The nation's budget deficit could fall to less than half of what it was just a few years ago.
The Congressional Budget Office has revised its deficit estimate, mostly because military spending will be less than previously thought. It now projects the deficit will narrow to $492 billion this year. However, the CBO still projects the deficit will turn higher again in 2016.
The CBO report also takes a look at the cost of Obamacare, and finds it will be considerably less than expected. The government is expected to spend $165 billion less over the next 10 years than previously forecast. That's partly because many of the plans have been designed with a narrow list of doctor networks, with low rates of reimbursements. %VIRTUAL-article-sponsoredlinks%As a result, the CBO now projects the increase in health care premiums will be slower than expected.
Of course, it's April 15 -- Tax Day, and no one likes to write a check to the IRS. But the wealthy seem especially unhappy this year. For the top 1 percent, the average tax bill will be more than $525,000. The Tax Policy Center says that's up $36,000 from last year, due to higher tax rates and limits on certain deductions.
If there's such a thing as social media jail, USAirways just got locked up. In response to a customer complaint, the company tweeted a response that included a racy picture. It took about an hour for the company to delete it, raising a bit of ruckus in the Twittersphere.
Here on Wall Street, the Dow Jones industrial average (^DJI) rallied 146 points yesterday, the Nasdaq composite (^IXIC) rose 23 and the Standard & Poor's 500 index (^GPSC) added 15 points.
Finally, Google (GOOG) has agreed to buy Titan Aerospace, the maker of solar-powered, high altitude drones that can fly for years at a time. The drones have the potential to bring internet access to millions of people in remote areas around the globe. It also collects images that could help Google maps.
-Produced by Drew Trachtenberg.
7 Tax Tips for Investors
Money Minute: Budget Deficit Shrinks; Obamacare Costs Less
The 1099 forms you received from brokerages and other financial institutions might not be the last ones they send. It's common for them to issue corrected versions a little later. Consider getting your tax return ready to go, then waiting until close to April 15 before submitting it. That way, you can incorporate any last-minute changes and avoid having to file an amended return.
Pay attention to when you sell any holding, because the capital gains tax rates differ for long-term and short-term holdings. Short-term capital gains are taxed at your ordinary income tax rate, which could top 30 percent. Long-term gains (those held for more than a year) get preferential rates, which are zero percent for those in low-income brackets and 15 percent for most of us.
If you own underwater stocks, consider selling them for a loss. You can use those losses to offset gains from other sales, reducing your taxes owed. You can always buy back the asset later, if you still believe in it -- just be sure to wait for 31 days to pass, to observe the "wash sale rule."
If you're planning to sell one or more holdings that will give you a really big gain, submit an amended W-4 form to increase your withholding, or send the IRS an estimated tax payment. Underpaying your taxes significantly during the year can lead to a penalty at tax time. You may be protected by a "safe harbor" provision, though, which can save you from having to jump through those hoops.
If you're planning to buy shares of a mutual fund, determine when it will distribute its dividends. Many funds do so near the end of the year, and when that happens, the fund's share price will drop by the amount of the distribution -- which is taxable to shareholders. It's better to just wait until after that payout to buy in.
Mutual funds with high turnover ratios (reflecting a lot of buying and selling in a fund) have expenses for these trades. It's worth favoring funds with low turnover ratios, especially index funds and index-tracking ETFs, which simply hold onto the mix of securities in a given index, without a lot of trading activity. (Index funds generally outperform their higher-turnover counterparts, too.)
Boost the power of your Individual Retirement Accounts by making your annual contributions early in the year, giving the funds more time to grow. Over decades, it can make a significant difference.