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 Susan Powers on August 22, 2018
Looking for a great tax deduction? Proposed regulations from the Internal Revenue Service regarding the new 20 percent qualified business income (QBI) deduction were issued August 8th. They attempt to clarify the definition of QBI and “Specified Service” businesses, how phase out rules can reduce or eliminate QBI deductions and an anti-abuse rule designed to prevent separating out parts of otherwise disqualified business.
Often referred to as a deduction for pass-through businesses, let’s be clear. These rules apply to owners of sole proprietorships, partnerships, trusts and S corporations allowing them to deduct 20 percent of their QBI.
Submitted by Pat Cote on July 24, 2018
There is change in the air for work and retirement. The lines between them have blurred and in a lot of cases, that can be a good thing.
When we work on financial plans, many of our clients tell us that they do not want to have a hard date in retirement at which they stop all forms of work. Many people enjoy what they do – one of the more common goals is to have some interim stage at which they continue with their profession (perhaps setting up their own business) with reduced hours. Many of the HENRYs (High Earners, Not Rich Yet) that we work with are working long hours, so having a more balanced lifestyle in a pre or early retirement stage is important to them. Of course, this is not feasible for everyone – fortunately, many professions and leadership roles allow for some form of scaled back work.
Submitted by Susan Powers on June 27, 2018
This week was the 6 month anniversary of the Tax Cuts and Jobs Act (‘TCJA’) designed to decrease the taxable rate for corporations and individuals, and significantly limit allowable deductions. Since this change to the Tax Code was one of the largest since the Reagan era, the Internal Revenue Service will need to publish many regulations and advisories in the coming months to better clarify provisions of the TCJA.
Submitted by Kate Hennessy on June 27, 2018
When I look around our neighborhood, I see numerous homes for sale. No better time to think about your financial future than the day you close on your new home. It’s the single biggest investment in your life - do you know how to protect it and what it means for the rest of your financial goals? Sit down with a financial advisor to review this major investment and how it fits in with your financial plan.
Purchasing a new home brings up various financial considerations and opportunities.