Yearly Archives: 2018

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New Pass-Through Income Tax-Exemption

Learn about the new pass-through income tax-exemption.People who claim their business income on their individual income tax forms (often referred to as “pass-through” income) may now be able to exempt 20 percent of that income from federal taxes. This new pass-through income tax-exemption could add up to significant tax savings.

High-earning professionals like accountants, lawyers and consultants may encounter some eligibility rules; for example, they don’t qualify if income exceeds $207,500 for an individual or $405,000 for a married couple filing jointly. However, single filers with total taxable income of less than $157,000 in 2018 (or $315,000 for joint filers) can take advantage of the pass-through tax break regardless of their line of work. That includes people with side jobs and home-based businesses, too.

Read this Consumer Reports article and talk with your tax advisor if you’d like to learn more about reducing your 2018 taxes.

By |December 17th, 2018|Taxes|

End of Year Checklist

Lupe Camargo offers a financial end of year checklist for review.Where has the year gone? Throughout the year we have several ways to help lower our tax bill and save more money. Although most of the year is behind us, there is still time to take advantage of some things that can help put you ahead. Take a minute to review this end of year checklist.

Maximize retirement account contributions.

How much more can you save before year-end in your IRA or company retirement account? Traditional and Roth IRAs have a limit of $5,500 with catch-up contributions of $1000 for those over age 50. The 401K contribution limit is $18,500 with a catch-up contribution of $5,500. These extra contributions may push you into a lower tax bracket, so it’s worth evaluating.

Don’t miss your Required Minimum Distribution (RMD).

At age 70 ½ you are required to withdraw at least the required minimum distribution from your IRA or face a steep penalty. Remember the option of doing a Charitable IRA Rollover. This allows individuals to use their RMDs to make a direct transfer of up to $100,000 per year to qualified charities without incurring federal income taxes. Remember though, because taxes are not taken out when you complete a Charitable IRA Rollover, these funds may not be listed on your tax return as a charitable contribution.

Spend your Flexible Spending Account (FSA) money.

Is there money left in your company FSA? Use it before the end of the year, or lose it. Buy those glasses, or get the dental work done, before the money disappears.

Capitalize on tax-loss harvesting opportunities.

At Perspective, we regularly review portfolios for tax-loss harvesting opportunities. This helps to offset taxable capital gains you have had throughout the year by selling investments that have lost value.

Review your spending.

Are you confident you know where your money is going? Begin the process of reviewing your statements and identifying opportunities to save more. By focusing on what you can control, you can help kick off 2019 in the right direction.

By |December 3rd, 2018|Financial Planning|

Maintaining Perspective

Patrick Eng addresses maintaining perspective.When the Dow Jones Industrial Average climbed above 22,000 in August 2017 (an all-time high) I wrote an article titled “Managing Expectations.” In early October 2018, the Dow reached a record-breaking 26,800 points. In the four weeks that followed, it dropped by 2,000 points. By mid-November, the it was back near 26,000. As I write today, and the Dow is hovering at roughly 25,000, the new mantra is “maintaining perspective.”

After seeing these numbers, I felt compelled to share once again the points from my summer 2017 article. As we traverse the landscape of volatile financial markets – experiencing both the euphoric highs and the inevitable declines – it’s important to remember the following:

  • Stay diversified; even if it doesn’t feel right, history shows this strategy works.
  • Avoid jumping in and out of the market; it is virtually impossible to time market movement.
  • Invest regularly, in both good times and in bad times; the potential to buy investments at discount prices can only happen if you are involved when things look the bleakest.
  • Market corrections, no matter how painful, are a natural part of the economic cycle.

These long-term fundamental principles of investing will serve you well and set you up for long-term investment success. It also helps to stay in communication with your advisor as changes take place in your life or if you just want to get some perspective on market movement.  An important role we play in our clients’ lives is being an “emotional surge protector” when unavoidable declines take place.

By |November 19th, 2018|Current Affairs, Investing, Uncategorized|

Strong Holiday Spending Expected

Photo courtesy of freedigitalphotos.net and photostock.

Holiday retail sales in November and December are expected to increase between 4.3 and 4.8 percent over last year. This is according to a recent forecast from the National Retail Federation (NRF). That strong holiday spending would equate to total sales of about $717 billion to $721 billion this year.

“Our forecast reflects the overall strength of the industry,” said Matthew Shay, NRF president and CEO.

“Thanks to a healthy economy and strong consumer confidence, we believe that this holiday season will continue to reflect the growth we’ve seen over the past year. While there is concern about the impacts of an escalating trade war, we are optimistic that the pace of economic activity will continue to increase through the end of the year.”

Holiday sales in 2017 totaled nearly $688 billion. That is a 5.3 percent increase over the year before and the largest increase since the 5.2 percent gain in 2010.

NRF’s forecast for strong holiday spending is based on an economic model using several indicators. They include consumer credit, disposable personal income and previous monthly retail sales. The forecast includes online and other non-store sales, as well.

Retail is actually growing faster than the rest of the economy at large, according to research from IHL Group. While the lines between digital and physical shopping experiences are blurring, stores are not going away. IHL data shows that for every single retailer closing stores, two others are opening stores. The group expects stores to be involved in 81 percent of all retail sales in 2021.

By |November 4th, 2018|Current Affairs, Small Business|