A 30-second read by Victor Cannillo: Whether you are tired of piles of papers cluttering up your home or are trying to go “paperless,” it is important to know what documents you should keep and which you could shred.
Below we list some of the important documents the Federal Trade Commission (FTC) suggests that you should always keep:
Birth certificates/ adoption documents
Social Security cards
Marriage licenses or divorce decrees
Passports or citizenship materials
Familial death certificates
For items like your home and car, you want to hold on to any automobile titles and home deeds for as long as they are in your ownership.
A 90-second read by Anthony Benante: What 5 things should you be thinking about at the end of the year when it comes to your finances?
1. Review your personal budget and commit to a savings plan for 2017
a. On January 1, write down the balance in your checking account. Do this on the first of the month for the next three months. After you incorporate your income for the period, as well as take note of any cash withdrawals from other accounts, you can get a general sense of what your monthly spending is.
b. We work directly with our clients at Baron to help understand how their budget and all of their financial assets work together. If you would like a budget sheet (either electronic or hard-copy), let us know.
2. Review your long-term investment strategy
a. Is the long-term strategy in place for you still right for your specific circumstance? Are you going to be making any large purchases coming up in the New Year? Are you thinking about revisiting your risk tolerance – becoming more aggressive or conservative?
b. At Baron, we use a customized approach to design client portfolios. We not only consider potential return, but also risk, as well as how the investments complement each other. Having a long-term investment strategy is critical for investing success and provides a guide for when markets act unexpectedly or make a major directional move.
A 45-second read by James Shagawat: Did you know that your appreciated investments could be among the best items to give to your favorite charity to get maximum tax benefits? Donating an appreciated investment instead of cash can qualify you for two tax breaks; you will get a charitable deduction for the current value of the investment and you will avoid having to pay capital gains taxes on the increased value of the investments.
So the next time you plan on donating cash or checks to an organization, you may want to consider some other options:
1) Does the charity of your choice have the resources or capabilities to accept gifts of appreciated investments directly?
2) For Federal Income Taxes, if you are older than 70 ½, consider a qualified charitable distribution (QCD).
A QCD “is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax deductible contributions” (IRS pub. 590b). For more information on QCD’s, refer to page 13 of IRS Publication 590b.
A 30-second read by Nicholas Scheibner: As public employees for the great state of New Jersey, there are some important factors to consider when it comes to your retirement income.
Regarding Your Pension:
New Jersey Pensions fall into two categories: “I contribute to my pension” or “I do not contribute to my pension”
For those employees who say, “I do not contribute to my pension” the entire portion of your pension in retirement will be taxable to New Jersey.
For those employees who say, “I do contribute to my pension”, when you retire, a portion of your pension will be taxable and a portion of your pension will be excluded from New Jersey state tax. Note: This is the reason your gross income is higher on your New Jersey tax return if you contribute to a pension. The federal government allows pension contributions to be deducted, but NJ State does NOT allow your pension contributions to be deducted.
Regarding Social Security:
Your Social Security may be greatly reduced if you have only worked as a public employee your entire life. The calculated estimates can be difficult, so it is important to speak with your financial planner about the possible impact a pension may have on your social security income.
A 60-second read by Victor Cannillo: Need more time to compile information for your tax return? Haven’t received all of the documents you need? It will be in your best interest to file a tax extension. This will extend the due date up until October 17, 2016.
How to file a Paper Tax Extension:
To file an extension, you are going to need to fill out Form 4868 [Application for Automatic Extension of Time to File U.S. Individual Income Tax Return]. You can download the form and instructions from the IRS website.
With the form, you also need to send in at least 90% of your estimated tax liability due for the year.
To pay by check, mail the form with the check together.
Make the check out to United States Treasury. On the memo line, write your Social Security Number, Form 4868, and the tax year (2015). This way, they know that you are sending the check as part of your extension.
When mailing in the tax extension, it is highly recommended that you send it via certified mail or another method that provides you with a tracking number. The envelope needs to be postmarked by April 18th (April 19th, if you live in Maine or Massachusetts). Check the instructions portion of Form 4868 for the correct mailing address (it varies according to what state you reside in).
To Prevent any Penalties:
Carefully read all instructions and follow all directions on Form 4868.
Correctly estimate your tax liability for the year and send in 90% of the amount due.
It is possible to file your extension online. See the IRS website for more details.
If you ever feel unsure or concerned about the process, consult a Tax Professional to assist you.
A 30-second read by Nicholas Scheibner: New Jersey is certainly not known as a “tax-friendly” state. However, the garden state has a much lower threshold on Medical Expense deductions than the federal government. New Jersey allows certain non-reimbursed Medical Expenses to be deducted after they exceed only 2% of your gross income.
A few examples of things you should make sure you keep track of throughout the year:
Medicare Insurance Premiums
Dental Insurance Premiums
Out-of-pocket Prescription Costs
Eyeglasses and vision exams
This is commonly overlooked by taxpayer’s who do not itemize their deductions. However, if you make $60,000 gross income per year, 2% is only $1,200. For most people, their medical expenses will exceed that 2% as long as they keep track of all of them.
Baron Financial Group hosted their 6th annual Town Hall Meeting at the Fair Lawn Community Center in Fair Lawn. Attendees listened to the Baron Principals speak about the efficiency of markets and the updates to taxes in 2013. Ed Coyne, of Royce Funds, spoke about small-cap equities and how they can provide both diversification and return for clients’ portfolios. Baron’s clients, friends, and guests enjoyed the event, as well as the famous Baron desserts. Baron Financial Group, in honor of its clients and friends, donated to the Fair Lawn Food Pantry.