By: Edward Leone Jr. CFP RFC RIA MBA DMD
Contact Information: 303-478-6793 leonedds@gmail.com
We are all siting at the edge of our chairs waiting to see exactly what tax reform legislation passed by the US Congress and signed by the President will contain. The process is on going with no definite conclusions to report. Regarding individual income tax rates there may be as few as 3 marginal tax rates or 4 or 7. It appears that the standard tax deduction will increase to $24,000 and that the child care tax credit may increase to $1600 or $1650. Tax deductions for electronic vehicles and education tax breaks other than the 529 program will end along with AMT (Alternative Minimum Tax— not ATM where you can get your money on deposit at the bank HA HA). Estate tax is in dispute under the House Bill version as opposed to the Senate Bill version, but it appears that the gift tax issue will be maintained. Such other tax deductions eliminations such as state and local income tax, sales tax, property tax, mortgage interest caping and medical expenses are proposed, but not in firm agreement. Charitable contribution deductions are likely to remain, but personal casualty loses, gambling losses, tax prep fees, business moving expenses, alimony payments and employee business expenses may be out the window! Retirement savings programs are likely to be retained as they exist now, but tax exempt organizations are likely to see some changes. Taxations changes for business will be adjusted in many ways regarding tax levels and expensing for business asset and equipment investments. The nature of these changes is also unsure at this time. So how should you engage your tax planning strategies for the conclusion of 2017? For now project strategies under what are exiting tax laws, but maintain the flexibility to make adjustments if a tax bill is passed prior to the year-end and is effective as of January 2017— a very tough task to accomplish without knowledge of firm tax law and profession help!!
We will have a new Federal reserve Bank Chairman in the near future named Jerome Powell. What will this mean? In the past, each new chair person has elevated interest rates early in their term. It will be interesting to see if this occurs and how it will affect equity markets while giving the FED addition ammo to deal with a future economic down turn.
There is no doubt that an equity market correction will occur at some time in the future. None of us know exactly when! It is important for retirement investors to maintain an asset allocation balance which deals with risk concerns and income flow needs from invested assets. Unfortunately, due to very low-interest rate levels at this time, bond and cash equivalent investments are yielding very low returns. This means that based on the asset allocation strategy engaged, total investment yields are likely to be lower than they have been in many past years. It is still important to engage such asset allocation strategies to survive the likely future equity market corrections. Seek qualified advise on these issues given your status and concerns.
Be thankful for who we are and where we exist given the up coming Thanksgiving Holiday. I have been moved by the major recognition given to our military veterans on Veterans Day. I will be visiting my Dad’s grave site at Fort Logan ( a WW II veteran) and was gratefully for the recognition and gratitude I received on Veterans Day at my church for my military service!
For The Record:
DJIA 23,422.21
S&P 500 2,582.30
NASDAQ 6,750.94
Suggested Reading: ” How To Day Trade For A Living ” by Andrew Aziz
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