A Christmas wish that your stockings are full of Holiday memories. My hope’s that you can create new ones.

Here are some ideas and thoughts to make 2018 even better for you than 2017.

Government is not here to help you

1. Many America’s falsely believe that our government will be there to support you for long term care. Although 70% of Americans over 65 will need some form of long term care, government programs for Medicare, Social Security will not pay for it. There are strict conditions for even minimal short-term care.

2. A 65 year old can expect to pay $138,000 in long term care over their lifetime. Many underestimate the cost and burn through their savings before qualifying for Medicaid and state programs for the poor. This is according to a 2017 Bipartisan Policy Center report.

3. Two thirds of Americans 40 and over have said they have done little in the way of planning. Only 11% of Americans have long term care insurance which runs on average around $2,400 per year. (NORC Center for Public Affairs Research). These premiums are too high for most with fewer and fewer insurance companies offering coverage. They underestimated the cost of these programs developed years ago.

4. The expensive nursing homes now cost $97,000 per year according to a Genworth survey in 2017. Young adults should remember that costs are rising.

5. Experts recommend that families have discussions about preferences.

6. Growing in popularity are “hybrid’ insurance products that combine death benefits or annuities with long term care benefits.

We can help you with this planning and give you some options.

Year End tax planning

It is too early to determine what is going to come out of Congress on tax reform until the Senate version is reconciled with the House’s version of tax reform. It appears some significant changes are on the horizon. Unless completed in December, it will not affect 2017 filings. Rates are theoretically going down and the standard deduction has been greatly increased.

What can you do now?

1. Classic tax planning suggests deferring income and accelerating deductions
to reduce your tax liabilities.

2. Pay both of your property tax installments if you can in December. The House plan limits property taxes to $10,000.

3. Donate merchandise to your favorite charity, taking a deduction for approximately FMV. If over $5,000, you need an appraisal in order to deduct.

4. Make sure if you have estimated payments for the state to make those before December 31st. If can’t pay amounts in full, pay as much as you can. High income taxpayers may not be subject to AMT. Even for those subject to AMT, the state income tax deduction reduces income subject to net investment income tax.

5. Summarize all of your out of pocket business expenses. Keep track of your business miles if you use your car for business.

6. Payments made for business expenses or medical bills can be taken as deductions on your returns, if you itemize.

7. Make IRA contributions before the end of the year, but also up to tax filing deadline in April of 2018.

8. To avoid costly penalties and interest, file your returns on time. Pay the balance due.

9. Buy that new car in December and take advantage of the DMV registration deduction.

10. Consider overpaying 2017 state taxes due in 2017, applying the overpayment to 2018 estimated taxes when the refund will be taxed at lower rates.

2017 Tax organizers will be sent to you via internet before Christmas.
Look out for them!

All the best during this Christmas season and in 2018

Chuck Anderson, C.P.A., CFP