Issue link: http://www.insightdigital.biz/i/233760
Tax changes A ndrew Hermsen says for the most part, only high-income filers will see tax changes in 2014. According to Broadridge, a global provider of investor information to financial firms, the rates go up for individuals reporting more than $400,000 as individuals or $450,000 when filing jointly; they also pay 20 percent, rather than 15 percent, on long-term capital gains. While tax planners often advise high income filers to push deductions into the next year, that isn't the advice this year. Broadridge says that individuals with adjusted gross income of $250,000 (or $300,000 for married couples filing jointly) could be subject to some dependency exemptions and limits on itemized deductions, so it makes sense to take them this year. Higher income brackets will also be subject to some additional Medicare taxes and will pay more tax on investment income. ability to handle risk on a scale from 1 to 10. In general, men have a higher risk appetite – around 7 is not unusual – while most women are below 5. But he did recently talk to a woman who plans to retire in a few months. She rated her risk tolerance at 3 and was 70 percent invested in equities. "People sometimes don't know how much risk they have in their portfolios," Hermsen says. Planners advise individuals to move some assets to less volatile investments than stocks as they approach retirement. The recommended ratios vary by firm and have been moving to include a higher percentage of stocks to catch market growth and provide protection against inflation. A good planner will ask clients a lot of questions about themselves, their dreams and feelings, Rossman says. "If they seem to have a strategy without knowing anything about you, that is an issue and it comes up a lot with clients who are bouncing from a broker relationship or a property and casualty insurance office." Individuals can also waste a lot of money with lawyers who claim to offer financial planning, she says. "We get clients who have been to an attorney and paid $5,000 for a revocable trust when all they needed was a simple will." w w w. i n s i g h t o n b u s i n e s s . c o m J a n u a r y 2 014 • Insight | 31