Where to find rebates, tax credits and rewards for energy-efficient home improvements

(BPT) – If you’re planning to make some home improvements this year, you’re probably thinking about energy-efficient options, knowing they can save you money in the long run. However, many eco-friendly home improvements that help lower your energy bills can also pay off right away in the form of rebates and tax credits.

Whether you’re considering installing an energy-efficient tankless water heater, putting solar panels on your house, or adding a skylight, chances are you can find a program that will put cash back in your pocket for improving your home’s energy efficiency. Here is where to look for rebates, tax credits and rewards for your energy-efficient home improvements:

Qualifying improvements

When you think of energy efficiency, insulation and appliances probably come to mind. But a number of improvements can help reduce your home’s energy consumption, and many of them qualify for tax credits, rebates and incentives from a variety of sources. The kind of improvements that can make your home more efficient and get you some cash back typically include:

* Solar energy systems (such as solar panels)

* Tankless water heaters

* Solar-powered appliances

* Energy-efficient windows and doors

* Skylights and solar-powered blinds

* Wood or wood-pellet stoves

* Home wind turbines

Manufacturer rebates and incentives

Makers of energy-efficient products and appliances often offer their own rebates to homeowners for making eco-friendly upgrades. If you’re considering an energy-efficient upgrade such as installing new windows, HVAC system or tankless water heater, be sure to ask the retailer or installer about any available manufacturer’s rebates.

For example, now through at least Feb. 15, 2017, you can get up to a $650 rebate on select tankless water heaters from Noritz. The average American household spends nearly 18 percent of its energy use on heating water, at a cost of $200-$600 per year, according to the U.S. Energy Information Administration. Tankless water heaters are more energy-efficient because they only heat water when you need it, rather than constantly consuming fuel to keep water hot in a tank. To learn more about tankless water heaters and the rebate, visit www.noritz.com.

Federal tax credits

Although many tax credits for energy-efficient home improvements expired at the end of 2016, some are still available. The federal government offers a tax credit of up to 30 percent for home solar energy systems through Dec. 31, 2019, and there’s no upper limit on the credit, according to EnergyStar.gov.

If you’ll be making energy-efficient home improvements, be sure to talk to your professional tax preparer about any credits or deductions that may be available to you from the federal government.

State-level programs

In addition to federal programs, a number of states offer their own incentives to encourage homeowners to make energy-efficient improvements. For example, Alabama allows homeowners to deduct 100 percent of the purchase price and installation costs of a wood-burning heating system. In Minnesota, homeowners can borrow up to $20,000 at 4.99 percent interest to make energy-efficient improvements such as water heaters, lighting, furnaces, air conditioners, insulation, windows, tankless water heaters and more.

You can find a searchable Database of State Incentives for Renewables & Efficiency at www.dsireusa.org.

Utility company incentives

Many utility companies also offer programs designed to help homeowners reduce energy consumption and save money. Typical programs include free LED or CFL bulbs to replace incandescent bulbs in a home, and rebates or discounts for installing energy-efficient HVAC equipment or programmable thermostats.

The best way to find out what programs your local utility offers is to check out their website or give them a call. You can also find state-specific lists of programs at www.dsireusa.org.

Energy-efficient home improvements pay off over the long-term by reducing your home’s energy consumption and utility bills. With a little bit of planning and legwork, you can also find rebates, tax credits and incentive programs that will also repay your eco-friendly investment right away. To learn more, visit Noritz.com, www.direusa.org, energy.gov, energystar.gov and irs.gov.

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4 reasons you should review your beneficiary designations

(BPT) – Baby boomers have been planning and saving for retirement for decades. They are also planning their legacy — creating wills, trusts and other sophisticated estate planning strategies to transfer their wealth to the next generation.

However, most people may not realize their IRAs and qualified retirement plans — a large part of their estate — are not subject to probate nor affected by the terms of a person’s will. These assets will pass to the next generation determined solely by the client’s beneficiary designation form. Accordingly, the beneficiary designation form is one of your client’s most important estate planning documents but it is often overlooked when creating a legacy plan.

Here are some common beneficiary designation mistakes to avoid:

Estate as a beneficiary

Many clients unintentionally name their estate as beneficiary of their retirement accounts. Some clients will actually direct their retirement assets to be paid “pursuant to the terms of my will.” Other clients simply fail to complete their beneficiary designation form or forget to name a new beneficiary after a beneficiary dies. When this happens, the assets are usually paid to the client’s estate by default, which is probably the worst beneficiary for IRAs and retirement plans.

IRAs and qualified retirement plans — assets that normally avoid probate — will become subject to probate when paid to the estate. The probate process can be long, cumbersome and expensive. Further, these assets may have to be liquidated and paid to the estate within five years after the client’s death. While individual beneficiaries can elect to have IRA assets paid over their lifetime, thereby “stretching” their tax liability over many years, estates cannot.

Finally, estates are subject to a much higher income tax rate than individuals. This can result in more money going to the IRS than necessary. To avoid this mistake, make sure your clients have an up-to-date primary and contingent beneficiary designated for all their retirement accounts.

Trust as a beneficiary

Many attorneys like to use trusts to facilitate an effective transfer of wealth and maximize all available gift, estate and generation skipping tax exemptions. However, there are several dangers to having retirement assets paid to a trust.

First, the IRS generally requires the assets to be paid to the trust within five years after the death of the client. The “stretch” rules generally do not apply to trusts unless the trust is drafted to be a “look through” trust. If the trust is a “look through” trust, the IRS permits you to “look through” the trust and “stretch” the IRA to the trust over the life expectancy of the oldest trust beneficiary. Trusts that fail to be a “look through” trust include those that have beneficiaries that are not individuals, such a charity, estate or another trust.

Second, it can be expensive to establish and maintain these trusts. If an IRA is “stretched” to a “look through” trust, a lifetime of legal, trustee and administrative fees can significantly reduce the amount the ultimate beneficiaries will receive.

Third, trusts become subject to the 39.6 percent tax rate (currently the highest) as soon as the income exceeds $12,400. By comparison, married taxpayers filing jointly do not reach the 39.6 percent tax rate until their income exceeds $366,950. That means if the IRA is worth more than $12,400, more than a third can be lost to the IRS. Unless there is a compelling non-tax reason to name a trust as beneficiary of an IRA or retirement plan, you should help your clients avoid making a costly mistake. Encourage your client to speak with their estate planning attorney about the pros and cons to naming a trust as a beneficiary of a retirement account.

Ex-spouse as a beneficiary

Few people really intend to leave IRA and retirement assets to an ex-spouse, but this happens all the time. People fail to update their beneficiary designation form after a divorce. Often, they are under the mistaken belief the divorce decree will automatically negate their prior beneficiary designations. Divorce decrees, court orders and wills generally have no affect on a beneficiary designation.

“Per Stirpes” or “Per Capita”

IRA and retirement assets are not always distributed as intended. Most IRAs will allow the owner to designate multiple beneficiaries. For instance, it is common for an IRA owner to designate his or her children as equal beneficiaries. If one beneficiary predeceases the owner or “disclaims” the inheritance, the remaining primary beneficiaries will generally receive the balance of the IRA and not the children of that deceased beneficiary.

For instance, assume Dad has an IRA he wants to leave to his two children Sue and Tom. Sue and Tom also have children of their own. If Tom were to die before Dad, Sue would inherit Tom’s share and nothing would go to Tom’s children. This is called a “Per Capita” distribution. If Dad wanted to make sure Tom’s share will benefit Tom’s family, Dad should make a “Per Stirpes” designation. This means Tom’s half will be shared equally by Tom’s children.

By conducting a review of your clients’ IRAs and retirement plans, you can help your clients avoid costly mistakes and assure the right beneficiaries inherit these hard-earned assets.

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Paying for college: Options reduce need for student loans

(BPT) – While only a fortunate few students can expect a free college education by winning full academic or athletic scholarships, everyone can take advantage of a combination of academic aid, grants, fellowships, work-study and student loans to pay for a four-year degree, says Peter Gayle, a vice president for Prudential Advisors. Unfortunately, many prospective students and their families often don’t know where to look.

With student debt increasingly becoming a long-term burden on graduates and families, adds Gayle, it’s never been more important to minimize the out-of-pocket expenses to put a student through college — and reduce reliance on student loans.

To put the weight of student debt in perspective, The Federal Reserve Bank of New York noted that in 1995, 54 percent of graduates had loans averaging $11,491. It’s more recent data in 2015 showed 71 percent of graduates joined the workforce with student debt averaging slightly more than $35,000. What’s more, the Federal Reserve Bank of New York estimates 25 percent of those who owe federal student loans are delinquent or in default.

The good news is that anyone willing to put in the time can likely find programs that help foot the bill — helping to reduce the need to take out loans — so a student’s education won’t break the budget or jeopardize a financial future. According to Gayle, families can take a few initial steps before choosing a school:

* Learn how the financial aid process works and get the most out of options that don’t need to be repaid.
* Understand each school’s actual net price — after financial aid — and set realistic expectations, choosing from the most affordable institutions.
* Explore types of financial aid, including grants, work study programs and scholarships; examine the specific types of aid available per school and find out how much of a family’s demonstrated financial need each school will cover.
* Understand the kinds of loans available, including a variety of federal loans and private loans, which may be used to fill any financing gaps after exhausting other options.
* Understand how parents’ “available income” is used to calculate how much parents are expected to contribute to their child’s education, especially for federal financial aid purposes.

Several guides, including Prudential Financial’s www.prudential.com/payingforcollege, can help families take a carefully considered approach to financing a college education while safeguarding a student’s long-term financial future, including the ability to save for retirement.

For families that must use student loans, the federal government is making it easier to understand how to borrow, process applications and repay loans through new online tools. Since 2010, all new federal loans, except Federal Perkins Loans, have been issued through the U.S. Department of Education, which offers information about borrowing and repaying loans.

There are multiple options to repay federally funded student loans, which generally require repayments to start six or nine months after a student graduates, leaves school or drops to half-time enrollment. A few popular choices for repayment include types of income-driven plans, which calculate payments based on a borrower’s ability to repay. One catch: It’s critical to re-certify income and family size annually to avoid huge monthly payment increases.

When debt becomes too burdensome, some loan programs offer forgiveness through public service, federal government employment, and options like teaching in underserved school districts.

Private loans are trickier since there is no standard: Interest rates and repayment terms vary from lender to lender. It’s also worth considering the need for life insurance to cover the full loan balance to aid co-signers or beneficiaries in the event of the borrower’s death, says Gayle. Financial advisors would be well-equipped to help explore this and other options, Gayle notes.

Employers are also beginning to offer employee student debt benefits to put their employees on a course for financial security. At Prudential Financial, for example, new employees hired through the company’s campus recruitment program beginning in January 2017 could earn an incentive of up to $5,000 toward paying off student loans after one year of service. Other companies match student debt payments with contributions to employee retirement savings plans.

Studies show college education can be worth the price. The U.S. Census Bureau estimates that students who attend college can earn nearly twice as much over their lifetimes as those with only a high school diploma. But with college tuitions continuing to rise, families must find the most effective way to finance a child’s college education to avoid jeopardizing their ability to save for retirement.

“Prudential Advisors” is a brand name of The Prudential Insurance Company of America and its subsidiaries located in Newark, NJ.

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4 life changes that affect your taxes and how to tackle them

(BPT) – Life changes often mean tax changes. Whether it’s getting married, buying or selling a home, moving abroad or having a baby, misunderstanding the tax and financial implications of these life changes can lead to taxpayers making mistakes or leaving money on the table.

Depending on your situation, there are new tax implications that will impact your benefits, tax bill and how you file. If you experienced a life change in 2016, here is a list of tax implications and how they will affect you.

Marriage

Many couples close the book on their “wedding to-dos” once the last thank you card has been sent, but looking at your new tax situation is an important first step in your married life. There are some instances when getting married can have negative implications for a couple’s tax situation. Once you’re married you must file either as married filing jointly or married filing separately. In some cases, a couple where one spouse earns most of the household income will benefit because their overall tax bracket may decrease. However, a couple with two high earners may find they face a higher tax rate than if each paid tax only on their own income and added the taxes paid.

However, there are some ways to protect against potential negative tax implications. After your marriage is official, update your W-4 with your employer to account for your new marital status. If you’re self-employed or a small business owner, make sure to adjust your quarterly estimated tax payments.

Buying a house

Purchasing a home may open the door to more deductions through itemizing if you weren’t already doing so. Once you become a homeowner, you can deduct many of your home-related costs, including your qualified home mortgage interest, points paid on a loan secured by your home, real estate taxes and private mortgage insurance premiums paid on or before Dec. 31, 2016. If you choose not to itemize, you may benefit from other tax advantages such as penalty-free IRA withdrawals if you are a first-time homebuyer under the age of 59 and a half, or residential energy credits for purchases of certain energy efficient property.

New homebuyers should be on the lookout for Form 1098 Mortgage Interest Statement, which is used to report mortgage interest. This form can help you identify these deductions when completing your Form 1040.

Moving abroad

Are you excited to move abroad, but have no idea what will happen to your taxes and how to file? Many Americans living and working overseas will not owe tax to the IRS because of the foreign earned income exclusion and foreign tax credit. However, even if you qualify for those benefits, you have to file a U.S. tax return each year if you received income over the normal filing threshold.

It is also important to understand your Social Security coverage before moving abroad. Knowing whether your earnings overseas will be subjected to Social Security taxes in the U.S. or the country you are residing in will be an important factor when analyzing the economics of your move.

Having a baby

A new baby means you may be able to take advantage of tax breaks, including the Child Tax Credit (CTC). The CTC is worth up to $1,000 for each qualifying child younger than 17, a portion of which may be refundable as the Additional Child Tax Credit (ACTC) depending on your income. A tax preparer can help you understand the qualifications to determine whether a child is considered qualified for purposes of the CTC. Some of those qualifications include but are not limited to their relationship and residency.

You may also qualify for the Earned Income Tax Credit (EITC) which is a benefit for working people with low to moderate income that reduces the amount of taxes you owe. However, it’s important to note that due to the new “Protecting Americans from Tax Hikes ACT” or PATH Act, this year the IRS is required to hold any refund from those claiming the EITC and ACTC until at least Feb. 15. This delay will be widely felt by tax filers who typically file as soon as the IRS accepts e-filed returns and who normally expect to receive their refund by late January.

To learn more about this new tax law change, how it may delay tax refunds in January and February, and H&R Block’s free solution to this delay, visit www.hrblock.com/refundadvance or make an appointment with a tax professional.

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Two out of Three middle-income Americans lack a financial plan. Do you?

(BPT) – As the holidays (and all the extra spending that goes with them) wind down and the new year ramps up, many people turn their attention to their finances. While New Year’s resolutions to spend less and save more come with the best intentions, when it comes to your financial future, you need more than a resolution. You need a plan.

Don’t have a plan? Don’t worry, you’re not alone. Just one-third of middle-income Americans, or those making between $35,000-$100,000 per year, has a comprehensive financial plan, according to a recent study, Beyond Retirement Advice, by Financial Engines, America’s largest independent investment advisor.

To start taking control of your financial future in 2017, Financial Engines offers the following tips:

1. Look at the big picture. The study found financial plans for middle-income workers are significantly less likely to address saving for a child’s college education, purchasing life or disability insurance or estate planning than plans of higher-income workers. However, regardless of income, most people’s plans failed to address important topics, such as making sure they’re saving enough to reach retirement goals or strategies to maximize Social Security benefits. As you develop a financial plan, be sure to address short-term goals, such as setting a weekly or monthly budget, but don’t overlook long-term goals. To test your knowledge about what should go into a financial plan, try this quiz.

2. Increase your savings rate. While it may come as no surprise that people who have a financial plan tend to save more for retirement, it’s eye-opening how saving just a little more today can have a big impact in the long-run. The study found that regardless of their incomes, people who had a financial plan reported saving around 10 percent of their salaries toward retirement, compared to those without a plan who reported saving just 6 percent. Consider this: a person starting with retirement savings of $50,000 who earns an annual salary of $100,000 and saved 6 percent toward retirement could have as much as $890,000 after 25 years. But if the same person saved 10 percent of their salary, they could have as much as $1.13 million after 25 years, or $240,000 (26 percent) more.

The moral of the story? If you haven’t been saving for retirement, make this the year you start. If you have been saving, consider increasing your savings rate – just one or two percent more can make a big difference.

3. Ask your employer for help. We don’t mean ask your boss for a raise (though that’s not a bad idea!), but rather ask about financial wellness and education resources that may be available to employees. Some employers offer financial planning services covering budgeting, college savings, insurance and more through the workplace, with more employers planning to in 2017. In fact, Aon Hewitt’s 2016 Hot Topics in Retirement and Financial Well-Being report found that 89 percent of employers are likely to add or expand the financial well-being tools and services offered to employees this year. The Financial Engines study found the majority of workers (57 percent) are “very or extremely interested” in accessing financial help via the workplace.

When faced with financial obligations like rent or a mortgage, groceries and other bills, it’s easy to let today to get in the way of planning – and saving – for tomorrow. But as the new year begins, it’s a perfect time to hit the reset button and make 2017 the year you invest in your financial future. One of the best ways to do this is with a comprehensive financial plan. If you’re not sure how to get started, consider setting up a meeting with a financial advisor who is a fiduciary, or one that puts your best interests first. Doing so can help set you up for a happy and financially healthy new year.

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No will? Haven’t documented financial information? Now’s the time to do something about it

(BPT) – Do you want to be remembered for being a great mom, dad, daughter or son? Do you believe you’re taking the necessary steps to leave this legacy?

More than half (53 percent) of respondents in a recent survey commissioned by MassMutual indicated they want to be remembered for being a great mom, dad, daughter or son. However, three out of five (60 percent) indicated that they do not have a will, and two out of five (40 percent) have not documented their financial information.

MassMutual offers the following tips to help plan for your financial future and legacy:

1. Start today by documenting financial information in the “What my loved ones need to know” guide to ease unnecessary burden and help family members and friends carry out your final wishes. Also, tell someone you trust where the information is. Respondents to MassMutual’s survey were most likely to trust their spouse or significant other (58 percent) with access to this information in the event of an emergency, while about one in five (19 perfect) trust their children with this information.

2. Draft a will. The consequences of not having a will could become troubling, time consuming and costly for loved ones.

3. Update beneficiary information and review it annually for necessary updates. For example, many may not know that it is not sufficient to simply change your will after a divorce, as the beneficiary forms for your life insurance policy and retirement accounts trump whatever is stated in your will.

4. As retirement nears, get up to speed on Social Security. In a separate survey commissioned by MassMutual last year, more than half (62 percent percent) of Americans over the age of 50 failed a true/false quiz when asked basic questions about Social Security retirement benefits.

“MassMutual honors its commitments, and at the forefront is helping people secure their future and protect the ones they love,” says Roger Putnam, head of MassMutual U.S. insurance operations. “By taking the time now to plan for the future, you can enjoy financial well-being, appreciate life’s most important moments, build a positive legacy and be more confident in the future of your loved ones and the memories you leave.”

To learn more about preparing for your financial future or to connect with a financial professional, visit massmutual.com.

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Get ready for summer and warm up with hot deals at your local boat show

(BPT) – Stop dreaming about summer boating and make it a reality by finding the best deals this winter. Starting in January, boat shows take place across the country. They offer some of the best pricing and incentives of the year — a major draw for the millions of Americans who take to the water each year on more than 12 million boats in the U.S. , according to the National Marine Manufacturers Association. For those ready to plan their summer fun, boat shows are often the place to start.

Whether it’s fishing, sailing, cruising, riding personal watercraft, wakesurfing or tubing — boat shows have it all and create a unique shopping experience with hundreds of boats are under one roof to board, browse and buy. However, most people don’t know about the special pricing, incentives and perks these events offer.

Discover Boating, the national awareness program to help get people on the water, offers five tips to find the best deal at your local boat show.

* Find your virtual dreamboat. Before visiting a boat show, you’ll want to know which boats to shop. Start your search online with DiscoverBoating.com’s Boat Selector to identify which boat types fit your lifestyle, interests, and budget. Plug in your preferences for on-water activities, number of passengers, boat length, price range and propulsion, to narrow down boat options before heading to your local boat show.

* Warm up with hot deals. Unlike auto shows, boat shows are the place to buy. Hundreds of new-year models are available to buy right at the show, often at some of the best prices of the year as exhibitors generally offer special show pricing or other incentives. Plus, it’s the perfect time to order a new boat to ensure it arrives ready to launch in spring.

*Make the most of show pricing. It helps to know what fits in your budget before shopping a show. Use this boat loan calculator on DiscoverBoating.com to estimate monthly payments, which can be as low as $250 a month or less.

* Try out the boating lifestyle. Boat shows are a great place for beginners to learn about boating and for more experienced captains to hone their skills, plus they offer lots of fun and interactive activities for the whole family. Look for boat shows that offer knot-tying, DIY boat maintenance, a sailing simulator, remote control docking ponds, virtual boating simulators, paddlesports pools, fishing for kids and much more. It’s not only fun to learn new skills, but smart to take advantage of the onsite training boat shows offer usually at little to no cost. Plus, it’s a great place to meet other boaters as many make their local boat show a winter rendezvous.

* Look for the seal of approval. When shopping for a boat at a show, online or at a dealership, always check to make sure it is certified by the National Marine Manufacturers Association. An “NMMA Certified” seal means a boat has met strict industry standards for safety, construction and federal regulations, ensuring the best quality to the buyer. Look for the NMMA certified sticker near the helm.

Boat shows not only offer the best deals of the year, but they are also a way to learn how to get on the water, while enjoying a taste of summer boating during the off season. Visit DiscoverBoating.com to find a boat show near you, a list of certified dealers and manufacturers, and unbiased advice for getting started in boating.

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6 common tax filing mistakes to avoid

(BPT) – It’s probably safe to say handing cash to Uncle Sam does not top the list of your favorite things. When it comes to filing taxes, making a small mistake can mean paying more taxes than you need to or forking over cash to cover penalties.

Fortunately, there’s an easy way to make sure your tax return is mistake-free: just take a little extra time to double check your work. Here’s a closer look at the six most common tax-filing errors and tips to help you avoid making them.

1. Mistake: Not reporting all income. Reporting your income is easy if your employer sends you a wage statement (called Form W-2) documenting what you made throughout the year. But what about the money you earned from any freelance work? Unfortunately, many people forget to report extra income from side jobs such as photography shoots, design projects and Etsy shops.

How to avoid the error: Depending on how much you earned, you may receive an “information return” called Form 1099 from the institution that paid you. There are numerous 1099 forms that report different types of income earned during the year, but in some cases you may not receive the document. For example, if you earn less than $600 as a freelance writer, the institution is not required to send you Form 1099-MISC. However, you still need to include the amount earned in your total annual income so it’s important to keep your own records of each transaction.

“To help accurately report your income, review last year’s return and match your income sources item by item,” says TaxAct Director of tax development, Mark Jaeger. “If you discover you haven’t received a 1099 for your work, last year’s return will serve as a reminder to ask about it. Keep in mind, all freelance or side-gig income is reported on Schedule C as part of your Form 1040.”

2. Mistake: Mistyping bank accounts and personal information. Believe it or not, incorrect bank account numbers or personal information – like Social Security Numbers – is one of the main reasons tax returns are rejected. Using a nickname or a shortened version of your legal name also lands near the top of the list.

How to avoid the error: Double – or triple – check any personal or bank account information before you submit your completed tax return. “If you need help figuring out account information, don’t be afraid to ask your bank for assistance,” Jaeger says.

3. Mistake: Paying too much to file your taxes. Whether you tap a tax professional or choose a DIY tax provider that charges an arm and a leg for their product, paying too much to file your return is a mistake.

How to avoid the error: Fortunately, filers have more affordable options to choose from. When looking for DIY options, do some comparison shopping. The leading tax preparation software providers offer similar features and benefits, but the price points can widely vary. In many cases, prices increase as the filing deadline nears. Look for a provider like TaxAct that not only offers a low price, but also guarantees your price won’t increase if you start your online return but wait to file later.

4. Mistake: Not e-filing. While 91 percent of tax returns were e-filed in 2016, there are still filers who file a paper return. Going the pencil and paper route often means longer tax return processing times.

How to avoid the error: Electronic filing (e-filing) is the quickest and most accurate way to file your tax return. In fact, the IRS typically processes e-filed returns within 48 hours. If you’re due a refund, you’ll get it quicker if you e-file and choose direct deposit.

5. Mistake: Incorrect calculations. When the IRS receives your tax return, one of the first steps the agency takes is to check the figures to make sure they add up. Unfortunately, it’s easy to miscalculate numbers – especially if you’re in a rush or aren’t sure what to add or subtract.

How to avoid the error: First, take your time and double check all numbers. Second, consider using DIY tax software so you don’t have to do the math on your own.

6. Mistake: Using the wrong filing status. Choosing the wrong filing status, like Head of Household instead of Single, can have a great impact on your tax rates, the number of personal exemptions you can claim, your qualifications for certain tax deductions, credits and more.

How to avoid the error: Before starting your return, review the five different filing statuses to help you select the one most appropriate for your tax situation. Carefully selecting the right one will help you feel confident you’re taking the right steps to maximize your tax outcome.

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5 steps toward improving financial well-being in the new year

(BPT) – With the start of a new year comes New Year’s resolutions. Many will focus on physical wellness, some on organization. Now is a perfect time to take stock of your financial house and work on financial wellness, which will take off a level of stress that can immediately have an effect on your physical well-being.

In fact, seven out of 10 American workers say financial concerns are their most common cause of stress; nearly half say they find dealing with their financial situation stressful.

MassMutual suggests taking five steps toward improving financial well-being which, in turn, will support your physical well-being in the new year:

1. Make a will. A MassMutual survey of Americans between ages 45 and 60 revealed three out of five respondents do not have a will. If you are one of those people, make it a priority in the new year to create a will to ensure your loved ones are protected. It is also important to update beneficiary information and review it annually.

2. Improve your credit score. Boosting your credit score is a lot like going to the gym — it can be painful at first, but is ultimately worth the (financial) effort. Late payments — one of the top “credit busters” — can impact your credit score, so make sure you pay your bills on time each month and pay off balances as quickly as possible (especially on ones with high interest rates).

3. Save more than you spend. Saving money is a time-tested way to improve your financial situation over time. A good rule-of-thumb is to save at least 10 percent of your net income each year.

4. Don’t leave your 401(k) behind. The growing use of automatic enrollment in 401(k) plans and shorter job tenures are contributing to an increasing number of inactive 401(k) accounts, according to a U.S. Government Accountability Office report. If the new year brings you a new job, or retirement, be sure to rollover your 401(k) to your new employer-sponsored account or an individual retirement account if you are leaving the workforce. And, if you’re not yet contributing to a retirement plan, do so and ensure you save at least enough to enjoy your employer’s match if there is one. Don’t leave any free money on the table.

5. Establish an emergency fund. Whether it is a job loss, health emergency, or car or home repair, an emergency fund provides a cushion to help you cover unexpected costs without interfering with your financial goals. Include backstops like disability income insurance to protect your income stream should you become seriously ill or injured, and consider life insurance with options that give you access to cash for life’s priorities, such as whole life insurance.

For more tips to help your financial well-being, visit massmutual.com.

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Where there is a will – and more – there’s peace of mind

(BPT) – What’s the state of your estate? Robert Fishbein, a vice president and corporate counsel in Prudential Financial’s Tax Department, says now’s a good time to find out.

Changes in federal estate tax law have significantly increased the amount at which federal estate tax is triggered, says Fishbein. The individual exemption is $5.49 million (2017 amount, indexed for inflation) so a couple can accumulate almost $11 million dollars of assets without federal estate tax depleting the value.

The $5.49 million will increase over time. As a result, most individuals no longer need an estate plan to minimize federal estate tax.

That said, Fishbein adds, there are compelling reasons for having an estate plan, and three core documents you’ll need to create one: a power of attorney, a living will or health care proxy, and a will. In this article, Fishbein describes these core documents and how you can use them.

Power of attorney

A power of attorney is the document designating someone to make financial decisions for you, whether you’re out of the country for a long period, have a physical injury preventing you from conducting business in person, or are mentally incapacitated.

A power of attorney can be “springing” — going into effect upon your incapacity — or “durable,” meaning it goes into effect immediately. The challenge with a springing power of attorney is it can be subject to disagreement and dispute between the holder of the power and another family member. One solution is to require the incapacity be certified by a physician, although even those findings can be disputed.

With the durable power of attorney, there’s no basis for contesting whether the holder of the power can act. The risk is the holder has the immediate right and ability to access and take action with respect to the financial assets subject to the power. One possible strategy? Limit the power to specific assets. This won’t help if the grantor if the power is totally incapacitated and the holder may need access to all of the grantor’s assets.

A durable power of attorney is arguably less problematic, provided you are comfortable with the person you’re choosing. The holder of the power has a legal obligation, as a fiduciary of the grantor, to act in the best interests of the grantor and not in his or her interests.

It makes sense to have a power of attorney so you know your financial affairs will be attended to. The alternative could be a costly judicial process and court appointment of someone to manage your assets while you are living and unable to do so yourself.

Living will and health care proxy

A “living will” ensures your health care wishes are acted upon if you are unable to make such decisions. It lets you describe the types of treatment you do or don’t want under specific circumstances. For example, if you have a terminal illness, you may not want extraordinary measures taken to save your life. The challenge is it’s almost impossible to anticipate all possible scenarios to indicate what health care treatment you’ll want.

An alternative to a pure living will is a “living will and health care proxy,” wherein you designate an individual to make health care choices for you. The living will portion describes in general terms your health care philosophy, and the health care proxy allows you to name an individual to make health care choices for you consistent with that philosophy. The choice of such an individual is important, and you should make sure you are comfortable he or she understands and will act consistent with your wishes.

You should have a living will drawn up as part of your basic estate planning. Again, the alternative is a costly legal process for someone — maybe not of your choice — to get appointed as your proxy to make health care decisions on your behalf.

Last will and testament

A “last will and testament” serves several important purposes, including determining how your assets are distributed, who’ll care for your minor children and who’ll invest and distribute property held in trust for your children, grandchildren or other beneficiaries. The basic function of a last will and testament is to ensure your assets are distributed as you’d want. Absent a will, your assets will be distributed in accordance with applicable state law.

You’ll also designate the legal guardian, and possible successors, for any minor children who survive you and your spouse. This is one of the most important and difficult decisions for parents — so difficult that it sometimes can hold up the entire estate plan. But agreement by the parents is important and avoids the possibility of someone else being court-appointed who may or may not share your child-rearing views.

With the increase of the federal estate tax exemption and an individual’s ability to use the exemption of a deceased spouse, trusts for federal estate tax planning have been made largely irrelevant for most individuals. However, if you have minor children who could take property if both you and your spouse die, or grandchildren who could take property if a child of yours dies and leaves children, you’ll probably need trusts to hold property for those beneficiaries. Such trusts will enable you to determine who’ll invest the trust property, how it’ll be used for the child’s benefit and at what age the beneficiary will receive the remaining property.

Think you don’t have a large enough estate to warrant setting up trusts for your beneficiaries? Consider even the most basic estate when you own a house, have retirement assets and maybe additional investments or property. Given the total value of these assets, you’d probably want to hold them in trust for minor heirs. If there’s life insurance, a trust for younger beneficiaries will almost certainly make sense.

Although federal estate tax is no longer a significant consideration for most individuals, you may want to consider the cost of state estate tax. The state exemption is sometimes less than the federal exemption, and state estate tax can take a meaningful bite out of what you expect to leave to your beneficiaries.

Prudential Financial, its affiliates, and its financial professionals do not render tax or legal advice. Please consult your tax and legal advisors for advice concerning your particular circumstances.

The Prudential Insurance Company of America, Newark, NJ and its affiliates.

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