Janell A. Israel & Associates
1585 Kapiolani Blvd., Suite 1604, Honolulu, Hawaii 96814 Phone: 808-942-8817
February 2016 Tax Newsletter
What's New in Taxes:
Be Sure To Use Updated Tax Numbers In Your 2016 Planning
By law, the IRS must adjust certain tax numbers for inflation each year. For 2016, due to a low inflation rate, many of the numbers are unchanged or change only slightly from 2015 amounts. Here are some of the tax numbers to use in your 2016 tax planning.
* The maximum individual retirement account contribution you can make in 2016 remains unchanged - $5,500 if you're under age 50 and $6,500 if you are 50 or older.
* The maximum amount of wages employees can put into a 401(k) plan remains $18,000. The 2016 maximum allowed for SIMPLE plans is $12,500. If you are 50 or older, you can contribute up to $24,000 to your 401(k) and $15,500 to your SIMPLE plan.
* For 2016, the maximum amount you can contribute to a health savings account is $3,350 for individuals and $6,750 for families. The catch-up contribution when you're age 55 or older is $1,000.
* The "nanny tax" threshold is $2,000 in 2016, up from $1,900 for 2015.
If you pay household employees $2,000 or more during the year, you're generally responsible for payroll taxes.
* The "kiddie tax" threshold remains $2,100 for 2016. If your child (under-age 19 or under age 24 for students) has more than $2,100 of unearned income (such as dividends and interest) this year, the excess could be taxed at your highest rate.
* The maximum earnings subject to social security tax in 2016 is $118,500, unchanged from 2015. The $15,720 earnings limit for those under full retirement age is also unchanged. If you've reached full retirement age, there is no earnings limit.
Contact us for additional information about these and other inflation-adjusted tax numbers.
Take Charge Of Your Debt
Looking for ways to manage your debt? Here are seven practical suggestions.
1. Stop adding to your debt burden. Some debt is unavoidable or is considered "good" debt, such as the mortgage on your home. But a mountain of debt created by purchasing luxuries you clearly can't afford does not fall into that category. Watch your spending and take a hard-line approach to new purchases.
2. Get a clear picture of all your debts. Put the data in a spreadsheet or other easily accessible ledger. Your credit history report can get you started with a listing of your outstanding accounts.
3. Create a payment calendar. Get familiar with due dates. Use your smartphone or other technology to provide reminders.
4. Make payments on time. If you miss a due date or skip a payment, you'll be stuck with a late fee in addition to what you already owe. Those fees make a bad situation worse.
5. Give 'til it hurts. At the very least, pay the minimum amount required. If you can stand the pain of paying more, you'll save time and money over the long term.
6. Prioritize your debts. Does your credit card charge sky-high interest rates? Pay that balance down first by putting any additional amount you can afford toward the principal. Devise a system for identifying and paying the debts that cost the most.
7. Set up an emergency fund. Although you'd like to use excess cash to pay off debt, you also need some "wiggle room." Stash funds in an easily accessible account so you can avoid adding to your debt if an emergency occurs.
Debt is a four-letter word that practically no one wants to hear. Nevertheless, with sound money-management techniques, you can take charge of what you owe. Give us a call for more suggestions that will help.
All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy. The information contained in this newsletter is provided by Mostad& Christensen, Inc. The information is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in this newsletter, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.
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Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Mosted&Christensen, Janell Israel & Associates and NPC are separate and unrelated companies. NPC does not provide tax or legal advice.
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