December 2015 Letter

With the outcome of Congressional action as uncertain as ever, what can be done to manage your own affairs as the 2015 tax year winds down? Included here are a number of areas for possible year-end review and tips to make your charitable giving more effective. There is also a recap of key tax code provisions that expired in 2014, but may still impact your 2015 taxes. Looking for something to talk about at the next family gathering? Consider sharing a quick, fun quiz regarding an iconic reindeer with a big shiny red nose. Should you wish to review your situation please call. Also feel free to forward this newsletter to someone who may benefit from this information.

Tis the Season...for Review As 2015 winds to a close, there are a number of tasks that should be reviewed. To help you plan accordingly, here are some things to consider. Employee benefits. Most employer benefit plans have enrollment periods that coincide with the calendar. Please review your benefit options with your employer and make any necessary changes. Common areas of review include employer-provided health insurance, dental benefits, childcare benefits, Health Spending Account contributions, Flex Spending Account contributions, disability insurance and employer retirement account contributions. Beneficiary review. Make it a practice to review beneficiary assignments on all your key accounts. This is especially important for your retirement accounts as the beneficiary assignment within the account can supersede a will. Retirement plan contributions. Review and adjust your contributions to your retirement plans. At minimum, try to contribute enough to take advantage of any employer matching funds in your work sponsored plan. This review should include IRAs (Roth, Traditional, SEP and SIMPLE), 401(k)s, 403(b)s, and 457 plans. Insurance review. Consider an annual review of your insurance policies. This includes health insurance, life insurance, disability insurance, home insurance and potential umbrella policies. Are the beneficiaries up to date? Are you happy with the coverage? Automatic billing. Review your checking account's automated billing transactions. This is a good time to identify what automatic monthly expenses should be reviewed, reduced or eliminated. You may also discover billing for services you thought were cancelled. This specific review often catches errors that a simple account reconciliation may be missing. Withholdings. Sometime in December or early January you may wish to review your payroll withholdings. Many of us do this after our tax return is filed. However, if you file close to April 15th, you are losing four plus months of proper withholdings. Develop your own list. The review suggestions mentioned here impact most of us. However, everyone's situation is not the same. Use this time to develop a list of your own annual review items. It might include reviewing College Savings Accounts or having an annual sit down to go through an aging parent's financial accounts.

Be a Better Charitable Giver Simple moves to make your giving go further These days, we all want our money to go further and charitable donations are no exception. Yet sometimes, even well-intentioned gifts may end up going to a poorly run charity or the charity does not receive the full benefit of your gift. Here are some tips to ensure that your donation makes the biggest impact: Research the Charity. Make sure the charity you donate to is a good steward of your resources. Websites like www.charitynavigator.org track the financial health and effectiveness of charities. Effective charities spend 75% or more of their resources on their services and 25% or less on fundraising and administrative costs. Be Proactive. Identify the causes that are most important to you and your family and then target those organizations - it's just too easy to give haphazardly to whomever asks you for money. Do Not Give Over the Phone. Charitable telemarketing campaigns generally use for-profit fundraisers who take a percentage of your gift. This means the charity often receives substantially less of your donation if you give over the phone. If you truly support the organization, hang-up. Then contact the charity directly to make your donation. Focus Your Support. Focus on one or two charities that you are passionate about. Repeat donations from reliable donors save charities money because they don't have to go looking for more donors and are not wasting money trying to woo uncommitted, one-time donors. Share Your Intentions. Whether your donation is a one-time gift or part of a long-term commitment, tell the charity so that they do not continue to spend money on seeking more donations from you. As part of your holiday season of giving, consider giving to a favorite charity. It can also serve as part of your year-end tax planning.

The ''Special'' Reindeer Quiz As the holidays approach, we will quickly be flooded with holiday specials, iconic movies and lit-up everything. As you sit around the fire staying warm, consider your knowledge of that iconic reindeer who guided Santa's sleigh on a stormy winter night. How old is Rudolf? The story of Rudolf is now 76 years old. Who wrote the now famous glowing nose reindeer story? Robert L. May. He created it for Montgomery Wards in 1939 as a free promotional book. The first year they printed over 2 million copies of the product. The Reindeer was not originally going to be a reindeer. What animal was he? A moose. The reindeer's nose was not initially going to be red. Why not? Montgomery Wards was afraid the red nose would be associated with chronic alcoholism. It was only when the cartoon shape was fashioned after a deer, that the shiny red nose was established and approved. Who made the now popular Rudolf the Red-Nosed Reindeer song famous? Most of us know the tune as sung by Burl Ives in the popular holiday TV show using stop motion animation. But the song was made popular by Gene Autry in 1949. Autry was widely known as the singing cowboy. He was also a former owner of the Angels major league baseball team. This song is one of the most popular holiday songs recorded of all time.

Déjà vù All Over Again Will the habit of late law changes continue? The Congressional habit for repeatedly making late tax law changes is now so bad that the IRS is reserving blank lines on the form 1040 for possible law changes this month. Given the potential for retroactive tax law changes in 2015, please prepare for the extension of the following tax laws that expired in 2014. While there is no guarantee that tax law extensions will be made, by being prepared with the proper documentation you can take advantage of any forecasted changes. Educator's $250 tax deduction If you are a teacher and have out-of-pocket expenses please keep your receipts. You may be able to deduct up to $250 of qualified expenses even if you do not itemize deductions. State sales tax itemized deduction option Keep receipts of any large purchases. The sales tax provision allows for you to take either a general sales tax deduction or a state income tax deduction as an itemized deduction. Direct contribution from retirement accounts for qualified seniors In 2014, qualified seniors who donated funds directly from their retirement plan could exclude the plan withdrawal from income. Hold off using this technique in 2015 until you receive confirmation from Congress this tax law is extended. Itemized deduction for mortgage insurance premium costs Keep your mortgage insurance documentation for a potential itemized deduction. Changes in small business depreciation Through late November, 2015 there is no longer bonus first year depreciation. In addition, Section 179 amounts are greatly reduced from $500,000 in qualified assets to $25,000. Even if the law changes, you have little time to purchase and install equipment. Please plan accordingly. If other late law changes impact you, rest assured those changes will be applied to your tax return as they become known. Note: Special thanks to the late Yogi Berra, baseball great, for our article headline.

As always, should you have any questions or concerns regarding your situation please feel free to call.

November 2015 Letter

As the year winds down, will you be ready for the application of all the new tax laws incorporated into 2015? Please take a moment to review your situation while there is still time to act prior to year-end. This is especially true if you have kids going to college and you need to file the annual FAFSA report to obtain financial aid. While you are at it, why not consider an annual credit check up and consider ideas offered below to reduce this year's tax obligation. As always, should you know of someone who may benefit from this information please feel free to forward this newsletter to them.

Want Federal Money for College? Prepare now for your FAFSA filing The Free Application for Federal Student Aid (FAFSA) is often the starting point to help families finance the ever challenging cost of a student's college education. The application is available starting January 1st. The earlier you file your application, the earlier you will receive aid packages from most participating schools. The application is used to receive grants (free money!), federal loans, and work study awards. Here are some hints to make sure the application process works in your favor. Create your signature PINs now.Both the student and parent will need to set up an electronic signature within the FAFSA system. You do not have to wait until January to set these up, so do it now. You cannot submit the FAFSA form without this. File the FAFSA early! As soon as possible after January 1st, fill out and submit your FAFSA. You will start to see reminders in the press in late December, but November is a great time to estimate your year-end tax obligation. Filing early maximizes your chances of receiving aid. It also minimizes your chances of missing an unknown application deadline. Start organizing your tax records. You can fill out and submit the FAFSA form before you finalize your tax return. If you choose this route, you will estimate your tax figures for the FAFSA and then go back later and update your FAFSA with actual numbers. Start organizing your tax records now, so you are in a good position to estimate your tax return. Let your advisor know. If you have a child ready to attend college, stay in touch with your financial advisor. Managing your assets to present a good financial picture starts before your student's junior year in high school. Collect needed information. To fill out a FAFSA you will need the following; Student and parent Social Security Numbers Drivers license Federal tax information for the student and parent (actual or estimated) for current year and actual information from the prior year Record of any untaxed income (excluding retirement account balances) Information for balances of the following Cash, savings and checking accounts Investment asset balances Other assets FAFSA PIN Involve your student The FAFSA is a student application for assitance. Use this application process to help your student feel owenership of their educational journey. Every January, the www.fafsa.gov web site is heavy with activity as students start submitting their FAFSA forms. Please ask for assistance if you need help with any part of the FAFSA submission. The form can be a daunting task for the uninitiated, but by proper preparation you can get your form done in quick order.

Annual Credit Check More Important Than Ever In the past few months, the IRS has admitted to a major breach into taxpayer records. This breach was not a hacking operation. The thieves had valid names, addresses, Social Security Numbers and more. They used this information to get by the security measures in place on the IRS website. The IRS believes these crooks will use the stolen information to file fake tax returns in early 2016. So what should you do? Actively monitor your credit reports. Free Annual Credit Report The good news is that each of the major consumer credit reporting agencies is required by law to provide you with a free report once a year. A web site has been set up specifically for this purpose. Here is the information to select your free report from the three major credit reporting agencies; Experian, Equifax, and TransUnion. Telephone: 1.877.322.8228 Web site: www.AnnualCreditReport.com Via mail: (fill out the online form and mail it to the following address) Annual Credit Report Request Service PO Box 105281 Atlanta, GA 30348-5281 Listed here are the three major credit agencies and how to contact them directly. TransUnion Telephone: 1.800.888.4213 Web site: www.transunion.com Via mail: 2 Baldwin Place PO Box 2000 Chester, PA 19022 Equifax Telephone: 1.800.685.1111 Web site: www.equifax.com/CreditReportAssistance/ Via mail: Equifax Credit Information Service P.O. Box 740241 Atlanta, GA 30374-0241 Experian Telephone: 1.888.EXPERIAN (397-3742) Web site: www.experian.com Via mail: P.O. Box 9532 Allen, TX 75013 If you find problems or think your identity has been compromised work through the credit bureau's process to correct the error. Also place fraud alerts on your credit agency account should you be subject to any kind of identity fraud.

2016 Retirement Contribution & Social Security Limits As the end of the year rolls around, if you have not already done so, now is the time to plan for contributions into your retirement accounts in 2016. Retirement Contribution Limits Retirement Program 2015 2014 Change Age 50 or over catch up IRA: Traditional $5,500 $5,500 none add: $1,000 IRA: Roth $5,500 $5,500 none add: $1,000 IRA: SIMPLE $12,500 $12,500 none add: $3,000 401(k), 403(b), 457 plans $18,000 $18,000 none add: $6,000 Social Security Item 2015 2014 Change Comment Wages Subject to Social Security $118,500 $118,500 none Annual Social Security employee tax: $7,347 Average Estimated Monthly Retirement Benefit $1,341 $1,328 +$13 Change in estimated amount Don't forget to account for any matching programs offered by your employer as you determine your various funding levels for next year.

Tax Savings Ideas are Still Available As the end of the year approaches, there is still time to make moves to manage your tax liability. Here are some ideas to consider before the glitter ball drops in Times Square. Maximize your retirement plan contributions. This includes IRAs and 401(k) plans at work. Given the contribution limits in 2016 are not increasing, now is the time to maximize the contribution potential for this year. Estimate your current and next year taxable income. With this estimate you can determine which year receives the greatest benefit from a reduction in income. By understanding what the tax rate will be for your next dollar earned, you can understand the tax benefit of reducing income for this year versus next year. Make charitable contributions. Consider which tax year will benefit most from your charitable giving of cash and non-cash items. Shift your giving into the year that will provide you the most benefit. Remember to track your charitable mileage. It is deductible as well. Take capital losses. Each year you can deduct up to $3,000 in capital losses in excess of capital gains. Start to identify which investments may make sense to sell to take advantage of this. If planned correctly, these losses can offset ordinary income. Consider donating appreciated stock. This strategy gives you a charitable deduction for the market value of the stock while not having to pay capital gains tax on the charitable gift. If you provide an annual pledge sheet to your church, this can be a great way to maximize your gift while giving needed funds to your church at the beginning of the year. Standard or itemized deductions. The standard deduction for 2015 and 2016 is $12,600 for joint filers and $6,300 for single filers. If your itemized deductions are close to these amounts, consider shifting the deductions into next year. You can then maximize the benefit of itemizing into one tax year. Retirement plan distributions. If you are age 70½ or older, don't forget to take your required minimum distributions for the year. If you are retired, but younger than 70½, consider taking tax efficient distributions from your retirement accounts. By paying some tax now, you may avoid paying higher taxes later when you have to follow the minimum distribution rules after reaching 70½ years old. Consider pending tax legislation. There may be late breaking tax legislation once again. Should this happen, please be prepared to move quickly to take advantage of any tax law extensions. Save receipts if you are a teacher. Consider charitable deductions from your retirement plan if you are a senior. Keep receipts of large purchases in case sales tax is added as an itemized deduction in lieu of taking a state income tax deduction.

As always, should you have any questions or concerns regarding your situation please feel free to call.