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.

October 2015 Letter

While the temperatures start to cool off from the highs of the summer, the election cycle is beginning to really heat up. Included in this month's newsletter are a few of the known tax changes for 2013. There are also articles discussing businesses' annuity billing practices, giving children allowances, and ideas to control your email spam.

Allowances: What's Happening Today?

A recent survey conducted by Harris Interactive for the American Institute of CPAs explored what parents are paying their children in the form of allowances. The survey was conducted in July 2012 using a telephone survey of 1,006 parents aged 18 or over. What were some of the key findings?
	61% of parents pay their children an allowance
	54% of parents start paying by the time their child is age 8
	48% of parents pay their children for good grades (average rate for an A? $16.60)
	89% of parents surveyed expect their children to earn their allowance with at least one hour of work per week.
	On average children spent 6.2 hours per week on chores
	Only 1% of kids save any of their allowance
	The average allowance? $65 per month ($780 per year)

Ideas for you

Opinions vary greatly regarding whether to give allowances, how much to pay, whether to require chores for payment, and whether to pay for good grades. If you are considering giving an allowance here are some ideas to consider.

	Set clear expectations. If you decide to pay an allowance make sure your children understand the rules. When will they receive it? What, if anything, must they do to receive it? What are the rules?
	Use an allowance to teach other things. Consider using the allowance to teach savings, charitable giving, and budgeting in addition to spending. Perhaps some of the allowance should be used to donate to church or a food-shelf. Have your child save for a larger ticket item like a bike or computer game. Perhaps a teen child should pay for their cell phone. Consider requiring part of the allowance be saved for college.
	Know the downside. If you require chores for pay, what happens if the work is not done? Perhaps a base allowance would work for you with bonus payments when special chores are done. Using an allowance to help understand the concept of work can be a good lesson if handled consistently. The downside to this approach is that your child may begin to think they should be paid for taking part in normal family activities.
	Use allowances as a discussion opportunity. A regular allowance gives you an opportunity to help your child learn important financial lessons. This is especially true if the allowance is used for things other than entertainment. This ongoing lesson can deeply establish an understanding for budgeting and savings and help your child create the association of work with income.

Given that schools often overlook this important topic, establishing good financial habits at an early age can pay dividends for your children during their adult years.

Preview Key 2013 Tax Figures

While official numbers for 2013 are not yet released by the Internal Revenue Service (IRS), many figures are formulas set within the Internal Revenue Code (IRC) or are based on the Consumer Price Index (CPI) published by the Department of Labor. Using the release of CPI figures in late August, a number of reference resources are projecting key figures for 2013. They are noted here for your planning purposes:

Tax Brackets: While the actual tax brackets are not set for 2013, the rate of inflation that impacts the income levels for each tax rate is anticipated to go up 2.5%. Please recall that if Congress does not act, the 10% income tax bracket becomes 15% and the top income tax bracket moves from 35% to 39.6%.

Personal Exemption: $3,900 in 2013 ($3,800 in 2012)

Standard Deductions: Tax Year 2013 2012 Single $6,100 $5,950 Head of Household 8,950 8,700 Married filing Joint 12,200 11,900 Married filing separately 6,100 5,950 Dependents 1,000 950 65 or blind: married Add $1,200 Add $1,150 single Add $1,500 Add $1,450 Other Key figures: Tax Year 2013 2012 Gift tax exclusion $14,000 $13,000 Roth and Traditional IRA Contribution limit 5,500 5,000

Caution: Remember, significant pre-scheduled tax law changes will automatically be put in place in 2013 unless Congressional action is taken. The figures noted here are most likely not to be changed by Congressional action.

Everyone Wants a ''Tiny'' Piece of Your Income

There is an old wisdom:

Put a live frog in hot water and he'll jump out.

Put a live frog in cold water, turn the burner on and you'll have frog legs for dinner.

This wisdom is not lost on some businesses as they have learned it's easier to sell you a service once and then bill you for it automatically over a long period of time versus reselling the service to you each year. This form of billing called "annuity billing" is quickly becoming common practice for many businesses. To make matters more complicated, certain businesses look for ways to add annuities on top of annuities. So who are the biggest users of this strategy?

	cell phone companies*
	cable and satellite television companies*
	garbage haulers
	banks*
	credit monitoring services
	cloud computing services (storage; file sharing)
	any "of the month" clubs (books; music; fruit; meats)
	land-line telephone companies*
	maintenance contracts from service providers (heating; air conditioning; landscaping)
	subscriptions (newspapers and magazines)
	Other on-line services (finding/rating local supplier services, online TV viewing, sports viewing packages)

* often contain multiple annuities within a bill

Action to take now

	Create a list of your annuities. Check your telephone and cable bills and list each monthly annuity charge separately. This will show you your actual monthly cost and your annual cost of annuities.
	Note long-term contracts. Check the annuities for any exit penalties and "auto renewal" clauses. Write the auto renewal companies immediately to formally move to month-to-month after the initial contract expires.
	Review the usefulness of an annuity. Start closing down those less valuable to you.
	Move to annual billing where possible. This requires the product to be resold to you each year.
	Look for alternatives. Perhaps it is more cost effective to drop a group of premium channels in your cable package and replace them with an online viewing service like NetFlix (or vice versa).
	Eliminate overlap. Do you need a landline telephone AND a cell phone? Can you combine your wi-fi and cable services to save money?
	Eliminate autopay. This out-of-site out-of-mind technique is wonderful for the annuity billers. Paying for a service each month is a simple reminder of the cost of the service and a subtle hint to assess the value of the service to you.

The problem with annuities is they slowly carve out portions of your income for many years. Perhaps it is time to jump out of an annuity or two and save some money.

The Problem of E-mail SPAM

Understanding CAN-SPAM

Turning back the clock to 2003, many states fed up with the flood of unwanted emails started passing their own anti-spam email laws. This stimulated the Federal Government to act in an attempt to make compliance a reasonable endeavor. This was done with the passage CAN-SPAM legislation. What is in the CAN-SPAM legislation? With the passage of the Federal anti-spam law CAN-SPAM, all emails need to follow these basic rules:
	They may not use false or misleading header information. This includes, but is not limited to, the "from", "to", and "reply to" routing information. It also prohibits the use of misleading or false domain names and email addresses.
	Subject lines may not be deceptive. The subject line of the email cannot mislead you in order for you to open the email.
	Advertisements must be clearly marked. There should be no confusion that the email you are about to read is trying to sell you something.
	Email senders must tell you where they're located. This can be a street address or a valid post office box.
	You must be able to opt out of future email. The email must provide a clear way to allow you to opt-out of getting email from the sender in the future.
	Email senders must honor your opt-out request promptly. If you ask to opt-out of future emails, the email sender must honor your request within 10 business days. In addition, the email sender must keep their opt-out mechanism open for at least 30 days after sending you an email. This request also prohibits the potential spammer from forwarding your email to anyone else for future use.

What you should know

	No one may send you an unwanted email. If they do, they are legally required to honor your opt-out request.
	Exceptions to receiving unwanted emails abound. Key among them are: If you are already a customer If the email company is a non-profit If the email company follows the CAN-SPAM rules But even these suppliers must honor your opt-out requests
	Your best defense is a good spam filter. These can be provided by your internet provider who subscribe to lists of known spammers and then will automatically block these senders. You can also filter emails using your computer's email software.
	The best spam filter is multi-layered. This includes using both your internet service provider and your email software based filter.
	Look to specific identification for further filtering. Most services allow you to specifically block addresses from sending you emails and they require the sender to manually confirm sending the email to you by entering a code. Prior to receiving the email, you must ok the sender. This keeps large spammers at bay, at the cost of inconveniencing your friends.
	Consider having two email accounts. Use one email for family & friends and the other email for business and internet commerce. In all likelihood the "commerce email" will be the primary source of spam. When the spam gets too heavy simply close down the "commerce email" and reopen a new one.

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