Federal Reserve Makes Record $52.1bn Profit

According to BBC, last year the Federal Reserve made over $51.1 in revenue last year, allowing them to pay a record $46.1 billion to the U.S. Treasury. This number represents the largest payment made to the Treasury since 1914. It was also a massive 47% increase from the year prior. As the BBC article explains, the record figure was largely a result of the Reserve’s attempts to support financial institutions with large bail out loans.

The Federal Reserve funds itself from its own operations and returns any profits to the Treasury department.

The figures suggest that US taxpayers have, so far, gained money from the US government's action in propping up the system. Some of the profit has come from interest earned on government bonds and mortgage-related securities, including those of mortgage giants Fannie Mae and Freddie Mac.

The emergency lending programs instituted by the central bank during the last year's financial crisis helped swell the Fed’s balance sheet to more than $2tn. They were designed to keep down interest rates and get banks lending to each other again, hoping to spark an economic recovery.

The Federal Reserve could also lose money on its holdings if it sells them at a time when they have fallen in value. The Fed also earned money from its emergency loans to banks and other firms, such as the giant carmakers. It charged both interest and fees on these.

Tax Recordkeeping Tips

Last week the Roni Deutch Tax Center® Tax Help Blog posted a new article on tips to keep your tax records organized. Check out a snippet of the article below, or you can find the full post here.

Old Documents

Before you go out and buy a huge safe to store your piles of financial documents, you might want to consider throwing some of them away. According to the IRS you will want to keep them for at least 3 years or up to 7, depending on your unique situation. There are some documents such as records on appreciable assets that you might want to keep for a few extra years. However, for the most part you should be fine discarding any documents more than 3 years old if you regularly file a return.

W-2s & 1099s

All income related tax documents should be kept somewhere safe. This includes any W-2s for jobs you have worked during the year, and 1099s from any independent contracting work and/or gambling winnings. All of these documents are considered “basic records” and should be kept for at least 3 years. If you have enough room, then you might even want to keep them a little longer just in case.

Receipts

As far as receipts go, too much is better than too little when it comes to storing your tax documents. If you are deducting any expenses, then you need to keep your proof. If you are having trouble organizing receipts of multiple different sizes, then you could always photo copy a few onto a single sheet of paper. This will make the documents easier to organize, and can save room as well.

Tax Settlement Records

If you recently settled IRS back tax debts, then you will need to keep all of your records for at least a few years. That way, if there are ever any discrepancies in the future – such as a new tax lien or wage garnishment – then you will be prepared to get it resolved as soon as possible.