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AMG, as part of the financial services industry, is considered an essential service and therefore we will continue to remain open for operations other than in-person appointments and tax return drop off/pick up.  We will have a combination of team members here in the office as well as working remotely, and we want to reassure you that we are working to fulfill the ongoing management of your portfolio and/or tax preparation and accounting needs.  Another thing to be aware of is the extension of the federal tax filing deadline from April 15th to July 15th, which most states are following as well. AS of March 23, 2020, Gov. Evers of Wisconsin announced a “Safer at Home” order that is in place until at least April 24, 2020.  In an effort to adhere to the Safer at Home order, and to support the health and safety of the community as well as the AMG Team, our lobbies are closed for in-person traffic effective as of March 24, 2020. We will reopen the lobbies upon upon the lifting of the Safer at Home order.  If you have an appointment scheduled in the next couple of weeks, you will be receiving a phone call from our office to discuss whether you prefer a phone or web meeting, or to postpone over the next few days.  Any meeting can be done remotely…we encourage you to keep your scheduled meeting with us.  In the meantime, we also encourage you to send us your tax information if you have not already done so.  We want to be able to get your return filed so you can claim your refund or plan for any amount due as soon as possible.  There are a few ways you can still get your information to us: Securely upload to our website (call our office if you do not have a login already) Securely email to us (call or email any of us to request the encrypted email thread) Mail via USPS, UPS, or FedEx We will get to work on things right away upon receiving your information. As always, you can call or email us at any time and we will respond and be accessible as usual this way. We wish you the best and hope everyone is staying healthy.   Regards, Your AMG Team

If you work for a living, you know that your wages are taxable, and you're probably aware that some investment income is taxed, too. But the IRS doesn't stop there. If you've picked up some extra cash through luck, skill or criminal activities, there's a good chance you owe taxes on that money as well. To avoid being caught off guard on April 15, take a look at our list of 10 surprising things that are actually taxable. If you collected any of the income or property on the list, make sure you declare it on your next tax return!   Scholarships If you receive a scholarship to cover tuition, fees and books, you don't have to pay taxes on the money. But if your scholarship also covers room and board, travel and other expenses, that portion of the award is taxable. Students who receive financial aid in exchange for work, such as serving as a teaching or research assistant, must also pay tax on that money, even if they use the proceeds to pay tuition.   Gambling Winnings What happens in Vegas doesn't necessarily stay in Vegas. Gambling income includes (but isn't limited to) winnings from lotteries, horse races, casinos and sports betting (including fantasy sports). The payer is required to issue you a Form W2-G (which will also be reported to the IRS) if you win $1,200 or more from bingo or slot machines, $1,500 or more from keno, more than $5,000 from a poker tournament, or $600 or more from other wagers if your take is more than 300 times the amount of your bet. But even if you don't receive a W2-G, the IRS expects you to report your gambling proceeds on your tax return. The good news: If you itemize, your gambling losses are deductible, but only to the extent of the winnings you report as income. For example, if you won $4,000 last year and had $5,000 in losing bets, your deduction for the losses is limited to $4,000. You can't deduct the balance against other income or carry it forward. Your state may want a piece of the action, too. Your home state will generally tax all your income (if it has an income tax)—including gambling winnings. But also watch out for a tax bill if you place a winning bet in another state. You won't be taxed twice, though. The state where you live should give you a tax credit for the taxes you pay to the other state. Also, check to see if your state allows a deduction for gambling losses.   Cancelled Debt Don't get too excited if a credit card company says you don't have to pay off the rest of your balance. That's because debt that is cancelled or otherwise discharged for less than the amount you owe is generally treated as taxable income. This applies to credit card bills, car loans, mortgages, or any other debt that you owe. So, for example, if your bank says you don't have to pay $2,000 of the $6,000 you still owe on a car loan, you have $2,000 of cancellation of debt income that you must report on your next tax return. There are some exceptions to the general rule, such as for certain student loans, debts discharged in bankruptcy, qualified farm indebtedness and a few other types of debt. Also, in the case of "nonrecourse" debt—i.e., where the lender can repossess any collateral property if you fail to pay, but you're not personally liable for the unpaid debt—any cancelled debt is not considered taxable income (although you might realize gain or loss from the repossession). If you do have a debt forgiven, the creditor may send you a Form 1099-C showing the amount of cancelled debt. The IRS will get a copy of the form, too—so don't think Uncle Sam won't know about it.   Stolen Property If you robbed a bank, embezzled money or staged an art heist last year, the IRS expects you to pay taxes on the proceeds. "Income from illegal activities, such as money from dealing illegal drugs, must be included in your income," the IRS says. Bribes are also taxable. In reality, few criminals report their ill-gotten gains on their tax returns. But if you're caught, the feds can add tax evasion to the list of charges against you. That's what happened to notorious gangster Al Capone, who served 11 years for tax evasion. Capone never filed a tax return, the IRS says.   Buried Treasure If you unearth a cache of gold coins in your backyard or discover sunken treasure while deep-sea diving, the IRS wants a piece of your booty. Found property that was lost or abandoned is taxable at its fair market value in the first year it's your undisputed possession, the IRS says. The precedent for the IRS's "treasure trove" rule dates back to 1964, when a couple discovered $4,467 in a used piano they had purchased for $15. The IRS said the couple owed income taxes on the money, and a U.S. District Court agreed.   Gifts from Your Employer Ordinarily, gifts aren't taxable, even if they're worth a lot of money. But if your employer gives you a new set of golf clubs to recognize a job well done (or to persuade you to reject a job offer from a competitor), you'll probably owe taxes on the value of your new irons. More than 50 years ago, the Supreme Court ruled that a gift from an employer can be excluded from the employee's income if it was made out of "detached and disinterested generosity." Gifts that reward an employee for his or her services don't meet that standard, the court said. Gifts that help promote the company don't meet that standard, either.   Bitcoin While you can use bitcoin to purchase a variety of goods and services, the IRS considers bitcoin—along with other cryptocurrencies—to be an asset. If the bitcoin you used to make a purchase is worth more than you paid for it, you're expected to pay taxes on your profits at capital gains rates—just like stocks and bonds. As the use of cryptocurrency has increased, the IRS has begun to crack down. In 2019, it sent letters to more than 10,000 people who may not have reported transactions in virtual currencies. If your employer pays you in bitcoin or some other virtual currency, it must be reported on your W-2 form, and you must include the fair market value of the currency in your income. It's also subject to federal income tax withholding and payroll taxes.   Bartering When you exchange property or services in lieu of cash, the fair market value of the goods and services are fully taxable and must be included as income on Form 1040 for both parties. But an informal exchange of similar services on a noncommercial basis, such as carpooling, is not taxable. If you exchanged property or services through a barter exchange, you should expect to receive a Form 1099-B (or a similar statement) in the mail. It will show the value of cash, property, services, credits or scrip you received from bartering. Every year, thousands of young, healthy women donate their eggs to infertile couples. Payments for this service generally range from $6,500 to $30,000, according to Egg Donation, Inc., a company that matches donors with couples. Those payments are taxable income, according to the U.S. Tax Court. Fertility clinics typically send donors and the IRS a Form 1099 documenting the payment.   The Nobel Prize If you were selected for this prestigious honor—worth more than $900,000 in 2019—you must pay taxes on it. Other awards that recognize your accomplishments, such as the Pulitzer Prize for journalists, are also taxable. The only way to avoid a tax hit is to direct the money to a tax-exempt charity before receiving it. That's what President Obama did when he was awarded the Nobel Peace Prize in 2009. If you accept the money and then give it to charity, you probably will have to pay taxes on some of it because the IRS limits charitable deductions to 60% of your adjusted gross income. Source: Kiplinger

Leave these 8 items at home If we lose our wallet or have it stolen, the cash inside may be the least of our worries. One survey shows that 62% of people have had their wallets or purses lost or stolen. If you carry all types of identification, documents, and cards, you may learn firsthand about the nightmare of identity theft.  Identity theft is on the rise, increasing by over 67% in just a couple of years. With that in mind, think about what you carry around with you most days. If you don’t really need it that day, it’s better to leave it at home in a fireproof safe than to risk losing it. Here are eight items you should not keep in your wallet. 1. Social security card Carrying around a social security card in your wallet is one of the worst offenses - and many of us do it. Once a thief has your social security card, there are unlimited ways they can use your identity to make life more difficult. In addition to not carrying around your social security card itself, don’t write the number down on a piece of paper that you carry in your wallet. Thieves know what it is. 2. Passport and passport card Passport Granted, there are times when there is no way around carrying a passport. If you are traveling to another country, you need to have it with you. But once you arrive, carry a copy and put your original in the hotel safe. Make sure you are staying in a hotel where the safe is secure. If you lose your wallet with your passport inside, identity thieves can use it to have a social security card made in your name, to open bank accounts, or even to attempt travel. Passport card A passport card is smaller than a passport and fits in your wallet. It can be used as identification for domestic flights and to enter the United States at land border crossings and ports of entry by water from Mexico, Canada, Bermuda, and the Caribbean. It’s often used by people who must cross the border frequently.  If you lose your passport card, identity theft is as much of a risk as it is with passports. If you don’t need it on a particular day, leave it at home in the safe. 3. Excess credit and debit cards Many of us have multiple credit and debit cards, but usually, we don’t use them all every day. If you lose your wallet or someone steals it, you must immediately contact all those financial institutions and cancel the cards.  Not only is this time-consuming, but it can leave you without any payment methods while yours are replaced. Better to leave no more than two in your wallet and keep the rest safely at home if you don’t plan to use them. Make photocopies of all your cards and leave them in your safe at home. If the worst happens, you still immediately have the numbers and information you must have to cancel your cards. 4. Password cheat sheet Even in this age of safe password managers such as LastPass, many people write their passwords down on a password cheat sheet. Only 24% of people use password managers. If you really feel you need a written password cheat sheet, at the very least keep it in a secure location at home. The last thing you should do is put a copy of it in your wallet.  If a thief gets hold of your wallet, they would have instant access to your financial information, among other sensitive accounts.  Our advice is to get rid of the cheat sheet altogether and start using a reliable password manager. And of course, you want to have many unique passwords rather than using the same one over and over. 5. Extra keys You may have a habit of keeping an extra home or office key in your wallet “just in case.”  Since you are likely carrying identification that includes addresses, the finder or thief may let themselves into your place and help themselves to your belongings - or worse. Reduce the risk of burglary by giving your extra key to a trusted friend or family member rather than carrying it in your wallet. 6. Blank checks Back in the day, everyone carried around a checkbook or a few blank checks in their wallet. If you still use checks, you would be far better off leaving them at home unless you have a specific plan to use one that day. If a thief gets hold of one of your blank checks, they could conceivably withdraw all the money you have in the account. Even if they are unable to do that, they can still get your bank account information and routing number from a check (and often, your home address!).  7. Gift cards and excess cash Some people routinely store gift cards in their wallets in case they want to use them when they are out. This is no big deal for $4 off at Starbucks. But should you have gift cards of significant value, keep them at home until you plan to use them. Otherwise, a thief can use the cards as though they were cash. And speaking of cash, avoid carrying around a big wad of money. If you aren’t going to spend it that day, keep it in the bank or your safe at home. 8. Multiple receipts Many of us have a habit of jamming receipts into our purses and wallets, leaving them there for months. If you paid with a credit or debit card, a receipt may show the last numbers of your card.  Should these receipts fall into the hands of a professional, they may be able to use those numbers, the name of the vendor, and other information in your wallet to phish for the rest of the card number. Try to get into the habit of emptying your wallet or purse of receipts at the end of the day. Keep those that are important in a physical safe or secure digital location. Shred the rest. Call us to discuss more ways to reduce your financial risk The risks go far beyond what not to carry in your wallet. If you’re concerned with reducing your financial risks, contact a certified financial advisor in LaCrosse to discuss the best ways to secure your future.  Call us at (608) 782-0200 in LaCrosse. Our Eau Claire financial advisors can be reached at (715) 834-9512, and our Green Bay financial advisors are available at (920) 434-2192. Advisors Management Group, Inc. is a registered investment adviser whose principal office is located in Wisconsin. Opinions expressed are those of AMG and are subject to change, not guaranteed, and should not be considered recommendations to buy or sell any security. Past performance is no guarantee of future returns, and investing involves multiple risks, including, but not limited to, the risk of permanent losses. Please do not send orders via email as they are not binding and cannot be acted upon. Please be advised it remains the responsibility of our clients to inform AMG of any changes in their investment objectives and/or financial situation.  This commentary is limited to the dissemination of general information pertaining to AMG’s investment advisory/management services. Any subsequent, direct communication by AMG  with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. A copy of our current written disclosure statement discussing our advisory services and fees continues to remain available for your review upon request.

It’s no surprise that consumers buy gifts for their significant others on Valentine’s Day, but a new survey shows that many are spending more on their pets, family members and friends. The Valentine’s Day shopping season is stronger than ever, according to an annual survey by the National Retail Federation, a retail trade association, and market research firm Prosper Insights & Analytics. The survey of 7,267 adults found that consumers expect to spend an average of $196.31 this holiday, up 21% from last year’s record of $161.96. Overall spending for Valentine’s Day is projected to reach a record $27.4 billion, which would be up 32% from last year’s record of $20.7 billion. Valentine’s Day not just for romance The additional money isn’t necessarily being spent on romantic partners. In fact, pets may be one of the biggest recipients of the increased Valentine’s Day spending, as 27% of consumers said they will spend money on their pets for Valentine’s Day, up from 17% in 2010. While consumers spend, on average, 52% of their Valentine’s Day budget on spouses and significant others, that percentage is down from 61% 10 years ago. In that same time period, the share of the Valentine’s Day budget spent on co-workers has risen from 3% to 7%. The share of the budget spent on Valentine’s Day gifts for pets has doubled from 3% to 6%. Survey respondents said they expected to spend, on average: $101.21 on significant others, up from $93.24 last year $30.19 on family members other than spouses, up from $29.87 last year $14.69 on friends, up from $9.78 last year $14.45 on their children’s teachers and classmates, up from $8.63 last year $12.96 on co-workers, up from $7.78 last year $12.21 on pets, up from $6.94 last year $10.60 on others, up from $5.72 last year The biggest spenders will be those between ages 35 and 44, who expect to put down $358.78 for Valentine’s Day. That’s followed by those between ages 25 and 34, who expect to spend $307.51, and those between ages 18 and 24, who expect to spend $109.31. Men plan to outspend women $291.15 to $106.22. Consumers expect to spend the most money ($5.8 billion) on jewelry, followed by: $4.3 billion on an evening out $2.9 billion on clothing $2.4 billion on candy $2.3 billion on flowers $2 billion on gift cards $1.3 billion on greeting cards While Valentine’s Day may be a great time to show the people (and pets) who mean a lot to you how much you care, make sure you follow common-sense money rules. For example, take the time to create a Valentine’s Day budget before you start spending money. Not only might you end up spending less, but you may less likely experience shopper’s guilt after Valentine’s Day is over. Source: Yahoo Finance 

The U.S. Labeled China a Currency Manipulator. Here’s What It Means The Trump administration labeled China a currency manipulator on Monday, after China allowed the value of its currency to fall. The designation — which the United States last used against China in 1994— is more a symbolic move than a substantive one. But it dials up the pressure in a trade war that has rapidly escalated, harming businesses, consumers and others that depend on steady relations between the world’s two largest economies. “The trade war has now become a currency war,” said C. Fred Bergsten, the director emeritus of the Peterson Institute for International Economics. “And the Chinese are undoubtedly going to take further action.” Here’s a look at what the label means, and how it could affect the United States-China relationship. What is currency manipulation, and why does it matter? The relative value of currencies can make a lot of difference when countries buy and sell their goods abroad. When the value of the dollar is strong, Americans have more purchasing power abroad, but American exports are also relatively expensive for other countries to purchase. When the dollar is weaker, it buys fewer imported goods but makes American exports relatively cheap for foreign buyers, which spurs exports. Some countries try to game the system, weakening their currencies to lift exports. They’ve included China, which held down the value of its currency in the past to speed its economic development. That and other policies helped China build a manufacturing sector that employs tens of millions of people and serves as a factory to the world. But economists estimate that China’s economic transformation has led to the disappearance of at least a million American manufacturing jobs — and perhaps paved Donald J. Trump’s path to the presidency. Currency manipulation will also matter in the trade war, as President Trump ratchets up tariffs on Chinese goods. A cheaper Chinese currency helps Beijing offset much of the pain of American tariffs, which otherwise would make Chinese goods considerably more expensive in the United States. Is China manipulating its currency now? Most economists agree that China manipulated its currency, with negative effects for the United States, for long periods from roughly 2003 to 2013. But some are arguing against the Trump administration’s move to label China a currency manipulator now. In an announcement on Monday, the Treasury Department said China had “a long history of facilitating an undervalued currency” and had taken “concrete steps to devalue its currency” in recent days to gain an unfair competitive advantage. China did allow the value of its currency to fall on Sunday, when the exchange rate fell below 7 renminbi to the dollar for the first time since 2008. The Chinese central bank likely would not have made such a move without a go-ahead from top officials. But the move appears to be in line with market forces. (More on that below.) And it doesn’t appear to satisfy the administration’s own guidelines. Twice a year, the Treasury Department puts out a report that analyzes whether countries are manipulating their currencies. In the most recent report in May, the department criticized China’s practices but said China met only one of several criteria for determining whether a country was a manipulator. The Treasury Department said China’s trade surplus with the United States had far exceeded its threshold. But China did not meet other requirements, including sustained intervention in its currency market. Technically, a country does not need to satisfy all those criteria before the United States can label it a currency manipulator. But to some trade experts, the report undercuts the Trump administration’s claim. Eswar Prasad, a former head of the International Monetary Fund’s China Division, said the administration was applying the label in an “arbitrary and clearly retaliatory manner.” In a report released in July, the I.M.F. also found that China’s currency was broadly where it should be. “The currency manipulation charge against China is difficult to support on the basis of objective criteria,” Mr. Prasad said. How much control does China have over its currency? The United States and many other developed countries let the market determine the value of their currencies, and typically influence that value only indirectly. For example, when the Federal Reserve raises or lowers interest rates, it can strengthen or weaken the dollar. China manages its currency more actively, though the market still plays a role. Officials set a daily benchmark exchange rate for the renminbi, but allow traders to push the value up or down within a set range. Officials then use that trading activity to help determine the next day’s exchange rate, though they disclose few details about how that process works. Recently, those market forces have been pushing the value of the renminbi down, as a weaker Chinese economy and Mr. Trump’s tariffs encourage investors to sell the currency. Brad Setser, a senior fellow for international economics at the Council on Foreign Relations, said China had been resisting market pressures on its currency for much of this year. China has been reluctant to have the value of the renminbi fall too far or too fast, for fear of sparking a mass sell-off. So the Chinese government has turned to its vast foreign exchange reserves, accumulated through years of China’s exporting more products than it imported. Beijing has used those dollars to purchase renminbi and prop up its value, Mr. Setser said. Until recently, that is. On Monday, Chinese officials let the renminbi fall to the lowest level in over a decade. On Tuesday, they set the exchange rate at a level that was weaker than Monday but nonetheless stronger than most analysts had expected. So what happens to China if the label sticks? Mainly, China must negotiate how to make its currency more fairly valued with the United States and the International Monetary Fund, which governs the few international guidelines that have been established on currency. Since the I.M.F. just determined that China’s currency was fairly valued, those negotiations don’t seem likely to go far. But the designation is likely to rankle Chinese officials, who have been very resistant to being labeled a currency manipulator, said Tony Fratto, a partner at Hamilton Place Strategies and a former Treasury Department official. And if China’s recent depreciation is the start of a trend, it could have much bigger implications for the world economy. A cheaper renminbi would harm American exporters and erode the effectiveness of Mr. Trump’s tariffs. It would also hurt exporters in Europe, Japan and elsewhere. And it could create market pressures for South Korea, Taiwan and others that compete in similar industries to devalue their currencies, potentially disrupting trade and investment flows. Mr. Trump could also use the label to justify further actions on China, including perhaps higher tariffs. Stephanie Segal, a senior fellow at the Center for Strategic and International Studies, said the actions on currency “have ushered in a new stage in the U.S.-China trade war that risks spinning out of control.” “China’s willingness to allow the currency to depreciate was likely intended to remind the president of the downsides of escalating actions,” she said. “If that was the idea, it didn’t have the desired effect.” Jeanna Smialek, Keith Bradsher, and Alexandra Stevenson contributed reporting. Source: The New York Times

The state of Wisconsin has a budget surplus of nearly $400 million.  Governor Walker and the state legislature have decided to return some of that surplus to tax payers who have children in the form of a child sales tax rebate. Basically, to qualify for the rebate you must have had a qualifying child that you claimed as a dependent on your 2017 tax return and lived in Wisconsin during 2017 (non-residents and part-year residents can qualify too).  The rebate is $100 for each qualifying child. DO NOT PROCRASTINATE! There is a window in which you can file.  Today is the earliest date you can file for the rebate and it ends on July 2, 2018.  According to the state, late filing will not be accepted. I filed for the rebate and the process is quite simple, taking less than 10 minutes.  The easiest way to file is to go to childtaxrebate.wi.gov and fill out the online form.  You will need the social security number and date of birth for yourself, your spouse (if you filed a married/joint tax return) and each child.  You can receive a check or you can have the rebate deposited into your bank account (have your routing and account number available for this option). The state has a great resource available answering most questions that you may have, including more detail about how to claim this rebate how you can qualify for this child sales tax rebate.

Tax lawyers, accountants and financial planners are burning the midnight oil trying to figure out all the ins and outs of the new tax law. The men and women of the IRS, given less than two weeks between the day President Trump signed the law and the time most of the new provisions went into effect January 1, are scrambling, too. When Congress approves the most sweeping changes in the tax law in more than three decades, you can bet you’ll be affected. Here are 17 things you need to know about how the new rules affect retirees and retirement planning. Supersized Standard Deduction The new law nearly doubles the size of the standard deduction – to $12,000 for individuals and $24,000 for married couples who file joint returns in 2018 (up from $6,500 and $13,000). The increase, in conjunction with new limits on some itemized deductions, is expected to lead more than 30 million taxpayers who have itemized in the past to choose the standard deduction instead (because it will reduce their taxable income by more than the total of their deductible expenses). There’s even more incentive for taxpayers age 65 and older to make the switch because their standard deduction will be even bigger. As in the past, those 65 and older or legally blind get to add either $1,300 (married) or $1,600 (single) to the basic amount. For a married couple when both husband and wife are 65 or older, the 2018 standard deduction is $26,500. All the hoopla about doubling the standard deduction is somewhat misleading. As a trade-off, the new law eliminates all personal exemptions. The 2018 exemption was expected to be $4,150, so, for a married couple with no children, the $11,000 hike in the standard deduction comes at a cost of $8,300 in lost exemptions. While this will affect your tax bill, it does not affect the standard deduction/itemizing choice. A Squeeze on State and Local Tax Deductions The new law sets a $10,000 limit on how much you can deduct for state and local income, sales and/or property taxes for any one year. This could be particularly painful for retirees with second homes in the mountains, say, or at the seashore. In the past, property taxes were fully deductible on any number of homes, and there was no dollar limit on write-offs for either state and local income or state and local sales taxes. The new law lumps all so-called SALT (state and local taxes) deductions together and imposes the $10,000 annual limit. This crackdown, along with the increase in the standard deduction, will lead millions of taxpayers to switch from itemizing to claiming the standard deduction. Loss of Deduction for Investment Management Fees Just as one part of government is pushing financial advisers who work with retirement accounts to charge clients set fees rather than commissions, Congress has decided to eliminate the deduction of such investment management fees. In the past, such costs could be deducted as a miscellaneous itemized deduction to the extent all of your qualifying miscellaneous expenses (including fees for tax advice and employee business expenses, for example) exceeded 2% of your adjusted gross income. As part of the tax overhaul, Congress abolished all write-offs subject to the 2% floor. If you’re paying a management fee for a traditional IRA, having it paid from the account itself would effectively allow you to pay it with pre-tax money. 401(k)s Spared A firestorm of criticism blew up last fall when it was learned that the House of Representatives was considering severely limiting the amount or pre-tax salarly retirement savers could contribute to their 401(k) plans. In the end, though, Congress decided to leave 401(k)s alone, at least for now. For 2018, savers under age 50 can contribute up to $18,500 to their 401(k) or similar workplace retirement plan. Older taxpayers can add a $6,000 “catch-up” contribution, bringing their annual limit to $24,500. Stretch IRA Preserved Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death. Stretch IRA Preserved Early on in the tax-reform debate, it appeared that Congress would put an end to the “stretch IRA,” the rule that permits heirs to spread payouts from an inherited IRA over their lifetime. This could allow for years, or even decades, of continued tax-deferred growth inside the tax shelter. One plan that gained traction on Capitol Hill would have forced heirs to clean out inherited IRAs within five years of the original owner’s death. The accelerated payout would have sped up the IRS’s collection of tax on the distributions. Ultimately, though, this plan wound up on the cutting room floor. The stretch IRA is still available as long as the heir properly titles the inherited account and begins distributions, based on his or her life expectancy, by the end of the year following the original owner’s death. FIFO Gets the Heave-Ho For a while, it looked as if Congress would restrict the flexibility investors have to control the tax bill on their profits. Investors who have purchased stock and mutual fund shares at different times and different prices can choose which shares to sell in order to produce the most favorable tax consequences. You can, for example, direct your broker to sell shares with a high tax basis (basically, what you paid for them) to limit the amount of profit you must report to the IRS or, if the shares have fallen in value, to maximize losses to offset other taxable gains. (Your gain or loss is the difference between your basis and the proceeds of the sale.) This flexibility can be particularly valuable to retirees divesting holdings purchased at different times over decades. The Senate called for eliminating the option to specifically identify shares and instead impose a first-in-first-out (FIFO) rule that would assume the oldest shares were the first to be sold. Because it’s likely that the older shares have a lower tax basis, this change would have triggered the realization of more profit sooner rather than later. In the end, though, this idea fell by the wayside. Investors can continue to specifically identify which shares to sell. As in the past, you need to identify the shares to be sold before the sale and get a written confirmation of your directive from the broker or mutual fund. Do-Overs are Done For The new law will make it riskier to convert a traditional individual retirement account to a Roth. The old rules allowed retirement savers to reverse such a conversion—and eliminate the tax bill—by “recharacterizing” the conversion by October 15 of the following year. That could make sense if, for example, the Roth account lost money. Recharacterizing in such circumstances allowed savers to avoid paying tax on money that had disappeared. Starting in 2018, such do-overs are done for. Conversions are now irreversible. Relief for Some 401(k) Plan Borrowers The new law gives employees who borrow from their 401(k) plans more time to repay the loan if they lose their jobs. Currently, borrowers who leave their jobs are usually required to repay the balance in 60 days to avoid having the outstanding amount treated as a taxable distribution and hit with a 10% penalty if the worker was under age 55. Under the new law, they will have until the due date of their tax return for the year they left the job. End of Home-Equity Loan Interest Deduction Taxpayers who use home-equity lines of credit to get around the law’s general prohibition of deducting interest get bad news from tax reform. The new law puts the kibosh on this deduction . . . immediately. Unlike the restriction of the write-off for home mortgage interest—reducing the maximum amount of debt on which interest is deductible from $1 million to $750,000—which applies only to debt incurred after December 14, 2017, the crackdown on home-equity debt applies to old loans as well as new ones. New Luster for QCDs The new law retains the right of taxpayers age 70 ½ and older to make contributions directly from their IRAs to qualifying charities. These qualified charitable donations count toward the IRA owners’ required minimum distributions, but the payout doesn’t show up in taxable income. As more and more taxpayers claim the standard deduction rather than itemizing, QCDs stand out as a way to continue to get a tax benefit for charitable giving. Taxpayers who qualify and claim the standard deduction may want to increasingly rely on QCDs. Custodial Accounts and the Kiddie Tax If you’re saving for your grandkids, or great grandkids, in custodial accounts, you need to know about changes in the kiddie tax. Under the old law, investment income over a modest amount earned by dependent children under the age of 19 (or 24 if a full-time student) was generally taxed at their parents’ rate, so the tax rate would vary depending on the parents’ income. Starting in 2018, such income will be taxed at the rates that apply to trusts and estates, which are far different than the rates for individuals. The top 37% tax rate in 2018 kicks in at $600,000 for a married couple filing a joint return, for example. That same rate kicks in at $12,500 for trusts and estates . . . and, now, for the kiddie tax, too. But that doesn’t necessarily mean higher taxes for a child’s income. Consider, for example, a situation in which your grandchild has $5,000 of income subject to the kiddie tax and that the parents have taxable income of $150,000. In 2017, applying the parents’ 25% rate to the $5,000 would have cost $1,250. If the old rules still applied, using the parents’ new 22% rate would result in an $1,100 tax on that $5,000 of income. Applying the new trust tax rates produces a kiddie tax bill of $843. The kiddie tax applies to investment income over $2,100 of children under age 19 or, if full-time students, age 24. New Rules for State 529 College Savings Accounts If you’re investing in a college fund for your grandchildren, you need to know about changes in tax-favored 529 plans. The new law expands the use of these savings plans by allowing families to spend up to $10,000 a year to cover the costs of K-12 expenses for a private or religious school. The $10,000 cap applies on a per-pupil basis. Previously, tax-free distributions were limited to college costs. Although 529 contributions are not deductible at the federal level, most states offer residents a break for saving in the accounts. Expanded Medical Expense Deduction While Congress cracked down on a lot of deductions, and the medical expense write-off was once threatened with complete elimination, in the end the lawmakers actually changed the law so that more taxpayers can benefit from this break. Until the new rules became law, unreimbursed medical expenses were deductible only to the extent that they exceeded 10% of adjusted gross income. The high threshold meant that relatively few taxpayers qualified, although retirees with modest incomes and high medical bills frequently did. The new law reduces the threshold to 7.5% of AGI and the more generous rule applies for both 2017 and 2018. In 2019, the threshold goes back to 10%. Tax-Free Income from Consulting Planning to start your own business or do some consulting in the early years of your retirement? If so, one change in the new law could be a real boon. The law slashes the tax rate on regular corporations (sometimes referred to as “C corporations”) from 35% to 21%, starting in 2018. There’s a different kind of relief to individuals who own pass-through entities—such as S corporations, partnerships and LLCs—which pass their income to their owners for tax purposes, as well as sole proprietors who report income on Schedule C of their tax returns. Starting in 2018, many of these taxpayers can deduct 20% of their qualifying income before figuring their tax bill. For a sole proprietor in the 24% bracket, for example, excluding 20% of income from taxation has the same effect of lowering the tax rate to 19.2%. Another way to look at it: If your business qualifies, then 20% of your business income would effectively be tax-free. For many pass-through businesses, the 20% deduction phases out for taxpayers with incomes in excess of $157,500 on an individual return and $315,000 on a joint return. Higher Estate Tax Exemption Congress couldn’t bring itself to completely kill the federal estate tax, but lawmakers doubled the amount you can leave heirs tax-free. That means even fewer Americans will ever have to pay this tax. Starting in 2018, the tax won’t apply until an estate exceeds about $11 million. This means a married couple can leave about $22 million tax-free. These amounts will rise each year to keep up with inflation. The Angel of Death Tax Break That’s what we call the provision that increases the tax basis of inherited assets to the value on the date the previous owner died. When it appeared that the new law would repeal the estate tax, some observers worried that the step-up rule would be changed or eliminated. In the end, the estate tax was retained, as noted in the previous slide. And, the step-up rule survived. If you inherit stocks, mutual funds, real estate or other assets, your tax basis will, in most cases, be the value on the day your benefactor died. Any appreciation prior to that time is tax free. Source: Kiplinger.com

Credit cards are a great tool. They can help you build credit and get paid for purchases you'd have made anyway. Alternatively, credit cards can be a path to financial ruin, leaving you deeply in debt and unable to accomplish financial goals. It all comes down to whether you make credit work for you -- or you become the credit card industry's dream customer. The good news is, mastering credit doesn't have to be hard. Just follow these five steps to make money off credit cards instead of having credit card companies make money off you. 1. Don't let your rewards go to waste Rewards cards are far more popular than cards that don't offer perks, but 31% of credit card users don't claim their rewards. This is a huge mistake akin to throwing out free money. To avoid making it, ensure you're using a card offering rewards that make sense for you. To find the right credit card, the foremost consideration should be whether you'll actually use the rewards, because it doesn't matter how many rewards you earn if they're never claimed. You may also wish to look for a card that rewards the types of purchases you routinely make. You can find cards geared toward many different categories of spending, ranging from travel and online shopping to gas station and grocery store purchases. Just don't be so wooed by the promise of a generous rewards program that you sign up even though you don't actually want the rewards being offered. 2. Don't pay interest No matter how much you earn in credit card rewards, you'll still lose money if you're paying interest. The average interest rate on a credit card is 15.99% for travel cards and 20.90% for cash back cards as of 2017. Interest, especially at these rates, makes it harder to repay your debt and costs you a fortune. If you owed $5,000 on a card with 20.90% interest and paid minimum payments of $137.50 monthly, it would take you 279 months to pay off your debt and you'd spend $8,124.64 in interest. That's a lot of money that could have gone toward retirement or a nice vacation. If you're already in debt and paying interest, make a plan to get out of debt ASAP. If you're committed to repayment and can avoid irresponsible spending in the future, consider transferring the balance of your debt to a balance transfer credit card offering a special introductory 0% rate. Most balance transfer cards charge you a small fee for the transfer -- typically around 3% -- but paying to transfer debt to a 0% interest card can still be a financially sound move since the 0% interest is so much lower than what you were paying before. Whether you opt for a balance transfer or not, make a plan to pay off debt as aggressively as possible. 3. Don't pay late Along with paying interest, paying late is also a financial disaster. A late payment can come with a fee up to $27 for a first late payment and $38 for a second within six months. A payment that is 30 or more days late will also be reported to the credit reporting agencies whose data provides the basis for your credit score. FICO data shows being late by 30 days could cause your credit score to decline as much as 90 to 110 points, if you previously had a score of 780 and no missed payments. If your score was 680 and you'd already been late twice, another late payment could lead to a drop of 60 to 80 points in your credit score. To avoid paying late, consider using auto-pay so at least the minimum payment is deducted from your bank account automatically. You can also set yourself calendar reminders. If you've already got a late payment on your credit report, ask your creditor for a good will adjustment. Often, if you've been a good customer and haven't made a habit of paying late, your creditor will be willing to take the late payment off your record. 4. Don't close old credit cards Old credit cards collecting dust in your wallet may seem useless-- but these cards are doing an important job for you by helping your credit score. Your credit score is calculated based on a number of factors, including payment history and mix of available credit. One of the factors that matters is the average age of your credit. This accounts for around 15% of a FICO score, and older is better because a long history of responsible payments shows lenders they can trust you. If you close old accounts, you'll lower the average age of credit and your score will take a hit. Another key factor essential to a good score is to keep your credit utilization rate low. Your credit utilization rate is worth 30% of your FICO score and it refers to the amount of available credit you've actually used. Ideally, you'll use no more than 30% of available credit to get high marks from lenders who don't like to see maxed-out cards. If you close old credit cards you aren't using, you reduce your available credit and hurt your utilization rate. If you had two credit cards each with $5,000 limits and owed a $3,000 balance on one card, you'd be right at the 30% utilization rate. If you closed your old card and now have just $5,000 in available credit, you'd be using 60% of your available credit -- a major red flag to lenders. 5. Don't open too many new credit cards all at once Opening too many new credit cards at the same time will also damage your credit score. When you apply for credit, an "inquiry" is placed on your credit report. This is true whether you're approved for credit or not. Too many inquiries make creditors nervous you may be about to go on a spending spree. Avoid this by limiting the amount of credit cards you open so you aren't constantly getting new inquiries on your record. Opening a few new credit cards all at once also lowers your average account age, hurting your score again. And, unfortunately, having all that open credit could potentially prompt you to charge more than you should. Don't create a temptation for yourself that could lead you into debt by having a lot of credit cards sitting around. You can master your credit Credit card issuers made $163 billion in 2016 in fees and interest charges. It's up to you if you want to fatten the pocketbooks of card issuers or if you want to have more cash to save for retirement and other financial goals. If you hope to keep more money in your own pocket instead of sending it to creditors, you have the tools to do that. Following these tips will help you keep your credit score as high as possible so you can get favorable interest rates, and you'll be able to avoid late payments or lost rewards. Source: USAToday.com

Older Americans are increasingly digitally savvy — but they are still a prime target for online scams. Nearly half (42 percent) of adults ages 65 and older now own smartphones, a number that's quadrupled in the last five years, according to a report by Pew Research Center conducted last year. Internet use by seniors has similarly jumped — and for the first time, half of older Americans have broadband at home. But with all that access to technology comes the increased risk of becoming a victim of cybercrime. In fact, internet scammers disproportionately target older Americans because they tend to be wealthier, more trusting and less likely to report fraud, according to the FBI. Another 2015 report estimated that older Americans lose $36.5 billion each year to financial scams and abuse. Davis Park, director of technology outreach program Front Porch Center for Innovation and Wellbeing, offers these tips to seniors – and everyone – for staying safe online: Choose a strong password. Passwords should be 12 to 15 characters long with strategically placed special characters or symbols. You should have different passwords on each of your online accounts. To help keep track of them all, use a password manager, like 1Password, Dashlane or KeePass. Keep your antivirus software up to date. That will help prevent hackers from accessing your computer, laptop and smartphone, as well as alert you to websites and downloads that could be suspicious. Use only trusted Wi-Fi resources. Free Wi-Fi seems convenient, but hackers can also use it to intercept your internet communications. Before joining a network at say, a coffee shop or retailer, confirm that the Wi-Fi connection you want to join belongs to the business you know and trust. When in doubt, use your personal Wi-Fi hotspot, or the network connection on your smartphone. Google it. Research any unfamiliar websites or email solicitations before giving up your information. Often, hackers create a link that may appear, at first glance, to be a legitimate website to trick you into giving up your personal data. Don't give your personal info. Be particularly wary of any request to provide information such as your date of birth, Social Security number or bank account. There are an increasing number of scams perpetrated by professional thieves who target vulnerable seniors, but you can protect yourself by knowing what to watch out for. Source: Cnbc.com

Social Security serves as a key source of income for countless retirees and disabled individuals. It's also an extremely complex program loaded with rules and terminology. If you're attempting to learn about Social Security (which is something you should do, regardless of how old you happen to be), here are a few key terms you'll need to understand. 1. OASDI OASDI stands for old age, survivors, and disability insurance, and in the context of your paycheck, it's the tax used to fund the Social Security program. The current OASDI tax rate is 12.4%. If you work for an outside company, you'll lose half that amount of your earnings up to a certain income limit, while your employer will pay the remaining 6.2%. If you're self-employed, however, you'll pay the full 12.4% up front. 2. SSI SSI stands for supplemental security income, and it's different from OASDI in that it's a program funded by general tax revenues, not Social Security taxes. SSI is designed to help those who are over 65, blind, or disabled with limited financial resources keep up with their basic needs. 3. FICA Tax FICA stands for the Federal Insurance Contributions Act. It's the tax that's withheld from your salary or self-employment income that funds both Social Security and Medicare. For the current year, FICA tax equals 15.3% of earned income up to $127,200 (12.4% for Social Security and 2.9% for Medicare), but those making above $127,200 will continue to pay 2.9% FICA tax on income exceeding that threshold. In 2018, the earnings cap will rise to $128,700. 4. Social Security credits In order to collect Social Security benefits, you must earn enough credits during your working years. In 2017, you'll receive one credit for every $1,300 in earnings, up to a maximum of four credits per year. For 2018, the value of a single credit will rise to $1,320 of earnings. Those born in 1929 or later need 40 credits to qualify for benefits in retirement. 5. AIME AIME stands for average indexed monthly earnings, and it's used to calculate your personal Social Security benefit. The amount you receive from Social Security is based on your highest 35 years of earnings. To arrive at your AIME, your past earnings are adjusted for inflation so that they don't lose value. 6. Full retirement age Your full retirement age, or FRA, is the age at which you're eligible to collect your Social Security benefits in full. FRA is based on your year of birth, and for today's older workers, it's 66, 67, or 66 and a number of months. Though you're allowed to claim benefits prior to reaching FRA (the earliest age is 62), doing so will cause you to collect a reduced benefit amount -- permanently. 7. Delayed retirement credits Though waiting until full retirement age will ensure that you collect your benefits in full, if you hold off on filing for Social Security past FRA, you'll rack up delayed retirement credits that will boost your benefits. Specifically, for each year you wait, you'll get an 8% increase in your payments. Delayed retirement credits stop accruing at age 70, so that's typically considered the latest age to file for Social Security (even though you can technically wait even longer than that). 8. Trust Fund The Social Security Trust Fund was established in the early 1980s to cover any future shortfalls the program might face. If Social Security has a year in which it collects more taxes than it needs to use, that money is placed in the Trust Fund and invested in special Treasury bonds. Once Social Security's incoming tax revenue fails to cover its scheduled benefits, the Trust Fund will be tapped to make up the difference. Come 2034, however, the Trust Fund is expected to run out of money, at which time future recipients might face a reduction in benefits. 9. COLA No, we're not talking about a soft drink. In the context of Social Security, it stands for cost-of-living adjustment, and it's designed to help beneficiaries retain their purchasing power in the face of inflation. Back in the day, those who collected Social Security received the same benefit amount year after year. But beginning in 1975, beneficiaries have been eligible for automatic COLAs based heavily on fluctuations in the Consumer Price Index. COLAs are not guaranteed, however. If consumer prices don't climb in a given year, benefits can remain stagnant. Such was the case as recently as 2016. 10. Survivors benefits Survivors benefits are designed to provide income for your beneficiaries once you pass. Those benefits are based on your earnings records and the age at which you first file for Social Security. Surviving spouses, children, and even parents of deceased workers are eligible for survivors benefits. Clearly, there's a lot to learn about Social Security, but familiarizing yourself with these key terms will help you better understand how the program works. It also pays to read up on ways to maximize your benefits so that you end up getting the best possible payout you're entitled to. Source: USAToday.com