04-27-17 Columns

Can you free yourself of some investment-related taxes?

 Tax Freedom Day generally falls around this time each year; for 2017 it was April 23.This is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year, according to the calculations made by the Tax Foundation. So you may want to use Tax Freedom Day to think about ways you can liberate yourself from some of the investment-related taxes you may incur.

Of course, Tax Freedom Day is something of a fiction, in practical terms, because most people pay their taxes throughout the year via payroll deductions. Also, you may not mind paying your share of taxes, because your tax dollars are used in many ways – law enforcement, food safety, road maintenance, public education, and so on – that benefit society. Still, you may be able to reduce those taxes associated with your investments, leaving you more money available to help you work toward your important goals, such as a comfortable retirement. Here are some suggestions for making investing less “taxing”:

Contribute regularly to tax-advantaged retirement plans. Contribute as much as you can afford to your IRA and your 401(k) or other employer-sponsored retirement plan. Traditional IRA earnings grow tax deferred, and your contributions may be tax-deductible, depending on your income. (Taxes will be due upon withdrawal, however, and withdrawals made before you turn 59-1/2 may be subject to a 10% IRS penalty.) Your 401(k) or similar plan also provides the opportunity for tax-deferred earnings growth. Roth IRA contributions are not deductible, but your earnings are distributed tax-free, provided you don’t take withdrawals until you’re 59-1/2 and you’ve had your account at least five years.

Follow a “buy-and-hold” strategy. If you sell investments you’ve owned for less than a year, and their value has increased, you will have to pay capital gains taxes at your personal income tax rate, which, in early 2017, could be as high as 39.6%. But if you hold investments for at least a year before selling them, you’d be assessed the long-term capital gains rate, which tops out at 20%. Be aware, though, that the Trump administration and Congress seem likely to change the tax rates. Early plans call for a maximum personal income tax rate of 33%, with the top rate for capital gains and dividends either staying at 20%, or possibly being reduced to 16.5%. In any case, you’ll still come out ahead, tax-wise, by holding your investments long enough to receive the long-term capital gains rate.

Consider municipal bonds. If you are in one of the higher income brackets, you might benefit from investing in municipal bonds, which are typically used to finance public projects, such as roads, schools, airports and infrastructure-related repairs. Interest payments from “munis” are typically exempt from federal income taxes and may also be exempt from state and local taxes, depending on the state in which the bond issuer is located. Interest payments from some types of municipal bonds may be subject to the alternative minimum tax (AMT). Again, though, watch for developments from Washington, as both the Trump administration and some congressional leaders favor eliminating the AMT.

When charting your investment strategy, consider your risk tolerance, time horizon, family situation and estate plans. But investment-related taxes should also be in your strategic mix – so look for opportunities to keep these taxes under control.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

Alcohol awareness

 Drinking too much alcohol increases people’s risk of injuries, violence, drowning, liver disease, and some types of cancer; this April, during Alcohol Awareness Month, the Berrien County Health Department encourages all residents to prevent alcohol abuse in Berrien County by spreading awareness about the dangers of drinking too much.

It is especially important for parents of teenagers to be aware of the dangers of teen alcohol use. This time highlights the important role that parents can play in giving kids a better understanding of the impact that alcohol can have on their lives. No other substance is more widely used and abused by America’s youth than alcohol, making alcoholism, and related problems, a major public health problem in the United States.

Alcohol use by young people is extremely dangerous – both to themselves and to society, and is directly associated with traffic fatalities, violence, suicide, educational failure, alcohol overdose, unsafe sex and other problem behaviors, even for those who may never develop a dependence or addiction. Adolescence is a time of heightened risk-taking and as alcohol and drugs enter the picture, parents are faced with a unique set of challenges. They can simply sit back and hope their kids will “get through it,” or they can take an active role in learning about alcohol and drugs and helping their kids do the same.

Research has shown that kids who have conversations with their parents to learn about the dangers of alcohol and drug use are 50% less likely to use alcohol and drugs than those who don’t have such conversations. The Berrien County Health Department encourages parents to help their teens foster healthy and responsible attitudes about alcohol, talk openly and honestly about the risks of alcohol use, and show teens that their opinions and decisions matter.

To learn more about spreading awareness about alcohol abuse, visit the Berrien County Health Department website at www.bchdmi.org.

Help is on the way in opioid epidemic fight

 It seems like everyone I meet these days is in some way impacted by the tragic, ongoing opioid abuse epidemic. The numbers are startling and heartbreaking: The Centers for Disease Control (CDC) estimates more than 33,000 Americans died from opioid abuse in 2015, including nearly 2,000 from Michigan.

This is why I was so pleased when the U.S. Department of Health and Human Services (HHS) last week announced the first round of grants to help states and territories combat this epidemic. Here in Michigan we will be on the receiving end of more than $16 million in grant money. These grants will be used specifically for strengthening public health surveillance, advancing the practice of pain management, improving access to treatment and recovery services, targeting availability and distribution of overdose-reversing drugs, and supporting cutting-edge research.

These federal funding grants were made available as part of my bipartisan 21st Century Cures Act that President Obama signed into law at the end of 2016. We fought hard to include this $1 billion in total funding to aid in this public health crisis and I want to applaud the administration for getting this first round of funding to states in an expedited manner.

In addition to this needed funding, I’m also proud to support the new White House Commission aimed at combating drug addiction and the opioid crisis. I look forward to engaging with President Trump, the Commission, and my colleagues on both sides of the aisle as we continue working together to end this scourge.

The opioid epidemic will not come to an end without real solutions. These grants provide a tangible path forward so that we can turn the tide on this unacceptable public health crisis. To those in the midst of this fight: Help is on the way.

To learn more about this and other important legislative issues, please visit my website: upton.house.gov or call my offices in Kalamazoo (269-385-0039), St. Joseph/Benton Harbor (269-982-1986), or Washington, D.C. (202-225-3761).

Career/Tech Education

 While the changing job landscape continues to adapt with the times, one thing everyone agrees on is the dire need in Michigan for skilled trade-workers. As a former educator, I am constantly looking for ways that we can better train our future workforce and prepare students for the jobs we know will be waiting for them.

That is why I was proud to co-sponsor merit curriculum legislation that recently passed by the State House. This legislation would help give high school students more flexibility when it came to choosing classes that align with their personal and career interests and place them on a pathway to eventually fill a growing number of vacant, well-paying jobs.

To achieve this, the proposed legislation would do four things. First, it would allow students to fulfill a 21st Century Skills requirement by completing a combination of career/technical education (CTE) or visual/performing arts courses. Second, it would allow for one of two required foreign language credits to be achieved through a CTE course, computer coding, or certain visual/performing arts courses. Third, it would allow the completion of an Occupational Safety and Health Administration general industry or construction training program within a CTE program to fulfill a health education requirement. Finally, it would allow a statistics course to be an alternative to Algebra II.

Employers are looking for young professionals proficient in skilled trades, computer coding and other in-demand specializations, but there are not enough people available to fill the positions. We believe this merit curriculum legislation is a step in the right direction. Through increased flexibility in class choices, we can allow students to pursue the pathways best suited to them and ultimately address a growing gap in our workforce. Through common sense efforts like these, I believe we can build the framework to make Michigan a top ten state.

As always, residents can contact my office with any state or local issues by calling (517) 373-1403, emailing KimLaSata@House.mi.gov or visiting my website at www.RepLaSata.com.

2016 Kevin’s Law revisions pave way for new treatment programs

 As many are aware, Michigan is currently facing an opioid abuse epidemic that is devastating families from every corner of our state.

In 2004, Gov. Jennifer Granholm signed what later became known as Kevin’s Law, which gave courts the ability to order outpatient treatment for individuals with a serious mental illness who do not meet the current criteria for involuntary hospitalization, but who have been determined to need treatment to protect themselves and others.

In 2016, the Legislature made revisions to Kevin’s Law that would pave the way for including treatment for those suffering from addiction.

These revisions allowed the Legislature to fund two new pilot programs in this year’s budget cycle, both of which are aimed at assisting prisoners who suffer from opioid addiction.

Currently, Medication Assisted Treatment programs allow either the courts or the Michigan Department of Corrections to treat opioid addiction. These programs will cover the time an individual is in prison. If treatment is a condition of parole or probation, that time will also be covered.

These pilot programs will provide additional care for a period of time after the person is out on their own as a way to help people from relapsing as soon as they are released from custody.

I support these initiatives because we need to lend a hand to those who struggle with addiction. Addiction is not specific to any population or location; it can affect anyone, and we all need to do our part to release our state from its stranglehold.

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.