12-07-2017 Columns

Consider these year-end tax-smart financial moves

With the holiday season upon us, you may be getting pretty busy. But once the holidays are over, you’ll enter into a new season – tax season. The filing deadline for the 2017 tax year is April 17, 2018, but until that date – and especially before the end of the calendar year – you may want to explore some tax-smart financial moves.

Here are a few to consider: Boost your 401(k) contributions. If you’re like most people, you probably don’t usually contribute the maximum amount to your 401(k), which, in 2017 is $18,000 or $24,000 if you’re 50 or older. Unless you have a Roth 401(k), your contributions are made with pre-tax dollars, so the more you put in, the lower your taxable income. Ask your employer if you can increase your 401(k) contributions in 2017. Also, if you receive a bonus before the year ends, you may be able to put that toward your 401(k) too, thus deferring the taxes you’d have to pay on this extra income.

Add to your IRA. You have until the April 17 deadline to contribute to your IRA for the 2017 tax year, but the more you can put in now the less you’ll have to come up with at the filing deadline. Contributions to a traditional IRA are generally deductible, but the deductibility is phased out if your income rises above certain levels. For 2017, you can put up to $5,500 into your IRA, or $6,500 if you’re 50 or older. (Roth IRA contributions are never deductible.) Contribute to a 529 plan. When you contribute to a 529 college savings plan, your earnings can grow tax-free, provided the money is used for qualified higher education expenses. (However, 529 plan distributions not used for these qualified expenses may be subject to income tax and a 10 percent IRS penalty.) Furthermore, your 529 plan contributions may be deductible from your state taxes. Be generous. It’s certainly the season for giving, and when you make charitable gifts, you can give and receive. By sending cash to a qualified charity, you may get a tax deduction, but if you look beyond your checkbook, you might gain even bigger benefits. Specifically, if you donate appreciated securities you’ve held for more than one year to charity, you may be able to deduct the value of the securities, based on their worth when you make the gift.

Offset your gains. If you own some investments that have lost value and may no longer be essential parts of your portfolio, you could sell them and use the loss to offset capital gains taxes on investments you’ve sold that have appreciated. If the loss from the sale was greater than your combined long- and short-term capital gains, you can deduct up to $3,000 against other income, including your salary and interest payments. And if your losses exceed your capital gains by more than $3,000, you can carry the remaining losses forward to future tax years.

Following these suggestions may help improve your tax situation for the year. So, give them some thought and consult with your tax professional to understand what actions are appropriate for you.

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.

Flu vaccination

As long as flu viruses are spreading, it’s not too late to get a vaccine to protect yourself and your loved ones. Flu season typically peaks between December and February but significant activity can occur as late as May.

For millions of people every season, the flu can mean a fever, cough, sore throat, runny or stuffy nose, muscle aches, fatigue, and miserable days spent in bed. However, you may not realize that each flu season, flu also causes hundreds of thousands of hospitalizations, and thousands or sometimes tens of thousands of deaths.

But there is a vaccine that can prevent flu. While how well the vaccine works can vary, the benefits from vaccination are well documented. Studies show that flu vaccination can reduce flu illnesses, doctors’ visits, missed work and school due to flu, as well as prevent flu-related hospitalizations.

This is why CDC recommends an annual flu vaccine for everyone 6 months and older. Some people are at high risk for serious flu-related complications, like pneumonia, that can lead to hospitalization and even death. This includes young children, pregnant women, people 65 and older and people with certain medical conditions, like asthma, diabetes or heart disease. For those at high risk for complications, getting the flu vaccine is especially important. It’s also important to get the vaccine if you care for anyone at high risk, including babies younger than 6 months because they are too young to get the vaccine.

You can get a flu vaccine in a variety of places, including at your doctor’s office, pharmacies, and at the Berrien County Health Department. Most health insurance plans cover the cost of recommended vaccines. For more information about influenza or the flu vaccine, talk to your doctor or call the Berrien County Health Department at 269-926-8121 or visit www.bchdmi.org.

Improving student career and education development

As part of an effort to meet the workforce needs of a growing economy, I have co-sponsored new legislation that would help ensure that every Michigan student has the tools necessary to explore exciting new career options and make the best educational decisions for their future.

Senate Bill 684 would create a talent portfolio and modernize educational development plans (EDPs). Michigan law requires local schools to provide an opportunity for students to begin developing an EDP in seventh grade.

The bill would ensure that students also receive information about various careers and the opportunity to develop talent portfolios that highlight their experiences and accomplishments that demonstrate marketable skills.

SB 685 would implement career exploration and job readiness by requiring schools to include more detailed information in their annual improvement plan, such as details on opportunities for work-based learning and activities that ensure every student in 12th grade can develop a resume.

Under the bills, schools would provide students with hands-on learning and age-appropriate career information.

I have long supported giving our students more information as they choose their own path to success and putting a greater focus on training and education in fields where jobs currently exist and are being created.

That is why I introduced SB 343, which would require schools to provide students with the most recent available analysis of in-demand occupations for their local economic forecast region.

Providing our students with additional career and educational development information can help them choose a successful career path.

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.

Implementation of 21st Century Cures a top priority

Last week, the landmark, bipartisan 21st Century Cures Act got an examination here in Congress. During this hearing we listened to Food and Drug Administration (FDA) Commissioner Dr. Scott Gottlieb and National Institutes of Health (NIH) Director Dr. Francis Collins outline how 21st Century Cures is working and also how we can continue to improve the implementation of this law.

When we began the process of crafting 21st Century Cures more than four years ago, we began with one goal in mind: Helping patients and their families. U.S. Rep. Diana DeGette, my partner from the other side of the aisle, and I were inspired after hearing from folks in the research community as well as patients and their families about the need for modernization and more resources at the NIH and FDA to more quickly bring lifesaving treatments to market.

As you might know, the 21st Century Cures Act provides the NIH and FDA with billions of dollars in much-needed resources so that our nation’s best and brightest can work on finding cures for diseases that impact every single family. As we close out 2017 and a new year begins, we will continue to make certain our work is being implemented so that patients and their loved ones here in Michigan, and across the country, benefit.

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).

Strains on local budgets

Having reviewed the data, it is difficult not to say the current revenue sharing model in the State of Michigan is broken. Unfortunately, between 2001 and 2011, statutory funding has been regularly used elsewhere as part of efforts to balance the state budget. Additionally, the formula developed in PA 532 of 1998 for funding municipalities was essentially abandoned in 2002, without ever fully being implemented. It is hard not to characterize this as the State shifting costs onto the backs of municipalities.

To make matters worse, the combination of the Headlee Amendment to the State Constitution along with Proposal A allow assessments to drop during hard economic times, but limit their growth during good economic times. It is my understanding that the result of this means some municipalities will not get back to where they were until 2030, and that is not accounting for the costs of inflation.

This broken funding model coupled with a history of disinvestment has a direct impact on the important services delivered by local governments. However, I am consistently impressed by the ability of our local elected officials to make prudent decisions, craft fiscally responsible budgets, and work together to deliver services to our communities.

It is my belief, that in order to best assist them, the State must look at every contributing factor that has led communities to the financial brink in the first place.

The list is long, but steep declines in property values; dramatic reductions in state revenue sharing; post-retirement costs; and the delivery of services must all be looked at.

As State Representative, I am committed to reinvesting in our local governments, restructuring state funding models, finding solutions to solving our unfunded liabilities, ensuring the delivery of government services, and protecting the promises made to retirees. It is a tall order, but it must be done.

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.

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