Equipping you as an informed investor

The Importance of Tax Planning

Careful planning throughout the year can assist you in reducing the taxes you pay - as well as help you achieve your financial goals. This brief guide provides a basic overview of some of the tax rates, credits, deductions and related considerations that may apply to you.

Tax planning should not be done in isolation, but instead should be driven by your overall financial goals and integrated with your total financial plan. By developing and implementing appropriate strategies to lessen or shift current and future tax liabilities, you can improve your prospects of meeting both long- and short-term objectives. For example, accurately projecting your income taxes can help you determine the cash flow available to you in the coming year.

Keep in mind that tax laws are often complex and frequently change. As a consequence, you should consult your tax advisor before making investment and tax decisions.

Year-End Considerations

While year-round tax planning is important, you may find extra benefits by gathering all your tax-related facts as the year ends. You may, for example, have a clearer picture of your capital gains and losses, as many mutual fund companies issue distribution estimates by mid-December. The end of the year is a fine time to:

• Examine your portfolio's asset allocation
• Rebalance your portfolio, if warranted
• Assess holdings (Are they performing as expected?)
• Add up tax-loss harvesting possibilities
• Max out contributions to 401(k)s or other tax-advantaged retirement accounts
• Make last-minute charitable donations
• Pay deductible taxes for 2016 early, if it helps reduce adjusted gross income
• If the alternative minimum tax applies to you, take AMT-appropriate actions

2017 Income Tax Changes

Careful planning throughout the year can assist you in reducing the taxes you pay - as well as help you achieve your financial goals. This guide provides an overview of tax rates, credits, deductions and related considerations that may apply to you.

Tax planning should not be done in isolation, but instead should be driven by your overall financial goals and integrated with your total financial plan. By developing and implementing appropriate strategies to lessen or to shift current and future tax liabilities, you can improve your prospects of meeting longand short-term objectives. For example, accurately projecting your income taxes can help you determine the cash flow available to you in the coming year.

Keep in mind that tax laws are often complex and frequently change. As a consequence, you should consult your tax advisor before making investment and tax decisions.

SOCIAL SECURITY CHANGES
As a result of the Bipartisan Budget Act of 2015, "Restricted Application" and "File and Suspend" strategies are being and have been phased out.

Restricted Application - Available to individuals born on or before January 1, 1954. This strategy can be elected when the individual reaches their full retirement age or later. Restricted application creates an opportunity for one member of a couple to claim a spousal benefit, while allowing their own benefit to grow until age 70. At age 70 they normally transition from a spousal benefit to their own benefit, if higher.

File and Suspend - Before its expiration on April 30, 2016, this strategy allowed one spouse to file for their Social Security benefit at their full retirement age and immediately suspend receiving their benefit. The act of filing and immediately suspending their benefit allowed the other spouse to begin drawing a spousal benefit. This process also allowed both of their worker benefits to defer credits up until age 70. At age 70 they would then switch to their own worker benefit, if higher.

IRS RULES FOR LATE 60-DAY ROLLOVERS
When redepositing funds from your IRA, Roth IRA or other plan, individuals receive a check and have a 60-day period in which to roll over those funds.

Now, with Revenue Procedure 2016-47 (released in August 2016), individuals who miss the 60-day rollover period can self-certify that they qualify for a waiver, so long as they meet a few criteria:

1. There can be no prior denial by the IRS for a waiver.

2. The late rollover must be attributed to one of the 11 reasons listed in the form provided by the IRS. (Go to irs.gov and search "2016-47" for the list of reasons.)

3. The funds must be redeposited into an IRA account "as soon as practical after the reason or reasons no longer prevent the taxpayer from making the contribution." This guideline does include a 30-day safe harbor window.

QUALIFIED CHARITABLE DISTRIBUTION
Since 2006, IRA owners who are at least 70½ years old could make a qualified charitable distribution (QCD) of up to $100,000 directly from an IRA to a charity without having to include the distribution in taxable income. Legislation has made these QCD rules permanent.

Donating IRA funds directly to qualified charities allows the IRA holder or beneficiary to avoid taking possession of the funds and the tax bill that comes with them. It also allows the extra income to be excluded from tax formulas for Medicare premiums or for the Pease limitation on itemized deductions.

In brief, a qualified charitable distribution (QCD) from an IRA can be made only by an IRA owner or beneficiary age 70½ or older, and can total up to $100,000. A spouse age 70½ with an IRA could give up to $100,000 as well. A QCD can be used to meet your required minimum distribution. The funds, which cannot come from active SEP or SIMPLE IRAs, must be sent directly to the qualified (IRS approved) charitable organization. [The gift cannot be made to a private foundation, donor-advised fund or supporting organization (as described in IRC Section 509(a)(3)). The gift cannot be made in exchange for a charitable gift annuity or to a charitable remainder trust.]

AGI THRESHOLD
As of January 1, 2017, taxpayers may deduct only the amount of the total unreimbursed allowable medical care expenses for the year that exceeds 10% of their AGI.

To write off medical expenses, deductions must be itemized. While it may seem unlikely that taxpayers will have an opportunity to write off expenses, there are some scenarios when this rule can prove beneficial. For example, if medical expenses are particularly high due to a serious illness or accident. Or, the AGI may be unusually low as a result of being out of work for part of the year or a low taxable retirement income.

Income Tax Rates

Taxable income is income after all deductions, including either itemized deductions or the standard deduction, and exemptions.

Personal and Dependency Exemptions

Standard Deductions*

Individual Retirement Accounts

Generally, traditional IRA contributions are fully deductible unless you or your spouse is covered by a workplace retirement plan, in which case the following deduction phaseouts apply. If neither individual nor spouse is covered by a plan, you can deduct up to $6,000 each ot MAGI, whichever is less.

*If neither individual or spouse is covered by a plan, you can deduct up to $6,000 each or MAGI, whichever is less.

**Applies to individuals whose spouses are covered by a workplace plan but are not covered themselves and you are married filing jointly.

Roth IRA: Eligibility of Contributions
Contributions made to a Roth IRA are not deductible, unlike contributions made to a traditional IRA, and there is no age restriction on making contributions. An individual may contribute up to $6,000 to the Roth IRA, subject to income phase-out limits.

Catch-Up Contributions
If you have either a traditional or a Roth IRA and attain age 50 or older during the tax year, an additional $1,000 may be contributed.

Trust and Estate Income Tax Rates

Education Planning

Education Credits

*Can be claimed for up to four years.

Student Loan Interest Deduction

Tax Credits

Annual Exclusion for Gifts