FINANCIAL HOUSEKEEPING | It’s easy to estimate your tax bill for 2006
With the year coming to a close, it’s now easy to forecast taxes due on your income for the year and to see if you have set aside enough in withholding to avoid a problem come April.
Armed with current paycheck stubs, plus any information on additional income or tax payments, consumers can get a detailed picture of what they are likely to owe this year and can ensure that they have set aside enough money to avoid penalties.
The Internal Revenue Service, generally speaking, requires paying more in taxes than the previous year, or 90 percent of the amount due, so getting an estimate is particularly important for anyone whose 2006 income represents a big raise over last year.
The 1040 Tax Estimator is provided by CCH Inc. and is available at www.finance.cch.com/sohoApplets/Tax1040.asp.
SHORT COURSE | Santa Claus rally
Sometimes called a year-end rally, the Santa Claus effect is a rise in stock prices during the week between Christmas and New Year’s Day.
While not a guaranteed move, history shows that there is at least a mild Santa Claus rally in most years for two reasons:
Investors are making moves at the end of the year, sometimes selling losers to lock in losses – which can then be used to offset future gains – and redeploying that capital, but also trying to get money into individual retirement accounts before year’s end.
Investors are anticipating the January effect, which is a rally that occurs in the first few days of the new year, as pension funds add new money to their accounts.
