The U.S. stock market, as well as most of the global stock markets, have entered into a “Correction”. A Correction is a series of stock market declines over several days or weeks leading to a 10% to 20% decline from a stock market high. The stock market typically recovers from a Correction in a relatively short time of 3 to 12 months. As of today, we do not see any system-wide issue so large as to cause the market to slide further into a “Bear Market” which is a decline of 20% from a stock market high. Our insight is also supported by strong consumer spending and business profits as further explained in The “Heat Map” section.
Starting in 2018, the “kiddie tax” is changed substantially. First, a child’s kiddie tax is no longer affected by the tax situation of his or her parent or the unearned income of any siblings – this makes tax return preparation simplified. Second, the taxable income of the child who must file a tax return is taxed using the Trusts and Estates rates – which could result in a higher tax on child’s unearned income like interest and dividends.
The new tax law knocks out the itemized deduction for interest paid on home equity loans. That’s right, a taxpayer may not claim an itemized deduction for mortgage interest paid or accrued on any home equity debt of any qualified residence of the taxpayer for tax years beginning in 2018 through 2025.
Tax Tips you can use
Mortgage interest related to home office. A self-employed taxpayer who reports his or her trade or business on Schedule C of Form 1040, and who uses a portion of his or her residence as a qualified home office will continue to be able to deduct the share of mortgage interest related to the home office, without regard to the mortgage limitation. (Note: The home office deduction is subject to limitation, based on the income earned by the taxpayer in the related activity).
The annual limit for gifts (to family members or other individuals) in 2018 has been raised to $15,000. Such gifts are free of income taxes for both the person giving the gift as well as the person receiving the gift.
Tax Tips you can use
Speaking of gifts, one the best gifts to consider is a gift to your child to jump start your child’s Roth IRA. The maximum Roth IRA contribution equals $5,500 per year. A gift of $11,000 would fund both 2017 and 2018 Roth contributions. Assuming your child is age 25, this $11,000 could grow to equal $165,700 at age 65, if it averages 7% per year. The entire $165,700 can be withdrawn at that time TAX-FREE.
Disclosure: 7% rate of return is used for illustrative purposes only. There is no assurance this rate of return will be achieved. Investments are not FDIC insured and may lose money.
You are going to receive a raise in your February paycheck. The IRS is expected to post the new income tax withholding tables this month for your employer to use for payrolls in February. The new withholding tables reflect the lower tax rates stemming from the new income tax law.
Section 529 qualified tuition plans are modified BY THE NEW TAX LAW to allow the plans to distribute no more than $10,000 in tuition expenses incurred during the tax year for designated beneficiaries enrolled at a public, private, or religious elementary or secondary school.
The FED has been raising interest rates. But, banks have been slow to raise interest rates in the same manner on their checking accounts, savings accounts and CD’s. There is an alternative which is becoming much more attractive. Money market funds now yield between .50% to 1.00% and by the end of next year could be yielding 1.25% to 2.00%.
As rates rise, it pays to shop for higher rates for your savings.
You may be entitled to appeal higher Medicare premiums for Parts B and D of Medicare. You may have recently received a nasty surprise in the form of a Medicare letter notice. This letter puts you on notice your premiums will be higher in 2018 (and your Social Security benefit will be lower since these Part B and D premiums are deducted from your Social Security) because your income exceeds certain levels in 2016.
You can appeal the Medicare notice if you have experienced a “life-changing event” that caused your income to decrease in 2017 from 2016. The definition of life-changing event is (1) retirement or reduced work hours or (2) marriage or (3) divorce or annulment or (4) death of a spouse or (5) loss of income producing property due to natural disaster or (6) loss of a pension.
However, a one-time boost in 2016 income due to sale of a vacation home or large portfolio distribution, for example, would not qualify as a life-changing event – in these cases your Medicare parts B and D premiums will be increased for at least one year.
If you qualify for the appeal, click here to obtain the form needed to make an appeal.
Charles Schwab & Co. and Valley National want you to have the highest level of confidence when you do business with Charles Schwab. So, Charles Schwab offers you this simple guarantee: Schwab will cover 100% of any losses in any of your Schwab accounts due to unauthorized activity.
The highest levels of security are only possible when we work together. To ensure your protection under this guarantee, it is your responsibility to:
- Safeguard your account access information. If you share this information with anyone, Schwab will consider their activities to have been authorized by you.
- Report any unauthorized transactions to us as quickly as possible. If you suspect you are a victim of fraud, please contact us and Charles Schwab immediately at 888-3-SCHWAB.
You do not have to do anything to get this protection. Schwab automatically provides this protection.
Here is how this guarantee works. If you suspect you have been a victim of unauthorized activity in your Schwab account, notify Valley National and Schwab at 888-3-SCHWAB immediately. Schwab will promptly review your claim and assist you in taking measures necessary to protect you from further loss. You will be required to complete a notarized affidavit of fraud and to identify items of unauthorized activity.
The guarantee applies to all Schwab Bank products (bank accounts and loans). If you suspect you have been a victim of unauthorized activity in your Schwab Bank account, notify Schwab at 888-3-SCHWAB immediately. If an unauthorized advance is made on your Schwab Bank loan account, you will not be responsible for repaying the amount of the unauthorized advance or any related interest or transaction charge.
This guarantee applies to all individual retirement accounts held at Schwab including those accounts managed by independent investment advisors doing business with Schwab Advisor Services like Valley National Advisers. However, keep in mind that transactions initiated by Valley National Advisers, as your investment advisor, or other people to whom you have granted authority to act on your behalf are considered authorized and not covered.
The Guarantee does not apply to 529 college savings plan accounts at Schwab because the assets are maintained by or held at a third party and Schwab cannot be responsible for any failure of those third parties to safeguard your information or protect your account.
Valley National commits to providing our clients with the best our industry has to offer. For example, Valley National’s client portal, which we brand-name “eVault”, received the 2017 WealthManagement.com Industry Award for best client portal. We are honored to bring this Tamarac developed service to you – without charge.
What’s a “client portal”? It serves as a digital hub of communication between Valley National advisors and their clients, providing a comprehensive view of your financial picture. It is integrated with top custodians, including Schwab, TD Ameritrade, American Funds, and Fidelity, and offers advanced security features. In addition, clients access the portal through single-sign-on from the Valley National website where they can view their portfolio and performance reports.
Valley National eVault client portal also features:
Net Worth Reporting – Net worth reporting provides investors with a complete picture of their finances, including their assets, liabilities, 401(k) and other held-away accounts in their client portal. Investors can leverage this information as they work with their Valley National advisor to achieve their financial goals.
Document Vault – The eVault offers advisors a secure, convenient and efficient way to exchange files between you and Valley National, a necessity in today’s increasingly interconnected, digital world. The document vault is a secure cloud-based file storage system with an intuitive interface.
Goal-Based Reporting – Recognizing that clients want to have more goal-based planning discussions with their Valley National advisor, the portal offers deep two-way integrations with MoneyGuidePro®, which give Valley National advisors and investors the ability to view financial planning data and take action.
Budgeting Tools – Coming in 2018, personal finance budgeting tools will equip clients with the additional resources they need to benchmark their progress and help achieve their financial goals.
Your eVault client portal has already been created. If you are interested in getting this working for you, just email your Valley National team to get you up and running with very little effort.