Important Information for Tax Season 2012

 As you prepare for the 2012 tax season, here is some information that you may find beneficial.

2012 Form 1099 mailing schedule

  • 1/31 - Mailing of original Form 1099s
  • 2/28 - Begin mailing delayed and amended Form 1099s
  • 3/15 - Final mailing of any remaining delayed original Form 1099s

Please note the exceptions immediately below:

Delayed Form 1099s

In an effort to capture delayed data on original Form 1099s, the IRS allows us to extend the mailing date until March 15, 2013, for clients who hold particular investments or who have had specific taxable events occur. Examples of delayed information include:

  • Income reallocation related to mutual funds, real estate investment, unit investment, grantor    and royalty trusts; as well as holding company depositary receipts
  • Processing of Original Issue Discount bonds
  • Cost basis adjustments

Amended Form 1099s

Even after delaying your Form 1099, please be aware that adjustments to your Form 1099 are still possible. Raymond James is required by the IRS to produce an amended Form 1099 if notice of such an adjustment is received after the original Form 1099 has been produced. There is no cutoff or deadline for amended Form 1099 statements. The following are some examples of reasons for amended Form 1099s:

  • Income reallocation
  • Adjustments to cost basis (due to the Economic Stabilization Act of 2008)
  • Changes made by mutual fund companies related to foreign withholding
  • Tax-exempt payments subject to alternative minimum tax

How we can help

If you have questions about your 1099’s or it would be helpful for us to discuss your tax situation with your accountant or CPA, please let us know. We are here to help with both administrative questions and planning strategies. We’ll also proactively work to keep you informed as to the status of your 1099 in the coming weeks and months.

What can you do?

If you receive an amended Form 1099 after you have already filed your tax return, you should consult with your tax advisor about the requirements to re-file based on your individual tax circumstances.

Links that may be of interest

Stay posted for additional information from Raymond James at http://www.raymondjames.com/taxreporting.htm.

Are you importing your 1099 into TurboTax®? Details on RJ import at http://www.raymondjames.com/investor/turbotax/.

Tim Wyman’s blog post: “How Will the Fiscal Cliff Deal Impact You?”

Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

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Serving Our Community and Profession

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 The Center takes pride in serving our communities, our profession and each other.  Below you’ll find the many organizations supported by our team’s volunteer efforts.

  • Sandy Adams, CFP® was appointed to the Board of Visitors for the Institute of Gerontology (IOG) at Wayne State University and also serves on the Legal and Financial Advisory committee for the IOG as well as a liaison to the Board of Visitors for the last two years.
  • Marilyn Gunther, CFP® serves the Board of her community foundation in North Carolina
  • Sandy Adams, CFP® and Julie Hall, CFP® led Junior Achievement activities.
  • Dan Boyce, CFP® served on the Governing Board of an elementary charter school, as well as continuing on the Board of Trustees of Prescott College.
  • Laurie Renchik, CFP® and Tim Wyman, CFP® participated in Leadership Oakland and Melissa Joy participated in Inforum’s Executive Leadership program.
  • The Center proudly supported the local community and Gleaner’s Community Food Bank of Southeastern Michigan through the celebration of food, wine and art! The 9th Annual Vine & Dine, hosted by the Birmingham Bloomfield Chamber of Commerce.
  • Matt Chope, CFP® offered his thoughts on what it means to leave a Legacy of Value as part of the The Youth Diversity Symposium annual event developed by the Southfield Community Foundation.
  • Carrying on a proud Center legacy (and following in Marilyn Gunther’s, CFP® footsteps), Sandy Adams, CFP® was appointed to the Board of Personal Financial Education Services, an Ann Arbor based non-profit organization with a mission of promoting personal financial education in Michigan and beyond and to empower youth and adults to build more stable financial futures through financial education.
  • Dan Boyce, CFP® continued his leadership at the Institute for Sustainable Social Change in Prescott, AZ.
  • Betsey Schrock, Bookkeeper/Office Manager, was elected president of Stagecrafters, a large community theatre organization located at the Baldwin theatre in Royal Oak.
  • Troy Wyman, CFP® was elected to the Board of Directors of the Financial Planning Association of Michigan and to the executive board of the Birmingham Bloomfield Chamber of Commerce.
  • Melissa Joy, CFP® began serving on the Business Development Committee for Detroit Chamber Winds & Strings.

To find out more please feel free to contact the team member aligned with your organization of interest.

Is It Time To Refinance Again?

*   Over the holidays I enjoyed some time off with my family.  This also meant I was able to do some deep thinking about my personal finances.  One question comes up every year, “Is it time to refinance my mortgage?” 

In my somewhat short adult life, depending on your perspective of course, I have asked myself this question many times.  Over my total of ten years of home ownership (two different homes), I am considering my fourth home refinance (not including financing upon purchasing the homes!) I know, I am getting tired of this process but you can’t ignore when there is a great opportunity to be had in the form of lower interest rates! 

Long-term interest rates and thus mortgage rates have continued their precipitous drop.   The chart below shows just how low our current rates are historically, a new all-time low in fact!

 Source: Ritholtz.com

*Federal Funds Rate used in chart above

 

But just because rates are super low, doesn’t mean a refi is right for you.  I’ll share with you my list of pros and cons that I use to help me make my refinance decision*:

Pros in Refinancing

  • Lower the term of the loan
  • Lower the amount of my monthly payment
  • Reduce the amount of interest paid over the life of the loan
  • Paying off my principal more quickly which will benefit me even if I sell the home five years from now

Cons in Refinancing

  • Hassel of finding someone reputable to work with
  • Seeking out competitive pricing for upfront costs as well as the long-term rates
  • Taking time to sign the reams of paperwork required to refinance 

*Please keep in mind that this list is specific to my situation. Each individual's situation will vary. Please consult the appropriate professional before making a decision.

In my case the pros far outweigh the cons of refinancing.  So if you plan to stay in the home at least as long as it will take you to recoup the cost of refinancing (generally around 2 years) and prevailing rates are at least 1% lower than what you are currently paying it is worth a look.  Analyzing the amount of money I can save over the next 5-15 years was enough to inspire me to pick up the phone and get started.  I encourage you to get inspired as well if it has been a few years since your last refinance!  Take the first step and consult with a professional to determine if refinancing is the appropriate next step for you.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material.  The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making a decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Office and Markets Will Be Closed January 21st

 In observance of Martin Luther King Day, both The Center and U.S. Markets will be closed on Monday, January 21. We’ll reopen for our regular hours on Tuesday, January 22. 

Fact or Fiction?

It is easy to create a federal holiday in the United States.

False. It took 86 years after his death to honor George Washington by designating his birthday as a federal holiday. Although its creation was controversial at the time, it took just 15 years to honor Dr. Martin Luther King Jr. by designating the third Monday in January as a federal holiday to honor the civil rights leader.

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Investment Performance - 4th Quarter 2012

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invcom_performance_2013q1.jpg

Source: Morningstar

Bonds represented by Barclay's Aggregate Bond Index a market-weighted index of US bonds. US Large Companies per S&P 500 Index a market-cap weighted index of large company stocks. Barclay’s Global Bond index is a market-cap weighted index of global bonds. US Small Companies per Russell 2000 Index a market-cap weighted index of smaller company stocks. International stocks measured by MSCI EAFE is a stock market index designed to measure the equity market performance of developed markets outside of the US and Canada. Commodities per Morgan Stanley Commodity Index a broadly diversified index designed to track commodity futures contracts on physical commodities. Barclays Capital US Corporate High Yield Index is an unmanaged index that covers the universe of fixed-rate, noninvestment-grade debt. Barclays Capital US Corporate High Yield Index is an unmanaged indexthat covers the universe of fixed-rate, noninvestment-grade debt.

Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor’s results will vary. Past performance does not guarantee future results.

What You Can Look For in 2013

 On behalf of our 20 team members, Happy New Year! We enter into our 28th year and will continue to serve with passion and the very best of our professional ability. In 2012 we experienced the rhetoric of a contentious presidential election and addressed difficult economic issues in Europe and beyond. While the Presidential election has passed, it's clear that much of the political turmoil remains. Like past years, we will help you navigate these issues as it relates to accomplishing your financial and life goals.

Economic Climate

At the time of this writing, the Fiscal Cliff deal known as the American Taxpayer Relief Act of 2012 is newly minted. No doubt you have questions. Fortunately, the Fiscal Cliff and resulting income and estate tax changes have been on our minds and in our plans for much longer than the headlines. We continue to digest and analyze the new law and share our early analysis in the following blog 'How Will the Fiscal Cliff Deal Impact You?'

Education and Awareness

We will continue to provide a variety of educational sessions for 2013. In response to your feedback, you can expect to see our content delivered in a more innovative manner. We look to incorporate recorded webinars or conference calls that may be accessed at your convenience. Expect to see topics that address: Applying for Social Security, Medicare strategies, and a fall Investment Forum. 

Blogs:  Timely & Relevant Topics

The Oakland Press continues to endorse our Money Centered blog which provides actionable advice surrounding many of today’s financial planning and investment opportunities. It's a great way to share our collective wisdom and continues to stretch our leadership in the financial planning community. Money Centered speaks to our clients, professional relationships, and general public.

In addition to Money Centered, don’t forget to check out our other blog platforms. Center Connections help to keep our clients apprised of news, events, and announcements concerning your Center team. Our quarterly Investment Commentary shares our insights and thinking as it relates to both big picture and market-focused investment topics. As always, please feel free to forward our blog posts to those that you care about.

Wishing you a healthy and prosperous 2013!   

How Will the Fiscal Cliff Deal Impact You?

 At the last second of the so-called eleventh hour, the Fiscal Cliff deal known as the American Taxpayer Relief Act of 2012 was forged. Because it is still relatively fresh you, no doubt, have questions and are wondering just how the provisions might impact your bottom line. Here’s a basic breakdown of the changes for taxpayers:

  • Did taxes go up or down?  Well, it depends upon your measuring stick and perhaps political persuasion.  Bear with me – here is the timeline. At midnight on 12/31/12 the Bush era tax cuts expired, meaning in theory income taxes for most Americans increased.  On 1/1/13 Congress enacted new law and reduced income taxes for most Americans.   According to the Tax Policy Center, a nonpartisan research group in Washington, about 0.7 percent of households (those making over $500k) will be subject to an income tax increase in 2013.
  • Payroll Tax Impact? However, if your measuring stick compares what you expect to pay in 2013 versus what you paid in 2012…..most will experience higher taxes (about 77% of households).  This is due to the fact that payroll taxes are being restored.  For example, a family earning $100,000 will pay roughly $2,000 (2%) more in payroll taxes in 2013 over 2012.
  • What’s your number?  There are different income (taxable income) thresholds for various income tax provisions that will be important in 2013.  Here are some that you and your planner will want to review:
    • $200,000 single/$250,000 married filing jointly:
      • New Medicare surtax of 3.8% on net investment income
      • New 0.9% additional tax on wages above the thresholds
    • $250,000 single/$300,000 married filing jointly:
      • Limitations on personal exemptions and Itemized deductions restored in 2013.
      • The net effect is approximately a 2% increase in marginal rates for those above the thresholds.
    • $400,000 single/$450,000 married filing jointly:
      • New top marginal bracket of 39.6%
      • Capital gains and qualifying dividends taxed at 20% up from 15%. Because of the Medicare surtax, this means that effectively capital gains and qualified dividends are taxed at 23.8%.
  • Estate & Gift Tax:   The new law makes permanent the exemption equivalent at $5.12M and top rate up to 40% from 35%.  Also, "portability" between spouses is now permanent. 
  • Annual gift exclusion: $14,000 up from $13,000
  • Charitable IRA:  Those over 70.5 may again choose to make tax free gifts up to $100,000 from their IRA to qualified charities.
  • Remaining issues to be resolved:  Based on what the new law doesn't change, we are sure to witness further confrontation over spending cuts and the debt ceiling. 

For more information pertaining to your individual situation, feel free to contact me at timothy.wyman@CenterFinPlan.com.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  You should discuss any tax or legal matters with the appropriate professional.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

Happy Centerversary!

 The Center celebrates its 28th year! Founded in 1985, our success and longevity would not be possible without the support from our team members. Let's take a moment to recognize our individuals celebrating a Centerversary in the month of January. 

Top: Marilyn Gunther, Daniel Boyce; Middle: Marilynn Levin, Betsey Schrock, Laurie Renchik; Bottom: Troy Wyman, Julie Hall.

We would like to share a special thanks and Happy Centerversary to Marilyn Gunther and Dan Boyce, two of our founding partners. Thank you for building such a strong foundation that will serve us toward our Vision 2020 and beyond!

Live YOUR Plan™

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