from your January bank statement.

Subtract the outstanding deposit from your small business ledger to adjust your records.

Conclusion

As a business, you are responsible for ensuring that your books are properly closed. Knowing your outstanding deposits enables you to keep accurate financial records. You can avoid accounting problems by reconciling your bank account.

When doing your bookkeeping, there is always the possibility of making a mistake. To avoid forgetting important monthly tasks, create a small business accounting checklist. Bank statement reconciliation ensures that your bank statement and books are in sync. If you don’t reconcile your accounts, you’ll waste more time and money correcting errors.

You can also use bank statement reconciliation to track the progress of your business. You can measure profitability and forecast cash flow by using outstanding deposits to balance the accounts.

FAQs

Are outstanding checks considered cash?

Checks that have been outstanding for an extended period of time cannot be cashed because they have become void. If a check is dated after 60 or 90 days, it becomes stale.

What is an outstanding check quizlet?

A check that has been written but not yet presented to a bank for payment. Outstanding payment. a deposit made and recorded in the checkbook but not yet reflected on the bank statement

Where are outstanding checks recorded?

The company does not need to write a journal entry because the checks were recorded in the general ledger account when they were written.

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