Asset Planning, Inc Blog

The latest from the team.

Tax Reform: Summary of Changes

President Trump signed the tax reform bill this morning. Most provisions are set to take effect in 2018, but many of those are also set to expire or sunset in 2025. Here's a summary of what we think are the major changes that will affect our clients. We will have a more in-depth analysis and summary in our year end newsletter.

1. Reductions in individual tax rates. The bill retains the current structure of seven investor tax brackets, but lowers five of them. It also includes the sunset provision, meaning it's a temporary arrangement from 2018 to 2025.
Here's the breakdown of the new vs. current marginal tax rates:

Current Marginal Tax Rate

Proposed Marginal Tax Rate

Income Level (Single Filers)

Income Level (Couples Filing Jointly)

10%

10%

$0 -- $9,525

$0 -- $19,050

15%

12%

$9,525 -- $38,700

$19,050 -- $77,400

25%

22%

$38,700 -- $82,500

$77,400 -- $165,000

28%

24%

$82,500 -- $157,500

$165,000 -- $315,000

33%

32%

$157,500 -- $200,000

$315,000 -- $400,000

35%

35%

$200,000 -- $500,000

$400,000 -- $600,000

39.60%

37%

$500,000 and up

$600,000 and up

2. Reduction in corporate tax rate to a maximum rate of 21% (a reduction from 35%). Also, corporate income earned abroad and brought back to the United States will be taxed between 8 and 15.5%, instead of the current 35%. These are permanent reductions.

3. Standard Deductions increasing nearly 90%. For married couples filing jointly, the standard deduction rises to $24,000 from $12,700; for single filers, it moves to $12,000 from $6,350.

4. Additional changes to Itemized Deductions. These vary, and some might be more impactful than others.

  • Personal exemption ending, but child tax credit increasing. The bill ends the personal exemption of $4,050 for you, your spouse, and your dependents; it doubles the child tax credit to $2,000 per dependent child under age 17.
  • Limits to state and local taxes ("SALT"). Under the bill, you may only deduct up to $10,000 in state and local taxes, including sales, income, and property taxes. This deduction was not previously subject to limitation.
  • Caps on mortgage interest. The bill allows mortgage interest deductions for current homeowners, but caps the interest deduction at $750,000 in mortgage debt for homes bought in 2018 and beyond, down from the $1 million limit in place now. It eliminates deductions for interest on home-equity loans, as well as deductions for moving expenses and employer-provided expense reimbursements (except for members of the military).
  • Expands medical deductions. Current law allows for deduction of medical expenses over 10% of adjusted gross income (AGI). The bill lowers the threshold to 7.5%.

5. Changes to estate planning.  The bill doubles the estate tax exemption to $10 million, but it's also indexed for inflation after 2011. The bill also calls for doubling the value threshold on the 40% levy on estates worth nearly $11 million for individuals and $22 million for couples. The estate tax exemption also has the sunset provision, meaning that the bill calls for a reversion back to current exemption amounts in 2026.

6. Charitable deductions. Although the current tax deductions stay in place, the doubling of the standard deduction to $24,000 essentially raises the threshold on deductibility. Taxpayers will have to itemize donations to get the benefit.

      From all of us at Asset Planning, Inc. we wish you a wonderful Holiday Season!


*Asset Planning, Inc. does not provide tax advice. We suggest clients consult with a tax-planning professional with regards to their personal circumstances.

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Bitcoin Mania

There is no denying it, Bitcoin is all anyone is talking about right now. We know that a lot of you have questions as to what it is, how it works, the risks etc. I came across an article this morning on Seeking Alpha written by Victor Dergunov that I feel has been the most comprehensive in explaining exactly what Bitcoin is and the risks involved when investing in it. I thought I'd share it with you to give you some insights on the mysterious cryptocurrency that is taking over the headlines. Follow the link below to read the article.

https://seekingalpha.com/article/4132006-bitcoin-big-short-coming?lift_email_rec=false&utoken=896c83f5aaeb6c09476c6308df1c6ef8

Have a great weekend!

Samantha

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Pet Donations Needed for Disaster Relief

Seeing the news about all of the displaced animals due to the hurricanes and wild fires has deeply touched our hearts. We have decided to try to do our part by collecting donations for local relief efforts as well as Puerto Rico. The rescue organizations are in desperate need of medications and new or gently used pet supplies. If you would like to donate to this cause feel free to drop off any of the items listed below at our office from now until Jan 15, 2018. 

MEDICATIONS- They accept dog, cat and people medications. Expired medications are fine too.
Antibiotics (ANY)
Especially: Clavamox,
Baytril, Albon, Biaxin,
​Doxycycline, Ciprofloxin,
Orbax, Augmentin,
Amoxicillin, Cephalexin,
Clindamycin, Erythromycin,
Azithromycin, Fungal Meds,
Heartguard, Nexgard,
Ivermectin, Dewormer
Lixotinic, ​Frontline, ​Revolution
Capstar, NutriCal
Ear & Eye Infection Medications

Pain & Anti-Inflammatory Medications

We will be shipping the medications directly to Puerto Rico.

New or gently used items such as:

Dog beds
Grooming supplies
Leashes and collars
Dog toys
Dog sweaters
Dog crates
Dog treats- hard and soft
Dry or canned dog/puppy food
Dog carriers and crates
Poop bags
Stainless steel bowls

These items will be dropped of at a local SPCALA location to be distributed by DART (Disaster Animal Response Team) where they are needed the most.


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Two-Step Verification

Two-Step Verification is a process that requires you to use two methods of authentication before logging into an account. You'll log into your account with the password that you set up and then they will either text, call or email you a code to verify that it is you logging in. There's also an option to remember the device, so if you're on your personal computer that you trust you won't have to get a new code each time. This may seem like a little bit of a hassle but it adds an extra layer of security to your accounts and we think is so important to set up, especially with so many data breaches happening every day. I personally have it set up on all of my accounts and I feel confident knowing that I will receive a notification letting me know that my account was logged into on a different device.

If you need any help setting this up on your accounts feel free to call me to make an appointment and I will be happy to help you.

Enjoy your weekend,

Melani

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Smartphone Security

Most of us live on our smartphones. Our whole lives are connected to them, from social media to online banking and more, so keeping them secure is more important than ever. I found a great article I wanted to share with you that has some tips on keeping your smartphone safe.

https://socialnomics.net/2017/05/10/7-best-practices-for-ensuring-smartphone-security/

I hope you find these tips useful!

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Notary Services

Don't forget that if you're ever in need of notary services, we offer them free to our clients. Give me a call at 714-827-5794 to set up an appointment.

Have a great weekend!

Melani

 

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Go Bag for Emergencies

After witnessing the devastation from the recent hurricanes and California wildfires I thought it was a good idea to send out a reminder about having a “go bag” or emergency kit ready. In the case of the wildfires the residents had little to no notice. This gave them no time to collect any of their belongings for themselves or their pets. Having this “go bag” ready and easily accessible is extremely important. On the FEMA website I found a comprehensive list of what you should have in your emergency kit as well as some additional tips to help you prepare for an emergency.It is attached below. Take some time to look over the list and get your "go bag" ready.

Emergency_Kit_Checklist-_FEMA.pdf

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Healthcare Emergency Planning for Adult Children

As I mentioned in the last newsletter, my daughter is now a college freshman. We also recently celebrated another milestone with her, the 18th birthday. Though, Ashley is technically an adult, I know she has some years ahead before she is truly an adult with real responsibilities and maturity. With that in mind, I knew I didn’t want to be caught in an emergency situation where I was unable to help my daughter because of her “legal” adulthood. I once experienced a medical emergency nightmare with my unmarried adult brother whom was hospitalized in an incapacitated condition. Due to HIPPA privacy laws and no established health care directives, we could not see him, get any information, nor make any decisions about his care.

To be prepared in a healthcare emergency, a HIPPA release and Healthcare Directive are two forms that can be prepared in advance by your adult children or any adult. A signed HIPAA release permits healthcare providers to disclose your health information to anyone you specify. A stand-alone HIPAA form does not have to be notarized or witnessed.

An Advanced Healthcare Directive form allows you appoint an “agent” to make medical decisions on your behalf in case you are incapacitated and cannot make such decisions for yourself. You can also specify your wishes regarding life support. Each state has different laws and forms governing these legal documents. If your child is out of state, complete the away and home state forms. Here are the links to the state of California’s standard forms. Also be sure to check with your insurance company or Medical Provider if they have their own form to sign as well. I know Kaiser does.

https://oag.ca.gov/sites/all/files/agweb/pdfs/consumers/ProbateCodeAdvancedHealthCareDirectiveForm-fillable.pdf

http://www.dhcs.ca.gov/services/Documents/Authorization%20for%20Release%20of%20Protected%20Health%20Information%20DHCS%206247.pdf

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Credit Freeze

It seems like everyday we are hearing about yet another major company being hacked and our personal information getting exposed. It's frightening to think of all the harm that could come from a criminal using that information to wreck havoc on your finances. If you haven't done so already, putting a freeze on your credit is something that you should strongly consider. A credit freeze restricts companies from seeing your credit report which would prevent them from opening new accounts in your name. If you want to open a new account or apply for a loan you will have to call and have the credit freeze lifted to do so. This may seem like an inconvenience but it's definitely better than trying to clean up the financial mess that fraudulent activity creates.

To place a freeze on your credit you will have to contact the credit reporting agencies directly at the numbers below:

Equifax 800-349-9960

Experian 888-397-3742

TransUnion 888-909-8872

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Medicare Reminders

With today being the first day of autumn I thought it would be a good time to send out a reminder about Medicare open enrollment that happens every year from October 15th- December 7th. If you would like to make any changes to your Medicare plan now is the time to do it. If you are currently working, most companies also have their open enrollment times as well and it is a great time to review your current benefits. Be sure you are taking advantage of a flexible savings account for healthcare or childcare. Also, you may want to increase your 401k contributions because of a recent raise in pay. Those are just a couple things to consider when reviewing your benefits.

Another important reminder is if you've received a medicare premium increase due to a higher annual income but you have had a major lifestyle change that has decreased that income you can appeal the higher premiums. Life changing events such as retirement, divorce, death of a spouse, or work reduction are a few examples of a basis for an appeal.

Here is a link to an article that gives you step by step instructions on how you can make an appeal.

https://www.hhs.gov/about/agencies/omha/the-appeals-process/part-b-premium-appeals/index.html

 

 

 

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