All posts by emerge

4 Ways to Save on your 2015 Taxes (Act by Dec 31!)

Regardless of your financial situation, if you know that you will need to file taxes for 2015 it is a good idea to start planning ahead during that tax year.  Most financial planners will recommend year round tax management, however, if you have not done so, it is not too late to take action before the end of the year.

 

The month of December is a time where you can assess your tax situation and take steps to ensure that you do not pay more tax than necessary when you file, including:

 

  1. Looking for losses in your investments and selling.
    Even if you don’t quite consider yourself an investment shark, you can benefit from “tax loss harvesting”. This is where you review your investments, such as mutual funds and stocks, to see if there are any which would incur a loss if you were to sell them now.  You can then deduct this loss dollar for dollar offset your income or other taxable gains. The investments can be re-purchased after 30 days.  Use this strategy carefully and with the help of a tax professional, and you can save a lot in taxes.
  2. Contributing to charities.
    Make a financial contribution, donate clothing or household items, or make other charitable contributions to an IRS qualified charity, and you can deduct the fair market value on your tax return. Only contributions over $250 require a bank record or communication from the charity, but it is a good idea to save all receipts.
  3. Deferring your income.
    You only pay for income in the year that it was received. If you are a salaried employee and you will receive a bonus for the year, find out if you can defer receiving that bonus until early 2016. If you are a business owner or otherwise self-employed, consider delaying billings until late December so that they are received in January. You can still deduct the costs of running your business, but you will not need to claim your income until 2017.
  4. Investing in retirement plans.
    401(k), 403(b), 457(b) plans are corporate and government plans where you contribute your income before it is taxed. You must contribute in the same tax year for which you are filing.  Don’t ignore these plans if your employer offers them. Similar plans are available for the self-employed such as a Solo 401K, SEP IRA or a Keogh plan.Individuals or business owners can also contribute post-tax dollars to an IRA, although this does not need to be done by December 31.  You have until April 15 of 2016 to receive the tax benefit of an IRA contribution.

 

Bonus #5:  This is not a planning tip, but a reminder… Don’t forget that the cost of tax preparation is a tax deduction that you can claim.  You can also deduct the cost of any tax related consultations, seminars, books, and so on.

 

Of course, everyone’s situation is unique, and there are numerous options available depending on any given situation.  A qualified tax specialist or financial planner can help you to assess your situation and make the right decisions and moves to mitigate your tax liability.

 

Contact me G_hilliard@emergefinancial.com at to find out how I can help you to lower your tax bracket and save money when you file in 2016.  Please also explore emergefinancial.com to learn more about the financial services that I offer and how I can help you to better ensure your financial future.

 

About Me

I am a financial advisor and investment guidance counselor with over 10 years of experience in providing professional and confidential financial services with integrity, care, and a personal attention to ensure that I meet all of my client’s financial needs.

 

I have a Bachelor of Arts degree from California State University, Hayward and I am a Certified Retirement Counselor with Series 7, 63, 65 designations.  I am also a California Life Insurance Agent: #0E71420.

 

“Your future deserves a great plan.”

 

 

!!!Attention!!! Alameda County employees… Did you know I am your dedicated Deferred Compensation 457(b) plan participant financial consultant?  That’s right.  You have full access to my services, free of charge, year round! You can contact me through your department or the county treasurer’s office.  You can also attend one of my county sponsored seminars to learn more, including:

  • help and advice on gaining a better understanding of the benefits of your plan
  • goal setting
  • proper asset allocation techniques
  • retirement distribution strategies

the integration of other retirement plans (where relevant)

8 Factors to Consider in Deciding the Best Pension Payout Option for You and Your Family

If you are one of a select few whose organization still offers a Defined Benefit Plan you will be asked to make a very important decision when you “call it quits” and it is time to exercise your benefit.

A Defined Benefit Plan is a type of pension plan in which an employer/sponsor promises a specified monthly benefit in retirement.  Most companies offer you the option of either receiving lifetime monthly income (also called an annuity) or a lump-sum payment.

Annuity/Monthly Payment

Choosing the monthly payment ensures that you will receive a steady income for the rest of your life.  You may also be able to provide a lifetime income to your spouse or another beneficiary.

Lump Sum

Choosing the lump sum payment gives you flexibility.  You can choose to pay off large expenses and remove debt, invest the money on your own, or choose any of the other options that open up when you receive a large cash sum.

You may want to step back and look at the big picture.  What do you want in retirement?  Do you want the security of a steady check that could last 30 years or more?  Or, do you want access to a large sum of cash that you control at the onset of your retirement?

Next, consider the following factors as they relate to your specific situation:

  1. Your health and your spouse/partner’s health
    The lump sum may help if you think you might need cash on hand to pay medical bills. It may also be the right option if you have concerns about your longevity.

 

  1. Investment knowledge (and your spouse/partner’s), and how this may change as you get older
    The lump sum may be the right option if you are confident investing and feel secure in your ability to grow and maintain the funds for as long as you need them to thrive in retirement.

 

  1. Living expenses (current and future)
    The annuity option might be right if your living expenses are typically fixed. Don’t forget yearly expenses and incidentals such as property taxes or car and house maintenance.  Your carefully planned monthly budget will help to make sure you are aware of all expenses.

 

  1. Debt (mortgage, car, credit cards, student loans, child support payments)
    Consider the lump sum as a way to pay down big debts. Consider the annuity if your debt incurs little or no interest and you can pay it as part of your monthly expenses.

 

  1. Taxes
    Make sure that you fully understand how you will be taxed on your pension payment and how those taxes will change depending on the payout option you choose.

 

  1. Savings, reserves, and other guaranteed income (social security, pensions from past employers).
    Think about your savings and other sources of retirement income. Factor this into your retirement budget planning.

 

  1. Assets to beneficiaries
    Both options may offer you the opportunity to leave money or assets to your heirs. Again, the lump sum offers flexibility while the annuity offers stability. Make sure you fully understand if or how each option can live on as your legacy.

 

  1. Financial health of your company
    Future payments that you receive depend upon your company’s ability to make those payments. Be sure to find out what happens to your annuity payments if your company experiences difficulty or failure. Pensions have a certain level of protection granted by the federal agency, the Pension Benefit Guaranty Corporation (PBGC), which will pay a portion of the payments up to a certain limit. The pension could also be turned over to an insurance company that would manage payments.

 

Help and Advice

The tradeoffs between taking pension payments or a lump sum payment should be very carefully and thoughtfully examined as this critical decision cannot be undone.

If you find you need assistance with making an informed decision, contact Gene Hilliard (g_hilliard@emergefinancial.com) at Emerge Financial Group.