Category: Tips

'Tis the season for notebooks and crayon deals. Backpacks, sneakers and collared shirts and even tech also will be at some of the lowest prices of the year as retailers try to woo back-to-school shoppers. According to the National Retail Federation and Prosper Insights and Analytics’ annual back-to-school spending survey, families with children in elementary school through high school are expected to spend an average of $696.70, which would top the record of $688.62 set in 2012. Families with college students are expected to spend an average $976.78, which is up from last year’s $942.17 and would top the previous record set in 2017 of $969.88. “Back-to-class shoppers still have the bulk of their shopping to do and are waiting to see what the best deals and promotions will be at a variety of different retailers,” said Phil Rist, an executive vice president at Prosper Insights, in a statement. A survey from consultancy Deloitte found price often matters most when shopping for back to school, with 57% of respondents saying competitive prices were a top motivator. Back-to-school sales tax holidays: Is your state giving families a tax break this year? Savings for teachers: These stores are treating teachers to back-to-school discounts But don't worry, you don’t need to do all of your school shopping at once. "Spreading it out over the year can help your budget and give you a chance to hit major sales," said Kelsey Sheehy, personal finance expert for NerdWallet. "Take advantage of tax holidays and back-to-school sales to get the items you need now, but don’t be afraid to hold off until later in August." If your state has a sales tax holiday, educate yourself on what's tax-free and what isn’t. Three states had their tax holidays in July and 13 are offering a tax break in August. Shop smart Some school supplies are at the lowest prices of the year in August and early September, but you can save more with the following tips. Make a list of everything you need. Target has school supply lists available through its School List Assist feature and Walmart also have teacher lists online. Compare prices. Start with a simple Google search of the product you want or use a price-comparison website like www.bizrate.com. When in-store, one of the easiest ways to check prices is by scanning a product with the Amazon app or another competitor. Use coupons. Stores have coupons in their weekly sales circulars and on their apps and websites. At Target, use Cartwheel to save on hundreds of items each day. Earn points and rewards. Take advantage of store loyalty programs to get money off a future purchase. Also, look for other savings opportunities like earning Kohl’s Cash on purchases of $50 or more and paying with a rewards credit card. There are apps for paying, too. Ibotta and Raise recently added mobile payments at dozens of stores and restaurants, which also allows you to earn a percentage of your purchase back. At Old Navy, get 7% of your purchase back when you pay through Ibotta and at Walmart, earn 1% on all purchases. Shopping online When shopping online, look for coupon codes, free shipping, and stores that offer free return shipping. Avoid shipping fees by using an in-store pickup. Stores that offer this option include Best Buy, J.C. Penney, Kmart, Office Depot, OfficeMax, Macy’s, Kohl’s, Sears, Staples, Target and Walmart. Check a product's price history on Amazon using camelcamelcamel, which has a Mozilla Firefox and Google Chrome browser extension called the Camelizer. Or go to www.camelcamelcamel.com. Price matching One of the easiest ways to grab a deal – and avoid driving to multiple stores – is by price matching.  Read store policies, which outline how to request a match both at the store and online. Some retailers, like Kohl's, require you to bring the physical newspaper advertisements to the customer service desk for a price match. Others allow you to price match competitors’ online prices, including Amazon. Timing matters. The price usually has to be valid at the time of the match, and the item has to be in stock by the competitor. It has to be an identical item, brand name, size and model number. For online prices, third-party sellers are excluded. Beware of other exclusions. Target, for instance, notes competitor doorbusters and lightning sales are excluded. When in doubt, ask to speak to a store manager. Some stores will offer online price matching by chat or by calling. Receipt reminders Always check your receipt before leaving the store. You should also keep receipts for: Easier exchanges or returns. If the store is out of a size or a color you want, see if you can exchange the item for the right size and color once it’s in stock. Price adjustments. If an item you bought goes on sale within the week or two after, some stores will credit you the difference. For submitting rebates. If you buy an item that’s eligible for a rebate, make sure to submit the rebate or it won't be a good deal. If you’re not going to follow through, consider looking for another sale. Digitize the receipts using apps like Receipt Hog and ReceiptPal, which also helps track spending and reward you for your purchases. Stocking up In the days leading up to the new school year as well as the days after the year begins, stores will have some of the best prices on essentials such as notebook paper and notebooks. Stock up to avoid having to pay full price in the middle of the school year. Consider donating extra school supplies to a school supply drive. In a few weeks, plan to shop clearance racks when school supplies and clothes will be marked down. For young children, buy the next size in clothes when the price is right. Source: USA TODAY

Choosing a financial advisor is a big decision. Being aware of these seven common blunders when choosing an advisor can help you find peace of mind, and avoid years of stress. 1. Hiring an Advisor Who Is Not a Fiduciary By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy. If your advisor is not a fiduciary and constantly pushes investment products on you, it's time to find an advisor who has your best interest in mind. 2. Hiring the First Advisor You Meet While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you. 3. Choosing an Advisor with the Wrong Specialty Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses - before signing the dotted line. 4. Picking an Advisor with an Incompatible Strategy Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style. 5. Not Asking about Credentials To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP. 6. Making Assumptions When They are Affiliated with a Reputable Brand An advisor might appear qualified and professional due to an association with a major firm like J.P. Morgan or Morgan Stanley. Working with an advisor from a reputable firm can lead to stability and better tools and information. However, choose an advisor because they are the best fit, not because of their branding. 7. Not Understanding How They are Paid Some advisors are "fee only" and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them. Source: SmartAsset

Joe and Jo Ann Paszczyk, of Chicago, love unique travel adventures. Over the past decade, the couple has taken about 25 trips with educational organizations. “We have many interests—science, astronomy, history, nature,” says Joe, a former TV producer. Adds Jo Ann, a retired human resources manager: “These are not your normal souvenir shopping trips. You’re in small groups with curious people who like to learn.” In the past three years, they have gone on trips led by Chicago’s Field Museum to Madagascar, India and Tanzania. The expert guides “were always pointing out details that you would otherwise miss,” says Jo Ann. Like the Paszczyks, an increasing number of travelers age 50 and older want to combine learning more about a place or a passion with visiting new destinations. They are selecting trips sponsored by a university, museum or other nonprofit educational organization. Led by experts, from professors to scientists to museum curators, these trips offer special access, such as private tours of historic sites and in-depth lectures. “We have seen a healthy increase, with our programs doubling in size in the last five years,” says Karen Ledwin, vice president of product management at Smithsonian Journeys, which leads 300 trips a year on every continent. The vast majority of Smithsonian clients—90%—are age 50 and older. “These are travelers seeking enrichment. Sitting on the beach is not for them,” Ledwin says. On a Smithsonian Journeys trip to Italy, Jo Ann Paszczyk recalls her group getting a private tour of the Uffizi Gallery in Florence, on a day it was closed to the public, and a private night tour of Basilica di San Marco in Venice, including a special lighting of the ceiling’s Byzantine mosaics. While in India on a Field Museum trip, a field biologist pointed out tiger paw prints and explained what scientists learned from them. “It was a magical moment for me,” Jo Ann says. “It felt like I was driving into a page of The Jungle Book.” Says Erica Au, Field’s manager of donor relations and major and planned giving: “Traveling with our experts, who have spent their careers studying a topic and can explain it in a meaningful way, adds an extra level.” For example, in summer 2020, the museum will take its annual two-week safari to Tanzania, hosted by their manager for mammals. It costs about $11,000 per person plus airfare. The group will visit the Serengeti to experience the wildebeest migration. They will take game drives to see black rhinos, cheetahs, gazelles, flamingos and hyenas, including a nighttime game drive to see nocturnal mammals, such as genets. Get Smart With a Bevy of Travel Options With so many educational organizations offering trips, at every price point, and by land, rail and boat, the choices can be overwhelming. Even the New York Times has gotten into the act, leveraging its journalists as expert guides. These trips can run from one-day city tours to 15-day or longer luxury vacations, in categories including sports, history and culture. This year, cookbook author and NYT contributing writer Joan Nathan will lead an eight-day trip exploring Jewish food and heritage in Florence, Siena and Rome for $7,490 plus airfare. Highlights include a visit to Europe’s only kosher winery in Tuscany and an evening of music and food at the home of a Libyan Jewish chef in Rome. History buffs may want to check out a six-day trip led by foreign correspondents that explores the fall and rise of Berlin from the World Wars to today. The trip costs $5,595 per person plus airfare. If you feel strongly about saving the planet, you could consider taking a sustainable trip. The World Wildlife Fund offers about 80 “conservation travel” trips a year, which feature “sustainable travel that supports the protection of nature, wildlife and local communities,” says Jim Sano, the nonprofit’s vice president for travel, tourism and conservation. “We educate travelers about environmental and conservation issues, and all of our guides are trained by us in basic natural history.” Additionally, all emissions from trips are 100% carbon-offset. In July 2019, the organization is offering its first “Zero Waste Adventure,” a six-day trip to Yellowstone country for 14 guests, for about $5,700 plus airfare per person. The goal of the trip is to “fit all waste produced into a single container,” says Sano. Highlights include exploring the northwest sector of the Greater Yellowstone ecosystem and a stay at a safari-style luxury camp. Another good source of educational trips is alumni associations of universities and colleges. You don’t always need to be a graduate of the school to sign up. For example, in November 2019, Stanford University offers a two-week trip called “Unseen Japan,” led by a lecturer in international policy. At $9,695 per person plus airfare, the trip includes visits to temples in Kyoto, a tour of I.M. Pei’s Miho Museum and an overnight stay at an inn in the hot springs town of Matsuyama. These trips can be expensive, so compare what’s offered before you sign up. For example, does the price cover most meals and drinks, tips for guides and drivers, special excursions, and medical, accident and evacuation insurance? Also, check to see if a professional tour manager will accompany the group to handle logistics and iron out any problems. Smithsonian Journeys always sends its own experts, Ledwin says. Select a trip according to whether you seek an active adventure or a more leisurely pace, says Jo Ann Paszczyk. Most trips are rated by activity level. African safaris tend to be more sedentary because you sit in a vehicle all day, while other trips require a lot of uphill hiking. “We are clear on expectations,” says Au, of the Field Museum. “Our Mexico trip featured horseback riding and hiking uphill in altitudes over 10,000 feet. But our Greece trip was geared to anthropology and you are on a cruise ship with some walking during the day.” Another benefit to traveling with a local institution is that it often creates a bond between travelers and the organization that extends beyond the trip. “We’ve made some new friends and become more part of the Field community,” says Joe Paszczyk. To him and his wife, that’s a gift that keeps on giving. Source: Kiplinger    

You can tap an HSA to pay the premiums for a long-term-care insurance policy, but the amount you can withdraw tax-free depends on your age. Question: Can I take out money tax-free from my health savings account to pay my long-term-care insurance premiums? If so, how much is tax-free? Answer: Yes, you can use money from your HSA tax-free to pay your long-term-care insurance premiums, with the maximum annual tax-free amount based on your age. If you’re 40 or younger, you can withdraw up to $420 tax-free from an HSA in 2019 to pay the premiums; if you’re age 41 to 50, you can take out $790; if you’re age 51 to 60, $1,580; if you’re age 61 to 70, $4,220; and if you’re age 71 or older, $5,270. If you and your spouse both have long-term-care policies, you can each use money tax-free from your HSA to pay premiums, up to the aged-based maximum for each of you (based on your ages by the end of the year). These limits increase slightly each year for inflation. To qualify, the long-term-care policy must cover only long-term-care services. And it must pay out if you need help with at least two activities of daily living or have cognitive impairment. Most traditional long-term-care insurance policies qualify. If you’re not sure, ask your insurer if your policy is “tax-qualified.” Source: Kiplinger.com

Your car insurance bill is probably one of your largest monthly expenses, especially if you have teenage drivers. To lower your premium, ask your insurer for a list of discounts, and let the insurer know if you qualify. For instance, some insurers offer discounts of 10% to 15% for those who make a living at certain profession, such as educators, lawyers, accountants, physicians, and law-enforcement personnel. You could also get a 10% discount for belonging to an alumni association or another organization. You may also receive a discount for carpooling or for having a hybrid car. Pay Your Bills Differently One of the easiest ways to reduce your premiums is to find out if your insurer will give you a break for paying your bill in a lump sum rather than monthly payments. Paying for the full policy term (usually six months) rather than monthly can reduce your rates by 5% to 10%. You may also get a discount if you set up automatic payments from your credit card or checking account. You could also save 3% to 5% on premiums if you sign up to receive bills and other information online instead of in the mail. Boost Your Deductible Increasing your deductible from $250 or $500 to $1,000 can reduce your premiums by up to 20%. It can also prevent you from filing small claims that could lead to a rate increase or jeopardize a claims-free discount. Add some money to your emergency fund so you’ll have cash to pay the deductible if anyone in your family gets in an accident. Bundle Up Buying your car insurance from the same company that provides your home or renters insurance can cut your rates by 5% to 20%. You may also get an extra discount if you add an umbrella policy with the same insurer, too. Get Good Grades Most insurers offer a discount of 15% to 25% for young drivers who maintain at least a B average in high school or college. To qualify, the driver usually has to be a full-time student younger than age 25. Also, tell your insurer if your child moves more than 100 miles away from home for college and doesn’t take a car. Your premiums could drop by 20% or more, but your child will still be covered when home from college. Sign Up for Data Tracking If you drive few miles and have safe driving habits, you could save money by participating in a data-tracking program, such as Progressive’s Snapshot, State Farm’s Drive Safe & Save, or Allstate’s Drivewise. You use an app on your smartphone or plug a device into your car that tracks how many miles you drive, how often you drive late at night, and if you have potentially dangerous driving habits, such as braking hard and accelerating rapidly. The average premium savings for participating is 10% to 15%, although discounts can be as high as 50%. Some insurers will raise your rates if you show risky behavior, but you can usually review your results online so you can improve your habits before your rate is set each term. See How Tracking Rewards Good Drivers for more information. Shop Around Car insurance premiums can vary quite a bit by each company. It’s a good idea to shop around for car insurance every few years, or more often if you’ve had any big life changes, such as getting married, moving, or having a teenager driving. The insurer that had the best rate for a married couple may charge some of the highest rates when you add a teen driver. You can compare rates from several insurers at Insurance.com or InsuranceQuotes.com. You could also get help from an independent insurance agent who works with several companies. Ask Your Insurer for a Rate Cut If you find a better rate from another insurer, let your current insurer know before switching. The insurance company may match the rate in order to keep you as a customer. Drop Certain Types of Coverage on Older Cars Collision coverage pays to fix your car's damages if caused by a collision with another car or object. Comprehensive coverage pays for damages caused by other covered events, such as theft, natural disasters, collision with an animal, or if an object falls on your car (such as a tree). Even if your car is totaled, the most you’ll usually get is the replacement cost for a car of its age. If your car is only worth a few thousand dollars, you may be paying more in premiums than you could ever get back from the insurer after paying your deductible. Compare the premiums for keeping the coverage with the cost to replace the car. An indivdiual can go to KBB.com to estimate their car’s replacement cost. Take a Driver-Safety Program Drivers younger than age 21 who take an approved drivers education course may get a discount. Some insurers even offer their own driver-safety programs that can save you extra money. State Farm’s Steer Clear program, for example, can cut premiums by up to 15% for drivers younger than 25 who have had no accidents and participate in the training program. (The program requires drivers to watch safe-driving videos, take quizzes, and record their trips, all on the Steer Clear app.) Some insurers give discounts of 5% to 15% for drivers age 60 or older who take an accident-prevention class. Watch the Clock After an Accident or Ticket In most states, tickets and at-fault accidents remain on your driving record for three or five years. Longtime customers with good driving records may not get a rate hike at all. Many insurers check motor vehicle records every 12 to 18 months. If your rate does rise, shop around. Some insurers care less about accidents or tickets than others. When an accident or ticket drops off your motor vehicle record, ask your insurer to remove the surcharge and then re-shop your policy. Get a Safe Car Before you buy a vehicle, find out how much it costs to insure. You can find out if a car tends to have higher or lower insurance costs by using State Farm’s vehicle rating tool and checking out a car’s safety ratings from the Insurance Institute for Highway Safety. Improve Your Credit Score In most states, insurers can use your credit score when setting your insurance rates. Check your credit report free at AnnualCreditReport.com, and make sure there aren’t any errors that could hurt your score. Paying your bills on time, limiting new credit, and keeping your charges low in relation to your available credit can also help you improve your score. See the credit-education page at MyFico.com for more information about factors that can affect your score. Source: Kiplinger.com

When completing your 2018 tax return, turn some attention to your tax plans for 2019. Although tax reform triggered major changes in 2018, the landscape has settled in 2019. Tax rules in 2019 will look very similar to 2018. Once your 2018 taxes are done and you have determined how the new rules affect your personal tax situation, get a jump-start on trimming your 2019 tax tab. Learn how about trimming your 2019 tax tab by reading below. Adjust for Inflation The IRS now uses the chained consumer price index (rather than the traditional consumer price index) to calculate inflation adjustments for various income thresholds and limits. Chained CPI accounts for the fact that consumers change their spending patterns as prices rise, making inflation appear lower. Although inflation adjustments will be smaller, you’ll still find increases across the board. (See the 2019 tax brackets.) Reminder: The standard deduction rises to $12,200 for single filers and $24,400 for married couples filing jointly. The extra standard deduction for those age 65 and older is $1,300 per person for joint filers and $1,650 for single filers. If you were on the edge of taking the standard deduction for 2018, consider whether those higher amounts may close the door on itemizing in 2019. The income threshold for the 0% capital-gains rate also rises to $39,375 of taxable income for single filers and $78,750 for joint filers. Plan Charitable Giving Determining whether or not you itemize could help you decide on other tax moves, especially charitable giving. Itemizers can deduct charitable contributions, but non-itemizers, and even some itemizers, may want to consider a different approach: an IRA qualified charitable distribution. Traditional IRA owners age 70½ or older can directly transfer up to $100,000 a year from their IRA to charity. You don’t get a charitable deduction by doing this, but the money is excluded from your adjusted gross income and can count toward your IRA required minimum distribution. To have a QCD do double duty as your RMD, make sure to do the QCD before taking out the full RMD amount. For example, let’s say your total RMD is $15,000. You can transfer $5,000 directly to charity and take $10,000 out of the IRA by year-end. That satisfies your RMD but only $10,000 will be taxable and included in your AGI. Of course, you can also do QCDs (up to the $100,000 annual limit) in excess of your RMD amount. Review Health Care Expenses New for 2019: The penalty for not having health insurance is zeroed out. If you go without coverage, there is no longer a cost at tax time. The threshold for deducting medical expenses has climbed for 2019. Taxpayers can now only deduct medical expenses that exceed 10% of AGI. Adjust Withholding Look at how your 2018 withholding stacked up against your actual 2018 tax tab. If you got a big refund and expect your tax situation to be similar in 2019, adjust withholding so you hold onto more money throughout the year. If you didn’t withhold enough, increase withholding in 2019. You can have money withheld from various retirement income sources, such as IRA distributions, annuity payments, and Social Security benefits. Pay Estimated Tax You can also make estimated quarterly payments to cover your 2019 tab. Paying estimated taxes can be a pain but not paying estimated taxes is even worse because you may face tax penalties. One way to avoid underpayment penalties is to pay at least 100% of last year’s tax bill (or 110% for higher-income taxpayers) through withholding, estimated tax payments, or both. The first estimated tax payment for 2019 is due Monday, April 15. Source: Kiplinger.com

A health savings account (HSA) enables you to set aside pre-tax money to pay for qualified medical expenses. The advantage is that this may help lower your overall healthcare costs.  Usually, you can’t use an HSA to pay insurance premiums. But there is a happy exception; you can use your HSA to pay for qualified long-term care insurance premiums. Keep reading to learn more and reach out to a financial advisor in LaCrosse for additional assistance. Benefits of an HSA An HSA can be invaluable if you have health insurance with a high deductible. As you get older, your deductible limits rise while medical expenses increase, and an HSA becomes increasingly helpful. An HSA has three major benefits: Tax deduction on contributions Tax-deferred benefits growth Tax-free distributions on medical expenses - that includes long-term care insurance! “Qualified” long-term care insurance Of course, like anything else to do with tax benefits, some qualifications must be met. Click to learn about the treatment of qualified long-term care insurance. To be considered tax-qualified, the long-term care insurance policy: Must be guaranteed renewable Can only pay for long-term care expenses Cannot have cash value Must be structured so all refunds of premiums and policyholder dividends are applied as a reduction in future premiums or to increase future benefits Withdrawal amounts There are limits to how much you can withdraw from your HSA to pay for long-term insurance premiums.  Those limits are based on the age you reached before the end of the tax year, and they typically change every year. The older you are, the more you can withdraw. Here are the allowed withdrawals for 2022 and 2023: [table id=1 /] Contribution limits In addition to a limit on withdrawals, there is also a limit on contributions. For 2023, you can contribute $3,850 for individual coverage You can contribute $7,750 for family coverage If you are age 55 or above, you may contribute an additional $1,000 to “catch up” Using your HSA to pay for long-term care insurance If your HSA has an attached checking account, you may write a check directly to the insurance company.  You may also pay the insurance company from another source and reimburse yourself. Contact us for more information about using your HSA to pay insurance premiums If you have questions about how you can best save money with your HSA,  how you can use it to pay long-term care insurance premiums, or whether your long-term care insurance is tax-qualified, contact us now.  Advisors Management Group has offices in La Crosse (608) 782-0200, or you may contact our Eau Claire financial advisors at  (715) 834-9512 or our Green Bay financial advisors 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.

A new calendar year is always a great time to take a step back to reflect on your goals and reset your financial plan to make sure you are on track. It is said that great outcomes come from asking great questions. This is also a useful way to think about your finances and can often save you from making costly mistakes. Start 2019 off by being one step ahead; ask your financial adviser these five commonly overlooked questions to help you optimize your finances. How much am I paying in fees? It's not always easy to get a handle on your investing costs, but you should know what you're paying. Getting that information should also be as easy as asking your adviser to spell it out for you. Do you know what your annual advisory fees are? That's a great place to start. Then, ask your adviser to outline anything else that you could be paying for, such as fund fees, account fees, and transaction fees. While costs like operating expenses on ETFs or mutual funds are often inevitable, some products have higher fees that others. It's crucial to keep an eye on how they are affecting your returns.  What employer-sponsored savings accounts and financial benefits should I take advantage of? Make time to ensure that you're taking full advantage of any employer-sponsored retirement plans, savings accounts, or other financial benefits available to you. Your adviser can help you determine how your 401(k) fits into your broader retirement plan, as well as the best way to leverage other financial plans your employer might offer. Other financial plans may include medical savings accounts (a flexible spending account or a health savings account) or employee stock purchase plans. If your employer offers contribution matching to your 401(k), it's generally smart to take advantage of the full match. An additional benefit of any amount contributed by your employer is that it doesn't count toward the annual IRS limit you can contribute yourself to max out your 401(k), meaning what you can put toward your retirement. How do the (relatively) new tax laws impact me? The Tax Cuts and Jobs Act that passed in late 2017 first took effect last tax season, but chances are you may still be adjusting to the changes. It's a good idea to look closely at how they affect you at the beginning of the year. A few noteworthy differences to be aware of include most tax brackets being lower, the child tax credit has gone up, the allowance for itemized medical expense deductions has increased, alimony payments are no longer deductible from taxable income, and inheritance tax exemptions have risen significantly. Even if you are aware of the new tax environment, you could have overlooked some of its effects. Be sure to speak with your financial adviser, as well as a tax adviser, about how these and other tax changes could impact your finances. How much risk is appropriate for me right now? The answer to this question is going to be different for each investor, and your financial adviser can help you determine how much risk within your portfolio is appropriate for you based on your age, financial situation, long-term goals, and general level of risk aversion. It's just as important to remember that your risk tolerance will likely change as you get closer to retirement and make more conservative financial moves. This is why it is wise to re-evaluate where you stand periodically. What other services are available to me? Finally, ask your adviser what other services are available to you through their firm. Can they help you with your estate, legacy, tax, banking, or other planning? These items may be important pieces of your financial plan. Don't be afraid to ask what you get for your advisory fee in order to maximize your financial professional's expertise or for a reference to an outside expert. Most importantly, make sure any conversation with your financial adviser relates to your specific long-term goals and how you are tracking against them. A final question to ask during a meeting can be as simple as, "What else should I be considering, and do you have a specific recommendation for me?" Your life stage, your needs, and goals are all unique to you. Your plan of attack for the new year should be the same. Source: kiplinger.com

Small-business owners are increasingly being congratulated for their contributions to the economy. They create jobs, provide much-needed services, promote diversity and put money back into their communities. Yet, those same business owners often are so busy with their day-to-day pursuits that they neglect their own financial needs. In doing so, they miss opportunities to protect the revenue that can help them further grow their business and secure their retirement. That particularly holds true when it comes to taxes. I can tell you from personal experience that paying taxes is easily the most frustrating part of owning a successful small business — and finance is what I do for a living. I know others face even bigger challenges — either because they don’t know what they don’t know or because they’re afraid they’ll do something to get the attention of the IRS and they’ll be audited. As far as audits go, there are two points to keep in mind: The IRS is not out to get you and in the case of an audit, as long as your return was honest and accurate, and you cooperate fully with the IRS’ requests, the process shouldn’t be too painful. Just make sure you are ALWAYS following the letter of the law. It’s unlikely you will be audited. For example, in 2016, 0.70% of individual tax returns overall, and only 1.7% of those making over $200,000, were audited. Neither of those concerns should keep you from using available tax strategies to maximize the value of your company to the benefit of your employees, your customers and your own future. Here are five scenarios to consider when consulting with your financial adviser, CPA and/or tax attorney. 1. Start saving for your retirement. Many of the entrepreneurs I meet seem to be constantly teetering on the brink of personal insolvency due to an isolated focus on their business. The most successful business owners I know are able to be more competitive because they feel financially fit themselves and thus more confident about the moves they make. An easy first step is to establish a retirement plan that offers you financial security regardless of the long-term success of your business. These plans come in many shapes and sizes, and a trusted financial professional can help you decide which is best for you. The most popular is the defined contribution plan, most often implemented as a 401(k) or SEP IRA to which you can contribute up to $55,000 per year. (Contribution limits may be even higher for those over age 50.) You may want to also use a cash balance pension plan to stash away closer to $150,000 per year in total. If you can use these tools to get your taxable income below certain thresholds, you could qualify your business for the new 20% pass-through tax break. If you’ve already taken this step, you may want to evaluate establishing what the founder of Wealth Factory, Garrett Gunderson, calls cash flow insurance, or properly structured cash value life insurance, providing you the ability to access these funds via policy loans before age 59½. What’s more, if the loans are used for your business, in most cases the interest you pay back to yourself is tax deductible. 2. Put your family members to work. I find employing family members to be one of the most overlooked and yet resourceful ways to begin reducing the household tax burden. By employing my wife as the director of operations for our firm, for example, we’ve been able to double the amount of income that can be deferred into our 401(k) plan. My wife spends a great deal of time heavily involved in our regular business activities. Even if your spouse isn’t working with you full time, he or she may be more engaged in your business than you think and could have a place there. If you have children, it may make sense to put them on the payroll, as well, as legitimate employees. Our family business has helped us teach our children about the value of a dollar and the importance of hard work. Our children have been employed nearly since they were born, initially under modeling contracts, as they have been utilized for advertising and promotional materials, then as they got older they were able to help with various menial tasks around the office justifying a higher, but still modest wage. Children typically will be in a lower tax bracket, but that doesn’t mean they aren’t spending plenty of the household money. Why not maximize the net income? Rather than taking your personal wages and paying for the children’s expenses, you can pay them their wages directly, so they can cover those expenses themselves at a lower tax rate and potentially no tax if their income doesn’t exceed their standard deduction. You could even have them open a Roth IRA to help them learn how to manage their investments and lay the foundation for their own tax-free retirement. 3. Rent your home when it’s used for business activities. If you regularly host business-related events at your home or some other dwelling you own, you may be overlooking an extraordinary opportunity. The Internal Revenue Code allows dwelling unit owners to rent their property to other individuals or entities for 14 days or fewer in a calendar year and exempts the income received from taxation. Just be sure you’re executing a contract in which the rent is paid at fair market value and that it is an ordinary and necessary business expense of the entity. 4. Reduce self-employment tax with an S corporation. Many people get so caught up in getting their business started that they forget to make the appropriate election to avoid paying excessive self-employment taxes. You have until the end of the year to elect to be taxed as an S corporation retroactively. You still must run your payroll and pay yourself a fair wage, but distributions can allow you to eliminate this 15.3% tax on a good chunk of your annual income. Keep in mind that avoiding self-employment taxes may ultimately reduce the amount of Social Security income you are supposed to receive in the future. My personal feeling on this is that I would rather save for my own retirement, rather than letting the government do so on my behalf, however if you feel the government can do a better job saving for your retirement than you it may make sense to pay a higher level of self-employment tax. 5. Evaluate the benefits of a C corporation. There’s been a long-running debate regarding the benefits of establishing a C corporation over an S corporation. Generally, an S corporation allows you to avoid being taxed twice as earnings realized at the corporate level flow through to your personal return. For most businesses, this is probably the most advisable default. But for some, the C corporation structure may offer comparable advantages. A C corporation gives you the ability to make use of tax-free employee fringe benefits not offered to S corporations, such as meal expenses; medical, disability and long-term care insurance; and even tuition reimbursements. In some instances, it may even make sense to combine corporate structures for the biggest tax benefits. Don’t be afraid to take legal measures to reduce your tax burden. Tax deductions, tax credits, tax-free reimbursements, corporate structures and more are all part of the tax code. As long as you follow the letter of the law, keep good records and have good counsel from a competent tax professional, as I do, you should be able to keep more of your money where it belongs: in your pocket. Source: Kiplinger.com

Given the high cost of many prescription drugs, you sometimes are better off paying a lower cash price instead of using insurance. Why? Because, in some cases, the Medicare co-pay can be higher than the out-of-pocket expense for the same medicine, especially if you can use a discount coupon. The strategy drew attention recently because of a new law that bans “gag clauses,” which had prevented pharmacists in some states from letting customers know about a lower price for their drugs if they paid cash or didn’t use insurance. The clauses had been regularly included in pharmacy contracts with insurers. The ban takes effect immediately for private insurance and is effective January 1, 2020, for Medicare Advantage and Part D prescription-drug plans. If you know to ask about a lower price, the pharmacist is permitted to tell you, even before the ban starts (see New Laws Lift 'Gag Clauses' on Pharmacists). But what you may not realize is that if you have Medicare Part D or Medicare Advantage, and you pay the lower cash price at a pharmacy in your plan, the money you pay can count toward your out-of-pocket expenses. You will have to submit documentation to your Part D or Advantage plan, and you will be credited up to the amount of the co-payment or the co-insurance you would have paid under your insurance, says Julie Carter, senior federal policy associate at the Medicare Rights Center. People definitely are not aware of this policy for the most part,” Carter says. “Still, all of the news around gag clauses and the cash price could mean people need to know this information more than before.” Why It Matters Having your out-of-pocket costs count under Medicare is important because the expenses you incur count toward getting you out of the coverage gap known as the doughnut hole. For 2018, once you and your plan have spent $3,750 on covered drugs, you’re in the doughnut hole. In the gap, you pay 35% of the costs of brand-name drugs and 44% of the cost for generics. Once you exceed $5,000 in out-of-pocket spending, you’re out of the coverage gap, and you automatically get “catastrophic coverage.” You face only a small co-insurance or co-payment of about 5% for covered drugs for the rest of the year. The coverage gap changes in 2019 (see below). Making sure your cash outlays for a drug count toward your total out-of-pocket costs can help you exit the coverage gap more quickly. Some Medicare beneficiaries hear about the policy only if their pharmacist happens to know and shares the information, says Leslie Fried, senior director for benefits access at the National Council on Aging. Though slightly hard to find, the policy is included in the Medicare Prescription Drug Benefit Manual at cms.gov (here's a link to the policy; go to the chapter titled "Direct Member Reimbursement"). Call your Part D or Advantage plan to confirm it will count your expenses and to get information on the necessary documentation, Fried says. You also should keep all your receipts. Then be sure to follow through and submit your documentation. “It will require you to jump through some hoops,” Fried says. Doughnut Hole in 2019 Initial Coverage Period. You pay up to your annual deductible (the standard Part D deductible is $415). Then you pay 25% of prescription-drug costs up to $3,820. Coverage Gap for Generics. For 2019, the doughnut hole closes for brand-name drugs -- you pay 25% of those costs until reaching catastrophic coverage. But the coverage gap remains for generics -- you pay 37% of those costs while in the coverage gap. Exit the Gap. Once out-of-pocket costs total $5,100 in 2019, you exit the coverage gap. Catastrophic coverage kicks in, and you now pay the greater of 5% of drug costs or $3.40 for generics and $8.50 for brand-name drugs. Source: Kiplinger.com