W. Edward Newton Jr., CPA, CFP | 13850 Ballantyne Corporate Place, Suite 500 | Charlotte, NC 28277 | 704-552-8689

 

 

Financial Services by Newton Financial Network

Ed Newton, CPA, CFP

As a Certified Financial Planner I recently attended a financial services workshop in Indianapolis, IN.

It was hosted by Archer Funds, the registered advisor firm we work through to provide financial advice to our clients here in the Charlotte / Mecklenburg County area.

This forum allowed for two days of learning and networking. Speakers included the President of Archer Funds, Troy Patton, who spoke on the state of the market.

Troy is known for understanding how world events and complex factors affect our U.S. Market.

Steve Demas, Portfolio Manager, spoke on client services. Steve has a long history of working with clients on their personal finances and individual investments before dedicating all of his time to researching appropriate investments for the Archer portfolios.

John Rosebrough, Chartered Financial Analyst, provided insight into the technical aspects of portfolio management.

Troy, Steve and John actively manage the Archer Funds and the portfolios that are built around these funds. We offer investment advice through our Newton Financial Network.

For a free review of your investments, give me a call at 704-552-8689 or download one of my 4 FREE reports on investing at my Newton Financial Network website.  Thanks!  Ed

 


 

 

Ed Newton, CPA


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Call our Testimonial Hotline & give us your feedback at:

 

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Filing Status Implications & Retirement Contribution Limitations

 

Filing Status Implications - For married taxpayers, the implications of filing a joint or separate return extend beyond tax rates and the standard deduction.

 

Like many aspects of income taxation, there is usually more than one approach to finding the optimal solution.

 

We have listed some of the more common implications of filing either a joint or separate return. Although not an exhaustive list, it highlights several issues to consider.

 

Some of the implications of filing a joint return include (among others):

  • The requirement that individuals who file a joint return cannot be claimed as dependents on another return. This can be important when married students are still supported by their parents.

  • An individual who files a joint return is not subject to the "kiddie tax" provisions.

  • Joint filers are both responsible for the tax on their joint return. Thus, nontax factors should be considered (i.e., questionable business transactions). In addition, divorced taxpayers will each be liable for tax, interest, and penalties due on a joint return filed before the divorce.

  • Finally, monthly Medicare premiums can increase substantially for a couple filing jointly versus filing separately, especially for a lower-income spouse.

The implications of filing a separate return include (among others):

  • If one spouse itemizes deductions, the other must also, even if total deductions are less than the standard deduction.

  • Taxpayers can generally only deduct expenses they actually paid versus those paid by either.

  • Credits for child care, adoption, education, and earned income are generally not available.

  • If separate filers lived with their spouse during any part of the year, a greater percentage of social security benefits may be taxable because the income threshold for determining the taxable amount is reduced to zero.

  • The exclusion of gain on the sale of a principal residence is limited to $250,000 (each) for separate filers versus $500,000 for a joint return.

  • The $25,000 passive loss exception for actively managed rental real estate may be totally or partially lost. Also, one spouse's passive income cannot be offset by the other spouse's passive losses.

  • The limit on the capital loss deduction on a separate return is $1,500 (each).

  • No exclusion is allowed for interest income from Series EE bonds used for higher education expenses.

  • The deduction for interest on qualified education loans is not available.

  • Taxpayers filing separate federal returns typically must also file separate returns for state income tax purposes.

There you have it: the implications for married taxpayers filing jointly or separately. Please contact us to discuss the most advantageous filing status or any other tax compliance or planning issue.
 



Retirement Contribution and Other Limitations for 2013

The IRS has announced cost-of-living adjustments affecting the dollar limitations for retirement plans, deductions, and other items.

 

Several of the limitations are higher for 2013 because the increase in the cost-of-living index met the statutory threshold. However, some limitations did not meet that threshold and remain unchanged from 2012.

 

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan increased from $17,000 in 2012 to $17,500 in 2013. The catch-up contribution limit for those age 50 and over remains unchanged at $5,500.

 

The contribution limit for both Roth and traditional IRAs has increased $500 from 2012. You can contribute up to $5,500 ($6,500 if you are age 50 or older by year-end) to your IRA in 2013 if certain conditions are met (i.e., sufficient earned income). For married couples, the combined contribution limits are $11,000 ($5,500 each) and $13,000 ($6,500 each if both are age 50 by year-end) when a joint return is filed, provided one or both spouses had at least that much earned income.

 

Keep in mind that contributions to traditional IRAs may be tax-deductible, subject to specific limitations that increase for 2013. When you establish and contribute to a Roth IRA, contributions are not deductible, but withdrawals are tax-free when specific requirements are satisfied. In addition, there are no mandatory distribution rules at age 70 1/2 with a Roth IRA, and you can continue to make contributions past age 70 1/2 if you meet the earned income requirement.

 

The 2013 limitation for SIMPLE retirement accounts increased $500 to $12,000. However, the SIMPLE catch-up contribution for those age 50 by year-end is unchanged from 2012 at $2,500.

 

The 2013 contribution limit for profit-sharing, SEP, and money purchase pension plans is the lesser of (1) 25% of the employee's compensation-limited to $255,000, an increase of $5,000 from 2012 or (2) $51,000, an increase of $1,000 from 2012.

 

The social security wage base, for computing the social security tax (OASDI), increases to $113,700 in 2013, up from $110,100 for 2012. The additional $3,600 for 2013 represents an increase of 3.3% in the wage base.

 

Finally, the annual exclusion for gifts increased by $1,000 and is $14,000 in 2013.

 

To read this or any other past article online please click here and then scroll down to our newsletter archive.

 

 



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If you have any questions about giving us a Review or have an accounting or investments question about yourself or your business, please give me a call at 704-552-8689.  I can help guide you in the right direction.

 

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As always you can call our offices if you have any questions about these or any other accounting, tax, financial planning or Quickbooks related issues, at 704-552-8689. 

 

Regards, W. Edward Newton Jr., CPA, CFP

Certified Public Accountant

 

 

 

W. Edward Newton Jr., CPA, CFP | Certified Public Accountant

13850 Ballantyne Corporate Place, Suite 500 Charlotte, North Carolina 28277 Phone: (704) 552-8689 | Email: ednewton@ednewtoncpa.com