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Northern Star Newsletter 01/02/2018


Northern Star Newsletter 01/02/2018

Message from Jon

 


Time well….paid for?

As many of you know, I have three kids, and they are all at the ages of 16, 17, and 20. My blessing is that they are also all millennials. Yeah, we had kids before their generation even had the nickname! In this period of their lives, my wife and I find that our roles have changed from “parent” to “mentor, coach, keepers of the watch, etc.”.

Normally, I am railing against the millennials and their expectant, entitled attitudes, which especially include my own kids on any given day as well.

Between a business to run, employees to manage, tasks to complete, and staff to accommodate, my wife and I often catch ourselves coming and going. Just last night, I was running to grab our youngest from “the boys’” house while my wife was running to pick up my oldest from her job and bring home dinner. We ate out of the box it came in!

Earlier that day, we took our kids all over the place, from the mechanic to a friend's house, apartment to mall, and so on. When we found ourselves in the same room together, we just stared at each other with a look of exhaustion and surprise at seeing the other in the same room. At 4 pm we finally closed on our rental house after having two previous attempts fall through, giving way to the old-fashioned saying of “third time’s the charm.”

Afterward, we were exchanging pleasantries with our agent, and she asked me how I felt and if I had regretted not doing this the “for sale by owner” way. I thought for a second, then said, “You do what you do, and I do what I do. I could have done the ‘for sale by owner’ thing but realized that time has its price. Paying you your fee allowed me to do what I do better and more effectively which ultimately allows everyone to make more money and be much, much happier.” At that moment, it dawned on me that the way you think separates you from others, that beliefs create thoughts and thoughts create actions which give way to outcomes. The correct thoughts pave the way for the best outcomes.

Some get what I am saying, and some will simply dismiss it as rubbish and move on down the line. Time is money, and how you choose to spend it will shape and determine your future. You can “do it yourself,” which is the lowest price per hour you can put on your time, or you can pay someone else, which is the highest price you can put on your time. Either way, every minute of every hour has a price attached to it.

Until we speak again, enjoy your New Year’s Celebrations!

Jon

Greetings!

 

While much of the political fire and fury from Congress' tax plan debate has settled, some of the economic smoke still lingers as financial analysts and private investors plot their way through the new $1.4 trillion law's long-range ramifications.[1]

 

President Donald Trump signed the historic tax bill into law December 22 following a firestorm of partisan exchanges in the last few weeks that painted near apocalyptic visions if the bill either passed or failed. Republican pundits hail the sweeping tax bill as Trump's first major legislative victory in office.[2]

 

American taxpayers are "going to start seeing the results in February. This bill means more take-home pay. It will be an incredible Christmas gift for hard-working Americans. I said I wanted to have it done before Christmas. We got it done," Trump said.[3]

 

The U.S. House of Representatives voted 224-201 December 20 in what was labeled by USA Today as an "unusual do-over vote"[4] to approve the bill following the U.S. Senate's 51-48 vote the same day, which included several minor changes from an earlier House version. The House voted 24 hours earlier to approve the tax plan's first version.

 

One of the 3 provisions Senators removed from the House version allowed families to use tax-advantaged 529 accounts for home-schooling expenses.[5]

 

The other 2 provisions[6] involved the law's title and excise-tax conditions colleges and universities can use for their endowments.[7]

 

The law slashes the corporate tax rate from 35% to 21% and gives business owners a 20% deduction on business income.

 

For taxpayers, the law nearly doubles the standard deductions to $12,000 for individuals and $24,000 for couples, which means itemizing deductions may help lower the standard tax load.[8]

 

The new tax brackets are 10%, 12%, 22%, 24%, 32%, 35% and 37%, which are slight decreases from previous categories. However, many workers will move into lower tax brackets under the new law. A couple making $76,000, for example, would pay 12% in income taxes as opposed to 25%.

 

 

 

What Does the New Plan Mean for Individual Investors?

 

The new tax law leaves the investment world mostly untouched and perhaps better positioned to take advantage of a rosier and potentially more robust marketplace.

 

Favorable rules for 401(k)s, IRAs, and other retirement accounts remain intact.[9]

 

The law, however, prohibits taxpayers from reversing Roth IRA conversions for a certain amount of time, which were used by account holders if investment values declined. Americans don't have to pay income taxes on Roth IRA withdrawals.[10]

 

Although the estate tax wasn't eliminated, the plan raises the federal exemption from $5 million to $11 million per person and to $22 million per couple.[11]

 

The plan also boosts the alternative minimum tax (AMT) from $50,600 to $70,300 for individuals and from $78,750 to $109,400 for married couples filing jointly. The AMT's aim was to prevent high earners from skirting full income tax payments by increasing the number of deductions. The AMT, a mandatory alternative to the standard income tax, takes effect when taxpayers' income reaches certain levels.[12]

 

Sole-proprietorships, partnerships, and S-corporations would pay taxes at individual rates, but be allowed to use the 20% income deduction. This provision would not apply to high earners making more than $315,000 and filing jointly as couples.

 

What Should I Do Now?

 

Take a look at previous years' tax filings to determine the differences in your tax situation.[13] If it appears your tax rate may drop or your ability to itemize changes, you may want to consider making changes to future contributions - such as charitable donations - or deductions, which may include medical expenses.

 

Retirees will benefit from the increase in the standard deductions for charity. To gain the most advantage, experts suggest doubling donation sizes but give less frequently. For example, by giving more in a single year and then skipping the next year, taxpayers would have a higher amount to write off on their taxes. Financial professionals also point to donor-advised funds rather than donating cash.[14]

 

Retirees will also have to monitor their income (withdrawals from their retirement accounts, which are taxable) to avoid moving into a higher tax bracket.

 

Retirees approaching 70½ in 2018 may want to start taking early distributions if they have high balances in their retirement accounts to avoid landing in higher tax brackets.

 

We hope you found this report useful. We strive to keep you abreast of the most recent developments in the financial industry. If you have questions, call us anytime.


Kind regards,

 

 

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

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[1] www.cnbc.com/2017/12/22/trump-signs-gop-tax-plan-short-term-government-funding-bill.html

 

[2] www.reuters.com/article/us-usa-tax/house-to-vote-again-on-tax-bill-trump-on-verge-of-win-idUSKBN1ED16V

 

[3] abcnews.go.com/Politics/president-trump-tax-bill-incredible-christmas-gift-hard/story?id=51870650

 

[4] www.usatoday.com/story/news/politics/2017/12/20/house-set-pass-tax-bill-again-and-fixes-sending-final-1-5-trillion-package-trump/968722001/

 

[5] www.bostonglobe.com/news/politics/2017/12/19/democrats-say-provisions-gop-tax-bill-violate-senate-rules-and-will-removed-forcing-house-revote-wednesday/3NgPleNoJ0mE4w5yQ3bL7I/story.html

 

[6] www.nytimes.com/2017/12/19/us/politics/tax-bill-vote-republicans.html

 

[7] www.pbs.org/newshour/politics/these-3-provisions-are-forcing-a-house-revote-on-the-tax-bill

 

[8] www.nydailynews.com/news/national/gop-tax-bill-individuals-article-1.3710628

 

[9] www.fidelity.com/viewpoints/personal-finance/tax-proposal-details

 

[10] www.rothira.com/roth-ira-conversion-rules

 

[11] wtop.com/business-finance/2017/12/4-changes-tax-bill/

 

[12] www.thebalance.com/alternative-minimum-tax-amt-who-has-to-pay-3305784

 

[13] www.fidelity.com/viewpoints/personal-finance/tax-proposal-details

 

[14] www.morningstar.com/news/market-watch/TDJNMW_20171220509/update-5-ways-the-tax-bill-will-affect-your-retirement.html