Your health is important, so you don’t delay that mid-year trip to the doctor for a check-up. Well your financial health is just as important! And July is the perfect time for you and your family to have a mid-year financial check-up. Not sure how to review your goals and update your financial plan? Here’s some ideas to get you started on the road to financial wellness.

FINANCIALLY IMPACTFUL IDEAS FOR INDIVIDUALS:

• Be Charitable. Consider this for that special graduate, or newly married child or grandchild, or your favorite non-profit. Fewer taxpayers will claim charitable deductions over the next few years due to tax reform, but remember your favorite charity when trying to avoid capital gains tax and gift them appreciated stock. If you are feeling generous towards family members, you can make annual exclusion gifts of up to $18,000 per individual each year.

 

• Make the Most of Employee Benefits. Mid-year is a good time to maximize 401(k) contributions, and if you get a bonus or expect extra commissions, consider putting it into your 401(k). 2024 Defined Contribution Plan Limits for 401(k) plans have risen slightly, the 2024 IRA contribution limit is $7000 for those under 50, and $8000 for those age 50 or over. Double check to see if your current health insurance plan is the most cost effective plan for you and if not, make a change at open enrollment. Be sure to shore up healthcare accounts like your FSA and HSA.

 

• Recalculate Retirement. While lounging by the pool, recheck your retirement goals, timeline, and savings so far this year. We mentioned 401(k) contributions above, but also make contributions where appropriate to a traditional IRA which are immediately tax-deductible, or contributions to a Roth IRA that are tax-favored at retirement. If you are an employer with a small staff consider setting up a cash balance plan!

 

• Think About Succession Planning. Want to make Summer vacation last all year long? If you own a business, and retirement is 3-5 years away, inquire about Business Exit Planning to build value today to make your business attractive to buyers tomorrow. You want get the most $$$$ possible when you sell your business for your retirement fund. Estate planning is not always enough to guarantee a secure financial future for your family. If you have a partner in a business, always be sure there is a buy/sell agreement in place.

 

• Leave a Legacy. Put an estate plan in place or revisit your existing wills, beneficiaries, gifting options, insurance and trust documents in light of tax reform and its “sunset” date of 2025. Transferring assets to a trust or other entity has potential tax consequences to consider, and things have changed dramatically this year. Since the lifetime gift tax exemption has been increased to over $13 Million (double for couples), historically high amounts of assets can be transferred often without incurring any estate tax. Assets like stocks, real estate and other holdings are passed on at their market value at the time of death, so if they have appreciated they may be sold and no tax may need to be paid on those gains.

 

• Monitor Investments and the Markets. Keep in mind that capital losses offset capital gains. Consider selling stocks or securities with losses and offsetting your current year gains. If your losses exceed your gains, you can deduct the difference on your tax return, up to $3,000 per year, and carry over any excess to future years. Long-term capital gains are taxed more favorably than short-term gains, and even though the tax brackets have changed for 2024, the long-term capital gains tax structure has stayed the same. In 2024 you’ll pay a capital gains tax rate of either 0%, 15% or 20% for assets you held for more than a year. Capital gains tax rates on assets held for less than a year correspond to your income tax bracket. Some investors may owe an additional 3.8% in Net Investment Income Tax – keeping an eye on your portfolio to evaluate the recognition of losses to offset gains may mitigate the NIIT. Revisit the fees you are paying to your wealth managers, the amount adds up overtime and may surprise you.

 

• Avoid Paycheck Surprises and Underpayment Penalties. Take a good look at current withholding, don’t get caught short if you got a raise this year. And beware the significant impact of taxes on that year-end bonus; depending on how it is reported it could significantly affect your tax bill. If your situation has changed and you are no longer subject to withholding, you may need to make estimated tax payments!

 

• Negotiate Reimbursable Business Expenses. If you’re a dependable employee, chances are that your employer won’t want to lose you over the cost of a cell phone, home computer and printer, or mileage that’s deductible for 2024. Consider asking your employer to reimburse lost expenses directly to you (non-taxable), or boost your salary to make up the difference (taxable).

 

• Get an Insurance Audit Where Appropriate. Life happens, things change. Divorce, marriage, more income, less income, new boat or new baby, so be sure you enough insurance and the right kind of insurance, and are not paying for what you no longer need..

 

• Got Real Estate? Consider a 1031 Exchange. Tax reform limits this capital gains deferral strategy to real estate assets only. You roll all the capital gains from the property you’re selling into a new property, which takes on the old property’s low basis, keeping money working for you that would have gone to pay taxes.

 

• Is Your Budget Busted? Examine your income and expenses over the last 6 months to see if you are following your budget. Do you have excess cash that could be put to better use with an appropriate investment or used to pay down credit card debt, student loans, or debt with high interest rates? We can help you crunch the numbers and compare your options.

 

• Use the Power of the 529! If you are saving to pay for college tuition for your kids, don’t discount the benefit of saving through a 529 plan. As tuition costs climb they are valuable as savings accounts that grow, but are exempt from federal taxes. Thanks to tax reform, 529 plans can now also be used for private elementary and high school tuition. Plans may vary by state. If you or a dependent is disabled, use an ABLE account to pay for approved expenses.

 

• Examine Medical Expenses. The good news is that medical and dental expenses survived tax reform and for 2024 the magic number is 7.5% of your adjusted gross income (AGI). The increase of the standard deduction in 2024 means that fewer taxpayers will have an incentive to itemize. But by “bundling” your deductions together – you can take advantage of them in the year that it makes the best tax sense. So if you know that you have a big medical expense coming up later in 2024, why not get those visits to the dermatologist, dentist, eye doctor and general practitioner scheduled over the Summer months?

 

• Brush up on Changes in Home Related Tax Breaks. For 2024 the rules have remained the same regarding caps on mortgage interest deduction and eligibility for home equity debt interest deduction. In other words, think twice about the tax consequences of paying down debt with a home equity loan or buying a second home for vacations. The total deduction for all state and local taxes, including both property taxes and either income taxes or sales taxes, is capped at $10,000. Taxpayers who suffer storm or other damage may lose, so your homeowner’s insurance should probably be reviewed.

 

• Work from Home. Consider the simplified home office deduction. Taxpayers can elect a simplified deduction for the business use of their home. Tax reform dictates that you cannot deduct home office expenses if you are an employee, but the rules for self-employed persons remain unchanged. If you are self-employed, you can continue to deduct qualifying home office expenses.

Turn Your Hobby into a Business. If your Summer hobby makes consistent income, turning it into a business will allow you to deduct losses if you keep good records for the IRS to show you are engaging in the activity to generate a profit.

Reach Out To Us: There are 6 months left in the year to make changes that could improve your financial wellness and save you tax dollars you could invest instead in your portfolio instead! Let’s get started and take those first steps by scheduling a meeting to discuss customized financial planning for your individual situation. Call Paul Wieseneck, CPA, RSSA, TFG Financial Advisor at 561-209-1102, or email him at PWieseneck@fuoco.com.

 

TFG Financial Advisors, LLC, is registered as an investment adviser with the SEC. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules and regulations are subject to change at any time. All investment strategies have the potential for profit or loss.

TFG Financial Advisors, LLC, is registered as an investment adviser with the SEC. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting. All expressions of opinion reflect the judgment of the authors on the date of publication and may change in response to market conditions. You should consult with a professional advisor before implementing any strategies discussed. Content should not be viewed as an offer to buy or sell any of the securities mentioned or as legal or tax advice. It is not affiliated with or endorsed by the Social Security Administration or Medicare. You should always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules and regulations are subject to change at any time. All investment and insurance strategies have the potential for profit or loss. Information presented is believed to be current. Photos and videos are used for the singular purpose of enhancing the website. None of them are photographs of current or former clients. Hyperlinks on this website are provided as a convenience. We cannot be held responsible for information, services or products found on websites linked to ours.