The new tax laws and you

The new tax laws and things you can do right now – as published in The Racine Journal Times | May 8, 2018

Now that April is in the rear view mirror, you may think you don’t have to think about taxes until next year but there are several changes in the latest tax law bill worth paying attention to now. One may simplify your life over the next year while the other may stretch your charitable donations further.

While there are many changes to the tax laws, I’m only looking at a couple items I think could impact your financial decisions now. The first major change is the increased standard deduction which almost doubled. Just like in the past, you are able to subtract the greater of the standard deduction or your itemized deductions from your gross income to arrive at your taxable income.

When the standard deduction was lower, more people itemized due to medical expenses, state and real estate taxes, mortgage interest, charitable deductions and a number of other deductible expenses. With new limitations on certain deductions and the higher standard deduction, most people will no longer itemize their deductions. This is important to know sooner than later because you may not need to keep receipts throughout the year for medical expenses or charitable donations. Gathering this information has been a necessary hassle for many taxpayers in the past but won’t be needed in the future.

In order to determine if this applies to you, I recommend looking at your 2017 Schedule A (assuming you itemized last year) to see how close you are to the new standard deduction limit of $12,000 for single taxpayers or $24,000 for married taxpayers. If you’re more than several thousand dollars less than the new standard deduction and don’t expect any significant changes this year, it’s unlikely you’ll itemize for 2018 which means you don’t need to save the receipts.

The second strategy to consider now is for anyone over the age of 70.5 who regularly gives to charity. If you’re not itemizing then you’re also not saving taxes on your donations. The alternative would be to take distributions directly from your Traditional IRAs as a “Qualified Charitable Distribution” (QCD) so you avoid paying taxes on this money which is the same as deducting it from your income. There are a few caveats to this strategy so I recommend speaking with your tax preparer or financial advisor to do this properly.

This is important to consider sooner than later so you’re not writing checks to charity that won’t save you taxes. You can still support the causes or organizations important to you but at least do it so everyone benefits (including you)!

Taxes can be a confusing and overwhelming topic but learning about the changes gradually over the next year increases the chances you won’t miss out on an important change that affects you personally.

Three priceless gifts of your career asset

Three priceless gifts of your career asset

It’s the season when everyone is thinking about meaningful things they can give to the people around them. Here are three gifts that stem from one of your most valuable financial assets—your career.Career Asset Management

The career gift of your knowledge. Never underestimate the value of your years of accumulated knowledge. Companies rely on long-standing employees who hold a wealth of institutional knowledge in addition to the knowledge they hold about their given job or role in the organization. Institutional knowledge is like being a company historian—because you’ve been around for a while, you’re probably able to navigate company politics like a pro, likely to have great information on processes and projects that have been used in the past and you know leaders who’ve come up through the ranks. Knowledge about your job is also important and human resource departments are always looking for ways to “transfer knowledge” to up-and-coming career talent who will eventually replace retiring talent. You can share the gift of your knowledge by suggesting ways to capture it and transfer it to younger employees.

The career gift of your skills. Like knowledge, you’ve likely invested heavily in building technical skills related to your role. Through the years you may have had to call on different skills in different roles and collectively they contribute to your overall value as an employee. Each new skill you add to your toolbox adds value to your career asset and can be viewed as a gift you’ve given to yourself at some point that can then be given and shared with others.

The career gift of your experience. In financial planning, we note that past performance is not indicative of future performance; however, in the case of your career asset, it can be a great gift to offer others. Sharing stories of how you approached an important decision or how you addressed a difficult situation can truly make a difference to others. Perhaps you worked on a project years ago that shared common characteristics of a contemporary project. Sharing your experience of the highs and lows of the original could help the team anticipate potential obstacles and prevent them from delaying the project or limiting its success. Like sharing your skills and knowledge, your experience is heavily weighted when it comes to younger talent seeking to learn from the gifts of later-career members.

In this season of gifting, take time to reflect on all the gifts you can offer through your own career lifecycle. Those are gifts worth sharing that will be received with lasting gratitude.

Learn more about Career Asset Management or get a copy of Mike’s book, Career Asset Management: Getting Ahead, Staying Ahead and Using your Head to Maximize your Career Value at CareerAssetManagement.com