Beware of Potential Tax Seasons Scams

Contributed by: Nick Defenthaler, CFP®

Scams are everywhere in the world we live in today. It seems as if it’s a daily occurrence to see a report on the nightly news of a new ploy to take advantage of consumers. Recently, the U.S. Federal Trade Commission (FTC) said it tracked a nearly 50% increase in identity theft complaints in 2015 and that the biggest contributor to this massive spike was due to tax refund fraud. Thousands of Americans have realized when going to file their taxes, that their return has already been processed! This could easily occur if a cybercriminal gets a hold of your Social Security number. 

Source for chart and statistic:  https://krebsonsecurity.com/2016/01/ftc-tax-fraud-behind-47-spike-in-id-theft/ 

With tax season now in full swing, avoiding an IRS/tax return related scam or a “phishing” ploy is top of mind for many. Below are some helpful tips the IRS has provided:

• The IRS will NOT…

  • E-mail or text taxpayers

  • Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.

  • Demand that you pay taxes and not allow you to question or appeal the amount you owe.

  • Require that you pay your taxes a certain way. For instance, require that you pay with a prepaid debit card.

  • Ask for your credit or debit card numbers over the phone.

  • Threaten to bring in police or other agencies to arrest you for not paying. 

If you’re contacted by someone who claims to work for the IRS or is demanding you to take action, the best course of action is to not provide any personal information, immediately hang up and contact the IRS directly by phone at 800-829-1040. Click here to visit the IRS’ website for more tips on protecting yourself from a potential tax related scam.   

Also, if you haven’t already, I’d recommend watching the webinar we hosted in early 2016 with Andy Zolper, Chief IT Security Officer with Raymond James to learn more about the measures we take to ensure the integrity of client information. Andy also offers some great advice on how to protect yourself from cyber threats at home and on your mobile devices. 

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick works closely with Center clients and is also the Director of The Center’s Financial Planning Department. He is also a frequent contributor to the firm’s blogs and educational webinars.

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This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links to third party websites are being provided for informational purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members. Raymond James Financial Services Inc. and its advisors do not provide advice on tax or legal issues, these matters should be discussed with a tax or legal professional.

Tax Terms: Carried Interest and the Buffett Rule

Contributed by: Matt Trujillo, CFP®

If you followed the 2016 campaign coverage as closely as I did, than you probably heard some tax-related terms repeated time and time again. Two terms in particular were “carried interest” and the “Buffet Rule.” For those that aren’t terribly familiar with these terms I will attempt to give a brief description of each.

What is "Carried Interest?”

Carried interest refers generally to the compensation structure that applies to managers of private investment funds, including private-equity funds and hedge funds. As a result of the carried interest rule, fund managers' compensation is taxed at lower long-term capital gain tax rates rather than at ordinary income tax rates. Both Clinton and Trump released plans calling for carried interest to be taxed as ordinary income.

What is the "Buffett Rule?”

In a 2011 opinion piece, Warren Buffett, chairman and CEO of Berkshire Hathaway, argued that he and his "mega-rich friends" weren't paying their fair share of taxes, noting that the rate at which he paid taxes (total tax as a percentage of taxable income) was lower than the other 20 people in his office (Warren E. Buffett, "Stop Coddling the Super-Rich," New York Times, August 14, 2011).

As Buffett pointed out, this is partially attributable to the fact that the ultra-wealthy typically receive a high proportion of their income from long-term capital gains and qualified dividends, which are generally taxed at lower rates than those that typically apply to wages and other ordinary income.

The "Buffett Rule" has since come to stand for the tenet that people making more than $1 million annually should not pay a smaller share of their income in taxes than middle-class families pay. As a result, some have proposed that those making over $1 million in annual income should have a flat minimum tax of 30%.

What is the right thing to do? That is not for this humble author to decide. But at least now, some of you can be better informed about what these terms mean the next time you hear them on the news!

The tax environment is evolving rapidly. Be sure to talk to a qualified professional before implementing any changes to your tax and investment strategy.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc.® Matt currently assists Center planners and clients, and is a contributor to Money Centered.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Matt Trujillo, CFP®, and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

More Potential Changes Under the Trump Administration

Contributed by: James Smiertka

The New Year always brings changes, but this year may be particularly notable. We have a new U.S. President & our Congress is ruled by a Republican majority. This surely brings a new direction for the country and also the prospect of policy and regulatory changes.

As we know, President Trump made tax reform a key issue during his campaign, and he has proposed wide-ranging changes to the U.S. tax system. Additionally, with the GOP with majority control of the House and the Senate, there is a better chance for an overhaul of the federal tax system than in the past. Changes will most likely not be quickly completed, and it is likely that any tax reform will not take place until late 2017 or early 2018.

Here are some of the potential changes:

Estate Tax

• Trump’s plan seeks to repeal the current estate tax as well as the alternative minimum tax (AMT) and generation-skipping transfer tax (GSTT)

• Total repeal is unlikely

• $10 Million exemption (per couple)

  • Assets above this amount would be subject to capital gains tax

• Likely change to the asset basis step-up for heirs

  • Date of death value rules likely preserved for heirs of smaller estates

  • Limited basis step-up for heirs inheriting from larger estates

• There is also the potential for state estate taxes to disappear as they are based on the federal estate tax system

Gift Tax

• Will most likely stick around in some form

  • Prevents income shifting from donors in high tax brackets to the donated in lower tax brackets

• If the estate tax is repealed, we could be looking at a change to the lifetime gift tax exemption in the neighborhood of around $1 Million or higher (lifetime), with the annual gift tax exclusion preserved (currently $14,000/year)

There are a wide range of possible combinations of estate & gift tax reform, and potential tax planning opportunities depending on the details of that reform. Here are some potential scenarios, per Michael Kitces:

While there are many potential planning scenarios for both individuals and businesses, nothing is certain. Only very broad strokes have been “painted” thus far. Regardless, Center for Financial Planning, Inc. is always staying up to date with the most recent changes. Make sure to speak with your financial advisor if you have questions on any of these topics.

Also, make sure to check out our previous blog on the new administration’s potential impact to marginal tax brackets, standard deductions, and capital gains tax.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.®

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of James Smiertka and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Sources:

• Kiplinger Tax Letter, Vol. 92, No. 2 (1/27/17)
• http://www.forbes.com/sites/ashleaebeling/2016/11/09/will-trump-victory-yield-estate-tax-repeal/#aef41902bf2a
• https://www.kitces.com/blog/repeal-estate-gift-taxes-and-carryover-basis-under-president-trump/
• http://www.forbes.com/sites/nextavenue/2016/12/12/what-the-trump-tax-proposals-mean-for-high-net-worth-retirees/#5f7253b17ef4
• http://www.cnbc.com/2017/01/22/how-trumps-proposals-may-affect-every-income-tax-bracket.html

What to Expect This Tax Season 2017

Contributed by: Josh Bitel

The Center's Commitment to You

At The Center, our goal is to provide exceptional service and help meet your needs as efficiently and effectively as possible. We offer the following commitments and services related to the tax season:

• Consistent communication about timelines for tax document receipt, as that information is available.

• Assistance in understanding your tax-related questions and coordination of information, such as cost basis.

• Coordination and communication with CPA’s and tax preparers upon your request. We’ve found that sharing and collaborating with your other trusted advisors can have substantial benefit to you.

• Financial planning and investment management integrated with perspective on tax consequences. If you would like to review or discuss our approach to taxes as it relates to your personal situation, please let us know!

• There is still time to make to contributions to IRA, Roth IRA, and SEP IRA’s until April 18th. Please contact us if you need assistance or would like to discuss this further. 

As you complete your taxes for this year, a copy of your tax return is one of the most powerful financial planning information tools we have. Whenever possible, we request that you send a copy of your return to your financial planner, associate financial planner, or client service manager upon filing. Thank you for your assistance in providing this information which enhances our services to you. If you would prefer that we request a copy of your returns from your tax preparer and have not already, please complete a Consent to Disclosure of Tax Return Information Form and return it to our office.

The Center and Raymond James are constantly exploring ways to enhance technology to provide better service and overall experience for our clients. One new software enhancement rolled out in late 2016 was the Tax Snapshot tool. This personalized report can be generated at any time throughout the year by simply contacting your planner. The Tax Snapshot will give a breakdown of any realized capital gains, losses, and income (dividends and interest) generated within your portfolio throughout the year. This report allows us to have a clear, concise view of the tax status of your portfolio and offers us the opportunity to better communicate these figures with your tax professional as we all strive to work on the same team to serve you in the best way possible.

IRS Filing Dates

Typically, the regular tax return filing deadline is April 15th. However, this year the filing deadline will be on Tuesday, April 18th. This is because the 15th falls on a Saturday this year, and also due to the observance of Washington D.C. Emancipation Day holiday on Monday, April 17th.

Raymond James Tax Reporting

Up to date information on Raymond James Tax Reporting can be found at this tax resource page. This page includes information for TaxACT, TurboTax, and H&R Block users and tax download instructions.

If you have Investor Access through Raymond James, you can view tax reports along with statements for all of 2016 by logging into your account. These documents are available as Adobe PDFs for printing and saving. The information will be archived for 14 years. If you have not already created an online profile, we strongly encourage you to do so.

As an added convenience, you can choose to receive your tax documents electronically. To go paperless, enroll or log in to Investor Access, Raymond James’ secure system for accessing your account information online.

With electronic delivery, you’ll have 24/7 access to your client documents as soon as they become available. Not only will you be able to view your documents sooner, but also, your documents are archived together in one secure location so they are easy to find when you need them.

Tax documents available electronically include the IRS Composite Form (1099-B, -DIV, -INT, -MISC, -OID) and IRS Forms 1099-R and 5498.

Mailing Schedule & Availability for Raymond James Forms

• February 15th – Mailing of original 1099s

• February 28th – Mailing of amended 1099s and those delayed due to specific holdings

• March 15th – Final mailing of any additional original 1099s as well as continued amended mailings as needed

Information on Amended and Delayed Documents

The IRS has granted Raymond James, along with several other broker/dealers, a reporting extension that allows them to delay 1099s for those clients who hold what are considered “pass-through” vehicles for tax reporting purposes. The goal of this extension is to provide an up-to-date 1099 that otherwise might be amended causing confusion or the need to refile.

As a reminder, Raymond James is required by the IRS to produce an amended 1099 if one of the following adjustments is received after the original 1099 has been produced:

• Income Reallocation: Certain investment types, including regulated investment companies, mutual funds, real estate investment, unit investment, grantor and royalty trusts, exchange traded funds, holding company depository receipts, and equities often adjust declarations of income paid during the previous tax year after year-end. These updates are referred to as income reallocations and may result in a more favorable tax treatment.

• Adjustment to Cost Basis: Raymond James is required to report the adjusted cost basis of sold covered securities to the IRS on Form 1099-B. Because cost basis reporting is mandatory, adjustments to reporting result in amended 1099s, which will be mailed as needed. Visit the Cost Basis Legislative Resource Center for more cost basis resources.

• Incomplete or Incorrect Reporting on Original 1099: If a taxable event was not reported or was incomplete on the original 1099, an amended 1099 is required. This includes adjustments received after the original 1099 was produced.

• Other Adjustments: In addition, processing of the following often result in delays in correct information being provided to Raymond James:

• Original issue discount bonds (including select municipal bonds)

• Some cost basis adjustments

• If there are changes made by mutual funds related to foreign tax withholdings

• Tax-exempt payments subject to alternative minimum tax

• Distributions from U.S. Treasury obligations and select mortgage backed securities payments (45 day delay bonds)

As always, we are here to answer any questions that you or your tax preparer may have. Don’t hesitate to let us know how we can help!

Josh Bitel is a Client Service Associate at Center for Financial Planning, Inc.®

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Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Josh Bitel and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Planning for a Wild 2017

Contributed by: Kali Hassinger, CFP®

Happy 2017 everyone! A new year is a great opportunity to evaluate your financial wellbeing and set goals for the future.  Some of you may have existing financial plans in place, and others may be thinking that 2017 is the year to take control of your finances.  In either situation, it’s important to understand that financial planning is an ongoing and ever-evolving process. Separate from your personal circumstances, there are many outside forces that affect your financial plan, and there are a few items that may be especially important to evaluate this year.

Given the events of 2016 and possible changes in 2017, the following circumstances could be prime examples of why it’s important to review and update your plan.

• Taxes – With the impending presidency of Donald Trump and the GOP in control of both the House and the Senate, we are anticipating a possible overhaul of the current tax system. For almost all taxpayers, your current tax rate could be reduced.  If the brackets are consolidated as expected, 2017 may be a good year to accelerate taxable income or max out your Roth IRA contributions. You can read more about the proposed tax plans here (http://www.centerfinplan.com/money-centered/2016/12/22/is-tax-reform-coming ).  

• Estate Planning – Just as with taxes, the political landscape of 2017 is set to possibly repeal the current Estate Tax. Because this tax is such a central point for Estate Planning with high net worth individuals, some current estate plans may need to be revised. There is also the possibility that the current gift tax laws may be on the docket for elimination. Although nothing is certain at this point, we will remain up to-date on any changes as they come.

• Allocation – 2016 was certainly a year of surprises for the market. After a decline in January, the shock of Brexit, and Donald Trump’s unanticipated election, the market overcame intermittent volatility and reached all-time highs in November.  Just as no one could predict that the market dip after Brexit would recover so quickly, no one expected the markets to actually go up in the wake of Trump’s election. There is no way to predict the future, but there is a disciplined investing approach that can help you through market uncertainties. With a balanced investment portfolio it is possible to reap the benefits of part of these gains while also insulating yourself from potential volatility. Your balanced portfolio returns may not reach the same highs as the S&P 500, but it can help you reach your goals with proper management over time. 

Regardless of your situation, a new year is always a great opportunity to reorganize and review your goals.  Life can be unpredictable, but not unplannable. We are always here to help, and we encourage you to reach out with questions.

Happy New Year! 

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

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This information does not purport to be a complete description of the securities, markets, or developments referred to in this material, it is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Opinions expressed are those of Kali Hassinger, CFP®, and are not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change. There is no assurance that the statements, opinions or forecasts mentioned will prove to be correct. Investing involves risk, investors may incur a profit or loss regardless of the strategy or strategies employed. Asset allocation and diversification do not ensure a profit or guarantee against loss. Raymond James Financial Services, Inc. and its advisors do not provide advice on tax or legal issues, these matters should be discussed with the appropriate professional. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Please note that direct investment in an index is not possible.

Is Tax Reform Coming?

Contributed by: Nick Defenthaler, CFP®

One of the hot topics in the recent presidential election was tax reform. Although both candidates may have had very different ideas of what changes they felt should be made, they did both agree that it was time to move forward with some type of reform. Our tax code is very confusing and many would also add, unnecessarily complex. The last tax reform we’ve had in the U.S was in 1986 – 31 years ago! Coincidentally, this is roughly the same period of time that elapsed between the reforms that were put in place previously in 1954.

Below is a breakdown of some of the proposals both President Elect Trump and the GOP have expressed as we enter 2017:

President Elect Trump:

• Tax Brackets

  • Reduce the number of tax brackets:

    • Currently seven different brackets (10%, 15%, 25%, 28%, 33%, 35% and 39.6%)

    • Proposal is to reduce the number of brackets to three (12%, 25% and 33%)

• Itemized Deductions and Standard Deduction

  • Consolidate the standard deduction and personal exemptions into a single, larger standard deduction:

    • $15,000 for single filers (compared to $6,300 in 2016)

    • $30,000 for those who are married and file jointly (compared to $12,600 in 2016)

    • Cap the total amount of itemized deductions ($200k for married filers, $100k for single filers)

• Capital Gains Tax

  • Maintain similar capital gains tax rates for the new, proposed brackets:

    • 0% for those who are within the 12% proposed tax bracket

    • 15% for those who are within the 25% proposed tax bracket

    • 20% for those who are within the 33% proposed tax bracket

  • Would eliminate the 3.8% Medicare surtax on net investment income

GOP:

• Tax Brackets

  • Reduce the number of tax brackets – same proposal as President Elect Trump:

    • Currently seven different brackets (10%, 15%, 25%, 28%, 33%, 35% and 39.6%)

    • Proposal is to reduce the number of brackets to three (12%, 25% and 33%)

• Itemized Deductions and Standard Deduction

  • Eliminate virtually all forms of itemized deductions except for mortgage and charitable deductions, but like President Elect Trump, consolidate the standard deduction and personal exemptions into a single, larger standard deduction:

    • $12,000 for individuals

    • $18,000 for individuals with a child

    • $24,000 for those who are married and file jointly

• Capital Gains Tax

  • Allow individuals to exclude 50% of their investment income – including both capital gains, qualified dividends and even interest income and then tax it at ordinary income rates

    • For example, this would mean if you’re in the 33% proposed tax bracket, investment income would be taxed at 16.5%

  • Would eliminate the 3.8% Medicare surtax on net investment income – same proposal as President Elect Trump

While obviously nothing is set in stone and many of these proposed changes could be blocked by a Democratic filibuster, history has shown that we are more than likely due for some type of tax reform in the near future. Stay tuned!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

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The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Nick Defenthaler, CFP®, and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Sources:
http://www.cnbc.com/2016/11/22/how-advisors-are-preparing-clients-for-trumps-tax-plans.html
http://www.forbes.com/sites/kellyphillipserb/2015/10/21/irs-announces-2016-tax-rates-standard-deductions-exemption-amounts-and-more/#28a4d953792e

Restricted Stock Units vs Employee Stock Options

Contributed by: Kali Hassinger, CFP®

Some of you may be familiar with the blanket term "stock options." In the past, this term was most likely referring to Employee Stock Options (or ESOs). ESOs were frequently offered as an employee benefit and form of compensation, but, over time, employers have adapted stock options to better benefit both the employee and themselves.

ESOs provided the employee the right to buy a certain number of company shares at a predetermined price for a specific period of time. These options, however, would lose their value if the stock price dropped below the predetermined price, thus becoming essentially worthless to the employee. As an alternative to this format, a large number of employers are now utilizing another type of stock option known as Restricted Stock Units (or RSUs). This option is referred to as a "full value stock grant" because, unlike ESOs, RSUs are worth the "full value" of the stock shares when the grant vests. This means that the RSU will always have value to the employee upon vesting (assuming the stock price doesn't reach $0). In this sense, the RSU is more advantageous to the employee than the ESO.

As opposed to some other types of stock options, the employer is not transferring stock ownership or allocating any outstanding stock to the employee until the predetermined RSU vesting date. The shares granted with RSUs are essentially a promise between the employer and employee, but no shares are received by the employee until vesting. Since there is no "constructive receipt" (IRS term!) of the shares, there is also no taxation until vesting.

For example, if an employer grants 5,000 shares of company stock to an employee as an RSU, the employee won't be sure of how much the grant is worth until vesting. If this stock is valued at $25 upon vesting, the employee would have $125,000 of compensation income (reported on the W-2) that year.

As you can imagine, vesting can cause a large jump in taxable income for the year, so the employee may have to select how to withhold for taxes. Some usual options include paying cash, selling or holding back shares within the grant to cover taxes, or selling all shares and withholding cash from the proceeds. In some RSU plan structures, the employee is allowed to defer receipt of the shares after vesting in order to avoid income taxes during high earning years. In most cases, however, the employee will still have to pay Social Security and Medicare taxes the year the grant vests.

Although there are a few differences between the old school stock option and the newer Restricted Stock Unit hybrid, these options can provide the same incentive for employees. If you have any questions about your own stock options, please reach out to us!

Kali Hassinger, CFP® is an Associate Financial Planner at Center for Financial Planning, Inc.®

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The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Kali Hassinger, CFP® and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. This is a hypothetical example for illustration purpose only and does not represent an actual investment.

Webinar In Review: Post Election Update & Year End Planning Opportunities

Contributed by: Center for Financial Planning, Inc.®

The Center's most popular webinar of 2016 was the Post-Election Update and Year End Planning Opportunity presentation. Melissa Joy, CFP®, and Nick Defenthaler, CFP®, break down what President Trump's win may mean for financial markets. They also review areas of financial planning including retirement, taxes, and investments for year-end financial planning opportunities.

Catch a replay of the webinar below. Also, we have a companion year-end planning guide available along with a year-end planning worksheet.

Center for Financial Planning, Inc. is a Registered Investment Advisor and independent of Raymond James Financial Services. Securities offered through Raymond James Fianncial Services, Inc., Member FINRA/SIPC.

Four Considerations for Year End Tax Planning

Contributed by: Nick Defenthaler, CFP®

With the end of the year fast approaching, end of year tax planning is top of mind for many clients. At The Center, we are proactive throughout the entire year when it comes to evaluating a client’s current and projected tax situation but now is typically the time most people really start thinking about it. Let’s be honest, how many of us feel like we don’t pay ENOUGH tax? Most clients want to lower their tax bill and be as efficient with their dollars as possible.

Here is a brief list of items we bring up with clients that could ultimately lead to lowering one’s tax bill for the year:

1. Are you currently maximizing your company retirement account (401k, 403b, Simple IRA, SEP-IRA, etc.)?

   • These plans allow for the largest contributions and are deductible against income.

     • In our eyes, this is often times the most favorable way to help reduce taxes because it also goes towards funding your retirement goals! 

2. How are you making charitable donations? 

   • Consider gifting appreciated securities to charity instead of cash if you have an after-tax investment account with appreciated positions. By doing so, you receive a full tax-deduction on the value of the security gifted to the charity and you also avoid paying capital gains tax – a pretty good deal if you ask me! 

     • Donor Advised Funds are a great way to facilitate this transfer and are becoming increasingly popular lately because of the ease of use and flexibility they provided for those who are charitably inclined.

   • If you’re over the age of 70 ½ and own a Traditional IRA, taking advantage of the now permanent Qualified Charitable Distribution (QCD) could be a great option as well. 

3. Should I be contributing to an IRA? If so, should I put money in a Traditional or Roth?

   • As I always say, in financial planning, there is never a “one size fits all” answer – it really depends on your income and your current and projected tax bracket

     • Keep in mind, not all IRA contributions are deductible, your income and availability to contribute to a company sponsored retirement plan plays a major role.

     • If your current tax bracket is lower than your projected tax bracket in the future, it more than likely makes sense to invest within a Roth IRA, however, as mentioned, everyone’s situation is different and you should consult with your advisor before making a contribution. 

4. Do you have access to a Health Savings Account (HSA) or Flex Spending Account (FSA) at work?

   • These are fantastic tools to help fund medical and dependent care costs in a tax-efficient manner.

     • HSAs can only be used, however, if you are covered under a high-deductible health plan and FSAs are “use it or lose it” plans, meaning money contributed into the account is lost if it’s not used throughout the year. 

This is a busy time of year for everyone. Between holiday shopping, traveling, spending time with family, completing year-end tasks at work, taxes are often times lost in the shuffle.  We encourage you to keep your eyes open for our year-end planning letter you will be receiving within the next few weeks which will be a helpful guide on the items mentioned in this blog as well as other items we feel you should be keeping on your radar.

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc.® Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

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Please include the following to all of the above: Please include: The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investments mentioned may not be suitable for all investors. Every investor's situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

How Not to be a Record Hoarder

Contributed by: Sandra Adams, CFP®, CeFT™

If you’re like me, this is the time of year to go through my files and piles of paperwork in preparation for income tax season.  Seeing the stacks of statements and paperwork I’ve collected makes me feel like I’m a prime candidate to be on an upcoming episode of “Hoarders,” because I never quite feel like I can get rid of things…I might need them someday.

Consult with your financial planner and your CPA for discarding any financial or income tax paperwork, and your attorney before parting with legal paperwork.  AND REMEMBER:  you should shred any paperwork with identifying names, addresses, dates of birth or account or Social Security numbers on them to avoid being a potential financial fraud victim.

To ease your mind as you purge your financial records, here are some document retention guidelines:

(CLICK HERE TO DOWNLOAD YOUR PDF COPY)

Bank Statements: Keep one year unless needed for tax records.

Cancelled Checks: Keep one year unless needed for tax records.

Charitable Contributions: Keep with applicable tax return.

Credit Purchase Receipts: Discard after purchase appears on credit card statement if not needed for warranties, merchandise returns or taxes.

Credit Card Statements: Discard after payment appears on credit card statement.

Employee Business Expense Records: Keep with applicable tax return.

Health Insurance Policies: Keep until policy expires, lapses or is replaced.

Home & Property Insurance: Keep until policy expires, lapses or is replaced.

Income Tax Return and Records: Permanently.

Investment Annual Statements and 1099's: Keep with applicable tax return.

Investment Sale and Purchase Confirmation Records: Dispose of sale confirmation records when the transactions are correctly reflected on the monthly statement. Keep purchase confirmation records 3-6 years after investment is sold as evidence of cost.

Life Insurance: Keep until there is no chance of reinstatement. Premium receipts may be discarded when notices reflect payment.

Medical Records: Permanently.

Medical Expense Records: Keep with applicable tax return if deducted on tax return.

Military Papers: Permanently (may be required for possible veteran's benefits).

Individual Retirement Account Records: Permanently.

Passports: Until expiration.

Pay Stubs: One year. Discard all but final, cumulative pay stubs for the year.

Personal Certificates (Birth/Death, Marriage/Divorce, Religious Ceremonies): Permanently.

Real Estate Documents: Keep three to six years after property has been disposed of and taxes have been paid.

Residential Records (Copies of purchase related documents, annual mortgage statements, receipts for improvements and copies of rental leases/receipts.): Indefinitely.

Retirement Plan Statements: Three to six years. Keep year end statements permanently.

Warranties and Receipts: Discard warranties when they are clearly expired. Use your judgment when discarding receipts.

Will, Trust, Durable Powers of Attorney: Keep current documents permanently.

If the hoarder in you is still too nervous to part with the paper, you do have some options:

• Electronically scan your important financial and legal papers and save them to a computer file; remember to back up your computer and save a copy of the list (on a disk or USB flash drive) in a safe place.

• Talk to your financial advisor, who may have an electronic document management system that is storing many of your documents (and backing them up) for you. 

Oh, and while you’re revving up your shredder and getting ready to make some confetti, here’s one more piece of paper to keep…this one.  Go ahead, press print.  Save this guide and you’ll save yourself the trouble of trying to remember it all next year. 

Sandra Adams, CFP® , CeFT™ is a Partner and Financial Planner at Center for Financial Planning, Inc.® Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

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The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.