How did you do on your tax return this year?

January 26th, 2009

By Terry Ostrander, Lakeshore Investment, Insurance & Tax Services

How did you do on your tax return this year? Was your refund or balance due about where you hoped it would be? Now is the time to take action so your return looks more like what you want come next spring!

With about half the year done, now is a good time to check if things are going as expected, or if action needs to be taken. Just give us a call at (920)794-5566 to schedule an appointment. One of our tax advisors can look things over to ensure there are no big surprises when you file.

The standard deduction keeps getting higher, which means that more people are not itemizing deductions on their returns. However, if you are paying state income tax, property tax, and have charitable contributions, you may be perfectly situated to “double-up” your deductions. This is a tax strategy that many of our members use to reduce the tax bite on an every-other-year basis. This may be a good option for you and can work whether you file as single or married filing jointly. It depends on how things fall in line.

One note of caution, some folks double-up just their property tax every other year. This may actually be costing you money due to the lack of a property tax credit on the Wisconsin return in the year that you don’t pay the tax. If you have questions, once again, give us a call and we can check for you.

Also remember that capital gains are not a bad thing. In fact, if you hold the investment longer than a year, the tax rate is less than if you had the same amount of income as wages or interest! The key here is to hold it for at least one year to get the favorable tax treatment. If you have short-term gains (less than one year), those dollars will be taxed at whatever your income tax bracket rate is.

One last tip for those retiring and starting social security payments: remember that some, none, or all of those payments may be taxable, depending on your situation, and that most times there is no tax withheld from your social security checks unless you specifically ask for it. Tax planning is as important at this time as well as planning for your retirement day. Don’t let the fact that you retired and have started drawing social security give you a big surprise when you file this year. We can calculate approximate refunds and liabilities so that your first year retired is not an expensive tax year for you.

Lakeshore Investment, Insurance & Tax Services

(920)794-5566

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Posted in Finance Corner |

Here today - gone tomorrow?!?!

January 26th, 2009

By Terry Ostrander, Lakeshore Investment, Insurance & Tax Services

Many folks who have left a job, either by their own choice, or not, have faced the choice of what to do with the money that is left in their employer sponsored retirement plan. Anybody that has read my articles or talked to me in person knows that I strongly advise not spending that money now, but rolling it over into an IRA that can be used for retirement. But, let’s just look at a situation that came my way recently.

A client walked in, who had just left his former employer (his choice in this case) and he had two weeks of time off that he and his wife wanted to take full advantage of before he started his new position. He said that they only needed $5,000 for a two week, all expenses paid, including the flight, trip to an exclusive resort in the Grand Caymans, and he was planning to take it from his retirement plan as he moved it into his own IRA. Let me point out the fact that he was moving it into his own IRA was a great idea – but let’s look a little closer at the “rest of the story”.

To have $5,000, he would actually have to withdraw $8,820 because of taxes and penalties (he was under the age of 59 fi)*. We talked a little more and I asked him, when did he expect to retire and his reply was “not until probably age 65”. He is currently only 30 years old. So then I asked him how long he expected to live once he turned 65 and his first response was “I have no idea” but then we talked a little more and we decided that he had a good chance of living to age 95, because all of his grandparents were still alive, and even two of his great grandparents.

Then I showed him the numbers. What if we were to take that same $8,820 and invest it (or in this case, leave it in the new rollover IRA) and let’s assume we can get an 8% average return for the next 35 years until he retired. That amount would grow to $130,407! To continue, now let’s just see how much that would amount to in his retirement, assuming that he made only 7% in retirement, and the amount was paid out in equal installments for 30 years. The total cost of this trip, now amounted to $305,587 in lost retirement dollars. All of a sudden, the idea of taking the money from his retirement account didn’t look like the best option. The bottom line is- don’t dip into your retirement money now, leave it for retirement!

We are always available to answer questions that you may have regarding investments and taxes. Just give us a call at (920)794-5566.

*Assuming 25% federal tax bracket, 5% state tax, 10% federal penalty, and 3.33% state penalty.

This is a hypothetical example used for illustrative purposes only and does not represent an investment in any specific product. Investment return and principal value will fluctuate with market conditions so that, upon redemption, the investment, including the principal value, may be more or less than originally invested. Illustration may not account for all fees, charges, or taxes.

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. FR090712-1C2B

Lakeshore Investment, Insurance & Tax Services

(920)794-5566

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Posted in Finance Corner |

10 Ways to Save More for Retirement

January 26th, 2009

By Terry Ostrander, Lakeshore Investment, Insurance & Tax Services

Feel you need to do a little extra to make sure your retirement savings plans are on track? Here are some simple, straight-forward tips to help you save more for your retirement years.

  1. Put more dollars into your company’s 401(k) or other savings plan. Remember, you can elect to save up to 15% of your salary, not to exceed $15,500 in 2007 ($20,500 if over 50 years old). At the very least, contribute up to your company match. Don’t give away free money.
  2. Contribute to an IRA. If you qualify, the maximum you can contribute is $4,000 per year. In most cases, a ROTH IRA is preferable over a traditional IRA.
  3. Pay yourself first. Each month, automatically deduct a set amount from your checking/share draft account and invest it for your retirement (possibly fund an IRA). After a while, you won’t even miss it. Do this in addition to your company sponsored retirement plan.
  4. Don’t ever dip into your retirement savings. Even if it’s for a good thing, such as a home purchase or for education. Remember…it is for your RETIREMENT…that’s why it’s called retirement savings.
  5. Spend less now. If you’re not putting enough away for your retirement and you don’t know where to find the extra cash flow, you may have to set your priorities. For example, you’ve got a $450 payment on your car or truck. You may want to consider a less expensive vehicle and putting away $200 more a month for your retirement.
  6. See a financial advisor and develop a retirement savings plan. According to the 2006 Retirement Confidence Survey from Employee Benefit Research Institute (EBRI), only 42% of workers have calculated their retirement savings needs. Yet this study shows that those who have done this calculation have more realistic goals and are saving more.
  7. Invest your savings appropriately. A big mistake is taking on too much risk or not taking enough. For example, a 35 year old probably shouldn’t be investing all their retirement savings in fixed rate, guaranteed investment. Make sure you’re diversified.
  8. Commit to saving more. Try to calculate the most you think you can put away for retirement…then add 10% to this amount. Now you’re committed. And you’ll never regret saving this much.
  9. Never “cash in” your retirement dollars when you switch jobs. Avoid unnecessary taxes and penalties by “rolling” these dollars to another plan or an IRA.
  10. Start today. The earlier you start, the better the results. Even if you’re 22 years old and in your first job, you won’t regret any of these moves. Ready, set…go!

For help with your retirement dollars, contact Terry, Lakeshore Investment & Tax Service Representative serving the members of Shoreline Credit Union at (920) 794-5566 for a no-cost, no-obligation Retirement Planning Consultation. Today is the best time to get started!

Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Nondeposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America. B2MM-0706-9704

Lakeshore Investment, Insurance & Tax Services

(920)794-5566

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Posted in Finance Corner |

Tax Time

January 26th, 2009

By Terry Ostrander, Lakeshore Investment, Insurance & Tax Services

It’s almost tax time again, and as a reminder, Shoreline Credit Union is right around the block for you again this year to prepare your tax return in an efficient, convenient and affordable manner. As part of our continuing effort to help our members with all their financial concerns, we are again offering a 10% discount on preparation to all credit union members.

We are confident that we can provide a professional and affordable return for you, so confident in fact, that if you had your return prepared last year by our largest national competitor, we will do a comparable return this year and give you a 20% discount from the fee that you paid last year. You can even have your refund deposited into your account. Experience has shown that when we electronically file your return, refunds from the Wisconsin Department of Revenue have been deposited in as little as two days!

Also for those of you who normally don’t have to file, but want to get your telephone excise tax refund, we will be doing those returns for a cost of only $2.50 per exemption claimed on your return. Make an appointment with Cheryl to have those returns prepared. If you have more than just the telephone refund, then our normal rates will apply.

I have had several questions about donating vehicles in the past couple of weeks so I’ll do a little explaining here, as the rules have changed pretty dramatically. The law covers cars, boats, motor homes and aircraft. If you claim more than $500 for your contribution, you need timely substantiation from the charity and value claimed may not exceed the gross sales price the charity receives from the sale.

The charity must identify themselves, the giver (you), and the item completely including Tax ID Numbers for you and the charity, as well as the VIN for a vehicle (equivalent identification for boats and aircraft). Generally, they must also send you this within 30 days of the later of the contribution or the charity’s disposition of the item. The value shows the gross sales proceeds they get from selling the item. Generally, this will limit your deduction. Example - you donate a vehicle that often sells for $2000 on a car lot. However, the charity sells it at auction for only $750. Your deduction is limited to the $750. You will also probably get a form 1098-C, and most charities will be using that form. KEEP THE FORM! That is your substantiation; if you lose it, you’re limited to $500.

There are some special cases, but this covers the majority of them.

As always, if you have any questions or concerns, or you want to set up your appointment, just give us a call at (920)794-5566. See you at tax time!

Lakeshore Investment, Insurance & Tax Services

(920)794-5566

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Posted in Finance Corner |

 

Securities and investment advice offered through Capital Financial Services, Inc. Broker/Dealer Investment Advice Member FINRA/SIPC Terry Ostrander Registered Representative