Submitted by Pat Cote on January 14, 2019
Many of us have New Year’s resolutions, as Susan talks about in her Financial Fitness article. Once you have addressed the key elements of financial fitness, the next step is to get or keep your financial house in order.
The first step is to know your finances. What do you have and what do you make/spend? You can put in many hours and make a very detailed spreadsheet if you are so inclined. We find about 1% of people actually want that level of detail. For the rest of us, a top-down, simple approach works fine and is a lot easier to maintain.
Submitted by Susan Powers on January 14, 2019
Feeling the need to take control? You’re not alone.
- The average American household owes $16,425 in credit card debt, which is an increase of 10% since 2013
- The Average Student Loan Debt is almost $48,000
- Only 32% of Americans maintain a household budget
- 56% of millennials don’t have any money saved in a retirement account
- 39% of both Baby Boomers and Gen-Xers have nothing put away for their golden years
Don’t panic, let’s define a few achievable goals to get 2019 off to a great start.
3 steps you should take now:
1. Payoff debt
2. Spend less by saving first
3. Utilize tax-efficient savings and withdrawal strategies
Submitted by Pat Cote on December 11, 2018
Between holiday parties and family/work activities, this time of year things tend to be hectic.
We have been writing about tax tips all year long, particularly since there are a number of areas that are different now with the new tax law. The list below summarizes the items we covered before that you still have time to address before December 31. If your taxable income is unusually low for you in 2018, be sure to see our blog called "Tax Tips If You Have Low Income This Year."
Submitted by Pat Cote on December 7, 2018
If you went back to school in 2018 or recently started a business and are incurring start-up losses, your income might be unusually low in 2018. If so, the tax strategies to address by December 31 are likely quite different than a typical income year: in particular, you should consider realizing unrealized capital gains or converting tax-deferred IRAs to Roth IRAs.
Both of these strategies aim to take advantage of the lower marginal income tax rates at lower incomes. For example, the following tax rates apply in 2018 if your taxable income is $77,400 if married filing jointly or $38,700 if single:
- 12% Federal income tax
- 0% Long-term capital gains tax
Submitted by Kate Hennessy on November 27, 2018
On this #GivingTuesday….check out my article about charitable gifting and year end tax planning. Donating appreciated assets is easier and more beneficial than you may realize.
At this time of year, it’s common for individuals to make charitable contributions. We recently had an opportunity to make a donation to a non-profit organization. In lieu of writing a check to the organization, I reviewed our holdings within our taxable account and identified that we could make the same donation by gifting a mutual fund. The mutual fund had a long term unrealized gain (profit that exists on paper from an investment that has yet to be sold in return for cash.) The benefit of gifting an appreciated asset is we avoided recognizing a long-term capital gain and also received a tax deduction. The non-profit organization was easy to work with and required minimal paperwork. If you have any unrealized capital gains in your taxable brokerage account, you might want to read this article on how to donate an appreciated asset - you might come out further ahead.
Submitted by Susan Powers on November 11, 2018
Looking for tips to help you save money on your tax bill for 2018? Smart tax planning starts now rather than waiting until next year when it’s often too late. Here are 5 tips to help you take full advantage of tax reform.
1. Review your investments, ‘harvest’ losses
Given recent market volatility, you may have losses in your taxable accounts. You can lock in those losses for tax purposes, while still being invested for the long-term by buying something similar, but not identical. You can use these tax losses to offset capital gains when you file your tax returns. This is a concept known as tax-loss harvesting. For example, if you sold one investment and realized a gain of $5,000 and then sold another at a loss of $4,000, you reduce your taxable gain to $1,000. If your loss is larger than the gain, you can deduct up to $3,000 of the net loss against ordinary income.
Submitted by Pat Cote on October 30, 2018
As the stock market has shown many times in the past, October was once again a month of high market volatility. This brings the usual chatter about what’s driving the volatility – the Fed raising rates, trade wars, political issues, etc. It is not necessarily a bear market looming - the reality is that we just experienced the longest bull market in US history, so we are overdue for market volatility, including a market correction.
There are three key steps to follow, especially with volatile markets:
Submitted by Kate Hennessy on October 10, 2018
When I was a teenager I worked and had a summer job. My parents helped me open a savings account and that started my path towards saving. I wouldn’t say I was saving for retirement, but I’d like to believe I started to understand the concept of saving.
Today there are many opportunities to help a child invest for their future, and teach a child the importance of saving. While the savings accounts still exist, there are tax efficient ways to teach a child to save for their future, such as with a Roth IRA.
Here’s how Roth IRAs work – an adult sets up the Roth for the benefit of a child. Once the child reaches majority (may be 18 or 21 depending on the state you reside in), the adult then transfers the account to the child’s name. Children under the age of 18 are eligible to contribute to a Roth IRA.