Agranovich Accounting: 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.