Charitable Giving Tool

To help with charitable giving decisions, the IRS recently launched a new online search tool called Exempt Organizations Select Check.  Among other things, this tool allows taxpayers to see if an organization is eligible to receive tax-deductible charitable contributions.  Users can search by various criteria including city, state, organization name, employer identification number (EIN) or deductibility status.  We would encourage you to visit this site prior to making gifts to your favorite charities. 

You may access the site from this link:  http://www.irs.gov/charities/article/0,,id=249767,00.html

It’s important to note that some entities eligible to receive tax deductible contributions are not part of this list.  For example, many churches which are included in group exemption letters may not be found.  Contributions to subordinate units of such organizations are often tax deductible under the central organization’s group exemption letter.  More information can be found in IRS Publication 4573.

Bait and Switch?

For years, American’s have saved for retirement through employer-sponsored retirement plans (i.e. 401ks) and personal retirement vehicles (i.e. IRAs).  The income tax incentives provided are primarily what make these plans so attractive for savers, and until recently there has been little doubt that these benefits will remain.

December 2011 Market and Planning Update

PLANNING COMMENTARY

Our end of year practice always includes a revisit of key assumptions used in client wealth planning.  We would like to provide a very brief summary of the assumption changes we are implementing for 2012.  Note that these long-term assumptions are being used over a typical clients planning time horizon and are illustrations of what we anticipate prospectively versus simply a measure of what has happened in the past.  READ MORE

INVESTMENT COMMENTARY

We entered 2011 with much hope and promise since the economy was showing signs of continued improvement.  However, extreme volatility took over last year due to Japan’s Tsunami, Libya and other middle-east unrest, a spike in oil prices, Europe’s debt crisis resurfaced, fears of another recession lingered, Congress continued its dysfunctional ways and then the U.S. credit rating was downgraded.  Through all this unrest, our economy showed tremendous resilience.  Investors are pleading for a smoother and much calmer market for 2012.  Unfortunately, we’re not likely to have that.  Uncertainty continues so we’d expect more volatility in the markets.  READ MORE 

January 2012 Market and Planning Update

YOUR FINANCIAL LIFE – IN PERSPECTIVE

For years, continued medical advancements and heightened awareness of personal health have led to increases in longevity.  Looking at this phenomenon over the past 100 years puts this in more perspective:

• A typical baby born in 1900 was expected to live to age 45; today, life expectancy at birth is roughly 82!
• The average 65 year old retiree is expected to live to age 86. 
• There is a 25% chance at least one member of a 65 year old couple will reach age 97!

READ MORE

MARKET COMMENTS AND OBSERVATIONS

How quickly the markets can change.  We always preach that “time in the market” is more important than “timing the market.”  Due to a resilient U.S. economy and some progress towards stabilizing Europe’s debt crisis, we’ve seen upward progress in the equity markets for January and now over the past 3 months.  As we write these comments the S&P 500 index is up 4.5% for the month and we’re on track for one of the better January’s on record.   You may remember that we increased our exposure to stocks during the month of August and that tactical adjustment has been rewarding to portfolios.  The emerging stock markets have also shown a strong January (up 9.8%), and they have erased almost one-half of their 2011 losses.

READ MORE

Are you financially literate?

According to recent research, financial literacy declines with age, on average.  The research was published through a working paper by Annamaria Lusardi, an economist at Dartmouth College. 

When asked to perform a simple compound interest calculation, a group of 51-56 year-olds were puzzled.  Less than one in five could arrive at the correct answer.  (question and answer can be found at the bottom)

A Taxing Matter

Our federal tax code is too confusing, too complicated and quite frankly unfair to many Americans.  We believe our tax code is in desperate need of an overhaul.  Think about the following: 

• Next week President Obama will introduce a FYE 2013 budget calling for higher taxes on those who earn over $250,000, including a repeal of the “Bush tax cuts.”  If the U.S. Tax Code is used to penalize success then we will see much less success achieved.  Taxes should be collected to fund our country, not as a political platform of “class warfare.”  We need a flatter, and less complicated system of individual income taxation as recommended by the Presidents own Simpson Bowles Deficit Commission.
• 23% of all personal tax returns that were filed in 1979 paid no federal income tax.  Thirty years later (in 2009) 42% of all personal returns that were filed paid no federal income tax. 
• There have been approximately 4,428 changes to our tax code over the past ten years.  That is an average of more than one per day.  During 2010, there were 579 changes to the code. 
• The wealthiest 1% of our population earns 19% of the income but pays 37% of the income tax.  The top 10% of income earners pay 68% of the income tax tab.  Meanwhile, the bottom 50% - those below the median income level - now earn 13% of the income but pay just 3% of the taxes.

Talk, talk and more talk……we hear many politicians speak of the need for change.  When will someone take the lead on real tax reform designed to drive growth and opportunity for all and start to make it happen? 

Source:  Internal Revenue Service

What Neighbors Do You Want?

According to the Tax Foundation’s most recent study, “2012 State Business Tax Climate Index,” Indiana ranks 11^th in the country for tax system attractiveness.  The study is intended to help business leaders, policymakers and taxpayers understand how hard their state is working to attract profitable businesses and successful individual taxpayers.  The least attractive state may surprise you…