1. Some personal aspects of personal finance that require knowledge of taxation include retirement planning, choosing investments,...
Question:
1. Some personal aspects of personal finance that require knowledge of taxation include retirement planning, choosing investments, renting or buying a home. Before investing you need to determine if it is a viable investment. For example, will the investment generate income or will there be a loss. Choosing to rent or buy a home can have a significant impact on your finances. An assessment must be done to determine which option is best. First you need to determine affordability of the monthly payment. You also need to determine how much you can afford to pay monthly and if you will have to pay out of pocket for repairs if you choose to buy the home.
2. Some aspects of personal finance that require knowledge of individual taxation include homeownership (owning a home versus renting), retirement planning, and evaluating job offers.
While renting is more manageable in the short-term, if one has the ability to buy a house, it can be less expensive in the long-run. As the textbook states, "Tax deductions for home mortgage interest and real estate taxes can reduce the after-tax costs of owning a home relative to renting." Retirement planning is an important step individuals should take to ensure they can support themselves when they can no longer work. For some, this may be a way to live their last years to the fullest, and for others it may be ensuring they have the bare necessities. Regardless, understanding the "tax-advantaged methods of saving for retirement" can help increase your savings over the years.
When evaluating job offers, an individual may discover that one job offer places them in a higher tax bracket than the other. While their gross income would be higher for one job, it may affect their net income/after-tax pay. In some cases, individuals may be better off taking the job offer that keeps them in the lower tax bracket.
Expert Answer:
1 Before investing consider all aspects of financing whether personal or others to reap benefits out of it Investing wisely results in tax savings whi... View the full answer
