2019 TAX AND FINANCIAL PLANNING INFORMATION€¦ · An overview of important changes, rates, rules and deadlines to assist your 2019 tax planning. TOPICS IMPORTANCE OF TAX PLANNING

2019 TAX AND FINANCIALPLANNING INFORMATION

An overview of important changes, rates, rules and deadlines to assist your 2019 tax planning

TOPICS

IMPORTANCE OF TAX PLANNING

Social Security Changes

IRS Rules for Late 60-Day Rollovers

QualifiedCharitableDistribution

Medical Expenses Deduction

Mortgage Interest Deduction

SALT

TAX RATES

Deductions

Personal Exemptions Phaseout (“PEP”)

Limitations on Itemized Deductions

QualifiedDividendIncome

Capital Gains Rates

Netting Process

Medicare Tax

Surtax on Unearned Income

Tax on Wages

Alternative Minimum Tax

RETIREMENT

Individual Retirement Accounts

Roth IRA

Catch-upContributions

IRA Rollovers

AfterTax401(k)toRothIRA

Social Security

RequiredMinimumDistributions

2019 TAX AND FINANCIAL PLANNING INFORMATION

ESTATE, GIFT AND GST TAX

Trusts and Estates Income Tax Rates

EstateandGiftTaxRates

EDUCATION

ContributionAmountstoCoverdell

Giftsto529Plans

American Opportunity Credit

Lifetime Learning Credit

Student Loan Interest Deduction

ModifiedAGI–USSavingsBond Interest Exclusion

KIDDIE TAX RULES

Child Tax Credit

BUSINESS

Corporate Tax Rates

Corporate Dividend Exclusion

Standard Mileage Rate

Pass-throughBusinessIncome

CONSIDERATIONS

Present Value of a Lump Sum

Future Value of a Lump Sum

Present Value of a Series of Annual Payments

Future Value of a Series of Annual Payments

TaxableEquivalentYields

IMPORTANT DEADLINES

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2019TAXANDFINANCIALPLANNING TABLES

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THE IMPORTANCE OF TAX PLANNING

After making its way through Congress and seeingnumerous last-minute tweaks, the tax reform bill wasapproved by Congress and then signed by PresidentTrump on December 22, 2017. The new tax rates andcountless other provisions generally took effect onJanuary1,2018.Thisguideprovidesanoverviewoftaxrates, credits, deductions and related considerations that mayapplytoyou.Formore informationaboutchangesmade, please refer to the Comparison of Prior Tax Law withtheTaxCutsandJobsActwhitepaper.

Taxplanningshouldnotbedoneinisolation,butinsteadshould be driven by your overall financial goals andintegratedwith your totalfinancialplan.Bydevelopingand implementing appropriate strategies to lessen or to shift current and future tax liabilities, you canimprove your prospects of meeting long- and short-term objectives. For example, accurately projectingyourincometaxescanhelpyoudeterminethecashflowavailabletoyouinthecomingyear.

Keep inmind that tax lawsareoftencomplexand frequentlychange. As a consequence, you should consult your taxadvisorbeforemakinginvestmentandtaxdecisions.

SOCIALSECURITYCHANGESAs a result of the Bipartisan Budget Act of 2015,“Restricted Application” and “File and Suspend” strategiesarebeingandhavebeenphasedout.


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Restricted Application – Available to individualsbornonorbeforeJanuary1,1954.Thisstrategycanbe elected when the individual reaches their fullretirementageorlater.Restrictedapplicationcreatesanopportunityforonememberofacoupletoclaimaspousalbenefitiftheirspousehasfiled,whileallowingtheirownbenefittogrowuntilage70.Atage70theynormally transition fromaspousalbenefit to theirownbenefit,ifhigher.

File and Suspend –BeforeitsexpirationonApril30, 2016, this strategy allowed one spouse to file for their Social Security benefit at their fullretirement age and immediately suspend receiving their benefit. The act of filing and immediatelysuspendingtheirbenefitallowedtheotherspousetobegindrawinga spousalbenefit.Thisprocessalsoallowedbothoftheirworkerbenefitstodefercreditsupuntilage70.Atage70theywouldthenswitchtotheirownworkerbenefit,ifhigher.

IRSRULESFORLATE60-DAYROLLOVERSWhen redepositing funds from your IRA, Roth IRA or otherplan, individuals receiveacheckandhavea60-dayperiodinwhichtorolloverthosefunds.

Now,withRevenueProcedure2016-47(releasedinAugust 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.TherecanbenopriordenialbytheIRS forawaiver.

2.Thelaterollovermustbeattributedtooneofthe11reasonslistedintheformprovidedby

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theIRS.(Gotoirs.govandsearch“2016-47”forthelistofreasons.)

3.ThefundsmustberedepositedintoanIRAaccount “as soon as practical after the reason or reasons no longer prevent the taxpayer from makingthecontribution.”Thisguidelinedoesincludea30-daysafeharborwindow.

QUALIFIEDCHARITABLEDISTRIBUTIONIRAownerswhoareat least70½yearsoldcouldmakeaqualifiedcharitabledistribution(QCD)ofupto $100,000 directly from an IRA to a charity without havingtoincludethedistributionintaxableincome.LegislationhasmadetheseQCDrulespermanent.

Donating IRA funds directly to qualified charities allowstheIRAholderorbeneficiarytoavoidtakingpossessionofthefundsandthetaxbillthatcomeswith them. It alsoallows theextra income tobeexcludedfromtaxformulasforMedicarepremiums.

In brief, a qualified charitable distribution (QCD)froman IRAcanbemadeonlybyan IRAownerorbeneficiary age 70½or older, and can total up to$100,000.Aspouseage70½withanIRAcouldgiveup to$100,000aswell. AQCDcanbe inexcessofyour required minimum distribution, but cannotexceed$100,000.Thefunds,whichcannotcomefromactiveSEPorSIMPLEIRAs,mustbesentdirectlytothequalified(IRSapproved)charitableorganization.[Thegift cannotbemade toaprivate foundation,donor-advised fund or supporting organization (as describedinIRCSection509(a)(3)).Thegiftcannotbe


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madeinexchangeforacharitablegiftannuityortoacharitableremaindertrust.]

MEDICAL EXPENSES DEDUCTIONDuring 2018, a taxpayer could deduct medical expensesinexcessof7.5%ofAGI.In2019thededuc-tionchangesto10%ofAGI(exceptfortaxpayersage65orolderforwhomthe7.5%floorwillremaininplace).Towriteoffmedicalexpenses,deductionsmustbeitemized.

MORTGAGE INTEREST DEDUCTIONThe Tax Cuts and Jobs Act passed in December2017limitedtheamountofmortgageinterestthatcanbetakenbyanindividualitemizingdeductions.Previously, an individual could deduct interest on upto$1,000,000ofqualifiedmortgagedebtonuptotwohomes.Currenttaxlawretainstheinterestdeduction on up to $1,000,000 for homes acquired before12/15/17but limitsthedeductionfornewpurchases to mortgage debt of $750,000. Thisdeductionisstillallowedforuptotwohomes.

Thedeductionforinterestonhomeequitydebtiseliminatedin2019exceptwhenusedtobuy,buildorsubstantiallyimprovethetaxpayer’shomethatsecurestheloan.

SALTTheTaxCutsandJobsActalso limitedstateandlocaltaxdeductionsto$10,000.

2019 TAX RATES

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

Standard Deduction–Single$12,200; HeadofHousehold$18,350;Joint$24,400. Dependent cannot exceed the greater of $1,100 or$350+earnedincome.

ExtraDeductionifBlindorOver65–SingleandHeadofHousehold$1,650;allothers$1,300

SingleIfTaxableIncomeis: YourTaxis:

Notover$9,700

over$9,700-$39,475

over$39,475-$84,200

over$84,200-$160,725

over$160,725-$204,100

over$204,100-$510,300

over$510,300

10%oftaxableincome

$970+12%oftheexcessover$9,700

$4,543+22%oftheexcessover$39,475

$14,382.50+24%oftheexcessover$84,200




MarriedFilingJointly/SurvivingSpouseIfTaxableIncomeis: YourTaxis:

Notover$19,400

over$19,400-$78,950

over$78,950-$168,400

over$168,400-$321,450

over$321,450-$408,200

over$408,200-$612,350

over$612,350

10%oftaxableincome







Head of Household


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IfTaxableIncomeis: YourTaxis:

Notover$13,850

over$13,850-$52,850

over$52,850-$84,200

over$84,200-$160,700

over$160,700-$204,100

over$204,100-$510,300

over$510,300

10%oftaxableincome







Married Filing Separately IfTaxableIncomeis: YourTaxis:

Notover$9,700

over$9,700to$39,475

over$39,475to$84,200

over$84,200to$160,725

over$160,725to$204,100

over$204,100to$306,175

over$306,175

10%oftaxableincome

$970+12%oftheexcessover$9,700






PERSONAL EXEMPTION PHASEOUT (“PEP”)TheTaxCutsandJobsActremovedpersonalexemptions.As a result, the phase out of personal exemptions was also eliminated.

LIMITATIONS ON ITEMIZED DEDUCTIONS (“PEASE LIMITATION”)The Pease Limitation was removed in the Tax Cuts andJobsAct.ThePeaselimitationreduceditemizeddeductionsby$3,000forevery$100,000ofAGIoverthe threshold amount. The Pease limitation didnot apply to investment interest expenses, medical expenses,casualtyandtheftlosses,andgamblinglosses.Inaddition,thePeaselimitationdidnotapplytoestatesortrusts.QUALIFIED DIVIDEND INCOMEThe tax law indefinitely extended the favorable

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long-term capital gains tax rates for “Qualified dividends.”Toqualify,thetaxpayermusthaveheldthestockformorethan60daysduringthe121-dayperiod beginning 60 days before the ex-dividenddate,andthedividendmustbepaidfromadomesticcorporationorcertainqualifiedforeigncorporations.

Dividend income that is not qualified dividend incomewillbetaxedatordinaryincomerates.

CAPITAL GAINS RATESShort-term Capital Gains: Assets held for one year orlessaretaxedatanindividual’sordinarytaxrate.

Long-term Capital Gains: Assets held for more than oneyeararetaxedatfavorableratesoutlinedinthechartbelow.

NETTING PROCESS

Long Term Capital

Gains Rate Single

Married Filing

Jointly

Head of

Household

Married Filing

SeparatelyTrusts and

Estate

0% Less than $39,375

Less than $78,750

Less than $52,750

Less than $39,375

Less than $2,650

15% $39,376-$434,550

$78,751-$488,850

$52,751-$461,700

$39,376-$244,425

$2,651-$12,950

20% Over $434,550

Over $488,850

Over $461,700

Over $244,425

Over $12,950


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A NOTE ABOUT WASH SALES

Selling a security at a loss and purchasing another “substantially identical” security –within 30daysbeforeor after the saledate –triggers what the IRS considers a “wash sale,” anactionthatdisallowsthelossdeduction.TheIRS looksatallofyouraccounts todeterminewhether a wash sale has occurred, so selling the stockatalossinataxableaccountandbuyingitwithinthat61-daywindowinyour401(k)orIRAisn’taviableoption.

SALE DATE

30daysbefore 30 days after

61-DAYWINDOW

1. Determine whether you have a net short-term or net long-term capital gain or loss on the sale of stock.

2. Netyourshort-termgainsandshort-termlosses.

3. Netyourlong-termgainsandlong-termlosses.

4. Netyourshort-termgain/lossagainstlong-termgain/loss.

5. Forgains,youmustpaytaxonallgainseachyear.Forlosses, you may only deduct up to $3,000 of excess lossesagainstordinaryincomeperyear.

6. Carry over any remaining losses to future taxyears.

MEDICARE TAX

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On January 1, 2013, pursuant to the Health Care and Education Reconciliation Act of 2010, high-income taxpayersbecamesubjecttotwoadditionalMedicaretaxes–anadditional0.9%Medicarepayrolltaxanda3.8%Medicaresurtaxonnetinvestmentincome.

3.8%SURTAXONUNEARNEDINCOMEThe3.8%surtaxon“unearnedincome”appliestoindividuals,trustsandestates.“Unearnedincome”is defined as investment income such as income from interest, dividends, annuities, royalties, capital gainsandotherpassiveincome.

Twoconditionsmustbemet for the3.8%surtaxtoapply.First,thetaxpayermusthaveinvestmentincome, and second, the taxpayer’s modifiedadjusted gross income (MAGI) must exceed thelimitsbelow,whicharenotindexedforinflation:

•$250,000fortaxpayersfilingjointly •$125,000fortaxpayersmarried

filing separately • $200,000 for other taxpayers

Forpurposesofthe3.8%surtax,theMAGIlimitationissimplythetaxpayer’sadjustedgrossincome(AGI)plus any excluded net foreign income. In generalterms,AGI is thenumberatthebottomofthefirstpageofataxpayer’s1040(line37).

If those two conditions aremet, then the 3.8%surtax applies to the amount of the investment income, or if smaller, the difference betweenthe taxpayer’sMAGI and the limits listed above.For example, if a single taxpayer has $10,000 of dividend incomeandMAGIof$205,000, then the

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3.8%surtaxappliesto$5,000.IfthesametaxpayerhadMAGIof$211,000,the3.8%surtaxwouldapplyto$10,000.

Filing Status 3.8%SurtaxApplies

to the Lesser of:

Married Filing Jointly Investment Income

MAGI minus $250,000

Married Filing Separately Investment Income

MAGI minus $125,000

All Others Investment Income

MAGI minus $200,000

The 3.8% surtax does not apply to distributionsfrom tax-favored retirement plans such as IRAs or qualified plans, although distributions fromtax-favored retirement plans may increase a taxpayer’sMAGI over the limits discussed aboveandtherebypotentiallyexposeinvestmentincometo the 3.8% surtax. In general terms, the 3.8%surtaxdoesnotapplytoactivetradesorbusinessesconductedbya soleproprietor,S corporationorpartnership, or to the gains and losses on the sale ofactivetradesorbusinesses.However,workingcapitalisnottreatedasbeingpartofanactivetradeorbusinessforpurposesofthe3.8%surtax.

0.9%TAXONWAGESAnadditional0.9%Medicaretaxwillbe imposedon wages of employees and on earnings of self-employedindividuals.The0.9%Medicaretaxwillapply to wages and self-employment earnings abovethelimitsbelow,whicharenotindexedfor

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inflation:

•$250,000fortaxpayersfilingjointly •$125,000fortaxpayersmarried

filing separately • $200,000 for other taxpayers

The0.9%Medicaretaxappliestoemployees,butnottoemployers.Forjointfilers,thetaxappliestothespouses’combinedwages.Forself-employedindividuals,the0.9%taxisnotdeductible.

ALTERNATIVE MINIMUM TAXThe tax rates for computing the AMT tax have remainedthesameat26%and28%,howevertheexemptionandphaseouthavechanged.

Filing Status AMT Exemption 2018AMT Exemption

Phaseout Threshold 2018

Single Filers and Head of Household $71,700 $510,300

Married Filing Jointly and Surviving Spouses

$111,700 $1,020,600

Married Filing Separately $55,850 $510,300

RETIREMENT

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INDIVIDUAL RETIREMENT ACCOUNTSGenerally, traditional IRA contributions are fullydeductibleunlessyouoryourspouseiscoveredbyaworkplaceretirementplan,inwhichcasethefollowingdeductionphaseoutsapply. Ifneither individualnorspouseiscoveredbyaplan,youcandeductupto$6,000eachorMAGI,whicheverisless.Contributionsarenotallowedintheyearonereachesage701/2orolder.

TraditionalIRA:DeductibilityofContributions

StatusModifiedAdjustedGross Income

Deduction Allowed

Single Filers and Head of Household

$0-$64,000 $6,000 Maximum

$64,000-$74,000 Partial

Morethan$74,000 None


$0 - $103,000 $6,000 Maximum

$103,000 - $123,000 Partial

More than $123,000 None

Married Non-Covered Spouse*

$0 - $193,000 $6,000 Maximum

$193,000 - $203,000 Partial


*Appliestoindividualswhosespousesarecoveredbyaworkplaceplanbutwhoarenotcoveredthemselves.

CATCH-UPCONTRIBUTIONSIf you have either a traditional or Roth IRA and attain age50orolderduring the taxyear,anadditional$1,000maybecontributed.

ROTH IRASContributionsmadetoaRothIRAarenotdeductible,

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unlike contributionsmade to a traditional IRA, andthere is noage restrictiononmaking contributions.An individual may contribute up to $6,000 to the RothIRA,subjecttoincomephaseoutlimits.

RothIRA:EligibilityofContributions

StatusModifiedAdjustedGross Income Contribution

Single Filers and Head of Household

$0 - $122,000 $6,000 Maximum

$122,000-$137,000 Partial

Morethan$137,000 None


$0 - $193,000 $6,000 Maximum

$193,000 - $203,000 Partial


CATCH-UPCONTRIBUTIONSIf you have either a traditional or Roth IRA and attain age 50orolderduringthetaxyear,anadditional$1,000maybecontributed.

Traditional&RothIRAContribution

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Individual maximum contribution

Catch-upcontribution ifage50orolder

$6,000 $1,000

401(k),403(b),457andSARSEPContribution

Employee maximum deferralcontribution

Catch-upcontributionifage50orolder

$19,000 $6,000

SimpleIRAContribution

Employee maximum deferralcontribution

Catch-upcontributionifage50orolder

$13,000 $3,000

Individualannuallimit(415forDCplans):$56,000Maximum compensation limit: $280,000Key Employee limit:$180,000forofficers,$150,000formorethan1%owners,$1formorethan5%ownersHighly Compensated Employee limit:$125,000

IRA ROLLOVERSCurrently,youcanonlymakeonerolloverfromanIRAina12-monthperiod.Inthepast,individualswouldtakedistributions from separate IRAs andmakemultiplerolloverswiththephilosophybeingeachIRAonlyhadonerollover.TheIRShasclarifiedthatallyourIRAsarecounted as one and only one rollover can occur per 12-monthperiod.However,thisisdifferentthantrusteetotrusteetransfers.Thosemovementsofmoneyarestillunlimited.Therulingappliestoindividualsreceivingacheckintheirhand,andthenrollingthemoneybackintothe IRA within 60 days.

AFTERTAX401(K)TOROTHIRA

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Previously if you wanted to roll your after-tax moneyina401(k)toaRothIRA,youhadtonavigatethrough some very complicated rules that even expertscouldnotalwaysagreeuponandthenkeepyourfingerscrossedthattheIRSwouldblessthetransaction.Now, if youhaveafter-taxdollars inaplanandyouareabletotakearollovereligibledistribution,youmaydirectthoseafter-taxdollarstoaRoth IRAasa tax-freetransaction.Therearetwo critical elements to the distributions. First,you must tell the plan administrator how you are allocating the pre-tax and after-tax dollars beforehand (separate checks preferred). Andsecond,thetransfersmustoccuratthesametime.

SOCIALSECURITYMaximum monthly benefit for retirees at fullretirementagein2019is$2,861.

If an individual files for Social Security prior to FRA, theyaresubjecttotheearningstest.Benefitswillbewithhelduntilfullretirementage,whenbenefitsare increased permanently to account for withheld benefits.

For those under full retirement age for the entire year:$17,640*Formonthsbeforereachingfullretirementageintheyearfullretirementagewillbereached:$46,920**Beginningwithmonthreachingfullretirementage: No reductioninbenefitassociatedwithearnings

*Ifyourearningsexceedthis,then$1ofbenefitsiswithheldforevery$2you earnabove$17,640

**Ifyourearningsexceedthis,then$1ofbenefitsiswithheldforevery$3you earnabove$46,920


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Taxation Thresholds

Upto50%taxed Upto85%taxed

Single $25,000-34,000 Morethan$34,000

Married Filing Jointly

$32,000-44,000 Morethan$44,000

*TaxationisbasedonCombinedIncome,whichisdefinedasAGI+ nontaxableinterest+1/2SocialSecurityBenefits

Taxablewagebase: $132,900

REQUIREDMINIMUMDISTRIBUTIONSMost IRA ownerswill use the following uniform life tableto calculate RMDs. There is an exceptionwhen a spousalbeneficiaryismorethan10yearsyoungerthantheparticipantandisthesolebeneficiaryonJanuary1.Inthiscase,adifferenttableisused.

To calculate your RMD, first find the age you will turn in 2019andthecorrespondingapplicabledivisor.Thendividetheprioryear-endbalanceofyourIRAaccountbythedivisor.Theresultingnumberisthedollarfigureyouwill need to remove from your IRA to meet your RMD for thecurrentyear.

For illustration purposes we are using Table III(UniformTables).

Forexample,ifyouarenow82,yourapplicabledivisoris17.1.IfthebalanceinyourIRAasofDecember31oflastyearwas$235,000,dividethatamountby17.1.Theresultis$13,742.69.ThisistheamountofyourRMDforthecurrentyear.

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AgeApplicable

Divisor AgeApplicable

Divisor AgeApplicable

Divisor

70 27.4 86 14.1 102 5.5

71 26.5 87 13.4 103 5.2

72 25.6 88 12.7 104 4.9

73 24.7 89 12 105 4.5

74 23.8 90 11.4 106 4.2

75 22.9 91 10.8 107 3.9

76 22 92 10.2 108 3.7

77 21.2 93 9.6 109 3.4

78 20.3 94 9.1 110 3.1

79 19.5 95 8.6 111 2.9

80 18.7 96 8.1 112 2.6

81 17.9 97 7.6 113 2.4

82 17.1 98 7.1 114 2.1

83 16.3 99 6.7 115+ 1.9

84 15.5 100 6.3

85 14.8 101 5.9

2019 ESTATE, GIFT AND GENERATION SKIPPING TAX

GST Exemption Equivalent Amount $11,400,000

Annual Gift Tax Exclusion $15,000

Non-Citizen Spouse Annual Exclusion $155,000

GiftandEstateTaxApplicableExclusionAmount $11,400,000

Unified Credit Amount $4,505,800

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TRUST AND ESTATE INCOME TAX RATESIfTaxableIncomeis: YourTaxis:

Not over $2,600

over $2,600 to $9,300

over$9,300to$12,750

over$12,750

10%ofthetaxableincome

$260plus24%oftheexcessover$2,600

$1,868plus35%oftheexcessover$9,300

$3,075plus37%oftheexcessover$12,750

EstateandGiftTaxRates

TaxableGift/Estate PercentageOf

Amount

Over Not Over Pay On Excess Above

$0 $10,000 $0 18% $0

10,000 20,000 1,800 20% 10,000

20,000 40,000 3,800 22% 20,000

40,000 60,000 8,200 24% 40,000

60,000 80,000 13,000 26% 60,000

80,000 100,000 18,200 28% 80,000

100,000 150,000 23,800 30% 100,000

150,000 250,000 38,800 32% 150,000

250,000 500,000 70,800 34% 250,000

500,000 750,000 155,800 37% 500,000

750,000 1,000,000 248,300 39% 750,000

$1,000,000 $345,800 40% $1,000,000

allowing married couples to gift acombined

$30,000

$15,000›THE ANNUAL GIFT TAX EXCLUSION

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EDUCATION

CONTRIBUTIONAMOUNTSTOCOVERDELL$2,000perbeneficiary.Thisamount isphasedoutfrom$190,000to$220,000formarriedfilingjointly,and$95,000to$110,000forsinglefilers.

GIFTSTO529PLANGifts canbe front loadedup to $75,000 (5 years x$15,000annualexclusion)and$150,000formarriedcoupleswhosplitgifts.Frontloadingusestheannualgift tax exclusion for the current year and the next fouryears.

As part of the 2018 tax legislation, the use of 529planshasbeenextendedtocoverexpensesfortuitionin connection with enrollment or attendance at an elementaryorsecondarypublic,private,orreligiousschool.Theseexpensesforasinglebeneficiaryduringanytaxableyearshouldnotexceed$10,000incurredduringthatyear.

AMERICANOPPORTUNITYCREDITUpto100%ofthefirst$2,000,and25%ofthenext$2,000, for a total of $2,500maximum credit pereligible student per year,with reduction forMAGIbetween$80,000and$90,000 for single filers,and$160,000and$180,000forjointfilers.

LIFETIME LEARNING CREDITUp to 20% of the first $10,000 (per taxpayer) ofqualified expenses paid in 2019 with reduction for MAGI from$58,000 to $68,000 for single filers and$116,000to$136,000forjointfilers.

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STUDENT LOAN INTEREST DEDUCTION$2,500“above-the-line”deduction,withreductionforMAGIfrom$70,000to$85,000forsinglefilersand$140,000to$170,000formarriedfilingjointly.

MODIFIEDAGI-U.S.SAVINGSBOND INTEREST EXCLUSION$81,100 to $96,100 for single filers and $121,600 to$151,600 formarried filing jointly.Bondsmustbe titled in thenameof theparents only, ownermust be age 24 or older at the time of issue,proceedsmustbeusedforqualifiedpost-secondaryeducationexpensesofthetaxpayer,thetaxpayer’sspouseorthetaxpayer’sdependent.

KIDDIE TAX RULES

The Kiddie Tax rules require the unearned income ofachildoryoungadultbetaxedatthetrustandestate tax rates once the unearned income exceeds $2,200.UndertheKiddieTaxrules,thefirst$1,100inunearnedincomeisnotsubjecttotax.Thenext$1,100ofunearnedincomeistaxedatthechild’srate.Then, any unearned income of more than $2,200 is taxedatthetrustandestaterate.TheKiddieTaxrulesapply to unearned income of the following:

• A child under age 18 at the end of each tax year

• An 18-year-old whose earned income does not exceed one-half of his or her support

• A 19- to 23-year-old full-time student whose earned income does not exceed one-half of his or her support

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Please note, your child would not be subject to the Kiddie Tax if:

• He or she only had earned income

•Heorsheisnotrequiredtofilebecausetheirincomeisbelowthefilingthreshold

•Heorsheisfilingjointly

CHILD TAX CREDITWith the TaxCuts and Jobs Act, theChild TaxCreditwas expanded to $2,000 per child, with $500 beingnonrefundablefordependentswhoarenotqualifyingchildren.Thecredit isphasedout$50foreach$1,000or fraction thereof of MAGI over $200,000 for single filers andmarriedfilingseparatelyand$400,000formarriedfilingjointly.Thecreditisalsopartiallyrefundableupto15%ofearnedincomeinexcessof$2,500foramaximumrefundof$1,400.

BUSINESS

CORPORATE TAX RATES:Flat21%

CORPORATE DIVIDEND EXCLUSIONCorporationsgetataxbreakforinvestingincommonandpreferredstocks(ofcompaniesotherthantheirown).

• There is a dividend exclusion of 50% that applies to corporations that own less than 20% of the other company. (In other words, 50% of dividends received fromanothercorporationaretax-free.)

• Ifthecompanyownsbetween20%and80%,thedividend exclusionis65%.

• If the company owns 80% ormore, the exclusion is100%.

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STANDARD MILEAGE RATE58centspermileforbusinessmiles.

PASS-THROUGHBUSINESSINCOMEThe Tax Cuts and Jobs Act introduced new taxationforpass-throughbusinesses.Anybusinessorganizedas a sole proprietorship, LLC, and partnership pays income as a pass-through entity. Owners can nowtakea20%deductiononthebusinessincome,withlimitations phasing in above $157,500 for singlefilersand$315,000formarriedfilingjointly.Thereare limitations on a taxpayer’s ability to take thededuction, and anyone subject to this new ruleshouldcontacttheirCPAformoreinformation.

CONSIDERATIONS

PRESENT VALUE OF A LUMP SUMWhatifyouknowyouwillneed$10,000accumulated10 years from now? How much money do you need to investtodayatanaverageinterestrateof8%toobtainyourgoal?Lookingatthetablebelow,goto10yearsandthenacrossto8%.Youseethat$0.463investedtodayat8%shouldyield$1in10years.Sinceyouwant$10,000,multiply$0.463by$10,000toarriveat$4,630.

Years 5% 6% 8% 10% 12%

10 .614 .558 .463 .386 .322

20 .377 .312 .215 .149 .104

30 .231 .174 .099 .057 .033

40 .142 .097 .046 .022 .011

This is a hypothetical illustration and is not intended to reflect the actual performance of any particular security. Actual investor results will vary.Investmentsinvolveriskandyoumayincuraprofitoraloss.

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FUTURE VALUE OF A LUMP SUMIfyouinvest$10,000ataninterestrateof8%,howmuchwillyour investmentbeworth in10years?Byreferringtothetable,youfindthat$1investedtodayat8%wouldgrowto$2.159 in10years.Sinceyou invested$10,000,multiply$2.159by$10,000,givingyou$21,590.

Years 5% 6% 8% 10% 12%

10 1.629 1.791 2.159 2.594 3.106

20 2.653 3.207 4.661 6.727 9.646

30 4.322 5.743 10.063 17.449 29.960

40 7.040 10.286 21.725 45.259 93.051

PRESENT VALUE OF A SERIES OFANNUALPAYMENTSHow much money would you need to invest today at an interestrateof8%toprovide$10,000peryearfor10years?Lookingatthechartbelow,toreceive$1peryearfor10yearsat8%,youwouldneedtoinvest$6.710.Multiplythatfigureby$10,000toget$67,100,theamountwhichyouwouldneedtoinvest.

Years 5% 6% 8% 10% 12%

10 7.722 7.360 6.710 6.145 5.650

20 12.462 11.470 9.818 8.514 7.469

30 15.372 13.765 11.258 9.427 8.055

40 17.159 15.046 11.925 9.779 8.244

These are hypothetical illustrations and are not intended to reflect the actual performanceofanyparticularsecurity.Actual investor resultswillvary. Investmentsinvolveriskandyoumayincuraprofitoraloss.

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FUTURE VALUE OF A SERIES OFANNUALPAYMENTSIfyoudeposit$5,000 inanannuityat theendofeachyearfor10yearsatan8%interestrate,youwouldhave$72,435($5,000x$14.487)inyouraccountattheendofthe10thyear.

Years 5% 6% 8% 10% 12%

10 12.578 13.181 14.487 15.937 17.549

20 33.066 36.786 45.762 57.275 72.052

30 66.439 79.058 113.283 164.494 241.333

40 120.800 154.762 259.057 442.593 767.091

TAXABLEEQUIVALENTYIELDS Taxable equivalent yield is the return that is required ona taxable investment tomake it equal to the returnon atax-exempt investment. The taxable equivalent yield iscommonlyusedwhenevaluatingmunicipalbondreturns.

TaxExemptYields 15% 25% 28% 33% 35% 39.6%

4.00 4.71 5.56 5.55 5.97 6.15 6.62

4.50 5.29 6.25 6.25 6.71 6.92 7.45

5.00 5.88 6.94 6.94 7.46 7.69 8.28

5.50 6.47 7.64 7.63 8.20 8.46 9.11

6.00 7.06 8.33 8.33 8.95 9.23 9.93

6.50 7.65 9.03 9.02 9.70 10.00 10.76

7.00 8.24 9.72 9.72 10.44 10.77 11.59

These are hypothetical illustrations and are not intended to reflect the actual performanceofanyparticularsecurity.Actual investor resultswillvary. Investmentsinvolveriskandyoumayincuraprofitoraloss.

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IMPORTANT DEADLINES

Quarterly taxes due April15,2019;June17,2019; September16,2019;January15,2020

Corporate return deadline March15forcalendaryearpartnershipsand S-corporations returns

RMD deadline

April1,2019,forthosewhoreached70½in2018 December31thereafter

Tax deadline April15,2019,for2018returns October15,2019,forextensions

RMD,lockingains/losses,makecontributions

to529plans,gift December31,2019

SIMPLE IRA

October1,2019

QualifiedPlanEstablishment December31,2019


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any government agency, not bank guaranteed, subject to risk and may lose value.66460219 JPR 2/19

Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar

with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You

should discuss tax or legal matters with the appropriate professional.

Documents

2019 TAX AND FINANCIAL PLANNING INFORMATION€¦ · An overview of important changes, rates, rules and deadlines to assist your 2019 tax planning. TOPICS IMPORTANCE OF TAX PLANNING