Viewing posts categorised under: Personal Finance
Coverdell ESAs: The tax-advantaged way to fund elementary and secondary school costs
Personal Finance

With school letting out you might be focused on summer plans for your children (or grandchildren). But the end of the school year is also a good time to think about Coverdell Education Savings Accounts (ESAs) — especially if the children are in grade school or younger.

One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private school tuition.

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Now’s a great time to purge old tax records
Personal Finance

Whether you filed your 2016 tax return by the April 18 deadline or you filed for an extension, you may be overwhelmed by the amount of documentation involved. While you need to hold on to all of your 2016 tax records for now, it’s a great time to take a look at your records for previous tax years to see what you can purge.

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Nebraska Real Estate Tax Protests

Screen Shot 2016-05-06 at 11.33.00 AMReal estate owners in the State of Nebraska, with few exceptions, are responsible for real property taxes on a percentage of the value of their properties. The taxable value of each parcel of property in Nebraska is determined each year by the office of the county assessor for the county in which the property is located. State law instructs county assessors and their offices to place valuations on each property based on the fair market value of the property.

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Why making annual exclusion gifts before year end can still be a good idea
Estate Planning


A tried-and-true estate planning strategy is to make tax-free gifts to loved ones during life, because it reduces potential estate tax at death. There are many ways to make tax-free gifts, but one of the simplest is to take advantage of the annual gift tax exclusion with direct gifts. Even in a potentially changing estate tax environment, making annual exclusion gifts before year end can still be a good idea.

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A brief overview of the President-elect’s tax plan for individuals
Personal Finance


Now that Donald Trump has been elected President of the United States and Republicans have retained control of both chambers of Congress, an overhaul of the U.S. tax code next year is likely. President-elect Trump’s tax reform plan, released earlier this year, includes the following changes that would affect individuals:

• Reducing the number of income tax brackets from seven to three, with rates on ordinary income of 12%, 25% and 33% (reducing rates for many taxpayers but resulting in a tax hike for certain single filers),
• Aligning the 0%, 15% and 20% long-term capital gains and qualified dividends rates with the new brackets,
• Eliminating the head of household filing status (which could cause rates to go up for some of these filers, who would have to file as singles),
• Abolishing the net investment income tax,
• Eliminating the personal exemption (but expanding child-related breaks),
• More than doubling the standard deduction, to $15,000 for singles and $30,000 for married couples filing jointly,
• Capping itemized deductions at $100,000 for single filers and $200,000 for joint filers,
• Abolishing the alternative minimum tax, and
• Abolishing the federal gift and estate tax, but disallowing the step-up in basis for estates worth more than $10 million.
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Using Roth IRAs to Help Your Kids Save
Personal Finance

Franklin eyes and coin ridgesRoth IRAs (Individual Retirement Accounts) turned eighteen years old this year. Established in 1998 by Public Law 105-34, the Roth IRA differs from a traditional individual retirement account in two crucial ways. First, funds invested in a Roth IRA are not tax deductible from current income; any money invested comes in the form of after-tax dollars. However, these investments will grow tax free once in the Roth IRA, and can be withdrawn tax-free after age 59 ½ (if the Roth IRA has been owned for more than five years).

While many taxpayers think of Roth IRAs (and IRAs in general) as accounts for adults, Roth IRAs for minors can be startlingly lucrative, and are generally underutilized. Not only does saving in an IRA help to teach kids valuable saving habits, but decades of compounded returns may be one of the best gifts parents can ever give their children.

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Beware of income-based limits on itemized deductions and personal exemptions
Personal Finance


Many tax breaks are reduced or eliminated for higher-income taxpayers. Two of particular note are the itemized deduction reduction and the personal exemption phaseout.

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3 mutual fund tax hazards to watch out for
Personal Finance


Investing in mutual funds is an easy way to diversify a portfolio, which is one reason why they’re commonly found in retirement plans such as IRAs and 401(k)s. But if you hold such funds in taxable accounts, or are considering such investments, beware of these three tax hazards:

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Properly fund your living trust to shield assets from probate
Estate Planning


Many people set up a revocable, or “living,” trust to shield assets from probate and take advantage of other benefits. For the trust to work, you must transfer assets to it that would otherwise go through probate — a process known as “funding” the trust. Most people fund their trusts around the time they sign the trust documents.

Once your estate plan is complete, however, it’s easy to overlook the need to transfer later-acquired assets to your trust. If you don’t transfer them, those assets may be subject to probate and will be outside the trust’s control.

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3 strategies for tax-smart giving
Estate Planning


Giving away assets during your life will help reduce the size of your taxable estate, which is beneficial if you have a large estate that could be subject to estate taxes. For 2016, the lifetime gift and estate tax exemption is $5.45 million (twice that for married couples with proper estate planning strategies in place).

Even if your estate tax isn’t large enough for estate taxes to be a concern, there are income tax consequences to consider. Plus it’s possible the estate tax exemption could be reduced or your wealth could increase significantly in the future, and estate taxes could become a concern.

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