Planning ahead for the 2016 tax season

| November 30, 2015

Compared to previous years, 2015 has been relatively quiet regarding tax law changes. Congress saw fit to extend a handful of tax breaks that threatened to expire annually in years past, but there are no significant changes to complicate the tax filing process. When it comes to taxes, it always pays to plan ahead, so here are three specific things you can do before the end of the year to make filing your taxes next spring just a little bit easier.

  1. Avoid Sticker Shock

People who wait for their tax reporting forms from mutual fund or investment managers are often shocked at the dividend and capital gain distribution numbers and the accompanying tax bill. The result of waiting can be the pleasure of writing a larger-than-expected check to the IRS and, in some instances, a penalty for underpayment of taxes during the year. It is possible to reduce much of the surprise that surrounds these numbers. Mutual fund companies begin releasing information about capital gain distributions during the 4th quarter of each year. For those who own portfolios containing multiple mutual funds with gains or losses from trading activity, make a brief appointment with your Advisor to go over year-to-date dividend and capital gains distributions, and estimates for additional distributions through the end of the year. By gathering this information before year’s end, you’ll have more time to save up or gather resources for a larger-than-usual tax bill and be better prepared to make an estimated tax payment for the 4th quarter of the year to avoid a penalty for underpayment.

  1. Fix IRA Contributions

Many people contribute regularly to a Roth IRA during the year only to find out at tax time that their income caused them to be ineligible for a Roth IRA contribution. In 2015, married couples filing jointly are eligible for a Roth IRA contribution until their adjusted gross income hits $183,000. At that point, the annual contribution limit starts diminishing until it phases out completely when adjusted gross income hits $193,000 (for single filers, the contribution starts phasing out at $116,000 and is eliminated completely at $131,000). Waiting until tax filing time to discover that you are ineligible for a Roth creates an opportunity to reverse those contributions and potentially redirect them to a Traditional IRA. From there, you can consider other IRA strategies with your Advisor. There is nothing wrong with waiting until tax time because the IRS is generous in its timeframe for fixing misdirected IRA contributions, but doing it prior to the end of the year reduces the hassle factor of an already stressful tax filing season.

  1. Procrastinate (in this one case, it may pay off!)

If you are over age 70½ and have an annual charitable giving commitment, it pays to wait for Congress to continue their habit of extending the qualified charitable distribution (QCD) privilege to IRAs. The Senate has extended this distribution option and we are waiting for the House of Representatives to do the same. The QCD rules allow an IRA distribution to be sent straight to a charity and not be included as income to the IRA owner. This feature is incredibly beneficial because it allows that charitable distribution to satisfy the annual required minimum distribution rules. Normally, it is better not to wait until the last minute to take a required minimum distribution, but for the charitably minded, it might pay to wait until December to see if the QCD option is available.



Career military families sticking with frugal ways for Thanksgiving

| November 23, 2015

Again this year, financial uncertainty and concern is prompting middle-class military families to kick off the holiday spending season with a leaner Thanksgiving celebration.

The annual Thanksgiving spending survey through the First Command Financial Behaviors Index® reveals that 82 percent of middle-class military families (senior NCOs and commissioned officers in pay grades E-6 and above with household incomes of at least $50,000) say their Thanksgiving plans will change as a result of the current economic situation.

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DoD Sequestration News

This week in DoD sequestration news

| November 20, 2015

This week I decided to show how sequestration, and specifically DoD budget cuts, are viewed by two different population sets: military households and the general population. Much of this information is drawn from last week’s post, but the interesting thing here is how vastly different these two populations view sequestration.

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Black Friday Shopping

Military families plan most of their holiday shopping for the day after Thanksgiving

| November 18, 2015

America’s career military families are preparing to make Black Friday the focus of their frugal shopping plans again this holiday season.

First Command’s annual holiday spending survey reveals that 40 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) plan to do most or all of their holiday shopping on Black Friday. 

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Elder care challenging family finances of career military

| November 16, 2015

The share of America’s career military families currently providing elder care is on the rise, creating unexpected monetary stresses.

The First Command Financial Behaviors Index® reveals that 42 percent of middle-class military families (commissioned officers  and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) are currently providing care for an elderly parent or other family member.

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DoD Sequestration News

This week in DoD News

| November 13, 2015

This Week in DoD Sequestration News

Anxiety over cuts to defense spending among military families remains high according to the latest results of the First Command Financial Behaviors Index®.

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Federal employee open season enrollment is here

| November 9, 2015

2016 Open Season Enrollment for federal employees is here, running Monday, November 9 through Monday, December 14. During this time, you will have the opportunity to choose your Federal Employee Health Benefits (FEHB) and Federal Employees Dental/Vision Program (FEDVIP) insurance coverage.

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Living life on your terms blog image

Living life on your terms

| November 2, 2015

November has been declared Long Term Care Awareness Month by the American Association of Long Term Care. It’s a time set aside to remind Americans about the importance of planning today for the real possibility that they will need long-term care at some point in their lives.

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DoD Sequestration News

This week in DoD sequestration news

| October 30, 2015

The House passed a bi-partisan budget deal on Wednesday, and the Senate approved it early this morning. It will go to President Obama next week for his signature.

The deal is similar to the Ryan-Murray budget deal of two years ago, which at that time staved off most sequester cuts for a two-year period.

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Skeleton’s hands holding bowl of Halloween candies

Frugal military families ready to spend big on Halloween

| October 26, 2015

America’s normally frugal career military families are not spooked about spending this Halloween season, according to the First Command Financial Behaviors Index®.

Survey results from late September reveal that 50 percent of middle-class military families (commissioned officers and senior NCOs in pay grades E-6 and above with household incomes of at least $50,000) who plan to celebrate Halloween will spend at least $100 and 35 percent will spend more than $200.

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