Essential Money Moves to Make Before the Year’s End

The end of 2018 is quickly approaching, but there are a few key money moves you should make before the new year, especially in light of the Tax Cuts and Jobs Act. The higher standard deduction means more Americans will ditch itemizing their 2018 federal tax returns.

That means you should probably focus on year-end tax strategies that first lower taxable income, rather than maximize tax deductions. Here are a few key items to tackle before the ball drops on the new year.

Take Stock of Losses

If you follow the stock market, you know that the last few months have been volatile, so there’s a good chance that some of your investments have become losses. That might sound bad, but any losses that are in a taxable account, such as an investment account, bank account, or money market mutual fund, can be sold to offset other taxable investment gains in the same year. Furthermore, if your losses exceed your gains, you can apply up to $3,000 to offset ordinary taxable income from this year.

Max Out Retirement Savings

As close as possible, that is. The more money you put into your 401(k), the more financial security you’ll have in the long run, but a lot of these contributions also reduce your taxable income. At this point you probably only have one or two more paychecks from which to have funds withheld, but even a few hundred dollars more can provide some near-term tax relief as well as bolster your retirement savings.

Fund Your HSA

You have until the 2018 tax-filing deadline to fully fund your health saving account (HSA) in order to get a bigger deduction. The maximum limits are:

  • Individuals: $3,450
  • Families: $6,900
  • 55 or older: an additional $1,000 catch-up contribution

These accounts can roll over indefinitely, so they’re a smart way to save for future medical expenses. HSAs also have a triple tax benefit: contributions are tax-deductible (even if you don’t itemize), earned interest is tax-free, and withdrawals are tax-free as long as they’re used to pay for qualified medical expenses.

Use Up Your FSA

The funds in a flexible spending account typically don’t roll over to the next calendar year. However, some employers allow $500 to carry over into the new year or grant employees until March to spend FSA funds. Even so, now is a good time to use the pretax dollars for doctor appointments, flu shots, and even some “everyday” drugstore items, such as non-prescription reading glasses, contact lenses and solutions, and reading glasses.

Maximize Deductions

If you’re wondering whether you should itemize your 2018 tax returns or take the standard deduction, here are a few last things to keep in mind:

  • Medical treatment: If you spend more than 7.5 percent of your adjusted gross income this year on medical expenses, you can deduct those costs.
  • Property taxes: If you paid less than the $10,000 limit for state and local taxes, your state may allow you to prepay 2019 property taxes. This way you’ll get the most from the state and local taxes deduction.
  • Mortgage Interest: Provided you’re not near the cap on the mortgage interest deduction, which is $750,000 after the new tax law, you can make your January mortgage payment in December to boost the amount of interest you paid during the 2018 tax year.
  • Charitable donations: If you routinely give to charities, double up on contributions and make your 2019 donation before year’s end. If you put the double donation into a donor advised fund, which is like a charitable investment account, you’re eligible to take an immediate tax deduction. That means you can take the deduction for 2018 while your funds are invested for tax-free growth, allowing you to make distributions to charity next year or beyond.

Here’s How Medicare for All Could Affect Americans

According to CNBC, 70% of Americans support Medicare for all, but the term is still murky for Americans. What does it actually mean and how could it affect Americans?

Implemented in its most historical meaning, Medicare-for-all would completely wipe out private coverage and replace it with a single-payer health insurance – a national government-run program that would cover every American. Under such a plan, deductibles, premiums, and co-payments would likely be things of the past. The government would deal directly with drug makers, which would lower prescription costs and streamline the administration process. Reuters defines it as “a publicly financed, privately delivered system with all Americans enrolled and all medically necessary services covered.”

How Much Would it Cost?

A study recently released by the Mercatus Center at George Mason University found that Sen. Bernie Sanders’ plan for universal healthcare, which is the highest-profile plan for Medicare-for-all, would increase government healthcare spending by $32.6 trillion during its first 10 years.

What Opponents Say

Supporters of Medicare-for-all are typically quick to point to Canada, which has successfully implemented a single-payer system, though Canadian citizens pay more in taxes than American citizens. Opponents argue that even as taxes and federal costs for health care rise, expenses for individuals and companies would drop, potentially canceling each other out. They’re also likely to refer to the Mercatus study for a different reason: the report suggests that national health expenditures – which include all national health spending (i.e. state Medicaid programs and private employees), not just government spending – could decline by $2 trillion over the first 10 years of implementation, though the author of the study admits that this is an unreliable number because it depends on too many variables.

What Critics Say

In 2016, the Urban Institute, a nonprofit research organization, came up with roughly the same number as the Mercatus study: $32.6 trillion over a 10-year period. Assuming both studies are correct, this would create an overwhelming financial burden on the federal government, requiring unprecedented tax hikes. Critics are also quick to liken Medicare-for-all to Medicaid rather than Medicare, claiming that if America is forced into a one-size-fits-all government program, patients will likely face long lines and delays in treatment. Moreover, the Mercatus study found that virtually any savings accrued from a single-payer plan would vanish if doctors and hospitals, who would be paid at least 10% less, wouldn’t agree to accept lower fees for patients who are now privately insured.

Healthcare reform is complicated, and the associated costs of Medicare for all have proven to be a stumbling block. Though Sanders’ plan is the most popular among Medicare-for-all advocates, he has yet to release a financing plan, so the potential impact on Americans and the healthcare industry as a whole is still uncertain.

Trumpcare: What It Repeals, Replaces And Keeps The Same

On the mind of many Americans in recent months is how our new President will alter the healthcare system. His promise throughout the campaign was that Obamacare would be “repealed and replaced” as quickly as possible. However, we all know the feeling when our time frame for getting things done doesn’t always work out, or how we envisioned a project would turn out isn’t often the final product either. Just last week, the House passed an initial bill that reconfigures the healthcare system as it is today; however, it still has to pass the Senate, and will likely go through many changes and amendments before being finally accepted into law. Although Trumpcare may not look exactly how President Trump imagined, nor has it “repealed and replaced” Obamacare as rapidly as he may have originally hoped, here are some key differences between his plan and our current system.

  1. Immediate repeal of the 3.8% net investment income tax, which taxes income from royalties, interest, rents, dividends, passive activities and gains for those with a gross income over $200,000. 
  2. Immediate repeal of the individual mandate excise tax, or the tax owed if you did not have health insurance. 
  3. Health savings account withdrawal penalties would drop from the 20% under Obamacare to what it was before, 10%. This penalty only occurs if you withdraw money from an HSA before 65 for non-medical expenses. 
  4. Removal of the $2,500 cap on the amount of pre-tax funds allowed to be placed in a healthcare flexible spending account. Decisions to impose a cap or not would be left up to employers. 
  5. Those with FSA’s or HSA’s would also be allowed again to utilize those pre-tax funds on over-the-counter meds. 
  6. Lowers the rate for medical itemized deductions. If you were under 65, Obamacare only allowed deductions for medical expenses that exceeded 10% of your adjusted gross income, whereas Trumpcare would take it back down to the previous 7.5% of your adjusted gross income. 
  7. While Trumpcare would eventually repeal the 0.9% additional Medicare surtax on those with gross incomes over $200,000, it would not do so until 2023, which is later than the first healthcare bill the House introduced.  

For the time being, these are the tax adjustments in place, although these could presumably change once the bill works its way through the Senate. This version of Trumpcare certainly differs from the House’s first proposal, but Americans may see many months pass and many modifications occur before the healthcare system truly moves away from Obamacare.

If you have any questions, please feel free to contact me at

Take a look at my article on a similar topic: “The New GOP Healthcare Plan and What That Means for You”.

The New GOP Healthcare Plan and What That Means for You

Our world is filled with seemingly constant changes and developments, however, most Americans have been paying close attention to the potential changes coming out of Washington. While President Trump made many statements about how he would revamp Washington if elected, one long-awaited claim has finally been revealed: his, and the GOP’s, promise to repeal and replace Obamacare. Now that their plan has been presented to the general public, questions many are asking include, what exactly does the plan entail? And how, or will, it affect me specifically, the taxpayer? Below are several points that will attempt to identify the main differences between the GOP’s plan and Obamacare, and what that truly means for you, the taxpayer.

  1. Changes the Insurance Mandate
    Under Obamacare, individuals and employers are required to either buy or offer coverage, or else face a fine. The GOP’s plan would do away with those penalties for both individuals and employers. However, in an attempt to prevent individuals from simply adding coverage when they need care, the GOP’s plan would permit insurance companies to enforce higher premiums on individuals who do so for the first year of their coverage.
  2. Changes in Medicaid
    Another major difference between Obamacare and the GOP plan is how they approach Medicaid. Many who gained coverage under Obamacare did so through Medicaid provisions, including an expansion that covered those within 138% of poverty levels, as well as a federal payout to those states that expanded their coverage and insured those newly eligible. The GOP plan would eventually eliminate the expansion, only giving states extra funding for those enrolled before 2020, and provide a set amount of money to states based on their enrollment numbers in 2016, rather than providing open-ended matching for Medicaid beneficiaries.
  3. Changes in Age-based Premiums
    While Obamacare did allow insurance companies to vary their premiums based on factors such as location, tobacco use and age, there was a 3-to-1 limit based on age. Essentially, the premium for an older individual could not be more than three times the amount charged for a younger person purchasing the same plan. The GOP would alter this limit and allow insurance companies to charge older individuals up to five times the amount of those who are younger.
  4. Changes in Tax Credits
    The tax credits under Obamacare subsidized insurance for those using government-run insurance exchanges, providing credits based on the enrollee’s income and cost of coverage in their area. The GOP’s plan would tie credits to age and income (rather than cost of coverage), and would look to end cost-sharing subsidies. Credits would start at $2,000 for those in their 20’s and increase gradually, reaching to $4,000 for those over 60. However, these credits would only be available to individuals making $75,000 or less and households making $150,000 or less.

The GOP’s bill would still allow adults under the age of 26 to be covered under their parent’s plans, as well as maintain the provision blocking insurers from denying coverage to those with pre-existing conditions. Because the plan has significant reviews to undergo , and most likely many amendments to be made, before American’s see a final proposal, many will want to wait and see before assuming they may qualify for specific credits or that their coverage may be affected based on age or income. Though change will certainly occur, taxpayers would be advised to maintain their current coverage until the final bill is passed.

If you have any questions about how the changes to the Health Care Laws may affect you, please contact me at

Repealing Obamacare: Tax Changes Could Spell Positive or Negative Changes For Americans

The Trump administration has wasted little time taking action on many of the promises that were made throughout the campaign. One major proposition made by President Trump was the immediate repeal and replacement of Obamacare. While the replacement of our current healthcare system seems to be pending, the repealing of the current system is certainly at the top of the administration’s list. Although the insurance aspect of the current system would seemingly stick around until the GOP and the Trump administration develop a suitable alternative, the tax aspects of Obamacare could be subject to immediate repeal. Thus, the insurance industry may have until 2018 or 2019 before they saw changes, but the tax industry (and therefore taxpayers) could see effects as early as this year.

How exactly the current administration chooses to repeal the tax aspects of Obamacare could be positive or negative for most taxpayers though. Under current law, there is an individual insurance mandate that penalizes monthly those who do not have insurance coverage, as well as an employer mandate penalizing employers (with more than 50 full-time employees) who do not offer affordable health care. However, if individuals obtain coverage through the state marketplaces and their income is between 100% and 400% of the federal poverty level, they receive a tax credit to assist in paying for their insurance premiums. Additionally, Obamacare levies a 0.9% Medicare tax and a 3.8% net investment income tax on certain high wage earners, or the wealthiest 2% of Americans.

Where repealing taxes associated with Obamacare could be positive for Americans is if Congress removed all taxes while maintaining the premium tax credit (until a replacement system is established). This would mean employers are no longer charged for not providing insurance coverage, taxpayers are not penalized for not having insurance and high wage earners will not be levied the additional taxes discussed above. If Congress chose this route, tax experts estimate that low to middle income wage earners could receive a tax break in the hundreds of dollars, whereas high end wage earners could receive a break in the thousands of dollars.

However, if Congress chose to repeal all tax aspects, including the premium credit, certain tax brackets would most certainly see negative effects. Without the credit, lower income brackets could see their taxes rise by an average of $4,000, middle income brackets could see their taxes rise by an average of $6,000, but higher income brackets would still see their taxes lowered by the thousands of dollars. But, these negative changes would only exist for lower or middle income brackets who currently claim the premium tax credit. Fortunately, at this point, Congress nor the Trump administration has made any claims about what they will do in terms of repealing Obamacare-related taxes, so Americans will simply have to wait and see what direction our nation’s leaders choose and how their wallets will be affected.