Money Matters 2019

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New Changes Affecting Tax Season in 2019

By ALEX MEYER Staff Writer With tax season starting Jan. 28, those planning to prepare their 2018 tax returns have a number of changes to consider this year.

Several new laws will affect tax return preparation due to the Tax Cuts and Jobs Act passed in December 2017, Wheeling-based certified public accountant Jeffrey Yourkovich said.

“This major tax overhaul affects virtually every tax return that will be filed this tax season,” said Yourkovich, owner of Yourkovich & Associates, 246 Kruger St., Wheeling.

The good news for taxpayers is that the majority will see a tax cut, resulting in more spendable and savable dollars, Yourkovich said. However, the downside is that the tax code is now bigger and more complicated due to the addition of new rules, he said.

For individuals, the overhaul changed tax brackets, expanded the child tax bracket, increased the standard deduction and eliminated the deduction for personal exemption, he said. The changes also added a $500 family tax credit and eliminated or limited certain deductions many people have used in the past.

In addition, the overhaul updated the traditional IRS Form 1040. Page one and two of the form are abbreviated into two half pages, designed for a “postcard” look, and six supplemental schedules are provided to complete the information required on the Form 1040,

Yourkovich said.

Yourkovich said his advice for people filing their taxes this year, like every year, is to be organized and seek professional advice from a qualified certified public accountant, or CPA. “This year more than ever is that advice is important,” he said. “The new laws also come with steeper penalties for getting it wrong. Seeking the advice and expertise of a qualified CPA will ease those worries and help you understand and interpret your overall tax situation.”

The overhaul also brings changes for business owners, Yourkovich said. There is now a 20 percent deduction on some owners’ income, which could result in significant tax savings on their personal rules.

“The rules are very complicated, but this favorable tax break will greatly reduce your taxes,” he said.

Yourkovich said determining eligibility and computing the deduction would probably increase tax preparation fees, but said the savings if eligible and done right will outweigh those additional costs.

In addition, the ongoing U.S. government shutdown may have some effect on this year’s tax season if it continues into February. The Internal Revenue Service stated that refunds will still be issued, but customer service and correspondence will likely be impacted, Yourkovich said. “ We are hopeful for a smooth filing season but there is obviously no guarantee that will happen at this point,” he said. “Just another reason a qualified CPA can help navigate you to a successful experience with filing your taxes.”

JEFFERY YOURKOVICH

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www.YourkovichCPA.com TRUST YOUR TAXING ISSUES TO A QUALIFIED CPA WITH OVER 20 YEARS EXPERIENCE 246 Kruger Street, Wheeling, WV 26003

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• Taxes: Individual and Business • Marcellus/Utica Shale Tax Planning • Estimated Tax Payments • Oil and Gas Taxation • Royalty Income Planning • Pipeline Related Tax Planning • Easements, ROWs & Damages

What to Take To The Tax Preparer

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Retiring early is a complex issue that requires weighing the pros and cons.

Pros and Cons To Early Retirement A lifetime of working compels many people to look forward to their retirement.

Some people even work to retire early.

But what are the advantages of early retirement beyond starting a life of leisure?

And are there any detriments to this plan?

A 2014 survey by the financial services provider TIAA-CREF found that 37 percent of Americans plan to retire before age 65. However, many of them will not have control over the matter.

Those who do may want to consider the pros and cons of early retirement.

Advantages: Many people seek early retirement so that they can live a life free of the constraints of schedules. In retirement, time becomes, more or less, a retiree’s own.

Leaving a job can be a boon to a person’s health as well. Relieving oneself of the pressures and stresses of professional life can free up the mind and body. Stress can affect mental and physical health, taxing the heart and contributing to conditions such as depression or anxiety.

According to the Mayo Clinic, stress can cause headache, muscle and chest pain and contribute to trouble sleeping.

The earlier the retirement, the more

opportunity to travel before health issues begin to limit mobility. Early retirement also can be a way to volunteer more or even start a new job opportunity — one where workers have greater control over their schedules and careers.

Disadvantages: One of the disadvantages of early retirement is a loss of income. Contributions to retirement accounts also ceases at retirement.

This can lead to financial setbacks if adequate savings were not allocated for retirement. According to the resource Wealth How, some people who retire early fear outliving their savings.While retiring early may be good for health, it also can have negative consequences.

An analysis from the National Bureau of Economic Research found that retirement can lead to declines in mental health and mobility as well as feelings of isolation. Retiring early may jump start these health implications.

Another consideration is that health insurance provided by an employer typically ends at retirement. That means having to pay out of pocket until a person ages into government-subsidized health care, such as Medicare in the United States, at 65.

For many working Americans, April 15 is synonymous with taxes. But taxpayers may be happy to learn that they have two extra days to file their returns in 2018.

That’s because this year April 15 falls on a Sunday, and April 16 is Emancipation Day, when the District of Columbia celebrates Abraham Lincoln’s signing of the District of Columbia Compensated Emancipation Act, which freed more than 3,000 slaves in D.C. The extra two days to file might not be much time, but the extra 48 hours will no doubt please taxpayers who tend to put off filing until the last minute. Whenever taxpayers decide to begin the process of filing their taxes, those who hire professionals to prepare their returns should have the following items ready when visiting their tax preparers. ∫ Personal information: Social security or tax ID number; Social security or tax ID number of your spouse, if applicable; Dates of birth of all dependents; Social Security or tax ID numbers of all dependents: Last year’s tax return; Spouse’s tax return from previous year, if filing jointly Income Information; W-2 forms from all employers you worked for in the last year.

If you are filing a joint return, W-2 forms from all of your spouse’s employers in the last year . Information regarding investment income, including proceeds from the sale of bonds or stocks, income from foreign investments, interest income, and/ or dividend income.

∫ Income from local and state tax refunds from last year. Business income and accounting records from businesses individuals own. Unemployment income.

Rental property income. Social security benefits. Proof of miscellaneous income, such as lottery winnings, gambling winnings, etc. ∫ Income adjustments (if applicable); Homebuyer tax credit; Green energy credits; IRA contributions; Mortgage interest; Student loan interest; Contributions to medical savings accounts; Self-employed health insurance; Moving expenses; Education costs; Qualified medical expenses ∫ Dependent care (if applicable); Education costs; Child care costs; Adoption costs. ∫ Charitable contributions (if applicable); Charitable donation receipts ∫ Bank information: Bank account number; Bank’s routing number.

This list is a general list of documents that taxpayers may need to bring when visiting their tax preparers. Individuals who want to be certain they bring all the documents necessary to file their returns should contact their tax preparers in advance of their appointments to determine which documents they will need to make the process go as smoothly as possible.

Whenever taxpayers decide to begin the process of filing their taxes, those who hire professionals to prepare their returns should have the following items ready when visiting their tax preparers.

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Whenever taxpayers decide to begin the process of filing their taxes, those who hire professionals to prepare their returns should have the following items ready when visiting their tax preparers.

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Perry & Associates Ready to Answer Latest Tax Questions Keeping up with the latest tax rules and regulations is a key component of the services offered at Perry & Associates, Certified Public Accountants located 1310 Market St. in downtown Wheeling.

Diana Kennon, CPA, CVA, at Perry & Associates, is a Certified Public Accountant and Certified Valuation Analyst, one of 70 employees within the company. Locally, the firm has offices in Wheeling and at 150 W. Main St., St. Clairsville, and is headquartered in Marietta, Ohio. Other locations are in Vienna, West Virginia and Cambridge, Ohio.

As a Certified Valuation Analyst, Kennon performs business valuations for many purposes, among them buy/sell agreements, estate and trust returns and litigation.

Below are questions Kennon recently answered regarding tax season.

Q: As people begin thinking about filing their taxes this year, can you give us a recap of the new

tax changes that went to effect in Jan. 1, 2018 and how that will affect filers?

A. There are several changes that will affect taxpayers. All individual tax rates have been lowered and many of the tax backets have been expanded which means you have to make more money before you jump into a higher tax bracket. The standard deduction amounts have been almost doubled which means fewer people will be itemizing deductions.

Personal examptions have been eliminated and the child tax credit has doubled to $2,000 per child under 17. These are just a few of the changes that will affect many individual taxpayers.

Q. What about the changes that affect businesses?

A. Many small business owners will get to take advantage of the new 20 percent business income deduction. This is available for most taxpayers who receive in-

come from passthrough entities such as a partnerships or S-Corporations as well as those individuals who file Schedule C for their business income and Schedule F for farm income. This deduction is subject to income limitations and certain professionals such as doctors, lawyers and accountants, lose deduction after a certain level of income, so you should seek professional guidance when dealing with this deduction. Traditional C Corporations now have only one tax rate for all taxable income and that is 21 percent. One other thing I’ll mention is that entertainment expense is no longer deductible.

Q. We know that Perry & Associates has been very active in the community providing educational programs to area groups.

What type of training did the company provide this year and why did you provide it?

A. Our company held

Individual & Business Tax Preparation Accounting Auditing Payroll Services Bookkeeping New & Small Business Accounting Services Forensic Accounting Business Valuations Oil/Gas Royalty Tax Work *** NEW CLIENTS RECEIVE A 20% DISCOUNT UP TO $50*** 1310 Market St., #300, Wheeling, WV 150 W. Main St., #A, St. Clairsville, OH

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Diana Kennon, CPA, CVA, at Perry & Associates, Certified Public Accountants, in Wheeling, answers questions regarding the latest tax laws. many seminars and lunch and learns this year to get the information out to the community on what the new tax laws entailed.

Our company is very community-oriented, and we believe that educational programs are a way of giving back to our communities.

Q. We are all very familiar with the oil/gas development that is happening in our area. What do people who are receiving oil/gas royalties need to know about paying taxes this year?

A. It is very important to keep the detailed stubs that accompany your royalty payments every month. Those contain the deduction amounts that the company has withheld before sending you your payment.

Companies report the gross royalties on Form 1099-misc and may not include the deductions in their year-

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end reporting to the property owner. Also, the depletion deduction is calculated on the gross royalty, not the net so it is very important to have that information to pay the least amount of tax possible. Royalty income is considered unearned ordinary income not capital gain, so it is taxes at the ordinary tax rate not the lower capital gains rate.

Q. What about those that received large sums of money to purchase property or contracts to drill on their property — what do they need to know?

A. The tax treatment of a sale is very different from a lease, and it is important for your tax preparer to know exactly what transpired. Sale of mineral rights is considered capital gain and the lower capital gains rights apply. Leasing is considered ordinary income and is taxed at the higher

ordinary tax rates.

Q. How can knowing this help them save money in the end?

A. This is something that would need to be considered before a lease or sale happens so the tax effect can be factored in.

Q. What do you consider the biggest change in the new tax law?

A. The biggest change is lower tax rates for every tax bracket. Almost everyone should see their total tax liability lower than it would have been last year for the same income level.

Q. For the average taxpayer, what would you tell them to expect this year?

A. One thing I would tell them is that their refund may not be what they are expecting because the withholding tax tables were changed at the beginning of the year to reflect the new See PERRY, Page 5

Perry (Cont. from Page 4) tax law and there was an attempt to match withholding closer to actual tax liability.

Most people saw an increase in their paychecks throughout the year because of the new withholding amounts. I would also mention that the forms, while similar to the past, are different with added schedules for many filers.

Q. Since this a year with new tax laws, what do you expect in regard to turn-around time for refunds after filing?

A. I expect there may be delays in refunds being issued. The IRS has announced that tax season will begin Jan. 28 but they will still wait to verify information to forms filed by others, such as Form W2 from your employer, before issuing a refund. There has been tremendous fraud in the past that the IRS is trying to mitigate so they will make sure the filing is verified before issuing a refund. Also, there are still many forms that the IRS hasn’t finalized that will be needed before many people can file.

Perry & Associates plans to offer extended hours for clients this year. The St. Clairsville office will have extended hours from 8 a.m. until 7 p.m Monday through Thursday and Saturday from 10 a.m. until 2 p.m. beginning Feb. 4. Fridays will remain 8 a.m. to 5 p.m.

The Wheeling office is open 8 a.m. to 5 p.m.

Monday through Friday and will have extended hours by appointment.

Kennon said new clients are being accepted and should make an appointment by calling 304-232-1358 in Wheeling or 740-695-1569 in St. Clairsville. Visit online at www.perrycpas. com.

How to Curtail Wedding Spending And Still Impress Your Guests Tying the knot can be an expensive endeavor. According to The Knot 2017 Real Weddings Study, which surveyed nearly 13,000 brides and grooms in the United States who got married in 2017, the average cost of a wedding was more than $33,000.

That figure may surprise some couples planning their weddings, many of whom may not be able to afford spending so much on their ceremonies and receptions.

Couples may feel pressure to compete with friends and relatives whose weddings they have attended in the past, and that may compel some to stretch their budgets and even go into debt to finance their nuptials. However, there are ways for couples to curtail their wedding spending and impress guests at the same time.

Trim the guest list. The 2017 Real Weddings Study found that couples spent an average of $268 per guest in 2017. Many couples are recognizing that smaller guest lists are a great way to lower wedding spending, and The Knot study found that the average guest count decreased from 149 in 2009 to 136 in 2017. Trimming the guest list may seem harsh, but couples who work together need not cut their guest lists in half. By working together, couples can likely find between 10 and 15 acquaintances on their initial lists who won’t be offended if they’re not invited. Couples who spend the 2017 average per guest can save nearly $3,000 by removing just 10 people from their guest lists.• Expand your venue horizons. A greater number of couples are looking beyond traditional wedding venues and opting for more unique locales to tie the knot. The 2017 Real Weddings Study found that 15 percent of 2017 weddings were held on farms, ranches and even in barns, while just 2 percent of weddings were hosted in such venues in 2009. The growing popularity of unique wedding venues may make some locations more expensive than couples anticipate, but a willingness to tie the knot in a unique venue greatly increases couples’options, improving the chances they will find more affordable venues.

Cut back on guest entertainment. Customizing experiences for guests is a major reason why today’s couples are spending so much more per guest than their predecessors. Spending for customized guest entertainment, which includes things like photo booths, sparklers and video booths, tripled between 2009 and 2017. Couples may want to give their guests unique experiences, but should not stretch their budgets or go into debt to do so.

Tie the knot in winter. Summer and fall

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Weddings are expensive, but couples can find ways to cut costs without sacrificing quality. were the most popular wedding seasons in 2017, and that does not figure to change anytime soon. Couples can take advantage of those trends by getting married in winter, a slow season for wedding venues and vendors, who might be more flexible with their

prices.

The most popular months to tie the knot in 2017 were September, June and October, so couples who don’t want to wed in winter but want to avoid paying top prices should avoid those three months.

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Estate Planning Important for Charitable Giving Charitable giving comes in many forms.

Some people donate annually to their favorite charities, while others may volunteer their time or professional services. One way many people choose to give to charity is to donate at the time of their death.

Including charitable giving into an estate plan is wonderful way to support a favorite cause. When researching this approach, it can be easy to become overwhelmed by references to tax codes, attorney fees and other items that can make including charitable gifts in one’s estate plan seem more complex than it needs to be.

Schwab Charitable, an independent nonprofit organization, notes that there are various ways to incorporate charitable giving into an estate plan, and that doing so is something almost anyone can do. ∫ Dictate giving in your will. When reading about charitable giving and estate planning, many people might begin to feel intimidated by estate taxes, feeling their heirs won’t get as much of their money as they hoped. But Schwab Charitable notes that including a charitable contribution in your estate plan will reduce your estate tax liabilities, which will help to maximize the final value of your estate for your heirs.

Speak with your estate attorney and ensure your donation is spelled out in your will.

Where People Spend Most Who hasn’t tallied up monthly bills or looked at a credit card statement and pondered if they’re spending a little too much? The average person also may wonder how their expenditures compare to other people around the country and what they need to do to enjoy financial freedom in retirement.

According to the U.S. Bureau of Labor Statistics, the average American household spends just about $57,000 each year between necessities and luxuries. Canadians are spending even more than their neighbors to the south. Statistics Canada indicates that, in 2016, the average annual expenditure on goods and services per household totaled $62,183.

So how are people allocating their funds?

The results may surprise you and indicate where it’s possible to trim some fat and save big bucks.

Across North America, housing is the largest line item in people’s budgets. Various sources suggest that housing and shelter needs account for anywhere from 30 to 40 percent of most household budgets. By making housing decisions based on areas with the most efficient cost of living, individuals can save considerably over the long run.

The second largest expenditure category is transportation. This accounts for the cost to finance or lease a vehicle and insure it, and it also includes urban dwellers who rely on public transportation or ride-share services to get around. Keeping transportation budgets in check can be great a way to save.

Food is the next largest expense. While everyone needs sustenance to stay alive, how that money is allocated can make a big difference in saving versus spending. The BLS says that food at home costs around $4,000 annually, while spending on dining out amounts to around $3,100, for a grand total of $7,100 each year. Statistics Canada notes that Canadian households spent an average of $8,784 in 2016 on food and that 26 percent of that spending was on dining out. Cutting back on dining out can be a great way to save money, as can becoming a more sale-conscious grocery shopper.

Health care, utilities and entertainment are the next most costly expenditures, respectively. But each of those items are considerably less expensive than the top three.

Therefore, making changes to where one lives, how one gets around and how one eats can certainly add up to considerable savings.

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∫ Donate your retirement account. Another way to utilize an estate plan to donate to charity is to designate the charity of your choice as the beneficiary on your retirement account. Schwab Charitable notes that charities are exempt from both income and estate taxes, so choosing this option guarantees the charity will receive 100 percent of the account’s value once it has been liquidated. ∫ Explore a charitable trust. Charitable trusts provide another way to give back through estate planning. For example, a split-interest trust allows men and women to donate their assets to a charity but retain some of the benefits of holding those assets. A split-interest trust funds a trust in the charity’s name, and people who open one receive a tax deduction any time money is transferred into the trust. But the donors still control the assets in the trust, which is passed onto the charity at the time of their deaths. You have various options at your disposal in regard to charitable trusts, so speak to a financial advisor to help you pick the best one for you.

Charitable giving is a part of many people’s estate plan. Explore your options and choose the one that’s most beneficial to you, your heirs and the charities you want to support.

How Parents Can Create Household Budgets Raising a family is no small feat.

Along with the love and joy, there are some obstacles that must be surpassed, including the financial investment required.

A 2015 report from the Department of Agriculture found that middle-income married couples would spend an estimated $233,610 to raise a child born in 2015.

Parents who find that figure high should know that it does not include costs incurred after children turn 18. So parents could be responsible for nearly a quarter million dollars before they ever write a college tuition check.

The high cost of raising a child only emphasizes the importance parents must place on creating household budgets. A few dollars put away here and there can add up to substantial savings over the years.

Housing: Housing is many families’ most substantial monthly expense.

When determining how much they can afford to pay for housing, families may come up with a figure they’re comfortable paying for their monthly mortgage.

But it’s important that parents, particularly those who have never owned their own home before, also take utility costs into consideration before signing their mortgage agreements.

Utility costs for single-family homes can dwarf the cost of utilities in apartments.

The U.S. Bureau of Labor Statistics’ Consumer Expenditure Survey recommends people making housing budgets commit 58 percent of total housing costs to mortgage payments, 21 percent to utilities, just over 9 percent to furnishings and equipment, and roughly 7 percent to household operations. Utilizing this formula before taking out a mortgage can help families ensure they are not scraping pennies together each month to meet their housing costs.

Food: Food is another significant expense, especially for growing families.

The BLS notes that the average U.S. household spends just about 13 percent of its monthly budget on food. Parents who examine their spending habits over the previous year can look at how much they’re devoting to food and find ways to reduce that figure if it’s well over 13 percent. Reducing food spending may require more savvy spending at the grocery store, including shopping sales or buying certain items in bulk when it’s advantageous to do so.

Transportation: Parents may find this odd, but the BLS reports that the average U.S. household spends more of its monthly budget (roughly 17 percent) on

transportation than it does food. Parents who want to trim their monthly budgets can opt for more affordable cars and trucks, reserving their splurging on luxury vehicles for later in life when their kids have moved out of the house.

Miscellaneous expenses: When creating their household budgets, parents should leave room for unexpected miscellaneous expenses, such as health care costs if the children get sick and cloth-

ing and entertainment. Without accounting for such expenses, parents may find themselves taking on potentially crippling debt in times of emergency.

Carefully constructed household budgets can help parents survive the often expensive costs of raising a family. Their splurging on luxury vehicles for later in life when their kids have moved out of the house.Miscellaneous expensesWhen creating their household

budgets, parents should leave room for unexpected miscellaneous expenses, such as healthcare costs if the children get sick and clothing and entertainment.

Without accounting for such expenses, parents may find themselves taking on potentially crippling debt in times of emergency.

Carefully constructed household budgets can help parents survive the often expensive costs of raising a family.

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The Benefits of Having Joint Bank Accounts Once a couple walks down the aisle and returns home from their honeymoon, various tasks must be performed. Couples should not overlook the importance of tending to their financial futures. One of the first steps is merging and managing bank accounts.

A study from Kansas City University found the number one cause of divorce in the United States is fighting over money and other financial problems. Therefore, being on the same page concerning finances and maintaining financial transparency can help reduce the propensity to clash over cash. Merging bank accounts can be a good idea for newlyweds for various reasons. ∫ Improved efficiency:

Having one account makes it easier to track income and spending and can make keeping track of money less complicated. Also, having only one bank means cutting down on statements or correspondence from multiple institutions. ∫ Greater communication: Some people are natural spenders and others savers. It’s easy to gloss over financial indiscretions when there are separate accounts.

A joint account makes it easy to talk about spending habits and the flow of money in and out of an account. ∫ Creates accountability: Not being able to hide debt or large expenditures or withdrawals makes couples accountable to each other.

This creates transparency in a relationship and may help

couples become closer as a result. ∫ Good in emergencies: According to the financial resource Money Under 30, having a joint bank account can ensure that a surviving spouse has uninterrupted access to funds in the event his or her partner dies. This may not be the case with individual bank accounts until the estate goes through probate. ∫ Get better banking: Certain financial institutions may offer perks like no fees if customers maintain a specific balance or meet the criteria of debit card usage per month. Such requirements may be more easily reached with two people utilizing the account. ∫ Combine with ease: Financial expert Dave Ramsay

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Joint accounts are a smart choice for married couples. says it’s particularly easy to tification and transferring different banks, select a conmerge when individuals al- the balance of one account venient institution and open ready were using the same into the other and adding a up a new account together bank or credit union. Sim- signer is all that’s needed. In after closing the individual ply showing up with iden- instances where couples use ones.

Prepare for the Financial Impact of Natural Disasters The fury of Mother Nature’s wrath is displayed in vivid color during stormy times of year, including hurricane season. And it seems no area of the planet is safe from such furor. In September 2018, Hurricane Florence battered the southeastern coast of the United States while Typhoon Mangkhut hit Hong Kong. Just a few months earlier, California saw devastating wild fires, and in August torrential rain flooded many areas of Taiwan.

After the flood waters recede and the rain or smoke has passed, people affected by storms must face the financial ramifications. Whether storms touch down nearby or overseas, the globalized economy means the financial fallout from natural disasters can be felt near and wide.

The National Centers for Environmental Information estimates that hurricanes cost an average of $21.8 billion per event in damages for the United States.

Since 1980, when data started to be collected, NCEI indicates hurricanes (tropical cyclones), drought, flooding, wildfires, freezes, and winter storms tend to be the most costly events.

It’s easy to underestimate the scope of the financial burdens caused by natural disasters. Here are a few ways to protect

one’s financial interests in advance of natural disasters. ∫ Experts at Property Casualty Insurers Association of America advise consumers to review and update their insurance

policies regularly. Many homeowners are underinsured for natural disasters, particularly for flooding or earthquakes, which are not included in most policies. ∫ Adjust insurance shortfalls based on

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what insurers provide and the type of weather that tends to affect the area in which you live. ∫ Policies should reimburse for hotel rooms or meals out if a home is uninhabitable after a disaster. In a Consumer Reports survey of people who experienced property damage after a hurricane, 5 percent said they had to stay elsewhere, while 42 percent needed to relocate temporarily after damages from wildfires. ∫ Remove valuables and store them in a bank safety deposit box or another location that’s outside the path of the storm. Theft, vandalism and looting can occur after storms. ∫ Have a backup employment plan and savings strategy if storms come through regularly. It is not uncommon for local businesses to shut down for some time to recover. This can mean temporary or permanent loss of employment. ∫ Recognize your portfolio may suffer as commodity prices and stocks take a hit if regions are decimated by natural disasters. Think ahead in regard to how your investments may be affected and make changes accordingly to mitigate the financial damage.

Explaining Financial Plans and Why You Need One A clear understanding of personal expenditures and savings rates is essential for securing a strong financial future. A financial plan can help everyone from the extraordinarily wealthy to those struggling to make ends meet.

The Financial Planning Association says a financial plan identifies goals and objectives that take finances to achieve and creates a plan for making those things happen. A financial plan can serve as a road map that people can look to for years to come as they work toward securing their financial futures.Whether you aim to retire by age 50 or to reduce your debt, a financial plan can be just what you need to turn your dreams into a reality.

Here are some steps for devising a financial plan.

1. Identify what you want. You must identify what you want to achieve. Goals may include buying a home, retiring early, providing for a child’s education, or having more time and money for travel.

Putting your goals on paper may inspire you to pursue them more vigorously.

2. Audit your finances. Conduct an audit of your finances so you can get a clear grasp of your current situation.

Make a list of all of your assets, and then

subtract existing debts to figure out your net worth. While you’re tabulating, find out how much you bring in and spend each month so you can get a clear picture of your spending habits. This will help you make smart choices in regard to spending and saving.

3. Eradicate existing debt. One of the key parts of a financial plan is to pay down high-interest debt to free up money for the future. Focus on paying off credit card balances, high-interest loans or balances for other accounts where interest is high. A debt consolidation loan may be worth exploring if you’re having trouble paying down high-interest debt.

4. Start saving. Building savings is essential to reaching many goals. It also is key to help avoid financial ruin during emergency situations, such as home or car repairs, disability that takes you out of work, etc. Start small by having a certain percentage of money deposited into a separate account automatically. Then watch it grow. Investing in the right products also can help you grow your savings.

Financial advisers can help individuals devise plans to meet their short- and long-term goals.

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Taking Your Taxes and Investing Them Wisely Investing has always been a means for people to grow their wealth and make their money work for them. Investors know that protecting investment earnings is important, and that often can be achieved through tax-advantaged investments.

Tax-advantaged investing, also called tax-efficient investing, allows investors to maximize the profits they can keep after taxes are filed. Investment selection and asset allocation are important factors affecting returns, but minimizing taxes and other costs is also crucial, according to the Schwab Center for Financial Research.

There are some ways for investors to keep more of their assets. A qualified financial adviser can help navigate the waters of the best tax-advantaged options. When investing on an annual basis, there are some general accounts people can use to their advantages. ∫ A 401(k) or 403(b): These accounts are an ideal way to get “free” money. Funds in these accounts are put away pre-tax. Because your adjusted gross income is lowered, so is your federally taxable income.

In addition, some employers may match contributions up to a certain percentage.

Companies also may offer Roth 401(k) plans, which differ from traditional plans in regard to when you pay taxes. With Roth plans, you pay taxes up front. When the money is eventually withdrawn, those withdrawals are tax-free.

∫ IRAs: Individual retirement accounts are similar to 401(k) plans in that they’re tax-deferred. However, they generally offer greater freedom in investment choices.

Roth IRAs, like the Roth 401(k) plans, must be paid with after-tax dollars. But

the advantages are higher contribution amounts, withdrawals that are tax-free and no mandatory withdrawals when a person reaches a certain age. ∫ Tax-Free Savings Account (TFSA): Canadian investors can explore TFSAs. These are accounts that do not tax any contributions, interest earned, dividends, or capital gains, and can be withdrawn taxfree. It is available to individuals ages 18 and older in Canada and can be used for any purpose. ∫ College savings accounts: Investing in a 529 plan can be wise for parents. While money is invested after tax, it is tax-free when withdrawn for qualified higher education purposes. ∫ Health savings accounts: To get a tax deduction on health expenses, an HSA is the way to go. HSAs are linked to high-deductible health plans and allow account holders to use the funds for qualified spending. Working with a financial planner can help investors maximize their investments to be as tax-efficient as possible. Financial experts understand funding limits and the timeline in which to invest for tax advantages.

Get Financial Facts About Timeshares

Many people turn to timeshares as a way to enjoy annual vacations. But is investing in a timeshare a financially sound decision? That depends on who you ask. Getting the facts about how timeshares work and learning a few tricks can help anyone make an educated decision about timeshares.In a timeshare, individuals purchase a place to stay in vacation property. They typically can then use this room and the surrounding amenities once per year, and often must travel to the same location time and again.

Timeshares long have held appeal because they are marketed toward people who may not be able to buy a vacation home, but still want to vacation each year. There are some advantages to timeshares. They provide a guaranteed vacation destination each year in a familiar place. This is great for people who value familiarity. Timeshares also make it possible to afford a vacation in an expensive resort. Sometimes a person can trade times or locations with other timeshare owners, enabling more versatility and new destination experiences. For those who have to skip a year, it may be possible to sublet the timeshare or let family and friends use it if the agreement allows.

Timeshares have some notable drawbacks as well. Cost-efficiency is one notable drawback of timeshares. The American Resort Development Association, a trade group for timeshare companies, offers that the average cost of a timeshare is around $20,000, with an annual maintenance fee of $660.

Photo Provided

Learn how to navigate timeshare purchases to find out if they’re a smart purchase for you.

Those fees are paid even if the resort isn’t used that year. more, those who sell a timeshare at a loss may find the InChances are a person can get a comparable vacation else- ternal Revenue Service doesn’t let them claim a capital loss, where for a lower cost — especially with the abundance of which is often the case with other investments and property. vacation property rentals available from traditional hotels as To make timeshares work, individuals can opt to buy well as sites such as Airbnb. used, which is often at a fraction of the cost offered new by A timeshare is not like a traditional real estate investment. resort developers. Also, realize that a timeshare is a lifestyle According to Investopedia, it is an illiquid asset that is likely purchase, not exactly a real estate investment. Timeshares to lose value over time. Those who decide to sell their time- are not a way to turn a profit. Try to purchase in desirable shares often find they must do so at a deep discount. Further- locations as well. Doing so increases the likelihood of resale

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Why Beneficiary Designations Are Important Beneficiary designations can provide a relatively easy way to transfer an account or insurance policy upon your death.

However, if you’re not careful, missing or outdated beneficiary designations can easily cause your estate plan to go awry.

We often complete these designations without giving it much thought, but they’re actually important and deserve careful attention. Here’s why: Beneficiary designations take priority over what’s in other estate planning documents, such as a will or trust.

For example, you may indicate in your will you want everything to go to your spouse after your death. However, if the beneficiary designation on your life insurance policy still names your exspouse, he or she may end up getting the proceeds.

Where you can find them Here’s a sampling of where you’ll find beneficiary designations: Employer-sponsored retirement plans [401(k), 403(b), etc.] ∫ IRAs ∫ Life insurance policies ∫ Annuities ∫ Transfer-on-death (TOD) investment accounts ∫ Pay-on-death (POD) bank accounts ∫ Stock options and restricted stock

∫ Executive deferred compensation plans Because you’re asked to designate beneficiaries on so many different accounts and insurance products, it can be difficult to keep up. However, it’s worth the effort; failing to maintain the beneficiary designation on that 401(k) from three employers ago could mean money will go to the wrong place.

When you first set up your estate plan, go over all the designations you previously made and align them with your plan. After that, you should review and update them regularly — a least once a year.

Ten tips about beneficiary designations Because beneficiary designations are so important, keep these things in mind in your estate planning: 1. Remember to name beneficiaries. If you don’t name a beneficiary, one of the following could occur: The account or policy may have to go through probate court. This process often results in unnecessary delays, additional costs, and unfavorable income tax treatment.

The agreement that controls the account or policy may provide for “default” beneficiaries. This could be helpful, but it’s possible the default beneficiaries

may not be whom you intended.

2. Name both primary and contingent beneficiaries. It’s a good practice to name a “back up” or contingent beneficiary in case the primary beneficiary dies before you. Depending on your situation, you may have only a primary beneficiary. In that case, consider whether a charity (or charities) may make sense to name as the contingent beneficiary.

3. Update for life events. Review your beneficiary designations regularly and update them as needed based on major life events, such as births, deaths, marriages, and divorces.

4. Read the instructions. Beneficiary designation forms are not all alike. Don’t just fill in names — be sure to read the form carefully.

Because you’re asked to designate beneficiaries on so many different accounts and insurance products, it can be difficult to keep up. However, it’s worth the effort; failing to maintain the beneficiary designation on that 401(k) from three employers ago could mean money will go to the wrong place.

When you first set up your estate plan, go over all the designations you previously made and align them with your plan. After that, you should review and

update them regularly— a least once a year.

5. Remember to name beneficiaries.

If you don’t name a beneficiary, one of the following could occur: The account or policy may have to go through probate court. This process often results in unnecessary delays, additional costs, and unfavorable income tax treatment.

The agreement that controls the account or policy may provide for “default” beneficiaries. This could be helpful, but it’s possible the default beneficiaries may not be whom you intended.

6. Name both primary and contingent beneficiaries. It’s a good practice to name a “back up” or contingent beneficiary in case the primary beneficiary dies before you.

Depending on your situation, you may have only a primary beneficiary. In that case, consider whether a charity (or charities) may make sense to name as the contingent beneficiary.

7. Update for life events. Review your beneficiary designations regularly and update them as needed based on major life events, such as births, deaths, marriages, and divorces.

Please see BENEFCIARY, Page 12

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Beneficiary (Continued from Page 11) 8. Read the instructions. Beneficiary designation forms are not all alike. Don’t just fill in names — be sure to read the form carefully.

9. Coordinate with your will and trust. Whenever you change your will or trust, be sure to talk with your attorney about your beneficiary designations. Because these designations operate independently of your other estate planning documents, it’s important to understand how the different parts of your plan work as a whole.

10. Think twice before naming individual beneficiaries for particular assets. For example, you establish three accounts of equal value and name a different child as beneficiary of each. Over the years, the accounts may grow unevenly, so the children end up getting different amounts — which is not what you originally intended.

11. Avoid naming your estate as beneficiary. If you designate a beneficiary on your 401(k), for example, it won’t have to go through probate court to be distributed to the beneficiary.

If you name your estate as beneficiary, the account will have to go through probate. For IRAs and qualified retirement plans, there may also be unfavorable income tax consequences.

12. Use caution when naming a trust as beneficiary.

Consult your attorney or CPA before naming a trust as beneficiary for IRAs, qualified retirement plans, or annuities.

There are situations where it makes sense to name a trust — for example if: Your beneficiaries are minor children; you’re in a second marriage; you want to control access to funds. Even in cases like these, understand the tax consequences before you name a trust as beneficiary.

13. Be aware of tax consequences. Many assets that transfer by beneficiary designation come with special tax consequences. It’s helpful to work with an experienced tax advisor, who can help provide planning ideas for your particular situation.

14. Use disclaimers when necessary — but be careful. Sometimes a beneficiary may actually want to decline (disclaim) assets on which they’re designated as beneficiary. Keep in mind disclaimers involve complex legal and tax issues and require careful consultation with your attorney and CPA. Next steps When creating, updating, or simply reviewing your estate plan, pay attention to your beneficiary designations.

Remember, beneficiary designations take precedence over what you may have specified in a will or trust.

Put a reminder on your calendar to check your beneficiary designations annually so you can keep them up-to-date.

Trust services available through banking and trust affiliates in addition to non-affiliated companies of Wells Fargo Advisors.

Wells Fargo Advisors and its affiliate do not provide tax or legal advice. Please consult with your tax and/or legal advisors before taking any action that may have tax and/or legal consequences.

This article was written by/for Wells Fargo Advisors and provided courtesy of McKenzie & Riedel Investment Consulting Group in Wheeling at 304-2322550.

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