Money Minute: U.S. Millionaires Club Grows; Inventory Woes Hamper Home Buying

More Americans belong to the millionaire's club than ever before.

The number of millionaires in the U.S. increased by 7 percent last year. That's another 640,000 people. The Spectrum Group says that brings the total number of millionaires to a record high 9.6 million. The group's definition of a millionaire is net worth topping $1 million, not counting their primary home.

Millions of Americans say they want to buy a home this year, but the online real estate website Zillow (Z) says most won't be able to do so because there's a limited supply of homes for sale, prices are soaring and there are higher standards to qualify for a mortgage. On average, home prices jumped by 11 percent last year.

Safety problems are mounting for General Motors (GM). %VIRTUAL-article-sponsoredlinks%A private watchdog group claims more than 300 deaths may be related to air bags that failed to deploy in some of the same compact cars GM recently recalled for ignition problems. The group blames GM and federal regulators for failing to investigate the defect trend.

Here we go again: another round of talk that stocks are headed for a correction. We haven't had one in quite a while. S&P Capital IQ says the market fell by nearly 10 percent in 2012 -- a 10 percent drop is the widely accepted definition of a correction -- and by 19.4 percent in 2011. The S&P 500 has reached a series of record highs during the past month.

Here on Wall Street yesterday, the Dow Jones industrial average (^DJI) tumbled 231 points Thursday, the Nasdaq composite (^IXIC) dropped 63 and the Standard & Poor's 500 index (^GPSC) slid 22 points.

Finally, a group of workers at McDonald's (MCD) has filed suit alleging the company failed to pay them for all of the hours they worked or for overtime. They filed class action lawsuits in California, New York and Michigan. It's the same group that's been pushing for higher wages and union representation.

-Produced by Drew Trachtenberg.

8 Zen Tips for Tax Time
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Money Minute: U.S. Millionaires Club Grows; Inventory Woes Hamper Home Buying

Don't parse every receipt and monthly bank statement, says Wenli Wang, a partner in the tax practice at Moss Adams in San Francisco. "Do some homework, so you know what is deductible and what is not," she says. "When you understand what is relevant to your tax prep, you’ll have a game plan."

"Clients spend a lot of time chasing small deductions. I tell them not to go crazy documenting $5 here or $10 there. Concentrate on bigger expenses that save the most in taxes," Wang adds. "And don’t spend money on unnecessary expenses just to save on your taxes."

Start with one of the many free checklists available. Here are a few from the IRS, its affiliate, TurboTax, or FreshBooks.

Avoid such audit triggers as running a cash business, claiming large deductions on minimal income, and reporting dependent exemptions for people who may not actually be your dependents for tax purposes, says Ebong Eka, a Washington accountant and author of "Start Me Up: The No-Business-Plan Business Plan."

If you report a business loss year after year, you risk having the IRS declare your company a hobby, says Mark MacLeod, an accountant and chief financial officer for FreshBooks. "Filling in your Schedule C with nice, even, rounded numbers in the hundreds or thousands is another red flag," he adds.

Buy an accounting system that automates your back office tasks, including tracking income and tax-deductible expenses. There are free and low-cost software packages available, too. FreshBooks' MacLeod -- who obviously has a dog in the fight -- advises business owners to steer clear of software that's designed for professional accountants. "If it's too complicated, you won't understand it and then you won’t use it," he says.
Spare your sanity by hiring a professional who will do right by your tax return while you work for your clients or drum up new business. "What is your time worth?" MacLeod asks. "If you're a graphic designer charging $100 an hour or more, do you want to spend hours on taxes?"

Running late and wilting under the pressure? "File an extension," Berger advises. "If you wait until the last minute, you'll make a lot of mistakes and you could miss the deadline anyway."

If you owe money, pay up. Or at least pay part of your liability and get on a payment plan for the rest. "Clients worry about owing money they don't have. But it's important to file your return on time, or file an extension at least," Berger says. Putting it off will only result in fines and penalties down the line -- not a prospect that invites much in the way of zen.

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