Saving for Retirement in 2019: 401Ks, IRAs, and Social Security

Saving for retirement is getting just a little bit easier in 2019.  As the cost of living increases, the IRS has announced higher contribution limits to 401Ks and IRAs.  These changes attempt to mirror the rise in cost of living expenses.  Technical guidelines are many and can be found in Notice 2018-83.  The major highlights for these 2019 changes include an increase from $18,500 to $19,000 for 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan.  Contributions to IRAs have not seen an increase since 2013, but are now shifting from $5,500 to $6,000. Also of note, there are certain conditions which allow deductions from traditional IRAs.  For example, if the taxpayer or spouse is covered by a retirement plan at their work, the IRS allows for a reduction or phase out of the deduction until eliminated.

Cost of living increases are having a positive impact on Social Security benefits in 2019 as well.  The Consumer Price Index measures cost of living increases based on changes in prices paid on consumer goods and services.  Social Security benefits will see a 2.3% increase in direct proportion to the CPI increase this past year. Of course, this increase in social security benefits will be covered by an increase in taxes in 2019.  The Social Security contribution will increase by around 3%.

If you are saving for retirement, 2019 will be a good time to add a little bit more to your nest.  At the same time, plan for the increase to come at tax time on social security contributions. If you are looking for additional information on changes to retirement saving and investing, we can help!


Just Because Gives: Greeting Cards for Worthy Causes

If you are looking for a unique gift this holiday, you’ve come to the right place!  Just Because offers whimsical greeting cards featuring real, live animals.  Their adorable designs utilize no photo shopping and star Pearl, a curious wild chipmunk who loves peanuts.  Pearl willingly poses for the camera in creative scenes designed to celebrate nature and fun. Pearl’s babies, Chip and Salsa, love free food but have not yet shown the same willingness to pose for pictures.

Just Because was created by Bethany, who has spent three decades working in the nonprofit world.  During that time she has worked to help prevent human trafficking, child sexual abuse, and homelessness.  The greeting card business allows her to balance a life seeking justice and fairness for everyone with taking time to just relax and be.  Just Because allows her to give back to causes that she believes in while pursuing other hobbies and enjoying nature. For every Just Because purchase, 50% of the profit is passed on to one of several charities committed to making the world a better place.  Among these worthy organizations are Hope International, International Justice Mission, Preemptive Love, and Samaritan Safe Places.  These organizations share a common bond of working to create safe and fair conditions for all people.

In addition to Pearl’s greeting cards, Just Because has teamed up with Freiman Stoltzfus.  As a friend and local artist, Freiman paints the gorgeous Freedom Dancer cards for Bethany to sell in conjunction with her own creations.  An equal portion of proceeds from these cards benefits the same worthy organizations.  

Pearl’s greeting cards will bring a smile to anyone’s face. To see available designs, please visit   https://justbecause.gives/cards/.  Five retail store fronts also offer the cards around Lancaster County and those locations can be found online at https://justbecause.gives/retail-locations/.  To view the latest Just Because happenings and creations, check them out on instagram, youtube, and facebook.  To contact Bethany directly, she can be reached at justbecausegives@gmail.com.

 

 

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”


Tax Inflation Adjustments

It’s never too early to plan ahead!  While we are still in the midst of preparing 2018 taxes for April 2019, the IRS has just released several changes that will impact next year’s tax returns.  These 2019 tax year adjustments are to be used on tax returns filed in 2020 and were designed to adjust for inflation.  Some of the more relevant to the majority of taxpayers are described here.

To begin, the standard deduction increases for everyone.  For married filing jointly it rises $400, for single taxpayers and married individuals filing separately it goes up $200.  Heads of households will experience a $350 increase from the prior year.

Many other deductions, exemptions, and credits will realize various increases for tax year 2019 as well.  Among these are the Alternative Minimum Tax exemption, which sees both an increase in the exemption amount and the phase out dollar figure.  Additionally the Earned Income credit increases when filing jointly with three or more qualifying children. The amount allowed for qualified adoption expenses increases incrementally as well.  There will be no penalty for not having minimum health coverage in 2019.

As can be seen, the number of changes and the intricacies are wide ranging.  Over 60 tax provisions were adjusted for 2019. For a complete list of these tax inflation adjustments, the IRS website contains a detailed list.  Our office is open for questions as well.  While many of these increases are small, the amounts can add up depending upon your filing status and qualifications!


Sam Beiler: Boosting Your Business Marketing Potential!

Sam Beiler is a local business entrepreneur who understands the power of marketing at all levels.  He began his career as a roofing tech with B&E roofing. There he gained the hands on experience that allowed him to see innovations that would work in the roofing industry.  His next steps were with Equipter in manufacturing, sales, and director of marketing.  Equipter creates the machinery that enables the roofing industry to run a little easier.  

Sam has been an Equipter team member for 11 years.  Throughout this time he’s worked with roofers and general contractors to help them to market their business.  The thing he enjoys most about his experiences in business is helping individuals and companies reach their full potential and purpose.  Sam’s 3 years in sales at Equipter where very impactful in gaining experience and education in business. He has been able to take the knowledge and experience gained there to create his own marketing platform, Boostpoint.  

Boostpoint is a streamlined ad platform that helps local brands create, target, publish and measure digital ad campaigns to build a brand that generates more local business.  Boostpoint helps small businesses to generate more revenue with 1 streamlined platform. With Boostpoint’s help, your business can create, target, publish, and then measure your digital ad campaigns.  To learn more about Boostpoint, check out their informational video.  Sam enjoys photography and videography when he has spare time.  He has been able to utilize his hobby in videography to create documentaries about his journey with the Boostpoint start-up.

Sam shares his brand building strategies through marketing workshops and webinars.  If you would like to learn more about how he can help your business achieve greater potential, he can be reached at 717-983-4474 or sam@boostpoint.com.

 

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”

 


The TCJA and Its Impact to Farmers

Lancaster County is thankful for our rich variety of farmlands, from tomato to dairy with a bit of everything else in between.  The Tax Cuts and Jobs Act (TCJA) has brought about some tax reform changes for our farming neighbors. As many business sectors are experiencing, the changes come in the areas of accounting and depreciation.  Following are some of the pros and cons as outlined by the IRS.

Net Operating Losses can now be carried forward indefinitely as opposed to a previous 20 year limit.  However, these loss deductions are limited to 80 percent of taxable income. The TCJA allows more farms to utilize the cash basis of accounting for taxes.  This change is good for farmers with average annual gross receipts of $25 million or less in the previous three years. For more information on how tax reform impacts farmers accounting, the IRS provides detailed information on their website.

The TCJA also affects how farmers may depreciate their farming business.  The IRS defines depreciation best: “Depreciation is an annual income tax deduction. It allows a taxpayer to recover the cost or other basis of certain property over the time that they use it. When figuring depreciation, taxpayers consider wear and tear, and deterioration of the property, as well as whether it’s now obsolete.”

How does the TCJA alter this depreciation deduction?  The recovery period is now shortened from what was seven years to just five years.  Used equipment and several other categories do remain at seven years, but the switch to five years will have an impact.  At the same time, several positive changes were made to increase bonus depreciation percentages and to expand the definition of what qualifies for bonus depreciation.  Because the number of stipulations and scenarios are so great, we recommend and refer to the IRS site again for more detailed information on exactly what equipment and property is covered.  Still confused after reading all of that information? Our office and phones are open, give us a ring!


Getting Divorced and Your Taxes

Last week in, Getting Married and Your Taxes, we explored what to do with your taxes as you tie the knot.  But what do we need to consider when saying, “I Don’t”? Among the changes seen with the December 2017 passing of the Tax Cut and Jobs Act (TCJA) are impacts to couples who divorce after 2018.  We discussed the Tax Cuts and Jobs Act in September and shared financial tips for those going through divorce in July with Starting Over After Divorce.  Here we will take a more indepth look at the specific changes the TCJA means to divorced taxpayers, along with financial considerations from a tax perspective.

The TCJA plans to raise billions in revenue for the government over the next several years.  To do so, many groups have been affected including those filing for divorce after the end of 2018.  For nearly a century, a deduction has been allowed to the spouse paying alimony. For all divorces finalized beginning January 1, 2019, alimony will not be tax deductible.  This could have the unfortunate consequence of leading to spouses not agreeing to paying alimony or settling for a much lower payment. Most often, alimony is paid to the woman in the divorce.  This tax change will therefore have a major impact on the financial livelihood and future of women.

An additional unfortunate consequence of this change is that many couples are speeding up divorces to be sure that they are completed prior to the end of 2018.  This can lead to hasty decision making and not keeping everyone’s best interest in mind.

There are additional tax considerations to make when filing for a divorce beyond those relevant to the TCJA.  Start to create your own statement of personal worth. To do so, gather paperwork for all of your assets and accounts.  This year would be a good one to call upon a professional tax preparer to help with your annual tax returns.

If you are planning to sell your home, it is best to do so while your still married for tax purposes if the home value has increased by more than $250,000.  Capital gains up to $500,000 are tax exempt for those filing as married but only up to $250,000 for single filers.

It is just as important to report address and name changes to employers, the IRS, and the post office when you get divorced as it is when you get married. Make changes with your employer if your W4 withholdings change.  Many of the considerations for newly wed couples apply in cases of divorce.

Going through a divorce hurts, but being prepared financially can take a little bit of the sting out.  Let our office know if you need help with tax questions during this difficult time. We are here to help!

 


Summer Day Camp & Your Taxes

Child and Dependent Care credit may cover more than you think come tax season.  If your child enjoys summer day camps, from arts and crafts to water polo, those expenses generally count as allowable expenses.  The credit was created as a way to help working parents. It serves to reduce the amount of federal income tax due and it varies depending on earned income.  There are several requirements to consider, but many taxpayers overlook these deductions when preparing for tax season. We discussed the specifics of dependent care in Whom May I Claim As a Dependent, and the following provides more specific information for summer day camps.

 There are several requirements to claim day camp expenses under the Child and Dependent Care credit.  Campers must be under the age of 13 and the camp cannot be an overnight one. However, you may select any day camp that you like, even if it’s not the least expensive.  The purpose of sending your child to the camp must be to provide care for the child while parents are working. In this way, camp expenses are comparable to daycare or babysitting fees paid to allow parents to work.  The camper must be you or your spouse’s direct dependent. You also need to pay for the camp above the table. While camp expenses are covered, equipment needed to participate in the camp does not count. If either parent is a stay at home parent or otherwise not actively seeking employment, the family does not qualify for this credit.    Finally, credit is not available if the day camp provider is your spouse, dependent, or the parent of the child.  

The tax credit allowed is 35% of expenses up to $3,000 for one child and $6,000 for 2 or more campers.  At tax time you will need a federal form 2441 attached to your 1040, 1040A, or 1040NR.  In order to claim this credit, you cannot use 1040EZ forms.

To see if the Child and Dependent Care credit is applicable to summer camp fees you may have paid this summer, see IRS Publication 503, Child and Dependent Care Expenses, for more information.


Getting Married and Your Taxes

If you tied the knot in 2018, there are several things you can do now, to make tax season a lot easier.

Before you file your return, be sure to report name changes to the Social Security Administration.  This can be done with a Form SS-5 Application for a Social Security Card. You will also want to report address changes to the US Postal Service, IRS, and your employer.  The IRS will need a completed Change of Address Form 8822. You can stop in at your local post office or visit their website to complete your address change with them.  This step will help to ensure that you receive all of the necessary tax paperwork in time to complete your return and you won’t have to chase it down next year. Remember, you are considered married for the entire tax year, regardless of what date you say “I Do”.

You now have more than 1 person to consider with your W4 paycheck withholding.  Be sure to use the Withholding Calculator to verify which withholding status is best for your new situation.  Then follow-up with your employer to change if needed.

There are some definite positives to be realized through marriage from a tax perspective.  We reviewed many of these advantages in our post Married….the Pros and Cons of Filing Separately.  Filing with a spouse allows a greater deduction for charitable contributions made throughout the year.  Along the lines of charity, you are legally allowed to leave any amount of money to your spouse without estate taxes being inflicted. Similarly, you may give cash or property gifts without worry of gift taxes.  Filing married usually leads to higher returns, takes less time than filing 2 returns, and generally costs less than filing 2 returns. With those larger returns, you can pay off debt, invest some in an IRA, or any of the countless options we shared in Spending Your Refund. Some additional perks include being able to claim two personal exemptions and a higher standard deduction.

There are of course some negatives to consider, as with anything.  Filing married makes you responsible for your new spouse’s old debt.  It will be harder to deduct for medical expenses because of your higher level of combined income.  While these risks should be considered, they’re certainly no reason to prevent walking down the aisle.  Just do your research and be prepared ahead of time……and congratulations!


Jesse Holloway Graphic Designer for Small Business

If you run a small business, advertising is essential.  It serves to help you look professional and get your name out there.  It is important to take the time to put yourself in front of people in your target market. Experienced graphic design and marketing professionals can help you through this process.

This is where Jesse Holloway and Akusuo can help.  Jesse has been a graphic designer for 12 years and in marketing for 5 years. His training began locally as he attended PCA&D for graphic design.  Prior to starting his own business he worked at Clipper Magazine.

Jesse enjoys coming up with creative solutions to help small businesses achieve a professional look. To meet this need, he offers graphic design and marketing services. He has also been known to help out with 3D modeling of products.  One unique part of Akusuo’s business model is their willingness to barter services. Trading services is how Jesse and ITP Taxes LLC were first introduced. Both businesses were at the beginning stages of development and the exchange of services was a great start for both organizations.

To find out more about how Jesse and Akusuo can help your business, Jesse can be reached via email at jesse@akusuo.com.

 

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“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”


Steve Ulrich Marietta’s Own Escape Room Host

Steve Ulrich is fortunate to have not just one, but five jobs that many would consider to be “dream careers”.  His businesses include two video-related companies: My Digital Conversion and Wilkum Studios, an escape room: First National Escape, a co working space: First National Coworking, and an outdoor ice cream café: Mulberry Thrill. He manages these companies with the assistance of his wife Abby out of an 1875 Victorian Bank in Marietta. If this isn’t enough, he enjoys serving as an adjunct professor of Video Production at Lebanon Valley College!

With a degree in Film Studies & English Literature from the University of Pittsburgh and a second degree in Business Administration from Albright College in Reading, PA, Steve is able to combine his passion for film and business.  His resume includes 13 years of freelance post-production with shows airing on PBS, Discovery Channel, TLC, NBC, and National Geographic, and 10 years of independent production through his company Wilkum Studios, providing all of your video production needs locally, including videography, 360 videography, motion graphics, voice-over, color correction, encoding for web or mobile, and custom music.  

At My Digital Conversion, Steve and his employees can transfer your film, audio, photos, and videos to digital CD, DVD, thumb drive, hard drive, or the web.  They can create custom slideshows and videos where you play the part of the “director.” Reminder: Christmas is right around the corner and custom DVDs and videos make a great Christmas gift!  

First National Coworking is one of the more unique co working spaces in the country, if not the world. A variety of eclectic, historical, and functional spaces serve the business needs of individuals and groups such as: small business owners who do not (yet) have their own private space, those traveling for business, teams who require conference space outside of their normal offices, students and writers.

First National Escape is an exciting variation on your typical escape room.  Located in an authentic 1875 Victorian Bank, the object is to break into the vault and collect as much money as possible in an hour before getting caught.  The artifacts found in the vault are antiques that span the age of the original bank from 1875 to 2000. The escape room provides more than your typical venue of this type.  If you are looking for a day with friends or family or to build up your corporate team, First National Escape offers common areas to relax and drink a cup of coffee, or conference areas that can comfortably fit up to 30 people.  From there, you can explore the rest of historic Marietta including the newly completed Northwest Lancaster County River Trail. This 14-mile long mostly flat paved trail is very popular for bikers and hikers and offers beautiful views of the Susquehanna River, White Cliffs, and bald eagle nests.

And if you happen to be on the Northwest Lancaster County River Trail, take a break and enjoy some ice cream or iced coffee at Mulberry Thrill, served out of the former Drive-Thru Teller Window located at the rear of the bank at 100 West Market Street in Marietta. All ice cream sandwiches are homemade, and they also offer classic novelties that you would find in an ice cream truck in the 1970s, along with some modern gluten-free and dairy-free items.

Whether you are in charge of planning your next company team building experience, producing a video, or in need of assistance converting those old delicate family memories into something digital, contact Steve to find out how he can help!  He is available by email at  stephenulrich@wilkumstudios.com

 

 


“ITP, LLC is supporting local small business owners through this post.  The experiences described are personal to particular users, and may not necessarily be representative of all users of the products and/or services.  We do not claim, and you should not assume, that all users will have the same experiences. Your individual results may vary. We are not affiliated with the organization referenced and are not paid or compensated for this publication.”