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Many taxpayers may not yet understand that the 2018 tax regulation changes include an increase in both the standard deduction amount to $24,000 for joint returns, and $12,000 for single returns. These amounts may exceed the amount of itemized deductions for most taxpayers, which can include their medical expenses, interest expenses, charitable contributions, and other taxes.

The investment conditions of the market are in the process of a major change, both in terms of risk character and the type of investments that are most likely to provide positive returns. While this market change has been coming for a few years, it appears to have become more evident and near-term based on the market’s volatility during 2018.  

Now that most of us have our 2017 tax returns behind us, focus is on to 2018. The Federal tax code was substantially changed for this year. You should be aware how it is likely to affect you and plan accordingly. The Tax Cut and Job Act of 2017 was made effective by a 50% majority vote (rather than 2/3%) of Congress and as such will expire in 2026 unless extended or ratified by a 2/3% vote by both houses of Congress. Here are the major changes involving individual returns:

For those of you who are approaching 65 or are already under Medicare, please know that Medicare is issuing new ID cards by replacing the social security number with an 11-digit code.  This will be referred to as MBI or Medicare Beneficiary Identifier.  These new cards will be coming to you via mail sometime between April 2018 and April 2019 and they don’t have a charge associated with them. 

There have been a number of changes brought to us by the 2018 Tax Law regulations. Some of them are not yet well known.

One of these changes is the increase in the flexibility of 529’s. Prior to 2018 the use of these funds tax-free was limited to paying qualified college expenses. Under the 2018 Federal tax regulations these funds may also be used for private school tuition (kindergarten to 12th grade) up to $10,000 per year.

It is January and we are busy writing the end of the year reports.  Why is that important?

It has been said there are only four kinds of people in the world – those who have been caregivers, those who are currently caregivers, those who will be caregivers, and those who will need caregivers.

There are some growing concerns for conservative investors having to choose between bonds and equities. Current bond returns today are minimal, and returns on cash are even less. Since most conservative investors are holding bonds for security and cash to live on, the weighting in these segments are pulling this part of your current portfolio’s gain down to 2% or less. Bonds offer little comfort even in those considered highly rated and safe.

Each year there is the opportunity to convert some or all of your IRA account assets to a ROTH account. The purpose in doing so is to eliminate the Federal and State tax on any future distribution amounts and enable you to withdraw funds earlier without penalty. Funds including gains held in ROTH account can be distributed tax-free subject to some manageable restrictions.

You don’t hear much about America’s personal savings rate these days, and the reason may be because the news is discouraging: collectively, the percentage of our income that we save is trending downward again, and may be about to hit record lows. The Federal Reserve Bank of St. Louis tracks the U.S. personal savings rate, going back to the late 1950s, when people were setting aside around 11% of what they made. Americans achieved a record 17% savings rate in the mid-1970s before a long decline set in.