December 2017 – Tax Law Update and Year-end Market Commentary

December 2017 – Tax Law Update and Year-end Market Commentary

Disclaimer:  These are the views of Summit Financial Consulting and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 


What Will The New Tax Law Mean To You?

Happy New Year to you from the staff at Summit! On December 22nd, 2017, the Tax Cuts and Jobs Act was signed into law. Now that the details have been finalized, we can share some details, and also provide an update on our portfolios. Because there were some changes to the estate tax and gifting rules, now may be a good time to review your will or trust. Feel free to call our office to schedule a time to discuss it. We can bring in an estate planning attorney if need be.

Portfolio Update
Our portfolios that are managed at TD Ameritrade had another great month, and overall, a great year in 2017. Especially on a risk adjusted basis, we’re very pleased with our overall performance. December marked the 13th consecutive month that the majority of our portfolios had gains. Stocks briefly dipped in the first few days of December, which we used as an opportunity. Moving into 2018, we’ll pay particular attention to the potential for infrastructure spending, and may invest in industrials to potentially take advantage. Because this is a mid-term election year, there is always a chance the stock market will slow down during the summer, like 2016 and many previous years. We will be closely monitoring these developments, but we are cautiously optimistic today that the new tax law will provide a tailwind to the economy in 2018.

If you are a client and disagree with any of the moves inside your portfolio, if you would like to update us on your risk tolerance preferences, or if you have had a dramatic change to your income or financial situation, please contact us to discuss it.

Tax Law Update
Before we get started on the details, through our full-service tax preparation firm, Summit Tax Services, we can help you determine how much you can expect to receive in 2018 extra because of the new tax law. Whether you’re working, a business owner, or retired, there are moves you can make now to make sure you take advantage of the new tax law, and plan for a potentially better tax refund or paycheck. To our clients, we are again offering full tax preparation for a basic tax return of only $99. Just call (586) 459-5340 to schedule and receive a personalized tax quote. We’ll be happy to review the past two years tax returns for free to determine if there are any missed opportunities.

The tax law has over 400 pages of details, but below are a few of the biggest changes worth noting. The first major change is the reduction of many tax rates and income brackets:

Single Filer
Current Law Tax Cuts and Jobs Act
10% $0-$9,525 10% $0-$9,525
15% $9,525-$38,700 12% $9,525-$38,700
25% $38,700-$93,700 22% $38,700-$82,500
28% $93,700-$195,450 24% $82,500-$157,500
33% $195,450-$424,950 32% $157,500-$200,000
35% $424,950-$426,700 35% $200,000-$500,000
39.6% $426,700+ 37% $500,000+
Table 1. Tax Brackets for Ordinary Income Under Current Law and the Tax Cuts and
Jobs Act (2018 Tax Year)

 

 Married Filing Jointly
Current Law Tax Cuts and Jobs Act
Note: The Head of Household filing status is retained, with a separate bracket schedule.
10% $0-$19,050 10% $0-$19,050
15% $19,050-$77,400 12% $19,050-$77,400
25% $77,400-$156,150 22% $77,400-$165,000
28% $156,150-$237,950 24% $165,000-$315,000
33% $237,950-$424,950 32% $315,000-$400,000
35% $424,950-$480,050 35% $400,000-$600,000
39.60% $480,050+ 37% $600,000+
Table 2. Tax Brackets for Ordinary Income Under Current Law and the Tax Cuts
and Jobs Act (2018 Tax Year)

(Source: https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/)

Another big change is that the tax law increases the standard deduction to $12,000 for single filers, $18,000 for heads of household, and $24,000 for joint filers in 2018 (compared to $6,500, $9,550, and $13,000 respectively under current law).

However, it eliminates the personal exemption, which does offset some of the other benefits, and it’s sending the state of Michigan legislators into overdrive to preserve a personal exemption at the state level. (Source: http://www.detroitnews.com/story/news/politics/2018/01/11/michigan-exemption-fix-tax-cuts/109343914/)

It retains the charitable contribution deduction, and limits the mortgage interest deduction to the first $750,000 in principal value. It limits the state and local tax deduction to a combined $10,000 for income, sales, and property taxes. Taxes paid or accrued in carrying on a trade or business are not limited. It limits or eliminates a number of other deductions, but expands the child tax credit from $1,000 to $2,000, while increasing the phaseout from $110,000 in current law to $400,000 married couples. The first $1,400 would be refundable if you’re lower income. It also raises the exemption on the alternative minimum tax from $86,200 to $109,400 for married filers, and increases the phaseout threshold to $1 million, which means lower taxes for higher earners.

A sticky situation will need to be resolved in 2018: Healthcare. The tax law effectively repeals the individual mandate penalty, by lowering the penalty amount to $0, effective January 1, 2019. If congress doesn’t act, it will take a difficult health insurance situation and convert it to an extremely dysfunctional health care system.

Overall
We’re cautiously optimistic that the new tax law will provide a boost to the economy because of larger paychecks for most people. A boost to the economy is typically good for the stock market. It will likely increase our national debt in the short term, but the hope is that it’s worth it in the long term.
As a reminder, there are two additional services that we provide that can be potentially very helpful to you, your family, and friends.

Summit Health Services
SHS is fully staffed and provides advice on health insurance, business health insurance, dental, vision, and Medicare Supplemental policies. We will shop and quote out the entire market for you to help you determine what will potentially keep the most money in your pocket. Just call (586) 226-2100 to receive a free analysis of your entire health insurance situation. If you or anyone you know works with Aon, especially, please give us a call because there’s a good chance we can save you a lot of money every month.

401(k) Service
Lastly, if you or anyone you know has a 401(k) or 403(b) through their current employer, we now provide suggestions on how to invest your 401(k), and more importantly, when to reduce risk. The stock market will drop eventually, and our goal is to help minimize or eliminate the losses in your portfolio by sharing our independent research, and providing timely suggestions on when to move to safety. Most people do not have time to research their options, read economic reports and comb through stock market data. We are happy to provide this service, just give us a call at (586) 226-2100, or click on Risk Score at the top of our website, www.summitfc.net any time.

Please feel free to forward this commentary to a friend, family member, or co-worker. If they would like to be added to our free commentary, please send us an e-mail at info@summitfc.net at your earliest convenience.
Thank you for your confidence and referrals!

Interesting Points

The Dow’s record close in 2017 ended with six full weeks of gains- the last time the Dow rose in each of the final six weeks of the year was in 1954. – CNBC.com, December 29, 2017

Roughly $1 billion in gift cards go unused every year. – Marketwatch, December 26, 2017

“Christmas is a time when kids tell Santa what they want and adults pay for it. Deficits are when adults tell the government what they want and their kids pay for it.” – Richard Lamm

Roughly 3.1% of the world’s children live in America, but they own 40% of the toys consumed globally. – University of California

On average, Americans throw away their own body weight in trash every month. – The Washington Post, November 21, 2017

There are more than 500 million visits to Apple retail stores per year, which is roughly equivalent to the population of the European Union. – MarketWatch, December 6, 2017

In the US, 99.7% of all businesses have fewer than 500 employees. Of those, nearly 80%, or more than 23 million, are one-person operations. – The New York Times, November 22, 2017

“Isn’t it funny how day by day nothing changes, but when you look back everything is different.”. – C.S. Lewis

 

Summit Financial Consulting LLC

43409 Schoenherr Road, Sterling Heights, MI 48313
Phone: 586-226-2100 Fax: 586-226-3584 E-mail: info@summitfc.net
Securities offered through Gradient Securities, LLC (Arden Hills, MN (866)991-1539) Member FINRA/SIPC
Summit Financial Consulting LLC is independent and is not an affiliate of Gradient Securities, LLC. Investment advisory
services offered through Summit Financial Consulting LLC, a Registered Investment Advisor in the State of Michigan.

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November 2017 – Market Commentary

November 2017 – Market Commentary

Disclaimer:  These are the views of Summit Financial Consulting and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 


New Tax Laws, Bitcoin, and a Portfolio Update

The House of Representatives and Senate have passed a tax bill.  The bill now heads to a reconciliation committee to come up with a final bill to be voted on in each chamber and sent to the President’s desk for signing.  With over 400 pages to digest, the potential effects on US citizens from every walk of life is lengthy.   There are two potential large takeaways in our opinion:

Stock Sales Hurt
First, the Senate version of the bill eliminates the ability of a stock investor to choose between LIFO and FIFO.  All future stock sales will default to FIFO, meaning First In First Out.  For anyone who has owned a stock for a long time, particularly buy and hold investors, this could cause large, negative taxable consequences if stock is sold in 2018 and beyond.  If they are receiving Social Security, it could cause their monthly income to be taxed more heavily.  If they are elderly, they could potentially miss out on the tax-free step up in cost basis that comes with passing away, which could also hurt heirs.  If you own individual stocks, you may want to consider selling some before year end to take advantage of the current LIFO option.  No one knows if this provision will make it to the President’s desk, but if you handle your tax planning with an abundance of caution, this is something to consider.

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Health Insurance, New 401(k) Service, & October Market Commentary

Health Insurance, New 401(k) Service, & October Market Commentary

Disclaimer:  These are the views of Summit Financial Consulting and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 


Health Insurance, New 401(k) Service, & October Market Commentary

It is everyone’s favorite time of year as it relates to healthcare: Open Enrollment! Whether you are working, self-employed, or on a Medicare Supplemental plan, this is the time of year when very important decisions need to be made.

As a reminder, we now have a full-service health insurance department. Anthony Landino works full time in our office and can assist with any health insurance questions you may have. If you are age 65 or older, we have been shocked by how many prescription drugs are no longer covered for 2018, and how many plans are changing benefits. Relax, let us simplify all health insurance for you. Give us a call today at (586) 226-2100 to discuss it at no cost.

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September 2017 – Data Breach & Market Commentary

September 2017 – Data Breach & Market Commentary

Disclaimer:  These are the views of Summit Financial Consulting and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. 


Data Breach and Market Commentary

Last month we performed well in our TD Ameritrade portfolios, but first, let’s address the topic that is on top of everyone’s mind:  The Equifax data breach.  Over 143 million American consumers had their personal information stolen.  The information that was taken was unfortunately very comprehensive, such as names, social security numbers, birth dates, addresses, and in some instances, driver’s license numbers.  To find out if your information was exposed, visit www.equifaxsecurity2017.com and click on the “Potential Impact” tab.

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Contact Us

Phone: 586-226-2100
Fax: 586-226-3584
info@summitfc.net

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We are located at:
43409 Schoenherr Road
Sterling Heights, MI 48313
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Securities services offered through Gradient Securities, LLC (Arden Hills, MN 866-991-1539).   Member FINRA/SIPC.  Investment advisory services are offered through Summit Financial Consulting, LLC, a MI registered investment advisor.  Gradient Securities, LLC and its representatives do not render tax, legal, or accounting advice.  Insurance products and services are offered through Summit Financial Consulting, LLC.  Summit Financial Consulting, LLC is not affiliated with Gradient Securities, LLC.

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