The Inside Press

Magazines serving the communities of Northern Westchester

Financial Asset Management

Back To School & Your Finances

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As September rolls around and school begins, no matter what age you are, it always feels like it is the beginning of a new year. It’s also a good time to review your finances and make any changes before the end of the year. Here are a few year-end things to consider:

• College Planning – Make sure to fund your 529 plan before year end. You can deduct up to $10,000 if married or $5,000 if single on your New York State tax return. Even if you will need the money to pay college tuition in January, you can fund the 529 plan, get the deduction, and then withdraw it to pay the tuition. Make sure you are funding the New York plan at NYSAVES.ORG. Go to NYSAVES.org to get started.

For those who have children in college or who will be starting college in 2019, you can complete the FAFSA forms beginning October 1st. If you looking for financial aid, schools often have limited resources so it’s best to get them done early.

• Retirement Plans – Are you fully funding your 401K, 403b and other work-related retirement plans? Review your current contributions to make sure you are getting the full benefit of the tax deduction and deferment that you can. In most cases you can fund $18,500 in 2018. If you are age 50 or older, you can add an additional $6,000 to your contributions.

• Tax Withholding – There has been much confusion regarding the new tax laws. With homeowners losing much of their property tax deductions starting this year, many may find that the lower tax rates are not having much of an impact. In fact, some taxpayers may actually have to pay more taxes than the prior year. Review your withholding and estimated taxes paid to date. If you need to make a change you can either pay an estimated tax payment or change your tax withholding. Now is a good time to review this with your accountant.

• Medicare Surcharge – If you are 65 or older and on Medicare, make sure to look at your income to see if you will be hit with higher Medicare Surcharges in the next year. IRMAA (Income Related Monthly Adjustment Amount) often is a big shock for many retirees each year. There are income limits that you should be aware of to help reduce this surcharge. Now is the time to look at your income and see how you can lessen the impact of IRMAA.

With tax deductions being reduced, now is the time to make sure you are taking full advantage of the available deductions you have. A “Back to School” review of the above areas can make sure your year-end planning goes smoothly!

Getting a Strong Start to 2018

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By Scott M. Kahan

It’s almost spring and now is the time to give your finances a “spring cleaning!”

With the stock market sell off and continued volatility after record highs, interest rate increases, new tax laws and the ongoing uncertainty as to what is going on in Washington, now is the time to organize. Here are a few quick things to address to get started.

  • Review your portfolio. With the return of volatility in equity prices and rising interest rates, it’s probably a good time to review your asset allocation. A simple way to re-balance your portfolio is to first set what percent of your portfolio should be in each asset class. Then when reviewing your portfolio, the sectors that have gone up will be over weighted and should be reduced, while the underperforming sectors will be under weighted and can be added to. If you follow this practice, it forces you to sell high, buy low and take the emotions out of investing.
  • Review Your Taxes and Cash Flow. New tax laws have ushered in much confusion. With a limitation of $10,000 for SALT deductions, (State and local tax), along with various other impactful changes, now is the time to review your 2018 taxes. Even though you may be in a lower tax bracket, you still could end up paying more tax due to the lower allowed deductions. Check your withholding tax to make sure you are not under or over paying your taxes during the year. Then look to see if you are fully funding your retirement plans and look for all possible deductions to minimize your income tax. When you file your 2017 taxes, make sure to do a projection for 2018 as well.
  • Review Your Estate Planning. When was the last time you looked at your wills and other estate planning documents? Make sure all beneficiaries are in place in retirement accounts. Review to make sure you have named guardians for minor children. If you have avoided setting up your estate plans, now is the time to address this important issue.

A simple review can help bring focus to your overall financial picture. A qualified Certified Financial Planner Professional can help ensure your financial affairs are consistent with your current and long-term goals and objectives. Get a strong start for 2018!

Back to College

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By Scott M. Kahan CFP®

It’s that time of year when summer draws to a close and your children are going back to or starting college for the first time. Often, families have figured out how to pay for the current year and put off planning how to pay for the next year. Well, if you are like most families you probably have not saved enough to afford that $65,000 per year price tag that comes along with a private school education. Now is the time to get a jump start on planning how to pay for the next few years’ college tuition for your child.

When thinking about funding sources for your children’s college education, you may assume your family earns too much to qualify for Federal grants, loans, and work-study job assistance. However, families with higher incomes are frequently eligible to receive some form of financial aid from the Federal government.

Start with the FAFSA

For most financial aid and loan programs, it is required for you to complete the Free Application for Federal Student Aid (FAFSA) as the initial part of the process. In addition to determining your family’s eligibility for Federal assistance, the FAFSA is the primary qualifying form used by many college, state, local, and private financial assistance programs. The first step in applying for financial aid is filling out the FAFSA. The simplest way to complete the FAFSA is by applying online at fafsa.ed.gov.

The start date to file is October 1st and there is no reason to delay the filing. When completing the FAFSA, you will use your financial information from 2016. This is called prior-prior year since you are filing forms for funds for the 2018-2019 school year.

There are numerous programs available to assist you in paying for college. Stafford Loans, which are student loans and PLUS Loans, which are in the name of the parents are a few of the most popular loan programs offered. Pell Grants, unlike loans, do not have to be repaid.

It can be confusing, but the sooner you get started in planning and preparing, the easier it will be!

Scott M. Kahan, is a Certified Financial Planner® professional and President of Financial Asset Management Corporation, a fee-only wealth management firm located at 26 South Greeley Avenue in Chappaqua. Call Scott Kahan at 914-238-8900.