Would direct sales work for you?

(BPT) – The Federal Reserve Board discovered in a survey of working Americans that nearly half of U.S. adults don’t have enough cash on hand to pay for a $400 emergency. If that’s a concern for you, you might be thinking about joining the 44 million Americans who have found ways to make money in addition to their main source of income. Common options include waiting tables, working retail, becoming a rideshare driver and direct selling.

Direct selling, also called direct-to-consumer sales, has been around for over 160 years, and companies like Avon, Tupperware, WorldVentures and Amway have been offering new business opportunities to independent sales representatives since they opened. The direct-sales business is still booming, with a record 20.5 million people involved in the U.S. alone in 2016. The estimated direct retail sales of $35.54 billion in 2016 was the second-highest in direct-selling history.

Is working in direct sales right for you? Benefits of working in the industry can include:

* Flexibility — You determine your schedule, and you choose to work as many — or as few — hours as you want. If you have a knack for direct selling, you could ultimately make it your main source of income.

* Personal growth and development — Take advantage of the tools and training offered by your direct selling company to help you build your business.

* Companionship — Connect with fellow sales representatives and prospective customers, which can lead to lasting relationships.

Passion for travel and financial freedom prompted Wayne Nugent, founder of WorldVentures, to launch his direct sales business in 2005. “We’ve been changing the way people take vacations for more than a decade, all while helping our independent representatives discover their potential and experience more in life,” says Nugent.

The direct seller of travel and leisure club memberships, is just one of many opportunities waiting for you. Whether you decide to go into direct sales, housesitting or part-time bartending, the possibilities for supplemental income are limited only by your imagination.

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Do the math: Homebuying now may save a lot

(BPT) – It is a common misconception that a 20 percent down payment is required to buy a home. Advice to wait and save a large down payment is often based on the theory that the cost of mortgage insurance (MI), which is required when you buy with a smaller down payment, should be avoided. This may not be the best advice and is, in fact, not in line with market trends, considering 60 percent of homebuyers buy with a down payment of 6 percent or less, according to the National Association of Realtors.

Yes, you can qualify for a conventional mortgage with a down payment as small as 3 percent of the purchase price. It is also true that you can reduce your monthly mortgage payment by paying for discount points at closing, but that can be 5 or 10 percent of the purchase price — not 20. And because every buyer’s situation is unique, it’s important to do the math. In today’s market, it could take a family earning the national median income up to 20 years to save 20 percent, according to calculations by U.S. Mortgage Insurers using a methodology developed by the Center for Responsible Lending; a lot can change during that time, in the family’s personal finances and in overall mortgage market trends.

How can buying now save you money later?

Consider you want to purchase a $235,000 home. A 5 percent down payment is $11,750 versus $47,000 in cash for 20 percent down. With a 740 credit score at today’s MI rates, your monthly MI payment would be about $110, which is added to your monthly mortgage payment until MI cancels. MI typically cancels after five years; therefore, you will only have this added cost for a short period of time versus waiting an average of 20 years to save for 20 percent.

With home price appreciation, today’s $235,000 home will likely cost more in the years ahead and this will also have an impact on the necessary down payment and length of time required to save for it. There are other variables in the equation too, such as interest rates. As federal rates rise, so too can the costs associated with financing a mortgage. The savings a borrower might calculate today could be altogether negated by waiting even a few more years. Another factor is that rents are on the rise across the nation, leading to a reduced capacity for many would-be homebuyers to save for larger down payments.

If you decide to buy today with a low down payment mortgage option, it is true that MI is an added cost on top of mortgage principal and interest, but keep in mind that it is temporary and goes away. Again, it typically lasts about five years. Private MI can be cancelled once a homeowner builds approximately 20 percent equity in the home through payments or appreciation and automatically terminates for most borrowers once he or she reaches 22 percent equity. And when MI is cancelled, the monthly bill goes down. Importantly, the insurance premiums on an FHA mortgage — the 100 percent taxpayer-backed government version of mortgage insurance — cannot be cancelled for the vast majority of borrowers with FHA mortgages.

So, do the math and let the numbers guide you. There are many online mortgage calculators that can help. Check out lowdownpaymentfacts.org to learn more.

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3 things you might not know about boat shows

(BPT) – Winter may be frigid for many, but it’s an ideal time to plan for warmer days ahead and make dreams of owning a boat a reality. Boat shows across the country offer some of the hottest deals around, with special pricing and incentives on new boat models and marine accessories — a major draw for the 142 million Americans who take to the water each year, according to the National Marine Manufacturers Association. For those ready to plan their summer adventures on the water, boat shows are the best place to start.

Whether you fish or sail, enjoy cruising, riding personal watercraft or wakesurfing, boat shows provide the opportunity to browse and board hundreds, sometimes thousands, of boats while taking advantage of boat show specials. Boat shows also provide an avenue to enjoy a taste of the boating lifestyle during the off-season, plus they offer educational opportunities and alternative ways to get on the water for novices looking to get their feet wet.

Whether you want to fulfill that New Year’s resolution of spending more time on the water with family and friends, or are simply in the mood to escape the winter doldrums, Discover Boating, the national awareness program to help get people on the water, offers three tips to get started in boating at a 2018 boat show:

* Escape cabin fever for the year’s best deals. Unlike auto shows, boat shows are the place to buy. Hundreds of new models are available to buy right on the show floor at some of the best prices of the year, with many exhibitors offering special show pricing and other incentives. Boat shows make it easy for you to shop all the region’s dealers in one location. Plus, it’s the perfect time to order a new boat to ensure it arrives ready to launch in the spring.

* Test the waters. You can learn the ropes of boating and take advantage of onsite training, which is usually offered at little to no cost. Educational opportunities at boat shows include everything from knot-tying and DIY boat maintenance seminars, to sailing simulators and boating lessons. You can often find fun activities to entertain the family and get everyone into the outdoors, from practicing how to reel in a fish to learning to dock and more.

* 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, enhancing an improved and safer boater experience. Look for the NMMA Certified sticker near the helm of a boat.

Visit DiscoverBoating.com to find a boat show near you, a list of certified dealers and manufacturers, and tips to get started in boating.

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Equipment warranties 101: What you should know

(BPT) – From smartphones to mattresses, almost everything you buy comes with some kind of warranty. How can you ensure you get the most benefit from a warranty, especially for a major investment that’s also critical to the comfort of your home, like a new furnace?

“Warranties are meant to assure a homeowner that the furnace they’re purchasing will do what it’s supposed to, is free of defects and meets applicable government regulations or standards,” says Chip Wade, HGTV expert. “However, warranties are often very specific about the circumstances under which the manufacturer will repair or replace the furnace if it doesn’t work properly. It’s important to carefully read your furnace’s warranty to ensure you understand exactly how it works.”

Warranty terms

Because written warranties are legally binding documents, you may come across unfamiliar terms as you’re reading yours, including:

Product warranty — This is the guarantee that comes from the company that manufactures the furnace. Contractors and installers may offer extended warranties that apply to their work, including the labor required to install the furnace. YORK(R) is one of the only manufacturers that manages their own extended warranties. Other manufacturers often work with outside firms that can make claiming difficult.

Warranty term — The length of time the coverage is offered is called the warranty term. These can vary significantly; however, YORK(R) heating and cooling offers a lifetime heat exchanger warranty on its YORK(R) Affinity(TM) gas furnaces. In addition, YORK(R) offers the Complete Assurance(TM) Warranty Pledge with this furnace. If the heat exchanger fails within 10 years of installation, YORK(R) provides optional furnace replacement in lieu of heat exchanger equipment.

Parts warranty — Most furnace warranties will cover replacement of specific parts if they malfunction within the warranty time frame and the problem is a result of a manufacturer’s defect. Most warranties have different coverage periods for different parts.

Non-transferable — When you have a new home comfort system installed, if the furnace warranty is non-transferable, the coverage will not transfer to the new owners if you sell the house before the end of the warranty term.

Protect your warranty

“No homeowner ever wants to hear their warranty has been voided by something they did or something they were supposed to do but didn’t,” Wade says. “That’s why it’s so important to read your detailed furnace warranty very carefully, so you know what the manufacturer and installer require in order to honor the warranty.”

Actions that help ensure a valid warranty:

* Register the product purchase with the manufacturer. Most manufacturers require homeowners to register their furnace with the manufacturer within a specified window of time after the purchase and installation. A majority of YORK(R) contractors will register the warranty on behalf of the homeowner. For those that do not, homeowners are required to register within 90 days of installation. Visit www.york.com/warranty to learn more about the company’s warranties.

* Work with a qualified YORK(R) contractor who can properly install the product. If a part doesn’t work because it wasn’t installed properly, the manufacturer will likely say the installer, and not the manufacturer, is liable for fixing the problem.

* Use branded parts or parts the manufacturer has certified for the furnace. Otherwise, you may void the manufacturer’s warranty, even for parts that would normally be covered.

* Follow manufacturer’s maintenance recommendations. In order for your furnace to operate as it should, it will need to be professionally serviced every year. Keep service records for reference, in case there is ever an issue that arises.

“A new furnace is a big investment, and it’s one that’s essential to preserve the comfort of your home,” Wade says. “A good manufacturer’s warranty can help you be sure you’re getting a quality product that’s backed by a company that will stand by its work.”

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How you can improve your FICO Score

(BPT) – Anyone who has tried to borrow money to purchase a car, buy a home or open a revolving line of credit may be familiar with the term FICO Score. Most lenders use this scoring model, which essentially determines a person’s creditworthiness.

“The FICO Score may seem like a big, daunting mystery, especially since your score can have a huge impact on your ability to borrow money at a competitive rate,” said Jim Johnston, of Colorado-based Bellco Credit Union. “The truth is, however, you do have power over your credit score, and there are things you can do to improve it over time.”

How FICO Score is calculated

FICO was named for the data analytics company Fair Isaac Co., which created the first credit-scoring system. In general, a credit score breaks down as follows:

* 35 percent is your payment history — Do you pay bills on time?

* 30 percent is the amounts you owe (on loans, credit cards, etc.) — Owing money on different credit accounts is not necessarily bad, especially if you’re paying your bills on time every month. FICO considers how many of your accounts have balances, if you’re using your entire credit line, and how much of any installment loan you still owe.

* 15 percent is the length of your credit history — Having a long credit history is good, but even if you’re young and barely have any credit history (such as credit cards and a car loan), you can still have a high FICO score.

* 10 percent is your credit mix — What is your mix of credit, meaning credit cards, retail accounts, installment loans, mortgage loans, etc.? A good mix of credit, especially with a history of on-time payments, is helpful to your score.

* 10 percent is any new credit — If you’ve opened numerous credit accounts in a short period, this can have a negative impact. Although closing a credit account still shows up on your credit history, it has no impact on your score.

Tips to improve your score

Repairing your credit takes time, so it’s important to be patient. Below are three things you can do.

1. Check your credit report — The first thing you should do is get a free copy of your credit report and make sure there are no errors. If you find an error, you have the right to dispute it with the credit bureau.

2. Get organized — Don’t make any more late payments on your credit cards. The best way to do this is to get organized. Set up auto payments through your bank or credit union, or set reminders to make payments before they are due.

3. Pay down your debt — While this is no easy task, it will make a difference. Use your credit report to make a list of all your credit cards and the balances you owe. Pick the credit cards with the highest interest rates, and tackle those balances first. Most importantly, don’t add to your debt by continuing to use your credit cards.

Your FICO Score does not take into account annual income, length of employment, or other sources of financial support such as alimony or child support. However, these are things that your bank or credit union can consider when you’re borrowing money, so it’s not all about the FICO Score.

Knowledge is power. Understand what your FICO Score is, how a good or bad score can impact your life, and if a low FICO Score is holding you back. There’s no better time than now to begin to make positive changes to improve your score.

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Rent vs. own: Which is right for you?

(BPT) – If you’re thinking of buying your first home, you’ve probably wrestled with the decision to rent or own your home — and for good reason.

Owning a home is a big commitment. With it comes a lot of responsibility and a long-term financial relationship.

But which is right for you? To answer that, let’s lean into the facts.

The improving housing market

Good news! Since the depths of the recession, the housing market has made a heroic comeback. That can be attributed to a number of factors, including a drop in unemployment and a stronger economy.

But as the housing market has recovered, it has experienced some growing pains. With a sharp increase in demand, housing supplies are being strained. This means, among other things, that prices are going up.

For families and individuals still recovering financially, finding affordable housing options can be difficult. This applies to home sales and rentals.

Making the decision

With rental and sales markets heading toward record highs, the decision falls back to what is best for you. Specifically, what is financially feasible.

Let’s look at the basic numbers. According to the U.S. Census Bureau, the median gross rent paid from 2012 to 2016 was $949 monthly. Compare that with the median selected monthly owner costs with a mortgage, which was $1,491 over the same time period.

Then there are utilities. The median monthly electricity cost for renters in 2015 was $82, with owners paying $117. For piped gas, the median amount renters pay monthly is $42, while owners pay $58.

For renters, it is wise to carry renter’s insurance. Some landlords will also charge maintenance and other fees. Utility costs will also vary depending on the quality of the structure and materials used as well as size of the rental space.

Homeowners will pay property taxes, insurance and an estimated $500 annually for routine maintenance, according to the Census Bureau.

The benefits of homeownership

At a glance, it may seem that renting is the lower cost option. But there are certain benefits to homeownership that may offset the additional regular costs. According to the Tax Policy Center, the primary benefit to owning a home is imputed rental income. Simply put, making a monthly payment on a home that you own is like paying rent to yourself.

While that money is not taxed, it comes with another benefit — potential tax deductions. When you file your federal taxes, you may be able to deduct a portion of the mortgage interest you pay. Talk to a tax professional for more information on the expenses you can deduct and the limits for those deductions.

Beyond the numbers

Homeownership provides a variety of benefits beyond the numbers. For many people, a home is the largest investment they will ever make. The upgrades, work and care put into the home that you own can add value to your investment. It also adds a sense of pride knowing that it is yours.

“Having a place to call your own, a place to return to at the end of the day, makes life better,” said Vanderbilt Mortgage and Finance, Inc. President Eric Hamilton. “You can see it from the moment they make the decision — that sense of pride. It’s a life-changing event and a memory that will last a lifetime.”

Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), Illinois Residential Mortgage Licensee, Licensed by the NH Banking Department, MT Lic. #1561, Licensed by PA Dept. of Banking.

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Tips to save money and energy this winter

(BPT) – Winter is a time of year when expenses can soar, especially your utility bills. Thankfully, Chip Wade, HGTV expert, has some advice on how you can save energy, and ultimately money, this year:

* Lighting: LED bulbs are 90 percent more efficient than incandescent light bulbs.

* Prevent heat loss: Find and seal air leaks in your home. “Areas around windows and doors are often culprits for allowing heat to escape,” says Wade. Use caulking or weatherstripping to seal these leaks and keep the heat inside your home.

* Water heating: Did you know you can control the temperature of your water heater? Most households only require water heater thermostats to be set at 120 F, which is lower than what the temperature is typically set at. By lowering your water heating temperature, you’re not only reducing energy, but also preventing water from becoming dangerously hot.

* Adjust the temperature: Hosting a gathering? Consider turning the thermostat down. “More people in your home means an increase in your home’s temperature,” says Wade. “To accommodate for this, I turn my thermostat five to ten degrees lower than normal before guests arrive, so that they are comfortable.” Also, if you’re traveling, it’s good to keep in mind that programmable thermostats like the YORK Affinity Hx Touch-screen Thermostat can take care of temperature adjustments for you while you’re away. YORK’s free downloadable app allows you to control the thermostat from your smartphone, no matter where you travel.

* Maintain your heating system: Be sure to schedule regular service appointments with your local technician to keep your heating and cooling system running properly. Also, set a calendar reminder to replace your air filters once a month to maintain proper airflow.

* Choose a high-efficiency furnace: Save energy heating your home by choosing a high-efficiency furnace. “Always consider a furnace’s annual fuel utilization efficiency (AFUE) rating,” says Wade. “The higher the AFUE, the more efficient the furnace and the greater the amount of heat it delivers for your money. Look for models with AFUE of 90 percent or higher.”

For more ways to save energy and money, visit www.YORK.com.

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What New Year’s resolution can you stick to and feel like you’re making a difference in the world?

(BPT) – This time of year, many Americans are setting (or already breaking) New Year’s resolutions focused on getting healthier, saving money, spending more time with friends and family, etc. These are great resolutions, but perhaps this year, you’re thinking about ways you can make a difference. Giving back by donating to a nonprofit can help you feel more connected to your community and more gratification in knowing your New Year’s resolution will have a lasting impact for someone else.

In many cases, however, starting the process of where to donate your hard-earned funds can be overwhelming. After all, the array of groups requesting donations is substantial and includes 1.5 million registered nonprofits in the U.S. alone.

In 2016, generous individuals donated a whopping $281.9 billion to U.S. nonprofits, a 4 percent increase from 2015. Because there are more than a million nonprofits to choose from, the decision of where to donate requires serious thought. When looking to donate, you should set some key criteria for choosing a group that means something to you. During that process, you should consider seeking answers to the following five questions:

1. Does the organization have a history of success? Take a good look at when it was founded, exactly how it has helped people and what it has accomplished to date. Do its achievements align with your ideas as to how the world can best be improved? Will this nonprofit have a real and lasting impact on a cause that you deeply care about?

2. Do its contributions appeal to you emotionally? Contributing to a specialized nonprofit that pulls at your heartstrings can be the most fulfilling option. As such, you should seek an organization that clearly communicates how your money will be spent and how it will help people in real, tangible ways. For example, for more than three decades The National Children’s Cancer Society (NCCS) has supported the families of nearly 42,000 children battling cancer, providing more than $65 million worth of transportation, emergency and emotional assistance, helping families stay strong, stay positive and stay together.

3. Can you easily find examples of individuals or families that have benefited from the organization? Actions speak louder than words. An organization may say how it helps others, but showing how it helps others is a proof point you should look for. Here’s an example of what you should be looking for. The NCCS was approached by a mother whose then 19-month-old daughter, Paisley, was diagnosed with acute lymphoblastic leukemia. Paisley spent several drawn-out months in the hospital, along with unexpected emergency room visits due to high fevers. Paisley’s mom, Paula, was a single mom spending enormous amounts of time caring for her daughter, and ultimately lost her job. Unemployed and with travel expenses quickly adding up, Paula almost lost her car. Paula was referred to the NCCS by her hospital social worker, and from there on out, the NCCS has been by Paula and Paisley’s side. Through the Emergency Assistance Fund and the Transportation Assistance Fund, NCCS helped Paula keep her car and pay for mileage expenses, ensuring that Paisley will get to each and every doctor’s appointment.

In another example, donations to the NCCS completely changed the lives of a family whose child has been struck three times by retinoblastoma, cancer of the eye. Parents Daniel and Marian are blind, and two of their three children, now 5 and 9, have endured multiple treatments since having potentially fatal eye tumors removed as infants. NCCS has helped by funding transportation and lodging for appointments, allowing the children to receive medical evaluations and surveillance. As of now, the chance their cancer will return stands at only 5 percent.

4. Does it serve people beyond just funding? Multiple organizations can redistribute your money to support worthy causes, but you may prefer to find one that also assists people in more personal ways. NCCS, for example, equips families with skilled case managers who provide practical and emotional support to help parents and caregivers navigate throughout their daunting childhood cancer journeys. Further, youth 10 to 17 are offered emotional support by young-adult mentors who have already survived cancer.

5. Is it credible? Is the charity you’re looking to support accredited by the Better Business Bureau? That organization sets standards for charity accountability that include governance, fundraising practices, solicitations and more. While having an emotional tie to a charity is important, recognition by a comprehensive, in-depth evaluation service like the Better Business Bureau is imperative.

Families and the vast network of social workers who refer them know what they get with NCCS — a reliable, compassionate and transparent partner that truly understands the landscape of childhood cancer, and the mountains families need to move to come out the other side victorious. If you’re looking to make a lasting impact with your New Year’s resolution this year, consider donating to NCCS today.

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Common tax mistakes to avoid in 2018

(BPT) – Life changes — getting married, having a baby, buying or selling a home, sending a child off to college or retiring — often come with changes to your tax situation. Overlooking these changes when filing your taxes can lead taxpayers to make mistakes that leave money on the table, potentially impacting their refund at a time when the average refund is about $2,800. Here is a list of common tax mistakes to avoid in the 2018 filing season to help ensure you don’t miss any deductions or credits that you deserve.

Using the correct filing status

One of the most common mistakes taxpayers make is selecting the wrong filing status. A taxpayer’s filing status can affect which credits and deductions they’re eligible for, the value of their standard deduction and their tax bracket. One situation that can make choosing a filing status difficult is when more than one filing status seems to fit. For example, if a taxpayer with children is in the process of getting a divorce, they may not be sure if they should file as married filing jointly or married filing separately or, in some instances, whether they qualify to file as head of household. In this case, the taxpayers should run the numbers to see if filing jointly or separately is more to their advantage rather than guessing.

In addition, common clerical errors such as mixing up names, forgetting to include information reported on your W-2, 1099 or other forms, or even making mathematical errors can also affect your tax benefits.

Commonly overlooked credits and deductions

Most taxpayers file their taxes using the standard deduction, but you may be eligible for a variety of itemized deductions that could possibly save you more. Also, you may be eligible for “above-the-line” deductions and tax credits, none of which require you to itemize. And it’s important to note that the newly passed tax reform generally does not impact these credits or deductions until you file your 2018 tax return in 2019.

Earned Income Tax Credit for lower-income workers:

Twenty percent of eligible taxpayers, particularly lower-income workers, do not claim the Earned Income Tax Credit (EITC). Depending on their income and the number of children they have, these taxpayers may be eligible for an EITC of $503 to $6,242. Since eligibility can fluctuate based on financial, marital and parental status, taxpayers can be ineligible one year and eligible the next.

Under the PATH Act, taxpayers who claim the EITC and who file early will have their refunds delayed until mid-February. Despite the delay, taxpayers should file as they normally would to get their refund as soon as possible.

Education credits:

Depending on your academic program, what year the student is in, income and other restrictions, there are federal tax credits that can help offset the costs of higher education for yourself or your dependents. To qualify, you must pay for post-secondary tuition and fees for yourself, your spouse or your dependent. Depending on the criteria, a student may use the American Opportunity Credit of up to $2,500 or the Lifetime Learning Credit of up to $2,000.

Itemizing deductions:

Itemizing can save taxpayers hundreds of dollars, as only one third of taxpayers itemize but millions more should — especially homeowners. Owning a home is often the key that unlocks itemization, but some taxpayers with high state taxes and charitable contributions may also be able to itemize.

Itemizing enables eligible taxpayers to take deductions such as:

* Charitable donations

* Medical expenses that exceed 7.5 percent of adjusted gross income

* Personal property taxes

* State income or sales taxes

* Casualty losses such as a fire, hurricane or earthquake

* Mortgage interest payments

Not filing

On average, the IRS announces annually that approximately $1 billion goes unclaimed in federal tax refunds. Taxpayers can claim a refund for up to three years after the filing deadline. So, in addition to filing your 2017 return, keep in mind to file your 2015 return by April 17, 2018. If not, you will lose your 2015 refund. There is no late-filing penalty if a taxpayer is due a refund. Also, even if you are not required to file a return, you may be entitled to a refund.

Taxpayers who want to ensure they get the maximum refund without a delay should visit https://www.hrblock.com/offers/refund-advance/ to see if you are eligible for a Refund Advance, or you can make an appointment with a tax professional.

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Here’s how the tax reform plan could affect you

(BPT) – With the newly passed tax reform bill, the Tax Cuts and Jobs Act (TCJA), now is the time to start thinking about how this will affect you so that you can plan ahead for the outcomes you will start to feel in your paycheck as early as February 2018.

This tax reform affects virtually everyone; however, families, homeowners, residents of high-tax states, the medically uninsured and small businesses will be especially affected. Most taxpayers will experience changes that could reduce or increase their taxes owed. If you’re not sure how this may affect you, here is a summary of possibilities.

Families

Like most taxpayers, many families will be affected by the loss of personal and dependent exemptions of $4,050 per person. However, families with income under $200,000 ($400,000 for joint filers) will be eligible for an increased child tax credit of $2,000. Those with income over that amount may be eligible for a smaller credit. This, along with larger standard deductions, may or may not make up for the loss of the personal exemption. Families with dependents over the age of 16 may also qualify for a new family tax credit of $500 for each dependent who does not qualify for the child tax credit.

Homeowners and residents of high-tax states

Homeowners and residents of high-tax states like California, New York and New Jersey, who typically itemize because they have large expenses like real estate taxes and state and local income taxes, may not be able to get the full tax benefit for these expenses, which are capped at $10,000. Some may not find it worthwhile to itemize going forward. Itemizing deductions is only worthwhile if all expenses exceed the standard deduction.

Medically uninsured

Starting in 2019, there will no longer be a penalty for those without health insurance. The penalty, which had become more and more expensive since first implemented in 2014, will not apply to taxpayers without insurance in 2019. Taxpayers who did not have insurance for all of 2017 and do not expect to be insured in 2018 need to make sure to talk to a tax professional, who can help you identify if you qualify for a penalty exemption.

Small-business owners

Some of the largest changes in the tax reform legislation apply to businesses, both large and small. These changes may also affect some rental activities. Corporations will see their top tax rate reduced to 21 percent from the current top rate of 35 percent, starting in 2018. Pass-through entities (LLCs, partnerships and S corporations) and self-employed individuals will be able to deduct 20 percent of their business income, subject to some limits (based on the type of business and income) and phase-outs (based on the partner’s/shareholder’s total income).

Retirement

Under the current law, taxpayers can reconvert a Roth IRA into a traditional IRA. This allows taxpayers to avoid paying high tax bills on an amount of money that had fallen in value after the conversion. Now, taxpayers will no longer be able to reconvert a Roth IRA to a traditional IRA.

The bottom line is that with this new tax legislation, you’re still going to need to get your documents in order and file your taxes, as well as decide if you’re going to itemize and what deductions work for your personal situation. This year, it’s more important than ever to talk to a tax professional about how this affects you to ensure that your taxes are done right and that you have a clear understanding of how changes that take effect in 2018 will impact how you file in 2019.

To learn more about the tax reform, how it may affect you and what steps you can begin taking to reduce what you owe in 2018, visit www.hrblock.com or make an appointment with a tax professional.

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