When you hear the term tax planning, what comes to mind? Do you think of the proverbial shoebox that holds all your receipts? Is tax planning just a matter of keeping track of your expenses and income? Or is it much more than that? The answer is yes! Tax planning is much more than just keeping a record of your income and expenses. It is the practice of effectively using available strategies to avoid or postpone taxes. It is theRead More
Savant offers perspective on a variety of topics. Entries range from current events to timeless insights in the world of finance and investments.
Most people dread the annual ritual of gathering all their tax documents, preparing their return, and the April 15th tax due date. Some people even choose to avoid the deadline and file an extension, prolonging the process. No matter how you approach it, your taxes will have to be filed.
The IRS has its own agenda for auditing tax returns each year. In general, here are some known areas the IRS likes to target when looking for individuals or entities toRead More
Retiring or changing employers is a big transition for most people. One way to maximize this time of change is to utilize a unique opportunity to roll your 401(k) monies from your old employer’s plan into an IRA. Doing so provides you with more flexibility and control over your retirement savings.
When leaving an employer you generally have three options for your 401(k) monies:
Leave your funds in the 401(k) plan
Take a direct distribution of the funds (penalties may apply if you
Let’s face it…summer is almost over. You can blame Earth’s axis for not standing up straight, but you’re probably too busy trying to soak up the last of the sun’s warmer rays. While relaxing pool side, check out these 10 tips to help you gear up for college this fall.
1. Call the Financial Aid Office
Did you fill out the FAFSA? Make sure your college has an updated version to ensure your financial aid is current and not delayed. Check outRead More
You may be a fan of do-it-yourself (DIY) projects. A visit to Home Depot or a search through Pinterest shows the popularity of a wide variety of DIY projects. Many folks are taking the DIY approach with their estate plan. Online document preparers offer a low-cost solution for simple estate planning. But beware of many pitfalls to this approach.
Complexities are often hard to detect.
You might not realize what complexities exist in your situation. Family circumstances, asset characteristics, net worth, andRead More
Many in the financial media tout the benefits of the early paydown of the home mortgage as one of the best financial strategies a family can implement. Unfortunately, this is one of those cases in which the rule of thumb can be completely wrong, particularly when it is not adapted for individual circumstances. Similar to consulting with a doctor before starting an exercise regimen, families should consult with a qualified financial professional before launching an accelerated mortgage paydownRead More
For charitably inclined individuals, many strategies exist that allow you to meet your philanthropic goals while creating tax savings. One strategy to consider is a Qualified Charitable Distribution, or QCD. QCDs are distributions that come directly from your IRA to a qualified charity of your choice. This type of IRA distribution is not included in the taxpayer’s AGI. QCDs became permanent with the Protecting Americans from Tax Hikes (PATH) Act of 2015, and this strategy allows individuals toRead More
You may be able to receive subsidies from the government for your health insurance premiums. In order to make health insurance more affordable, the Affordable Care Act allows eligible individuals to receive a premium tax credit if they obtain health insurance through the Marketplace.
The Marketplace is a health care exchange that was established by the government under the Affordable Care Act and is also referred to as “Obamacare.” It was signed into law March 23, 2010. This legislation requires allRead More
In early 2000 I knew I wanted to be a financial planner. It merged two of my favorite loves: working with people and math. (I loved math so much that I took classes over the summer of my teenage years so I could finish Calculus in my sophomore year of high school. I know, I know…youth is wasted on the young.) The problem was that my university did not offer a degree in financial planning, so I was on myRead More
When I first learned to drive, my father taught me how to jump start a car. When attaching the jumper cables, he instructed, always match the positive cable to the positive side, and the negative cable to the negative side. Failure to align the charge could result in serious damage to the car and a shower of sparks. The same can be said when designing your estate plan. Once your estate plan is properly drafted and signed, it is imperativeRead More
I earned my undergraduate degree in the late 1990s, a time that was truly fascinating to be taking classes in Investments. Alan Greenspan’s ominous warning of “irrational exuberance” was already fading to distant memory, and I remember one of my professors teaching us about the “New Economy” and openly questioning – in all seriousness – whether the United States would ever have another recession. The thesis was that the Federal Reserve may have become so good at feathering the monetaryRead More
It’s a tough market out there. Investors are nervous, and rightfully so! Although I’m an optimist, each day the market drops a little (or a lot!), I get a sickening feeling in my stomach. It’s not because I am invested in the stock market…I’m 31 years old and 100% in a diversified stock portfolio. I’m worried for my clients, who are my family, friends, and those with whom I have become newly acquainted. All of them are hard-working (or wereRead More
At the beginning of each tax season, the IRS releases a list called the Dirty Dozen, featuring the top tax scams for the year. Identity theft makes a repeat appearance on the 2016 Dirty Dozen. In mid-February the IRS reported that there was a surge in phishing and malware incidents as the 2015 tax season began. Identity theft is a constantly evolving threat, and it is important to stay informed about the ways you can protect yourself.
Beware of Phishing
There’s no question that we experience emotional pain and anxiety when our portfolios are losing money due to market downturns. Behavioral scientists tell us that we feel losses twice as keenly as positive returns.
But that doesn’t tell us what we really want to know, which is: other than selling at the wrong time and locking in losses, how do we make these downturns less painful?
Economist Richard Thaler conducted a stock market experiment that offersRead More
Tax season is upon us, and many investors may receive an unpleasant surprise on the 1099 forms from their investment accounts. Box 2a on Form 1099-DIV reports total capital gain distributions from mutual funds and exchange-traded funds (ETFs). These distributions represent gains realized by the funds and are taxed as long-term capital gains in the year they are paid to the investors. Translated into plain English: you have to pay tax on capital gain distributions.
Typically, activelyRead More
Whenever a lottery reaches a crazy amount, many people who are not typical gamblers start to dream and buy a ticket. I would personally argue that the wistful dreaming of a better life than the one we currently have is an unhealthy exercise. If I can afford a Toyota for my new car purchase, I don’t walk into a BMW dealership: I will like the Toyota I ultimately end up buying far less than I otherwise would have.
How often do you conduct business electronically? You may be surprised at the answer!
Any time you check your bank account online, have your paycheck or Social Security payment directly deposited, make contributions to your IRA, pay for your home utilities, make a purchase online, file your taxes, or use social media, you are sending or receiving information electronically. You have an electronic account in some form or another with almost every organization with which you transact.
Community foundations across the country are working hard to improve their local communities, but many people are not aware of how they work or the benefits of partnering with them. Here’s an example of how Savant partnered with the Community Foundation of Northern Illinois (CFNIL) in a guest blog from their president, Jon Bates.
In November, Savant Capital Management received the 2015 Best-in-Business IMPACT AwardTM, part of Schwab’s annual IMPACT Awards® program which recognizes excellence inRead More
Ben Franklin once said, “Be at war with your vices, at peace with your neighbors, and let each New Year find you a better man.” The beginning of a new year often leads us to examine our lives and find ways to battle vices.
While many of our goals for the New Year may be physical in nature, there are many parallels between our physical and financial well being. When I think of financial goals, I divideRead More
Yesterday I was in the mood for some good milk on my cereal. You know the kind: the milk that costs more but has that rich flavor. I bought some with a new box of my favorite cereal and returned home to enjoy my breakfast. The second I began to pour, I knew something was wrong. The consistency was off. I looked more closely at the label:
“buttermilk.” How could I have done that? The packaging had looked right;
This is the season of college applications. The season of campus visits, standardized testing, and early admissions. With my oldest being a high school sophomore, I should not be aware of any of this process yet. But my daughter’s email inbox has been inundated over the last several months with communications from over 100 different colleges and universities.
As her parent, I am floored by the intensity and breadth of the marketing process involved in the College Decision. I admire myRead More
Have you asked yourself where your paycheck will come from in retirement? Once taxes are considered, will it be enough to live the way you want? For most of us, starting and ending our career with the same company is a thing of the past, as are the days of pension checks funding the majority of our retirement. For better or worse, most of us now bear the responsibility for our own retirement planning and determining how our savings willRead More
My three-year-old daughter was in the checkout line at a craft store with my wife, happily dressed up for the day as a witch. She had a black dress and black hat, plus she was excitedly holding a bouquet of artificial flowers. (After all, it was a craft store!) Another mother and slightly older daughter waited in front of them in the line. The child pointed at my daughter and said in a loud voice, “Look, Mom – that girl’sRead More
When the markets decline, it’s natural to want to sell equities. It’s hard to watch your account values go down and listen to your advisor telling you to be patient. Although selling equities when they are down is a bad decision, there are things you can do to make the most of a downturn. A Roth conversion is one possible way to take advantage of declining markets.
A Roth IRA is a retirement savings vehicle that grows tax-free. Withdrawals are alsoRead More
You may recognize the phrase above, coined by the London Underground subway system. In London, “mind the gap” simply means to watch carefully as you exit the train to the platform, as there can be a gap between the surfaces. In an articleI read recently, this phrase was used in a different manner. It referred to the gap in age between millennials and baby boomers.
Did you know that by the end of 2015 millennials (peopleRead More
We have never seen instability like this before; the market is going to crash! When the Housing Bubble burst in late 2007, I was just about to get my driver’s license (some might argue that’s just as scary). When the Dotcom Bubble popped in 2000, I had just mastered multiplication and division tables. For the crash prior to that, Black Monday on October 19, 1987, my parents had not even met. Now that I invest my own money,Read More
June 26, 2015 marked a historic decision when the Supreme Court ruled that same-sex couples have a constitutional right to marry in all states (Obergefell v Hodges). This means that financial benefits available only to traditional married couples can now be enjoyed by couples of the same sex.
Prior to June 26, 2015, same-sex couples could receive Social Security benefits based on a combination of legal factors such as jurisdiction of marriage, residency, and whether there was a non-legal civil arrangement otherRead More
You have worked hard, saved and accumulated wealth, and are now entering the years when you can start benefiting from the money you’ve saved as well as government-provided benefits. There are many milestones during this time period, and it may be difficult to keep them all straight.
Here are a few highlights of what you can expect:
Age 59 ½: This is the magic age at which you gain access to all your retirement accounts, includingRead More
Our journey through life involves setting goals such as graduating from college, buying home, starting a new business, or traveling the world, and working to accomplish those goals. It’s invigorating to identify a dream and set plan in place to achieve it. The feeling of pride that comes from reaching a new milestone and realizing the fruit of our efforts is one of a kind.
Saving for retirement is a very important life goal but it canRead More
Year-end and spring tax filing seasons are popular times to focus on your finances. A mid-year check doesn’t sound like the ideal way to spend your summer, but it is a great time to take stock of your situation.
Financial health becomes increasingly important as pensions get harder to come by and the future of Social Security is questionable. Early- and mid-career Americans will need to rely on their own savings to support themselves in retirement. SometimesRead More