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Melissa J. Stein
President
CFP®, CRPC®
Contact Us:
4000 Washington Road
Suite 101 McMurray, PA 15317
Phone:
724-260-0491
E-mail:
Website:
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Time to Consider
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Taxes: December is the time to consider the following, if they apply to you.
- Accelerating income
- Defer expenses and convert IRAs
- Estate gifting or making capital transactions
- RMD's: If you are over 70 ½ you must make a distribution or there is a 50% penalty.
- Making charitable contributions
- Stein Wealth Advisors' Flat Financial Planning fees will be billed in January 2013
- 1099s from Pershing will be sent by February 15th 2013.
Paperless Statements
Reminder: Tax documents will be sent via email if you are signed up for paperless statements. If you would like to sign up for paperless statements, please contact our office at 724-260-0491 or email Mary Lynn Bonifield at email address:
mary.bonifield@multifin.com |
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Investment Words | |
"ABC" Words for December
A.M. Best
The agency that focuses on
rating insurance and financial companies with regard to their strength and ability to pay claims that are made by policy holders.
ADR
American Depositary Receipt
A negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange. ADRs make it easier for Americans to invest in foreign companies, due to the widespread availability of dollar-denominated price information, lower transaction costs and timely dividend distributions.
Blue Chip
1. Stock of a large, national company with a solid record of stable earnings and/or dividend growth and a reputation for
high quality management and/or products. These stocks are expected to provide their investors with a sizeable return despite the ups and downs of the economy.
2. Also, more generally, anything of very high quality.
BSE
Bombay Stock Echange
The fourth largest and oldest stock exchange in Asia located in Mumbai. (Mumbai, earlier known as Bombay, is the capital of the Indian state of Maharashtra.)
CAC 40 Index
Cotation Assistee en Continu
Benchmark index for the French stock markets composed of 40 of the largest and most liquid stocks trading on the Paris Bourse exchange. "Cotation Assistee en Continu" is French for "Continuous Assisted Quotation". The CAC 40 Index was started in 1987 with a value of 1000.
COLA
Cost of Living Adjustment
An annual adjustment in wages to offset a change (usually a loss) in purchasing power, as measured by the Consumer Price Index. The Consumer Price Index is used rather than the Producer Price Index because the purpose is to offset inflation as experienced by the consumer, not the producer. |
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Greetings!
Happy Holidays, Merry Christmas, Happy Hanukkah, Feliz Navidad and Happy New Year to you and yours from me, my staff and our families. We look forward to working with you in 2013!
Frohe Weihnachten, Joyeux Noël, Buon Natale,
Feliz Natal, メリークリスマス, Veselé vánoce
С Рождеством, Vrolijk kerstfeest, 中國普通話
and finally from your fellow citizens in Hawaii:
Mele Kalikimaka ame Hauoli Makahiki Hou!
Best Regards,
Melissa J. Stein
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Market Commentary |
FINANCIAL CONSIDERATIONS FOR 2013
It isn't too early to think about next year.
Presented by Melissa J. Stein
We are now in plain view of the "fiscal cliff". After the election, Congress may or may not end up keeping income and estate tax rates at their recent levels. Next year may bring some notable financial developments, and it isn't too soon for households to think about them.
You may want to prioritize tax reduction. If the Bush-era tax cuts sunset, everyone will see higher taxes. The federal income tax brackets (10%, 15%, 25%, 28%, 33%, 35%) that we have known for the last nine years would be replaced by five higher ones (15%, 28%, 31%, 36%, 39.6%) come 2013. (1)
High earners may want to watch their incomes. If your earned income for 2013 tops $200,000 - or exceeds $250,000, in the case of a couple - you may face two Medicare surtaxes. While the Medicare payroll tax on earned incomes above these levels is set to rise to 2.35% from the current 1.45%, the second surtax may prove to be the real annoyance: there is scheduled to be a 3.8% charge on net investment income for individuals and couples whose modified adjusted gross incomes surpass these levels. (1,2)
Some fine points about this second surtax must be mentioned. It would actually be levied on the lesser of two amounts - either your net investment income or excess MAGI above the $200,000/$250,000 levels. Most investment income derived from material participation in a business activity would be exempt from the 3.8% surtax, along with tax-exempt interest income, tax-exempt gains realized from selling your home, retirement plan distributions and income that would already be subject to self-employed Social Security tax. (2)
The bottom line is that a bonus, an IRA distribution, or a sizable capital gain may push your earned income above these thresholds - and it will be wise to consider the impact that would have.
You may have less take-home pay next year. Social Security taxes for paycheck employees are slated to return to the 6.2% level in 2013. They've been at 4.2% since the start of 2011. If you earn $75,000 during 2013, you will take home about $1,500 less of it than you would have in 2012. If you earn $50,000, we're talking $1,000 less. (3)
Any 2013 Social Security COLA may be minor. In 2012, the cost of living adjustment to Social Security benefits was 3.6%. Before that, Social Security recipients went three years without a COLA. As inflation is mild, whatever COLA is announced this fall in tandem with Medicare premium changes may not amount to much. (1)
Next year, medical expense deductions may shrink. If you are thinking about delaying a procedure or surgery until 2013, remember that the itemized deduction threshold for unreimbursed medical expenses is set to increase from 7.5% to 10% of adjusted gross income in 2013. Even if that happens, however, the threshold will remain at 7.5% through 2016 for taxpayers age 65 and older. (1)
You may be able to find a better Medicare Advantage plan for 2013. The Affordable Care Act has altered the landscape for these plans (and their prescription drug coverage). Using Medicare's Plan Finder (click on the "Find health & drug plans" link at Medicare.gov), you may discover similar or better coverage at lower premiums. The enrollment period for 2013 coverage runs from October 15 to December 7. (1)
Those without work may find a safety net gone. Extended jobless benefits may disappear for the long-term unemployed at the start of 2013. Will Congress extend them once again? Possibly - but that isn't a given.
The estate & gift tax exemptions may shrink significantly. The (unified) lifetime federal gift and estate tax exemption is currently set at $5.12 million - and it will drop to $1 million in 2013 if Congress stands pat. Federal gift tax and estate tax rates are also slated to max out at 55% in 2013, as opposed to 35% in 2012. Right now, an unused portion of a $5.12 million lifetime exemption is portable to a surviving spouse; in 2013, that portability is supposed to disappear. (4)
Many analysts and economists think that Congress will eventually abide by President Obama's wishes and take things back to 2009 instead of 2001 - that is, a $3.5 million estate tax exemption, a $1 million lifetime gift tax exemption, and a 45% maximum estate and gift tax rate. (4)
Prepare for year-end drama ... and for 2013. The last two months of 2012 will surely bring political theatre to Capitol Hill. As it unfolds, you may want to look ahead to next year and consider the impact that these potential changes could have on your financial life.
Melissa J. Stein may be reached at Phone: 724-260-0491 or at melissa.stein@multifin.com (After Jan. 2, 2013, Ms. Stein's email address will be melissa@steinwealth.com )
Citations (Cut and paste in browser.)
1.- money.usnews.com/money/blogs/the-best-life/2012/08/29/get-ready-for-5-key-money-changes-in-2013 [8/29/12]
2 - www.cliftonlarsonallen.com/inside.aspx?id=364 [2/23/12]
3.- money.cnn.com/2012/05/29/news/economy/payroll-tax-cut/index.htmx [5/29/12]
4.-www.smartmoney.com/taxes/income/preparing-for-taxmageddon-1337724496427/ [5/23/12]
This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment. |
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Featured Article |
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The Gift That Keeps Giving and Giving
and Giving |
'Tis the season to give gifts. 'Tis the season to give gifts that were once given to us and have languished on our shelves and in our closets. Yes, 'tis the season for regifting - the act, or perhaps it is now an art - of giving to someone else a gift that was earlier given to you. Once an act that was frowned upon, regifting has lately become not only socially acceptable, but an act of some finesse and even environmentally desirable since one recycles!
No one really knows when the first act of regifting happened. Maybe it began in Europe and the practice came over on the Mayflower...a regifting of a practice from the old world to the new world. Microsoft Word's document spell check still flags regift as needing to be checked/changed and lists "resift" and "refit" as possible corrections. Ah, Microsoft does not know everything, after all, because the Merriam Webster Online dictionary lists the word "regift" as a verb meaning "to give someone a gift that was previously received from someone else." It lists 1995 as the year of the first known use of the word. Jerry Seinfield, in his NBC sitcom, coined the word in the dialogue of a 1995 episode. Jerry gave prize Super Bowl tickets to acquaintance, Tim Whatley. In return, Tim gives Jerry a label maker. Later in the plot, Elaine Benes, Jerry's friend, says that she had earlier given that same label maker to Tim as a present. Jerry then accuses Tim of being a "regifter". (1)
Now, almost 18 years later, regifting is so acceptable that there are efforts to promote it and research studies are conducted to measure people's beliefs about and reactions to the practice. A December 4, 2012, Wall Street Journal article by Sumathi Reddy quotes a nationwide consumer spending survey by American Express that "58% of people believe it is OK sometimes to regift an item." For the holiday season, "that figure rises...when 79% of respondents said they believe regifting is socially acceptable." Further, nearly one-quarter of 2,000 consumers polled said they regifted at least one item the previous holiday season. (2)
There are of course...wait for it...web sites supporting and promoting regifting. One of the the latest is Gyft, Inc. (Web Site Address http://www.gyft.com/how-it-works.html) Consumers buy, store, receive, and organize gift cards via mobile and social media. (3) It is integrated with Facebook (Nasdaq: FB) and Apple apps. Gift cards were estimated to have reached $100 billion in sales in 2011, yet The Wall Street Journal estimated that in 2011 "41 billion of the amount spent on gift cards was never redeemed between the years of 2005 to 2011." (4) What opportunities for regifting!
Now that we have covered the provenance of regifting, let's establish a few etiquette rules for regifting: Don't regift any item that was handmade specifically for you or that has your name or initials on it. That book with the loving inscription from Aunt Hattie should not be regifted. Don't regift any item that has been partially used. No regifting of that once opened, once used aftershave or perfume, even if the bottle is beautiful. If you have any doubt at all about a specific regift for a specific person, don't do it. Consider selling the item on ebay or donate it to a charity and receive a tax deduction. If you know where it was purchased, you can try returning it for another item or for cash. Do wrap the item nicely - don't announce it is second hand by its tattered or dated wrapping.
Finally, when you receive gifts you know you won't use, store them in a special box or place and label from whom the item came so that you won't embarrassingly regift to the original giver. Try to match the regift to the person so that hopefully the item will find a home. Unused gift cards are fair game, but do call the toll free number on the back to be sure the card is still valid, not partially used or expired.
Ease up on yourself and embrace sensitive regifting. Remember that you are reducing clutter in your own life and also recycling and contributing to sustainability for the environment by using your resources well. After reading this article, send it on to a friend - regift it!
Citations
1. Plot Summary for Seinfield "The Label Maker" 1995
http://www.imdb.com/title/tt0697719/plotsummary (Cut & paste into your browser.)
2. The Wall Street Journal, The Science Behind Gifting: Research Shows Which Gifts People Really Appreciate; Hint: Forget Thoughtful. By Sumathi Reddy December 4, 2012. (Cut & paste into your browser.)
3. & 4. Gyft unwraps way to regift gift cards on the sly. [sic]
By Teresa Novellino, Entrepreneurs & Enterprises Editor, November 13, 2012.
(Cut & paste into your browser.) http://upstart.bizjournals.com/news/technology/2012/11/13/gyft-makes-regifting-gift-cards-easier.html?page=all
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*The views are those of Melissa Stein and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no guarantee as to its completeness or accuracy.
**Please note that neither Multi-Financial Securities Corporation nor Stein Wealth Advisors, LLC. give legal or tax advice. For complete details, please consult with your tax advisor or attorney.
***Securities and Investment Advisory Services offered through Multi-Financial Securities Corporation, member FINRA, SIPC. Stein Wealth Advisors is not affiliated with Multi-Financial. |
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