Single Point of View

Single Point of View is our way to occasionally share planning ideas relating to personal finance. Our goal is to pass along concepts that you may not be exposed to on a daily basis.

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Year-End Tax Reform Planning

Given the passage in both the House and Senate of the Tax Cuts and Jobs Act, the stakes for year-end tax planning are higher than usual.  We do not know what final legislation will look like when it comes out of reconciliation but there are themes in the House and Senate tax bills that give us insight into beneficial tax moves to make prior to year-end.  We’ve highlighted some of the proposed changes and related planning opportunities to consider. Deductions Both the House and Senate plans agree on increasing the standard deduction amount, nearly doubling the current allowance:   Current (2018) House Senate Single $6,500 $12,200 $12,000 Married $13,000 $24,400 $24,000 Head of Household $9,550 $18,300 $18,000 On the flip side, the proposed legislation makes significant changes to expenses that are allowed as itemized deductions.  Some notable changes include: Medical expense deduction – the House bill eliminates the deduction completely while...
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Making Your Estimated Tax Payments Online

With tomorrow being June 15th, we wanted to update this post from last year as a reminder to pay your quarterly tax estimates.  Below are the links to simplify things and make these payments online. For many of us who have income that is not subject to tax withholding (for example: earnings from self-employment, interest, dividends, rents, alimony, etc.) April 15th, June 15th, September 15th and January 15th represent a day of writing checks to the IRS. These are known as estimated tax payments.  If you've ever found yourself scrambling to find your vouchers, or, the address to mail them to on the due date there is a simpler way.   Did you know you could make these payments to the IRS using their "Direct Pay" service? For Federal payment, use this link for the IRS site: http://www.irs.gov/Payments/Direct-Pay   If you are in MA, you can also make your estimated state...
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Big Planning Opportunity with Health Savings Accounts

In short: fund it and invest it, don't use it.   Potentially, the best way to use your Health Savings Account (HSA) is to maximize the funding of it, but, instead of using the funds year-by-year to cover your out-of-pocket health care expenses, invest the funds and allow them to grow for the future.  The reason this strategy makes sense is the unique tax benefits of HSA's:  tax deductible contributions, tax-free growth & tax-free distributions.  Do you know what other types of accounts have all of these long-term features? NONE! IRAs & 401ks are tax deductible in the year you make the contribution, but you are taxed when you take the money out. Roth IRAs grow tax-free and are tax-free upon distribution, however, you do not get a tax-deduction when you make the contribution. The HSA combines the tax benefits of these two types of accounts. In fact, a good retirement...
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Track Your Home Improvements Now to Save on Taxes Later

We all know that when you sell a stock you pay a tax on the profit (the difference between what you paid for it, and, what you sold it for).  This is referred to as a capital gain.  The same principal holds true for the sale of a property, be it an investment property or your personal residence. One caveat to this is if you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse (*see the note at the bottom for more detail). Even with these exclusions, if you own your property for a long enough period of time, there is a good chance that some tax could be owed upon sale.  The below guidelines...
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MA now offers tax deduction for 529 contributions

If you live in Massachusetts, and are currently utilizing a 529 plan for college savings, you should consider reviewing which plan you are using.   Effective January 1, 2017 through the 2021 tax year, contributions to Massachusetts 529 plans of up to $1,000 per year by an individual, and up to $2,000 per year by a married couple filing jointly, are deductible in computing Massachusetts taxable income.   The catch is you have to use the MA state sponsored plan.  Luckily, this is a good plan managed by Fidelity its called the U.Fund).  They have improved the plan over the years, including lowering fees on the investment options (through the Fidelity Index Funds available in the plan).   Prior to this change in tax law, we helped clients choose the right plan for them based on a number of factors.  This becomes one of the factors in deciding the appropriate plan...
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