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Thoughts on a Tax Filing Season Like No Other….

Tax season is potentially more complicated this year, with many new provisions resulting from the tax law changes in place for the first time.

Because of these changes, many may be avoiding the start of the filing process altogether. The IRS reports that it has received fewer returns than usual thus far.

This could be a particularly challenging year to delay the start of the tax-filing process, precisely because there are so many new variables in play.

Accredited’s Director of Tax Planning, Chris Link, CFP®, CPA, provides thoughts regarding why starting the filing process sooner — especially this year — may be the best option

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Levin: Why Minnesota needs to rethink its estate tax

I think that there are many good reasons for a federal estate tax, even though it currently only applies to married couple estates above $22.8 million (half of that for singles). While some people may argue that it is a double tax, most estates that size involve never-taxed capital gains.

It is also difficult to suggest that a society which believes everyone has an equal shot can say that those who have inherited wealth are starting in the same place as those who began with nothing. And a society which values the fruits and benefits of hard work may look askance at those who made it financially and are able to pass with limited restrictions all that accrued to them to heirs who may have done little work to earn it.

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Levin: How to apply Marie Kondo’s ‘Tidying Up’ to your finances

I admit that I haven’t watched Marie Kondo’s hit show “Tidying Up,” but our daughters have described it to me. And while I love thinking about what may spark joy in me, from a financial planning perspective, I am also interested in what we can get rid of. So let’s tidy up our financial perspectives.

You feel frustrated because your partner just bought something you don’t think they need or they discourage you from getting something you really want — throw those sentiments away. Something gets triggered in these interactions, but it isn’t about money. The key thing is to get agreements around what you reasonably can spend and then don’t sweat how it is spent. Being too frugal or over spending are generally about fears of something like not having enough or not fitting in. Throw away the judgment and decide how to allocate your money by aligning it with your values. 

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Levin: How to handle false positives in your financial planning

When we are walking our dog at night and hear something behind us, we may cross the street even though there is a far greater likelihood of it simply being a neighbor rather than a mugger. And when we are hiking the North Shore and hear a rumbling in the weeds, we may quickly get loud to scare off the bear that isn’t there as a squirrel harmlessly climbs a tree. 

These false positives protect us. Crossing the street or making noise may be unnecessary, but if our fears were real, we would be glad we did so. The important thing to discern is when false positives are useful and when they are not. Let’s go over typical ones we see in financial planning.

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Levin: Striving for a higher meaning in your philanthropy

I am a strong believer in philanthropy. Deciding to give a percentage of income to charity, even as we walk through life’s changes and disruptions — starting businesses, building careers, having children, educating them — is a commitment to hold to our charitable objectives.

But being charitable and being generous may be two different things.

The financial benefits of charity are directed to those who can most afford to give. This is especially true with the new tax laws. Charitable gifts are deductions from your taxes, but only if you itemize. The increased standard deduction means fewer people are going to itemize their deductions. Those who itemize will most likely maximize their property and state income tax deductions at $10,000, and have a fair amount of mortgage interest and significant medical deductions. For married couples under age 65, the standard deduction is $24,000. So your charitable contributions are not really deductible until your itemized deductions are over $24,000!

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Levin: How to keep money issues from turning bitter

I pulled up to the four-way stop a couple of seconds before the driver on my right, who briefly slowed and gunned it right through. I stared in annoyance at how someone could violate not only the rules of the road, but general etiquette, and worse, how they could do it to me. Once I took myself out of it, I realized that the incident cost me at most five seconds and I chose to leave my resentment behind.

Anne Lamott in her new book “Almost Everything: Notes on Hope,” writes: “Expectations are resentments under construction.” That sentence has had a remarkable impact on me. I see how expectations affect me, but I also see it every day with clients. Here are a couple of ideas on how to handle things before the resentment builds.

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With Rising Rates, It Now Pays To Hold Cash

For nearly a decade, earning a meaningful return on cash has challenged investors. Interest rates in the United States were compressed to near historic lows by the policy of the Federal Reserve following the Great Recession. Although this action helped support the struggling U.S. economy, there was little opportunity to earn interest for those holding cash. This low interest rate market was largely a global phenomenon and escalated to the extent that some investors internationally paid others to hold their cash.

As the broad economic recovery continues, interest rates have slowly reversed course from their historic lows. This has led to yields on many cash savings solutions increasing to more meaningful levels. This has given investors several ways to find yield on their cash without extending into opportunities with increased risk to their principal.

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Levin: You need to ask the right questions to get the correct answers about money

We spend too much time on answers and too little on questions. What difference does the right answer make if it turns out to be the wrong question?

Let’s look at a few questions that many clients ask and what the real question should be.

The right question isn’t when do I retire, it’s what do I want to be doing with my life? In his book, “Transitions: Making Sense of Life’s Changes,” William Bridges writes, “Every transition begins with an ending. We have to let go of the old thing before we can pick up the new one – not just outwardly, but inwardly, where we keep our connections to people and places that act as definitions of who we are.”

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Figuring out who you aren’t can help your financial planning

Halloween and the upcoming election are not that different from each other. Children and candidates come to the door with their hands out, threatening bad things if you don’t give them what they want. You try to figure out who they really are. It is easier to determine who they aren’t.

Figuring out who we aren’t is also helpful when it comes to financial planning. If we are conscious of who we aren’t, we are more likely to make decisions that connect our actions and values. When our behaviors and beliefs intersect, we tend to be less scared about money. So think about who you aren’t.

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