Taxes: Start Your Money
Plan Here
Brought to you by 360 Degrees of Financial Literacy
and America's CPA Financial Planners
Take Charge: Your Money. Your Life.
1
Let’s get this out of the way …
The general information contained in this web seminar
is provided by the American Institute of Certified
Public Accountants as a service to the public and our
members. It is not intended to serve as tax, legal or
any other professional advice applicable to any
particular person or matter.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Your Host
Chris Benson, CPA/PFS
L.K. Benson & Company
Baltimore, MD
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Head of PFP Emerging Leaders Group
AICPA member
PFS credential holder
MACPA PFP Committee Member
Website: www.lkbenson.com
Twitter: @ChrisBensonCPA
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Retirement is Americans’ Top Concern
Not having enough money for retirement is the #1
financial concern of Americans
Unexpected events contributing to financial fears
and adding complexity to personal financial
planning:
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Unexpected health care costs
Care for aging relatives
Divorce
Job loss
Adult children returning home
Baby Boomer retirement
Source: AICPA CPA Personal Financial Planning Trend Survey
Personal Financial Planning Section
360 Degrees of Financial Literacy
4
Personal Financial Satisfaction Index (PFSi)
Purpose: To help CPAs, the media and consumers
gain clearer insights into how Americans feel about
their financial situation.
AICPA’s Media Relations team has just released the
Q1 2015 PFSi
Measures the personal financial satisfaction of the
typical American with both AICPA proprietary and
normalized official US Government data based on 8
factors.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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PFSi Q1 Results
Pleasure Index
Pain Index
• Job openings
• Real home equity
• AICPA CPA Outlook
Index
• PFS 750 Market
Index
• Inflation
• Underemployment
• Personal taxes
• Loan delinquencies
Decreases in inflation, loan delinquencies, personal
taxes, and underemployment have lifted Americans’
overall financial satisfaction.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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The Benefits of Planning Ahead
% Feeling very confident in
managing money, savings
and investments
% Not feeling behind on
any specific goal
% Living comfortably
Statistics for households with incomes of $100,000 or more.
2012 Household Financial Planning Survey, Certified Financial Planner Board of Standards, Inc. and
the Consumer Federation of America. July 23, 2012.
02.09.12
Source: BAM Advisor Services
Personal Financial Planning Section
360 Degrees of Financial Literacy
The Takeaway: Americans Need a Plan
Where are you now?
Where do you want to be in the future?
The Plan: Your roadmap to get there!
Where to turn for help
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Where Are You Now:
Your tax return tells a story. In it
you will find:
• Details of your cash flows.
• Information important to your
investment, retirement and estate
planning strategies.
• Overlooked opportunities to help you
achieve your financial goals.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Your Tax Return and Supporting Documents
Provide Valuable Information on Where You
Are Now:
Your stage in life
How you make money
Spending/saving habits
Marginal tax bracket
How you spend your money
General makeup of your taxable investment portfolio
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Stage in Life
Personal Financial Planning Section
360 Degrees of Financial Literacy
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How You Make Money
Personal Financial Planning Section
360 Degrees of Financial Literacy
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How Much are you Saving and Spending?
How much are you
saving?
• Company retirement plans
• IRAs
• Personal savings
Personal Financial Planning Section
Estimate your total current
spending:
• If W-2 employee
• If self employed
• If retired
360 Degrees of Financial Literacy
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Tax Bracket
Current Marginal Tax Bracket: the tax rate that
applies to the next dollar of income earned.
Find your Total Taxable Income on Line 43 of 2014
Form 1040.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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2014 Federal Tax Brackets
2014 Federal Taxable Income Brackets and Rates
Rate
Single Filers
Married Joint Filers
Head of Household
Filers
10%
$0 to $9,075
$0 to $18,150
$0 to $12,950
15%
$9,076 to $36,900
25%
$36,901 to $89,350
28%
$89,351 to $186,350
33%
$186,351 to $405,100
35%
$405,101 to 406,750
$405,101 to 457,600
39.6%
$406,751+
$457,601+
$18,151 to$73,800 $12,951 to $49,400
$73,801 to $148,850
$148,851 to
$226,850
$226,851 to
$405,100
$49,401 to
$127,550
$127,551 to
$206,600
$206,601 to
$405,100
$405,101 to
$432,200
$432,201+
Source: Internal Revenue Service
Personal Financial Planning Section
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360 Degrees of Financial Literacy
How You Spend Your Money
Medical expenses >10% AGI
Mortgage Interest Expense
(no principal payments)
Charitable contributions
State Taxes
Misc. Expenses >2% AGI
Personal Financial Planning Section
360 Degrees of Financial Literacy
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360-Degree View
Your tax return gives you a 360-degree view of your
finances that you can use to improve your future.
File Taxes
Improve
Future You
Evaluate
Investment
Strategy
Personal Financial Planning Section
Evaluate Tax
Strategy
Evaluate
Retirement
Strategy
360 Degrees of Financial Literacy
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Tax Planning: The Bridge to Financial Planning
Think about taxes year round.
Save money tax efficiently for
future needs.
Spend money tax efficiently
so you keep more to invest in
your future.
Hint: Visit www.360taxes.org for year-round tax tips.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Where do you want to
be in Retirement?
What lifestyle do you want?
How will your expenses change?
Are you planning for medical expenses?
Do you have an overall game plan?
Taxes: Start Your Money Plan Here
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360-Degree View
File Taxes
Improve
Future You
Evaluate
Investment
Strategy
Personal Financial Planning Section
Evaluate Tax
Strategy
 Save money tax efficiently
 Identify future deductions
 Spend money tax efficiently
Evaluate
Retirement
Strategy
360 Degrees of Financial Literacy
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What's Your Tax Strategy?
How are you timing income and deductions?
Have you considered ways to bunch deductions?
Are you losing deductions due to phaseouts?
Do you have a system for tracking expenses?
Taxes: Start Your Money Plan Here
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Decrease Debt or Invest?
Pay down debt when you can’t invest at a higher rate
401(k)
Interest Paid /
Received
Match*
Credit
Card
Investment
Mortgage
100.0%
18.0%
8.0%
4.5%
--
0.0%
-2.0%
-1.1%
100.0%
18.0%
6.0%
4.9%
Tax effect @ 25%
Net Paid / Received
* Assumes 100% matching of first 3% of your pre-tax 401k contributions
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Planning Bonus
Estate Planning Tip: While reviewing retirement
documents, check beneficiary information to ensure
it is accurate and up to date.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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360-Degree View
File Taxes
Improve
Future You
Evaluate
Investment
Strategy
Personal Financial Planning Section
Evaluate Tax
Strategy
Evaluate
Retirement
Strategy
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Maximize deferral opportunities
Reduce unnecessary complexity
Maximize Social Security benefits
Ensure sustainable withdrawals
360 Degrees of Financial Literacy
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Retirement—Planning
Key Document
• Form 1040
Key Questions:
• Do you have a plan for retirement?
- Divide your total spending by 3- 4%
• Are you maximizing deferral opportunities?
- 401(k), 457, 403(b), IRA
• Do you have multiple retirement plans?
- Consider consolidating them.
• Have you considered a Roth conversion?
- Run the numbers on your plan
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Retirement—Distributions
Key Document:
Form 1040
Key Questions:
• Are you withdrawing at a sustainable rate?
- Don’t run out of money before you run out of life expectancy.
• Are you taking required minimum distributions?
- Over 70 ½ you have to take a required minimum distribution.
• Are you drawing from the right place?
- Pull money from the right pool for tax efficiency.
• Are you maximizing Social Security benefits?
- Know rules for spouses, divorcees.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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360-Degree View
File Taxes
Improve
Future You
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Review asset allocation
Match returns to goals
Manage risk
Reduce unnecessary complexity
Personal Financial Planning Section
Evaluate
Investment
Strategy
Evaluate Tax
Strategy
Evaluate
Retirement
Strategy
360 Degrees of Financial Literacy
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3.8% Tax on Net Investment Income
Applies to individuals with
modified AGI above certain thresholds:
• $250,000 for married couples
filing jointly
• $200,000 for single taxpayers
Includes capital gains, interest
and dividend income from
investment assets
May also apply to rental and
royalty income
Personal Financial Planning Section
360 Degrees of Financial Literacy
Increased Tax Rates on Dividend Income and
Capital Gains
The dividend income and long-term
capital gains tax rate jumped in 2013
from 15% to 20% for high earners
(23.8% if the new net investment
income tax applies).
The dividend and long-term capital
gains rates for other taxpayers
remained the same,
ranging from 0 to 15%.
Personal Financial Planning Section
360 Degrees of Financial Literacy
Investments
Is your plan consistent with your goals?
Does asset allocation consider risk tolerance?
Are your investments tax efficient?
Have you considered the safety of your assets?
Does your asset allocation consider cash flow?
Taxes: Start Your Money Plan Here
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Investment Considerations
Key Document:
• Schedule B—Interest & Dividends
Key Questions:
• Are you properly diversified?
- Risk and return are married.
• Do you have enough cash?
- Emergency cash reserve
• Do you have too much cash?
- Balance inflation with interest rates.
• Do you have too much cash in one bank?
- Watch FDIC limits.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Investments
Key Document:
• Schedule D—Capital Gains/Losses
Key Questions:
• Are investment decisions coordinated with tax planning?
- Lower capital gains rates; Medicare tax
- Asset location: where are you holding taxable vs tax free
investments
• Are you harvesting losses?
- Offset capital gains by taking losses.
• Are you carrying losses forward?
- Reduce your future tax bill.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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360-Degree View
File Taxes
 Assess insurance needs
 Review estate plan
 Create an emergency fund
Improve
Future You
Evaluate
Investment
Strategy
Personal Financial Planning Section
Evaluate Tax
Strategy
Evaluate
Retirement
Strategy
360 Degrees of Financial Literacy
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Future You
Have you set clear goals?
Do you have protection for your family and assets?
Are you ready for emergencies?
Taxes: Start Your Money Plan Here
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Future You
Planning is only as good as your goals.
• Know where you’re headed.
• Develop a clear picture for retirement.
• Evaluate the education needs of your children.
- Will you pay the entire cost of tuition?
- What percentage will you commit to?
• It is a continuous process, not a one time event
Protection is as important as planning.
• Without proper insurance you could jeopardize all the saving
and planning you have done.
• Estate planning is not just for the wealthy. It’s for everybody.
• An emergency fund helps bridge difficult times.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Future You
Planning is only as good as your goals.
• Know where you’re headed
• Establish a budget and savings goals
• Develop a clear picture for retirement
• It is a continuous process, not a one time event
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Where to Turn for Help
Personal Financial Planning Section
360 Degrees of Financial Literacy
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A CPA Financial Planner and a CPA/PFS are trusted
advisors who…
Operate at the highest professional level when
delivering PFP services to clients, acting in the
clients’ best interest.
Adhere to high standards as required by the Code of
Professional Conduct and the Statement on
Standards in PFP Services through the application
of objectivity, integrity, due care and competence
required by CPAs.
Are regulated by state boards of accountancy.
Integrate advanced planning concepts, including tax
and business considerations, with the entire
financial plan.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Resources
findacpapfs.org
aicpa.org/pfp/consumer
360financialliteracy.org
Among them:
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Checklists to use with your own return.
Today’s PowerPoint presentation.
Archived recording of today’s webcast.
Tips on choosing the right financial advisor.
Personal Financial Planning Section
360 Degrees of Financial Literacy
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Questions?
Personal Financial Planning Section
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