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2021 Vision for a New Year

December 16, 2020

Hindsight is defined by Merriam-Webster as the full knowledge and complete understanding that one has about an event only after it has happened. After experiencing a year filled with adversity and unexpected challenges, we are all hoping to bring that hindsight into focus as we move into 2021.

The global pandemic known as COVID-19 has brought substantial devastation to our way of life globally, nationally, and locally. Many among us continue to feel the full force of the economic and health impacts to our daily lives. However, there are encouraging signs that the end of the global pandemic is nearing. Multiple vaccine candidates have had successful clinical trials and are being reviewed and approved by regulatory authorities as of this writing. Effective therapeutics continue to show promise as alternative treatment options. These combinations give us hope that a semblance of normal is possible in 2021. That same optimism can translate into what changes 2021 might bring and how they will impact your finances.

First, there will be a new President inaugurated in January. While most people feel strongly about one party or another, history shows the stock market tends to be indifferent to which party occupies the White House and Congress. According to research from RBC Capital Markets that has tracked the returns of the S&P 500 dating back to 1933, the best outcome for markets have been a Democratic President and split Congress, with an average annual return of 14%. The second-best outcome was a tie between a full Republican sweep and a Democratic President with a Republican Congress. Both of these scenarios returned 13% annually.

Second, 2021 tax laws also continues to offer ample opportunities for investors. Individuals with 401(k) plans can contribute up to $19,500 to their plan from their salary, and for those age 50 or older, an additional $6,500 catch-up contribution is available. Eligible individuals can save up to $6,000 in a Traditional or Roth IRA with a $1,000 additional catch-up contribution for those age 50 or older. Expanded income tax brackets coupled with low tax rates provide opportunity to convert pre-tax retirement accounts to tax-free Roth IRA accounts and manage future taxes and retirement costs such as Medicare premiums.

The year 2020 will undoubtedly go down in the history books as unprecedented.  Let’s look to 2021 and do some financial planning so we will be ready to travel, attend concerts and do all the things to build our economy. From all of us at Keller and KMH, we wish you a Happy New Year! 

Published in the Victoria Advocate

Kyle W. Noack CPA/CFP® is Chief Financial Officer for Keller & Associates CPAs, PLLC and KMH Wealth Management, LLC.

https://kellercpas.com/wp-content/uploads/2021/08/blog-newyear.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2020-12-16 16:59:002021-11-06 17:34:162021 Vision for a New Year

Intentional Giving is Heartfelt

December 6, 2020

As the season of giving is upon us, let us remember that the best gifts are those given from the heart. Gifts always mean so much more when they are given intentionally.

My husband and I have three small children. It only took a few years of parenting for us to realize that new toys quickly lose their shine and become stress-inducing household clutter. After a few chaotic Christmases, we needed a solution. Together, we put an intense amount of thought into how we want to gift and have adopted a strategy that brings our children year-round joy without the waste and clutter.

Santa has children all over the world to deliver gifts to, and we want our children to know that Santa treats all the kids on the nice list equally. So each of our children receive four gifts from Santa, (something to wear, something to read, something they want, and something they need). As Mom and Dad, we gift our children experiences rather than toys. For us, that includes a family pass to The Texas Zoo, The Children’s Discovery Museum, The Texas State Aquarium, and other local attractions. Likewise, we encourage our friends and family to do the same when giving gifts to our children. Fishing on Coleto Lake with Grandpa and performances at Theatre Victoria with Grandma are memories that last a lifetime, unlike toys. Thanks to our thoughtful planning, we now enjoy less clutter and more joy that extends far beyond the Christmas season.

Charitable giving is owed the same, deep level of thought and should be considered as a part of your year-end tax planning. If you itemize deductions on your federal income tax return, you can generally deduct your gifts to qualified charities. With the right preparation, the tax benefits associated with charitable giving may even potentially enhance your ability to give. For example, consider a charitable gift of $1,000. At a 32% tax rate, you may actually be able to give $1,471 to charity [$1,000 ÷ (1 – 32%) = $1,471; $1,471 x 32% = $471 taxes saved].

If you can control the timing of income and expenses, then try to time your recognition of income to be taxed at the lowest rate possible, and time your deductible expenses to be claimed in years when you are in a higher tax bracket. If you expect to be in a higher tax bracket next year, making a charitable contribution the following January instead of this December will allow you to take the deduction next year, resulting in a greater tax benefit.

Make sure you keep records of all of your charitable gifts in the form of bank statements and written confirmations and avoid being scammed by only dealing with recognized charities. Visit irs.gov and use the Tax Exempt Organization Search tool to check the status of any charities you are considering gifting to.

Gifts of all kinds, whether to children or to charity, truly have the potential to go much further when they are given with intention. Together, a CERTIFIED FINANCIAL PLANNER™ professional and a CPA can help you develop an intentional plan for your charitable efforts that works for you and your unique financial goals.

Published in the Victoria Advocate

Hannah is a CERTIFIED FINANCIAL PLANNER™ professional and the Chief Compliance Officer of KMH Wealth Management, LLC. She has been with the firm for nearly 5 years.

https://kellercpas.com/wp-content/uploads/2021/08/blog-giving.jpg 247 500 KMH Wealth http://kellercpas.com/wp-content/uploads/2022/04/keller-logo-290-1.png KMH Wealth2020-12-06 17:07:002021-11-06 17:34:41Intentional Giving is Heartfelt

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