Between unexpected expenses like home repairs or car trouble and milestone expenses like college tuition or retirement, it can be difficult to know if you are using the best savings strategies. When it comes to saving wisely, a lot can be said for employing methods that help you retain more of your money and allocate it in tax-smart ways.

To help you save more wisely this year, consider trying one of the following strategies:

  • Contribute the maximum to your workplace savings plan.

Consider gradually increasing your annual contributions, and therefore those of your employer, to your 401(k), 403(b), or governmental 457(b) plan until you reach the maximum annual amount.

  • Open a health savings account.

A health savings account (HSA) can be a tax-efficient way to pay for medical expenses now and when you retire. Your elected contributions are made pre-tax, and many employers will offer a regular contribution to allow you to build your savings year after year.

  • Pay down high-interest debt.

When managing multiple debts, try using extra savings to first pay down the one with the highest interest rate while continuing to make the minimum payments on your other debts. Once the debt is paid, focus on the one with the second-highest interest rate, and so on.

  • Contribute to an IRA.

Whether a traditional IRA (earnings grow tax-deferred, but income taxes are charged on withdrawals) or a Roth IRA (earnings grow tax-free and qualified withdrawals can be taken tax free), opening one of these accounts can be a tax-smart way to save for retirement.

  • Open a 529 college savings account for a loved one.

If helping a child, grandchild, or other loved one pay for college, a tax-advantaged 529 savings account may be the best option.

Call our office at 814-536-1040 to schedule an appointment to discuss these and other saving strategies to ensure you’re on the best path for you and your family!

While the dawning of 2017 brings with it many significant changes, there are some that may impact you and your family’s financial standing more than others. Most notably, there are several new rules surrounding retirement accounts taking effect in 2017, including:

  • Higher IRA income limits. Employees who are covered by a retirement plan at work who earn $62,000 or less annually ($99,000 or less for couples) can take a full deduction up to the maximum contribution limit of $5,500 ($6,500 for ages 50 and older). The tax deduction is phased out for those earning between $62,000 and $72,000 ($99,000 and $119,000 for couples) this year.
  • Longer Roth IRA income cutoffs. Those who earn less than $118,000 annually ($186,000 for couples) can make contributions to a Roth IRA that may position them to receive tax-free retirement income. Roth IRA eligibility will be phased out for those who earn between $118,000 and $133,000 ($186,000 and $196,000 for couples).
  • Higher income threshold for the saver’s credit. Those who earn less than $31,000 annually ($62,000 for couples) might qualify for a credit worth 50%, 20%, or 10% of 401(k), Roth IRA, or IRA contributions up to $2,000 for individuals and $4,000 for couples, depending on adjusted gross income.
  • Special rules for those impacted by Hurricane Matthew. Those who live or work in FEMA-designated counties in North Carolina, South Carolina, Georgia, or Florida affected by the hurricane will be allowed to access hardship distributions and loans from 401(k)s, 403(b)s, and certain types of retirement accounts without the typical restrictions in order to cope with storm-related costs, including food and shelter. Distributions taken between October 4, 2016 (October 3, 2016 in Florida) and March 15, 2017 will qualify for this policy.

 

Please call our office at 814-536-1040 to learn more about these changes and what they might mean for you.

Between unexpected expenses like home repairs or car trouble and milestone expenses like college tuition or retirement, it can be difficult to know if you are using the best savings strategies. When it comes to saving wisely, a lot can be said for employing methods that help you retain more of your money and allocate it in tax-smart ways.

To help you save more wisely this year, consider trying one of the following strategies:

  • Contribute the maximum to your workplace savings plan.

Consider gradually increasing your annual contributions, and therefore those of your employer, to your 401(k), 403(b), or governmental 457(b) plan until you reach the maximum annual amount.

  • Open a health savings account.

A health savings account (HSA) can be a tax-efficient way to pay for medical expenses now and when you retire. Your elected contributions are made pre-tax, and many employers will offer a regular contribution to allow you to build your savings year after year.

  • Pay down high-interest debt.

When managing multiple debts, try using extra savings to first pay down the one with the highest interest rate while continuing to make the minimum payments on your other debts. Once the debt is paid, focus on the one with the second-highest interest rate, and so on.

  • Contribute to an IRA.

Whether a traditional IRA (earnings grow tax-deferred, but income taxes are charged on withdrawals) or a Roth IRA (earnings grow tax-free and qualified withdrawals can be taken tax free), opening one of these accounts can be a tax-smart way to save for retirement.

  • Open a 529 college savings account for a loved one.

If helping a child, grandchild, or other loved one pay for college, a tax-advantaged 529 savings account may be the best option.

 

Call our office at 814-536-1040 to schedule an appointment to discuss these and other saving strategies to ensure you’re on the best path for you and your family!

If you had changed your withholdings last year to increase your take home pay, because of tax savings, you may need to change them again for the new tax year! We will be glad to review this with you at your annual review. Remember, that the goal of proper tax planning is to set your withholdings so you owe nothing, and get back nothing, when you file your return!

Why? Because in general, you must have 90% of your current taxes paid in when you file, or have 100-110% of the past year’s taxes paid in to avoid being penalized.

And, you never want to get back a refund, because that will mean you did something, well, something horrible:

Loaning money interest free to the IRS. Ouch!

It hurts my word processor to get those nasty words on paper. I don’t mind if you loan money to your “brother-in-law”, or to a friend, interest free, because some good may come from it.

But the IRS? Loaning them money without getting interest is ghastly. You deserve all your hard earned money to earn interest, or something. You work too hard to give them anything they aren’t entitled to by law. Since they aren’t entitled to over withholding, don’t give it to them!

The key is to prepare a tax plan for the current year, see how much you’re likely to owe for the year…and adjust your withholdings so you pay in between 90-100% of the total taxes by the end of the year!

If you’re not sure what to do, we’ll help you figure out what your withholdings should be set at so you pay in no more than you owe…and don’t make the awful mistake of loaning money to the IRS interest free!

Oh yeah, I forgot to mention that some company payroll offices think you are committing an act of treason if you change your withholdings to anything above “Married – 1”. They get all nervous, and tell you all sorts of incorrect information about how the IRS will confiscate your home if you don’t over pay.

Don’t listen to them. You are required to do some filings of an additional form if you claim over 10 exemptions, but that’s it. As long as you’re justified, your human resources office can’t say squat (anything). So, if you run into an evil payroll situation, let us know, and we’ll help you get it straightened out. (As well as help you with the forms, if necessary.)

Please keep in mind that this tip is designed to be of help for you, but is not to be relied upon as advice. It is merely a reminder that there are many choices you have available to you, and that planning is the only way to find the right answers for your situation!  As with any financial issues, make sure you get the right information before making a decision!  If you have any questions, we’ll be glad to help you!

 

After months of one of the most highly-contested presidential elections in our country’s history, a president-elect has been named and we can now begin to process what changes may be coming our way.

Some of those changes may be financial. As we continue to learn the specifics regarding the Trump administration’s fiscal policy, we know the anticipated broad strokes of it will include lower tax rates, a targeted fiscal stimulus, and the deregulation of business. These actions, some financial experts say, have a solid chance of positively impacting our economy.

Other positive changes that might be on the horizon include:

  • New growth opportunities. From the steepening of the U.S. Treasury yield curve to the positive performance of commodities, the new policies may offer new revenue streams to clients.
  • Market effects. Historically, the S&P 500 index has produced a positive total return in presidential election years.
  • Tax reform. To help stimulate the economy, new tax strategies might ensure significant cuts in taxes, particularly for higher-earning Americans.

As a valued client, please know that our commitment to your financial success, and that of your family, supersedes the changing tides of politics. As you save and invest for your goals, remember that market disruptions are not the norm, but the exception. Please call our office at 814-536-1040 if you have concerns or questions about how things are going with your investments.

 

More than 5,700 IRS scam victims have lost a reported $31 million as of March 2016. By arming yourself with knowledge about how the IRS operates, you can protect your hard-earned money and reputation. Call us today to learn the facts!

 

If you are holding individual stocks in a retirement account as well as in a regular non-retirement account, it is important to be aware of having the correct stock in the right account.

For example, stocks paying high dividends should go into your retirement account, since those dividends would otherwise be taxed right away at the regular income tax rate. If they were in your regular account, they would lose the benefit of tax-free growth.

Also, aggressive growth stocks should largely be left in the regular account for two reasons. One, they usually don’t pay big dividends and two, stocks sold in the regular account are taxed at the capital-gains rate while those sold in a retirement account are taxed at the higher income tax rate.

Always remember that in no matter what account you hold your equity investments they should be well diversified so as not to expose yourself to too a high a risk.

As always these tips are general in nature, and are intended to give you some ideas and guidelines as to things you should be aware of.

Please don’t take any actions without consulting us, or other appropriate professionals!

People in retirement often wonder what to do when you need money to live on, or to make a major purchase or go on vacation; or before retirement, for buying a house or to pay for college, or whatever.

Some people say that you should look at taking money out of a tax deferred vehicle for things like this while others say you should take tax deferred money out last. We’ve heard advisors say things like “you’ll be in a lower tax bracket in retirement, so you should keep socking away money into tax deferred accounts. Others say the exact opposite, and you shouldn’t put money into tax deferred accounts.

What’s the right answer?

 FIGURE IT OUT BY CRUNCHING THE NUMBERS!

We just had a client come in to see us who moved here from out of state, and had been told to accumulate money in certain accounts because she would be in a “lower bracket” in retirement. Well, because she hadn’t done the math, she found out that by doing what she did, she pushed herself into a HIGHER bracket in retirement, and cost herself a bundle in needless taxes!

Another client was told NOT to accumulate money in tax deferred accounts because he’d end up paying the same or more in taxes when he took the money out. When he came in to see us, we had the unpleasant task of telling him he had overpaid his taxes for years and years based on his advisor’s advice given without the benefit of CRUNCHING THE NUMBERS!

So, the tip is to never go by rules of thumb or people’s guesses when it comes to making big decisions with your money! You have to plan in a careful and thoughtful manner, and be sure to CRUNCH THE NUMBERS!

As always, these tips are general in nature, and are intended to give you some ideas and guidelines as to things you should be aware of. Please don’t take any actions without consulting us, or other appropriate professionals!

Income Solver Brochurehttps://www.facebook.com/AssetPlanning/photos/pb.162916080404800.-2207520000.1472811701./1317850064911390/?type=3&theater

 

 

People in retirement often wonder what to do when you need money to live on, or to make a major purchase or go on vacation; or before retirement, for buying a house or to pay for college, or whatever.

Some people say that you should look at taking money out of a tax deferred vehicle for things like this while others say you should take tax deferred money out last. We’ve heard advisors say things like “you’ll be in a lower tax bracket in retirement, so you should keep socking away money into tax deferred accounts. Others say the exact opposite, and you shouldn’t put money into tax deferred accounts.

The right answer?  FIGURE IT OUT BY CRUNCHING THE NUMBERS!

We just had a client come in to see us who moved here from out of state, and had been told to accumulate money in certain accounts because she would be in a “lower bracket” in retirement. Well, because she hadn’t done the math, she found out that by doing what she did, she pushed herself into a HIGHER bracket in retirement, and cost herself a bundle in needless taxes!

Another client was told NOT to accumulate money in tax deferred accounts because he’d end up paying the same or more in taxes when he took the money out. When he came in to see us, we had the unpleasant task of telling him he had overpaid his taxes for years and years based on his advisor’s advice given without the benefit of CRUNCHING THE NUMBERS!

So, the tip for this month is to never go by rules of thumb or people’s guesses when it comes to making big decisions with your money! You have to plan in a careful and thoughtful manner, and be sure to CRUNCH THE NUMBERS!

As always, these tips are general in nature, and are intended to give you some ideas and guidelines as to things you should be aware of. Please don’t take any actions without consulting us, or other appropriate professionals!

More and more people are working at least part time out of a home office and claiming it as a deduction.

Before claiming home office deductions, homeowners should take into consideration the impact the deductions will have on the sale of their home, when the time comes.

Anybody who claims deductions for a home office may end up paying tax on part of their profits on the sale. This is true even if the profits are less than the current home sale exemption of up to $500,000.

There’re a couple of reasons for this. One is that the home-sale exemption can’t be used to protect that part of your gain that is equal to any depreciation deductions allowed for business or rental use of the property for periods after May 6, 1997. Two, is that unless 100% of your home qualifies as a principal residence for at least two of the five years preceding the sale, you’ll be forced to pay capital gains tax on the business portion of your home.

Anyone taking a home office deduction should get the advice of a tax professional to make sure that you are taking full advantage of the laws that benefit you, while at the same time not setting any tax traps for the future.