04-26-2018 Columns

Take steps to control your investment taxes Tax season is finally over. Of course, how much you pay in taxes depends on a variety of factors, many of which you can’t control. But you might give some thought to how you can manage your investment-related taxes. Here are some suggestions to consider: Contribute to your employer’s retirement plan. If your employer offers a 401(k) or similar plan, such as a 403(b) or 457(b), contribute as much as you can afford. The more pre-tax dollars you put in to your retirement plan, the lower your taxable income. Your employer also may offer a Roth 401(k) option, under which you invest after-tax dollars, so your annual income won’t be lowered and your withdrawals will be tax-free. Contribute to an IRA. Even if you have a 401(k) or similar plan, you may still be eligible to contribute to an IRA. With a traditional IRA, your contributions may be fully or partially deductible, depending on your income level; with a Roth IRA, contributions are not deductible, but your earnings can grow tax-free, provided you’ve had your account at least five years and you don’t start taking withdrawals until you’re 59-1/2 years old. Follow a “buy-and-hold” strategy. You can’t control the price movements of your investments, but if you do achieve gains, you can decide when to take them – and this timing can make a substantial difference in your tax situation. If you sell investments that you’ve owned for one year or less and their value has increased, you may need to pay capital gains taxes at your personal income tax rate, which, in 2018, could be as high as 37 percent. But if you hold investments for more than one year before selling them, you’d be assessed the long-term capital gains rate, which is 0, 15 or 20 percent, or a combination of those rates. Consider municipal bonds. If you’re in one of the higher tax brackets, you may benefit from investing in municipal bonds. The interest on these bonds is typically free of federal taxes, and possibly even state and local taxes. Interest from some types of municipal bonds may be subject to the alternative minimum tax (AMT). However, because of the new tax laws, the AMT exemption amounts were increased significantly. You might be wondering what these new laws mean to investors. In terms of your regular investment activities, the effect might not be that significant. The tax brackets for qualified dividends and capital gains – such as those realized when you sell stocks – will remain about the same. This means that most investors will continue to pay 15% to 20% on long-term capital gains and dividends. Consequently, the new tax laws shouldn’t really affect you much in terms of your decisions on buying and selling stocks or investing in companies that may pay dividends. Of course, it’s still a good idea to consult with your tax advisor on how the totality of the new laws will affect you. Ultimately, your investment decisions shouldn’t be driven only by tax implications – nonetheless, it doesn’t hurt to take steps to become a tax-smart investor. This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Michigan’s 2018 fishing license season underway Every year, fishing on Michigan’s abundant waterways contributes billions of dollars to our economy. I encourage Southwest Michigan families and out-of-state visitors to get out and enjoy some of the world’s best fishing on both inland and Great Lakes waters. It’s fun, relaxing and helps preserve our great outdoors. With spring here, now is the time to get a new fishing license. Michigan’s 2018 fishing license season kicked off on April 1. All 2018 fishing licenses are valid through March 31, 2019 and are good for all species. Fishing licenses can be purchased online 24 hours a day, seven days a week at www.mdnr-elicense.com. Anglers can also visit a local license retailer or Department of Natural Resources (DNR) Customer Service Center to buy a license in person. The DNR has also developed an electronic license that now allows individuals to display electronic copies of their fishing licenses on their smartphones. There are several fishing regulation changes this year, and I encourage everyone to get to know all fishing rules before heading out. Anglers can use the 2018 Michigan Fishing Guide for helpful information, including images of popular fish and details on current regulations. The guide is available where fishing licenses are sold or online at www.michigan.gov/dnrdigests. The online version is kept up to date and is always available for download. I hope everyone gets a chance to experience the joy of fishing. It is truly one of the things that make Michigan such a great place to live. As always, I look forward to hearing your comments and feedback on the important issues facing Michigan. You can contact me at 517-373-6960.

More help on the way for those fighting the opioid epidemic Last week, the U.S. Department of Health and Human Services (HHS) announced that Michigan will receive $16.3 million this year as part of the second round of grants to fight the opioid epidemic. I worked to include these Opioid State Target Response (STR) grants as part of the 21st Century Cures Act, a bill that I sponsored and was signed into law. Just last year I applauded the first round of funding from HHS and last month the president signed into law a government funding bill that provided $4 billion to help address prevention, treatment, and enforcement issues as part of the opioid epidemic. Clearly, we’ve made progress in funding critical opioid prevention and treatment programs as well as assisting law enforcement efforts – but clearly more work remains. The grants are to