Ready for 2014? Here's some financial advice to make sure you are.
Ready for 2014? Here’s some financial advice to make sure you are.
As the new year wears on, you begin to realize that this may not be “your year,“ a dedication you’d emphatically made New Year’s Eve to no one in particular after too many glasses of cheap champagne in plastic cups. While you can’t be assured of your own change from year to year, you can be almost certain that tax and financial contribution laws will change.
At this point, we are mired deep enough into 2014 to be reasonably assured you won’t have to cross out any more erroneous 2013’s on documents, but let’s make sure you don’t make any of those bigger mistakes which may be a little more difficult to fix.
First, I’d like to draw your attention to Uncle Sam’s take…
The more things change
The top income tax rate that was introduced last year of 39.6 percent remains in place as the top rate for 2014, and all tax brackets remain unchanged for 2014. This means that after your deductions have been taken, if you are a single filer with income over $406,750, or if you are married, file your taxes jointly, and your income is over $457,600, you will suffer income taxation at that nearly 40 percent rate federally.
Capital gains and dividend rates stay the same as well, at 0 percent for those in the 10 percent to 15 percent brackets, 15 percent for those in the 25 percent to 35 percent brackets, and 20 percent for those in the highest bracket.
If you are still working, you will find that more of your income will be subject to taxation for social security purposes this year than in prior years. The maximum taxable wage base for social security purposes has risen this year from $113,700 to $117,000, which means that you can, at most, be taxed $7,254 for social security purposes this year if you are an employee. If you are self-employed, and all of you out there who are can commiserate with me on this one, then you know that we pay this tax twice over, and thanks to the new limits, that is $14,508 for us.
All of this talk of income taxation, and retirement begins to look like a welcome respite. A few modest changes to the retirement account savings limits highlight the fact that most have not changed for the year.
While contribution limits for Traditional and ROTH IRA’s remain at $5,500 with a $1,000 catch up contribution if you are 50 years old or older, the income base at which you must reduce your contributions to Traditional IRAs if you are covered by an employer sponsored plan has increased a mere $1,000.
This means that if you are covered by a retirement plan at work, and you are single and your income is below $60,000 (as opposed to last year’s $59,000), or if you are married and your income is below $96,000 (as opposed to last year’s $95,000), then you may be able to contribute to a Traditional IRA and take the full tax deduction for those savings.
To ROTH, or not to ROTH
While the discussion as to whether or not you should participate in a ROTH IRA is well beyond the scope of this column, let’s consider whether or not you are able to for 2014.
Last year, if you were filing taxes as a single person, an income below $112,000 meant that you probably still had full access to this savings strategy. If you were married in 2013, then the income limit was $178,000 for the full contribution to still be an option. The income base for single filers jumped up by $2,000 to $114,000 and the income base for joint filers who want to make the full ROTH contribution jumped $3,000 to $181,000.
There’s still time
It is worth noting that Traditional IRA and ROTH IRA contributions, if they are allowable (and advisable) for you based on your financial situation, can still be made for 2013 up through April 15 of this year. If you haven’t contributed and you would like to, you may want to consider discussing this option with the financial professionals in your life.
And so much more
This has hardly been a comprehensive review of tax law and financial changes, so before attempting to use any of this information for your benefit, you should consult with a financial and tax professional .
For a list of Key Facts about 2014 financial limits, visit our website at www.contewealth.com and download the fact card.
Remember, it’s your money, your plan!
Anthony M. Conte is Managing Partner at Conte Wealth Advisors with offices in Camp Hill, Pennsylvania and Fort Myers, Florida. He has a Master’s Degree in Financial Services and the CERTIFIED FINANCIAL PLANNER ™ certification, and he welcomes your emails: firstname.lastname@example.org.
Registered Representative Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Conte Wealth Advisors, LLC are not affiliated.
The opinions expressed in this column are solely the writer’s and do not reflect the opinions of PennLive.com or The Patriot-News.
Before acting on any financial advice, readers should consider whether it is suitable for their circumstance and consider seeking advice from a financial or investment adviser.