In December of 2014, Congress approved the Achieving a Better Life Experience (ABLE) Act that allows for tax-advantaged savings for persons with disabilities. Known as ABLE accounts, these new accounts allow earnings to grow tax-free and distributions to be tax-free for qualified disability expenses. Under the provisions of the new law the accounts cannot reduce certain Medicaid or supplemental security income (SSI). The accounts are designed to encourage savings to maintain health, independence and quality of life and secure funding that will supplement other benefits individuals with disabilities receive through Medicaid, SSI, or employment without disqualifying them from those benefits.

The beneficiary of the account can withdraw contributions and earnings at any time for qualified disability expenses. These include:

• Education
• Housing
• Transportation
• Employment training and support
• Assistive technology and personal support services
• Health, prevention and wellness
• Financial management and administrative services
• Legal fees
• Expenses for oversight and monitoring
• Funeral and burial expense
• Other expenses consistent with the purpose of this provision

In our desire to provide you with the timely instructions to comply with existing IRS guidance on the tangible property regulations, we asked you on Friday, February 13, 2015 to mail in provided Form(s)  3115 to the IRS. Ironically, later on the same day, the IRS provided long-awaited guidance and relief.

Under this new guidance taxpayers are still required to file Form(s) 3115 if they have at least $10M in average gross receipts over the last three years and at least $10M of total assets in 2014. 

However, for anyone not meeting the $10M threshold, there is no longer a Form 3115 filing requirement. 

If you received a Form 3115  from us and have not yet mailed it to the IRS, we ask that you not file the form in light of this new guidance and wait until your tax preparer reaches out to you directly. If, however, you already mailed in a Form 3115 that is no longer required, do not worry – there is no harm in this. 

If you are a taxpayer that is still required to file a Form 3115 under the new guidance and have not received the form from us, know that we will still prepare the form and either send it to you in advance of or with your tax return. 

Thank you for your cooperation  and PATIENCE in this process and please let us know if you have any questions.

One of the most common inquiries clients have for their accountants is “What documents do I need to save, and for how long?” Retaining, organizing, and filing old records can become a burden, both at the business and individual levels. As we all strive to achieve a more "paperless" process, how do we determine what warrants taking up valuable office and storage space and what does not?

Records should be preserved only as long as they serve a useful purpose or until all legal requirements are met. To keep files manageable, it is a good idea to develop a schedule so that at the end of a specified retention period, certain records are destroyed.

At Stockman Kast Ryan + Co., we have developed a Records Retention Schedule we think you will find helpful. Although it doesn't cover every possible record, it does cover the most common ones. As always, please feel free to ask us should you have specific questions or concerns.

Tax time is becoming a more and more lucrative time for those wanting to steal your identity or scam you out of money. Identity theft has topped the Internal Revenue Service’s “Dirty Dozen” annual list of scams for the last 3 years. 

The IRS will never do any of the following:

1. Call to demand immediate payment
2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe
3. Require you to use a specific payment method for your taxes, such as a pre-paid debit card or wire transfer
4. Ask for credit or debit card numbers over the phone
5. Threaten to bring in local police or other law-enforcement to have you arrested for not paying

If you receive a phishing email:

Don't open any attachments or click any links and don't reply to the message or give out any personal or financial information. Forward the email to phishing@irs.gov and then delete it.

To help minimize your risk:

With contributions from Penny Sayre, CPA, Tax Manager

Substantiation requirements must be met for charitable donations to be allowed

The federal government encourages your generosity by allowing you to deduct your gifts to charities on your income tax return if you itemize deductions. However, you must follow the IRS’s reporting and substantiation rules to assure your charitable deduction is allowed. While all contributions must be substantiated, there are numerous and overlapping requirements.

General Rules

For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written communication from the donee organization showing its name, plus the date and amount of the contribution. Any other type of written record, such as a log of contributions, is insufficient.

For a contribution of property other than money, you generally must maintain a receipt from the donee organization that shows the organization's name, the date and location of the contribution, and a detailed description (but not the value) of the property. If circumstances make obtaining a receipt impracticable, you must maintain a reliable written record of the contribution. The information required in such a record depends on factors such as the type and value of property contributed.

Contributions Over $250

If the contribution is worth $250 or more, stricter substantiation requirements apply. No charitable deduction is allowed for any contribution of $250 or more unless you substantiate the contribution with a written receipt from the donee organization. You must have the receipt in hand when you file your return (or by the due date, if earlier) or you won't be able to claim the deduction. If you make separate contributions of less than $250, you won't be subject to the written receipt requirement, even if the sum of the contributions to the same charity total $250 or more in a year.

The receipt must set forth the amount of cash and a description (but not the value) of any property other than cash contributed. It must also state whether the donee provided any goods or services in return for the contribution, and if so, must give a good faith estimate of the value of the goods or services. If you received only “intangible religious benefits,” such as attending religious services, in return for your contribution, the receipt must say so. This type of benefit is considered to have no commercial value and so doesn't reduce the charitable deduction available.

Contributions Over $500

In general, if the total charitable deduction you claim for non-cash property is more than $500, you must attach a completed Form 8283 (Noncash Charitable Contributions) to your return or the deduction is not allowed. In general, you are required to obtain a qualified appraisal for donated property with a value of more than $5,000, and to attach an appraisal summary to the tax return. However, a qualified appraisal isn't required for publicly-traded securities for which market quotations are readily available. A partially completed appraisal summary and the maintenance of certain records are required for (1) nonpublicly-traded stock for which the claimed deduction is greater than $5,000 and no more than $10,000, and (2) certain publicly-traded securities for which market quotations are not readily available. A qualified appraisal is required for gifts of art valued at $20,000 or more. IRS may also request that you provide a photograph.

Recent Case Provides a Note of Caution to Taxpayers Related to Documentation of Noncash Charitable Contributions

As we begin the new tax year of 2015, a review of a 2014 Tax Court Memorandum Decision (TC Memo 2014-203, Thad D. Smith v. Commissioner) provides a reminder that the IRS and the courts take the charitable contribution rules seriously and that good tax documentation is required to support a deduction for noncash charitable contributions. Here’s a summary of the take-away lessons from the Smith case regarding documentation of noncash charitable contributions:

• Taxpayers must obtain a written acknowledgement from the charity that indicates what was donated, the date of the donation and a statement that no goods or services were provided in return for the donation or a description of what was provided by the charity in return for the donation. The written documentation from the charity must be received by the due date of the tax return or the date of filing, whichever is earliest.
• Taxpayers must maintain the following documentation for items donated (including groups of similar items) that exceed $500 in value: (1) date of acquisition of each item, (2) detailed description of the property and its current condition, (3) estimated cost of each item, (4) estimated current fair market value of each item, and (5) an explanation of how current value was determined.
• For noncash items (including groups of non-cash items) that exceed $5,000 included in the donation, an appraisal by a qualified appraiser must be obtained.

Recordkeeping for Contributions for which You Receive Goods or Services

If you receive goods or services, such as a dinner or theater tickets, in return for your contribution, your deduction is limited to the excess of what you gave over the value of what you received. For example, if you gave $100 and in return received a dinner worth $30, you can deduct $70. But your contribution is fully deductible if:

• you received free, unordered items from the charity that cost no more than $10.20 in 2014 ($9.90 in 2013) in total;
• you gave at least $51 in 2014 ($49 in 2013) and received only token items (bookmarks, key chains, calendars, etc.) that bear the charity's name or logo and cost no more than $10.20 in 2014 ($9.90 in 2013) in total; or
• the benefits that you received are worth no more than 2% of your contribution and no more than $102 in 2014 ($99 in 2013).

If you made a contribution of more than $75 for which you received goods or services, the charity must give you a written statement, either when it asks for the donation or when it receives it, that tells you the value of those goods or services. Be sure to keep these statements.

Cash Contribution Made through Payroll Deductions

You can substantiate a contribution that you make by withholding from your wages with a pay stub, Form W-2, or other document from your employer that shows the amount withheld for payment to the charity. You can substantiate a single contribution of $250 or more with a pledge card or other document prepared by the charity that includes a statement that it doesn't provide goods or services in return for contributions made by payroll deduction.

The deduction from each wage payment is treated as a separate contribution for purposes of the $250 threshold.

Substantiating Contributions of Services

Although you can't deduct the value of services you perform for a charitable organization, some deductions are permitted for out-of-pocket costs you incur while performing the services. You should keep track of your expenses, the services you performed and when you performed them, and the organization for which you performed the services. Keep receipts, canceled checks, and other reliable written records relating to the services and expenses.

As discussed earlier, a written receipt is required for contributions of $250 or more. This presents a problem for out-of-pocket expenses incurred in the course of providing charitable services, since the charity doesn't know how much those expenses were. However, you can satisfy the written receipt requirement if you have adequate records to substantiate the amount of your expenditures, and get a statement from the charity that contains a description of the services you provided, the date the services were provided, a statement of whether the organization provided any goods or services in return, and a description and good-faith estimate of the value of those goods or services.

Please call us if you have any questions about these rules. Together we can make sure that you'll get all the deductions to which you are entitled when we prepare your 2014 tax returns.

On Oct. 30, the IRS issued its cost-of-living adjustments for 2015. In a nutshell, with inflation remaining in check, many amounts increased only slightly, and some stayed at 2014 levels. As you implement 2014 year end tax planning strategies, be sure to take these 2015 adjustments into account in your planning.

Individual income taxes

Tax brackets will widen and personal exemptions will increase slightly for 2015.

Tax-bracket thresholds increase for each filing status but, because they’re based on percentages, they increase more significantly for the higher brackets. For example, the top of the 10% bracket increases by $150 to $300, depending on filing status, but the top of the 35% bracket increases by $3,625 to $7,250, again depending on filing status.

The personal and dependency exemption increases by only $50, to $4,000 for 2015. The exemption is subject to a phaseout, which reduces exemptions by 2% for each $2,500 (or portion thereof) by which a taxpayer’s adjusted gross income (AGI) exceeds the applicable threshold (2% of each $1,250 for separate filers).

For 2015, the phaseout starting points increase by $2,425 to $4,850, to AGI of $258,250 (singles), $284,050 (heads of households), $309,900 (joint filers), and $154,950 (separate filers). The exemption phases out completely at $380,750 (singles), $406,550 (heads of households), $432,400 (joint filers), and $216,200 (separate filers).

Your AGI also may affect some of your itemized deductions. An AGI-based limit reduces certain otherwise allowable deductions by 3% of the amount by which a taxpayer’s AGI exceeds the applicable threshold (not to exceed 80% of otherwise allowable deductions). For 2015, the thresholds are $309,900 (up from $305,050) for joint filers, $284,050 (up from $279,650) for heads of households, $258,250 (up from $254,200) for singles and $154,950 (up from $152,525) for separate filers.

AMT

The alternative minimum tax (AMT) is a separate tax system that limits some deductions, doesn’t permit others and treats certain income items differently. If your AMT liability is greater than your regular tax liability, you must pay the AMT.

Like the regular tax brackets, the AMT brackets are annually indexed for inflation. For 2015, the threshold for the 28% bracket increased by $2,900 for all filing statuses except married filing separately, which increased by half that amount.

The AMT exemptions and exemption phaseouts are also indexed. The exemption amounts for 2015 are $53,600 for singles and heads of households and $83,400 for joint filers, increasing by $800 and $1,300, respectively, over 2014 amounts. The inflation-adjusted phaseout ranges for 2015 are $119,200–$333,600 (singles and heads of households) and $158,900–$492,500 (joint filers). (Amounts for separate filers are half of those for joint filers.)

Education- and child-related breaks

The maximum benefits of various education- and child-related breaks generally remain the same for 2015. But most of these breaks are also limited based on the taxpayer’s modified adjusted gross income (MAGI). Taxpayers whose MAGIs are within the applicable phaseout range are eligible for a partial break — breaks are eliminated for those whose MAGIs exceed the top of the range.

The MAGI phaseout ranges generally remain the same or increase modestly for 2015, depending on the break. For example:

The American Opportunity credit. The MAGI phaseout ranges for this education credit (maximum $2,500 per eligible student) remain the same for 2015: $160,000–$180,000 for joint filers and $80,000–$90,000 for other filers.

The Lifetime Learning credit. The MAGI phaseout ranges for this education credit (maximum $2,000 per tax return) increase for 2015; they’re $110,000–$130,000 for joint filers and $55,000–$65,000 for other filers — up $2,000 for joint filers and $1,000 for others.

The adoption credit. The MAGI phaseout ranges for this credit also increase for 2015 — by $3,130, to $201,010–$241,010 for joint, head-of-household and single filers. The maximum credit increases by $210, to $13,400 for 2015.

(Note: Married couples filing separately generally aren’t eligible for these credits.)

These are only some of the education- and child-related breaks that may benefit you. Keep in mind that, if your MAGI is too high for you to qualify for a break for your child’s education, your child might be eligible.

Retirement plans

Many retirement-plan-related limits increase slightly in 2015; thus, you may have opportunities to increase your retirement savings:

Your MAGI may reduce or even eliminate your ability to take advantage of IRAs. Fortunately, IRA-related MAGI phaseout range limits all will increase for 2015:

Traditional IRAs. MAGI phaseout ranges apply to the deductibility of contributions if the taxpayer (or his or her spouse) participates in an employer-sponsored retirement plan:

• For married taxpayers filing jointly, the phaseout range is specific to each spouse based on whether he or she is a participant in an employer-sponsored plan:
• For a spouse who participates, the 2015 phaseout range limits increase by $2,000, to $98,000–$118,000.
• For a spouse who doesn’t participate, the 2015 phaseout range limits also increase by $2,000, to $183,000–$193,000.
  • For single and head-of-household taxpayers participating in an employer-sponsored plan, the 2015 phaseout range limits increase by $1,000, to $61,000–$71,000.

Taxpayers with MAGIs within the applicable range can deduct a partial contribution; those with MAGIs exceeding the applicable range can’t deduct any IRA contribution.

But a taxpayer whose deduction is reduced or eliminated can make nondeductible traditional IRA contributions. The $5,500 contribution limit (plus $1,000 catch-up if applicable and reduced by any Roth IRA contributions) still applies. Nondeductible traditional IRA contributions may be beneficial if your MAGI is also too high for you to contribute (or fully contribute) to a Roth IRA.

Roth IRAs. Whether you participate in an employer-sponsored plan doesn’t affect your ability to contribute to a Roth IRA, but MAGI limits may reduce or eliminate your ability to contribute:

• For married taxpayers filing jointly, the 2015 phaseout range limits increase by $2,000, to $183,000–$193,000.
• For single and head-of-household taxpayers, the 2015 phaseout range limits also increase by $2,000, to $116,000–$131,000.

You can make a partial contribution if your MAGI falls within the applicable range, but no contribution if it exceeds the top of the range.

(Note: Married taxpayers filing separately are subject to much lower phaseout ranges for both traditional and Roth IRAs.)

Gift and estate taxes

The unified gift and estate tax exemption and the generation-skipping transfer (GST) tax exemption are both adjusted annually for inflation. For 2015 the amount is $5.43 million (up from $5.34 million for 2014).

The annual gift tax exclusion remains at $14,000 for 2015. It’s adjusted only in $1,000 increments, so it typically increases only every few years. It increased to $14,000 in 2013, so it might go up again for 2016.

Is tax relief on your horizon?

With the 2015 cost-of-living adjustment amounts trending slightly higher, you have an opportunity to realize a little bit of tax relief next year. In addition, with many retirement-plan-related limits also increasing, you may have the chance to boost your retirement savings. If you have questions on the best tax-saving strategies to implement based on the 2015 numbers, please give us a call. We’d be happy to help.

Provisions affecting businesses

Provisions affecting individuals

An ongoing battle

The Individual Shared Responsibility Provisions

Minimum Essential Coverage

Health Insurance Premium Assistance Refundable Credit

Exemptions from Requirement for Health Coverage

Payments Required for Noncompliance with the Individual Shared Responsibility Provisions

New Tax Forms and Reporting Required for Individual Shared Responsibility Provisions

Conclusion

Uncertainty over expired tax provisions complicates year end tax planning

Now that the final quarter of 2014 has begun, many businesses and individuals are turning their attention to year end tax planning. This year, however, uncertainty over dozens of expired or expiring tax provisions complicates the planning process, particularly for business owners.

Fifty-seven provisions expired at the end of 2013 and six more are scheduled to expire at the end of 2014. Congress may extend many of these provisions (in some cases retroactively to the beginning of 2014), but that likely won’t happen until after the midterm elections on Nov. 4 — and perhaps not for a month or more after that date. In the meantime, there are many year end tax planning strategies for businesses and individuals that are available now. Others won’t take shape until after Congress acts.

Keep an eye on expired tax breaks

Year end tax planning for businesses often focuses on acquiring equipment, machinery, vehicles or other qualifying assets to take advantage of enhanced depreciation tax breaks. Unfortunately, the following breaks were among those that expired at the end of 2013:

Enhanced expensing election. Before 2014, Section 179 permitted businesses to immediately deduct, rather than depreciate, up to $500,000 in qualified new or used assets. The deduction was phased out, on a dollar-for-dollar basis, to the extent qualified asset purchases for the year exceeded $2 million. Because Congress failed to extend the enhanced election, these limits have dropped to only $25,000 and $200,000, respectively, for 2014.

Bonus depreciation. Also expiring at the end of 2013, this provision allowed businesses to claim an additional first-year depreciation deduction equal to 50% of qualified asset costs. Bonus depreciation generally was available for new (not used) tangible assets with a recovery period of 20 years or less, as well as for off-the-shelf software. Currently, it’s unavailable for 2014 (with limited exceptions).

Lawmakers are considering bills that would restore enhanced expensing and bonus depreciation retroactively to the beginning of 2014, but probably won’t take any action until late in the year. In the meantime, how should you handle qualified asset purchases?

1. If you need equipment or other assets to run your business, you should acquire it regardless of the availability of tax breaks.
2. For less urgent asset needs, consider spending up to $25,000, the amount you’ll be able to expense regardless of whether Congress extends the expired breaks.
3. For additional planned asset purchases, consider taking a wait-and-see approach and be prepared to act quickly if and when “tax extenders” legislation is signed into law.

Keep in mind that, to take advantage of depreciation tax breaks on your 2014 tax return, you’ll need to place assets in service by the end of the year. Paying for them this year isn’t enough.

Other expired tax provisions to keep an eye on include the Work Opportunity credit, Empowerment Zone incentives, the health care coverage credit and a variety of energy-related tax breaks.

Revisit the research credit

Congress is likely to extend the research credit (also commonly referred to as the “research and development” or “research and experimentation” credit), as it has done repeatedly since the credit was first established in 1981. But regardless of whether the research credit is restored, it pays to investigate whether your business is eligible for the credit for previous tax years.

Even if you lack the documentation to support traditional research credits, you may qualify for the alternative simplified credit (ASC). Until recently, the ASC could be claimed only on a timely filed original tax return. But the IRS issued new regulations in June allowing most eligible businesses to claim missed credits for open tax years by filing an amended return.

Don’t overlook the manufacturers’ deduction

Many businesses miss out on significant tax savings because they fail to recognize that they’re eligible for the manufacturers’ deduction, also called the “Section 199” or “domestic production activities” deduction. It allows you to deduct up to 9% of your company’s income from “qualified production activities,” limited to 50% of W-2 wages paid by the taxpayer that are allocable to domestic production gross receipts.

Many business owners assume that the deduction is available only to manufacturers. But it’s also available for certain construction, engineering, architecture, software development and agricultural activities.

Consider traditional year end strategies

As always, consider traditional year end planning strategies, such as deferring income to 2015 and accelerating deductions into 2014. If your business uses the cash method of accounting, you may be able to defer income by delaying invoices until late in the year or accelerate deductions by paying certain expenses in advance.

If your business uses the accrual method of accounting, you may be able to defer the tax on certain advance payments you receive this year. You may also be able to deduct year end bonuses accrued in 2014 even if they aren’t paid until 2015 (provided they’re paid within 2½ months after the end of the tax year).

But deferring income and accelerating deductions isn’t the best strategy in all circumstances. If you expect your business’s marginal tax rate to be higher next year, you may be better off accelerating income into 2014 and deferring deductions to 2015. This strategy will increase your 2014 tax bill, but it can reduce your overall tax liability for the two-year period.

Finally, consider switching your tax accounting method from accrual to cash or vice versa if your business is eligible and doing so will lower your tax bill.

Implement strategies for individuals

Like businesses, individuals often can reduce their tax bills by deferring income and accelerating deductions. To defer income, for example, you might ask your employer to pay your year end bonus in early 2015. And to accelerate deductions, you might pay certain property taxes early or increase your IRA or qualified retirement plan contributions to the extent that they’ll be deductible. Such contributions also provide some planning flexibility because you can make 2014 contributions to IRAs, and certain other retirement plans, after the end of the year.

Remember that, when you use a credit card to pay expenses or make charitable contributions this year, you can deduct them on your 2014 return even if you don’t pay your bill until next year.

Other year end tax planning strategies to consider include:

Investment planning. If you’ve sold stocks or other investments at a gain this year — or plan to do so — consider offsetting those gains by selling some of your poorly performing investments at a loss.

Reducing capital gains is particularly important if you’re subject to the net investment income tax (NIIT), which applies to taxpayers with modified adjusted gross income (MAGI) over $200,000 ($250,000 for joint filers). The NIIT is an additional 3.8% tax on the lesser of 1) your net income from capital gains, dividends, taxable interest and certain other sources, or 2) the amount by which your MAGI exceeds the threshold.

In addition to reducing your net investment income by generating capital losses, you may have opportunities to bring your MAGI below the threshold by deferring income or accelerating deductions.

Charitable planning. If you plan to make charitable donations, consider donating highly appreciated stock or other assets rather than cash. This strategy is particularly effective if you own appreciated stock you’d like to sell but you don’t have any losses to offset the gains. Donating stock to charity allows you to dispose of the stock without triggering capital gains taxes, while still claiming a charitable deduction. Then you can take the cash you’d planned to donate and reinvest it in other securities.

Monitoring expired tax breaks. Keep an eye on Congress. If certain expired tax breaks are extended before the end of the year, you may have some last-minute planning opportunities. Expired provisions include tax-free IRA distributions to charity for taxpayers age 70½ and older, the deduction for state and local sales taxes, the above-the-line deduction for qualified tuition and related expenses, and the credit for energy efficient appliances.

Start now

Most strategies for reducing your 2014 tax bill must be implemented by the end of the year, so it’s a good idea to start planning now. Uncertainty surrounding the fate of expired tax breaks complicates matters, so contact us today to develop contingency plans for dealing with whatever tax legislation is signed into law.

The bumpy economy and volatile markets haven’t made saving for retirement any easier. But, you’ve still got to keep saving for your golden years. And when doing so, everyone needs to abide by certain fundamentals.

Cash is king

Volatile markets aren’t the only danger your retirement nest egg faces. In fact, you could present one of the biggest dangers — if you make early withdrawals from your IRA or take a 401(k) plan loan.

For example, in addition to being subject to income tax, traditional IRA withdrawals before age 59½ will likely be subject to a 10% early withdrawal penalty. A 401(k) loan (if your plan allows) won’t create a tax liability. However, if you default on it, your outstanding balance will be treated as a distribution and trigger any additional tax liabilities and penalties.

Perhaps more important, the amount that can continue to grow tax-deferred — tax-free in the case of a Roth account — will be reduced after a retirement plan withdrawal or loan, which can significantly shrink what you have at retirement.

To avoid having to tap into your retirement plan, maintain a cash reserve. The optimal amount will vary depending on your age, health, available credit and job situation. But generally you should have enough cash on hand to cover three to six months of living expenses.

Contributions count

While market volatility may make you leery of putting more into your retirement plan, for most people it’s advantageous to do so. First, the power of a retirement plan is tax-deferred (or, in the case of Roth accounts, tax-free) growth. The more time funds have to grow, the larger your nest egg can become.

Second, when the value of stocks is low, you can buy more shares for the same amount of money. Assuming retirement is still at least several years away (so there’s ample time for the market to recover), a down market can be a great time to buy.

Third, if your employer offers a match, at minimum you should contribute enough to get the maximum match. If you don’t, it’s essentially like turning down additional compensation.

Financial objectives change

Examine your investments to see whether the allocation percentages are in harmony with your current risk tolerance and financial objectives. Diversification (which offers not only some protection during market declines, but also higher potential returns over the long run) continues to be a critical investment strategy.

Because retirement plans are subject to annual contribution limits, many people also need to save for retirement outside these tax-advantaged accounts. Consider the tax consequences of investments that create realized capital gains or dividend distributions, because they’ll affect your return on investment. And remember that timing can have a dramatic impact.

For instance, the top long-term capital gains rate of 20% is nearly 20 percentage points lower than the highest ordinary-income tax rate of 39.6% — and it generally applies to the sale of investments held for more than 12 months. Even if you’re not subject to these top rates, paying tax at your long-term capital gains rate rather than your ordinary-income tax rate will provide substantial savings.

Insurance is integral

If you’re like most Americans, your biggest asset is your ability to earn income. Disability insurance can help you protect that asset.

Although many employers offer short-term disability insurance, you may wish to obtain additional, long-term coverage. In computing the level of coverage to carry, plan so that monthly income (based on disability benefits and your current resources) equals at least 60% of your pretax salary.

Also evaluate whether you have adequate life insurance. The amount needed will depend on your current net worth, the lifestyle you want to provide for your family, and your personal circumstances and desires.

Time goes on

Just about everyone’s retirement needs evolve. But that doesn’t mean retirement planning itself changes drastically. Fundamentals such as these should help you get to where you want to go.