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A LACK OF CHARITY
After tax reform, many charities are feeling the pinch
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Most American charities expressed concern after the 2017 tax reform bill was passed with its higher individual and joint tax exemptions. The charities forecasted that without that tax incentive, Americans would find less reason to give as generously as they had in the past.
Turns out, charities were right to be worried. After a banner year of giving in 2017, which saw a 5.7% increase in individual giving (Source:
Giving USA), charitable donations fell by 2% in 2018. Adjusted for inflation, that's a reduction in giving of 3.4%. That may not sound significant, but it's a $292.09 billion shortfall for charities.
From a big picture perspective, that loss of income means that the nonprofit organizations that serve our society are having to cut back on vital programs and services. And if the trend continues, the outlook for nonprofits will only get worse in the years ahead. So here are two key take-aways to consider:
If a charity was worth your investment before tax reform, it is probably still worth it today, despite the possible loss of a tax incentive.
Secondly, for some taxpayers, there still are tax-advantages to be had if you itemize your taxes. And, you can donate appreciated assets - such as mutual funds and stocks - which will allow you to avoid capital gains while deducting the full fair-market value of the asset.
In this season of giving, it's important to remember all the good that our charities do and how important our financial gifts are to their successes.
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CONSUMER FRAUD ALERT
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It's a sad fact of life that humans' most generous instincts, that is, giving to others, can also bring out the worst in those with fraud on their minds. And the rise of online holiday shopping has given scammers lots of new and effective ways to steal our money and even our identities.
Technology's Dark Side
In the past, we've written about phishing emails in which a scammer embeds a link to a website that looks for all the world like your bank, utility company, credit card merchant, or some other legitimate website you have no reason to suspect. Scammers are able to trick you with these fake websites by "spoofing" the real deal, creating facsimiles that to the casual observer appear to be legitimate. Once there, the unsuspecting consumer is prompted to enter all kinds of sensitive information, ranging from personal identification, including social security numbers, to detailed banking and credit card data. With this information collected from their victims, scammers can raid bank accounts, make unauthorized purchases, and steal their victims' identities for all kinds of purposes.
This holiday season, scammers have taken email phishing and website spoofing to new levels. They've begun manipulating search engines so that their fake websites display when you search for name-brand retailers.
Short of throwing your computer out the window, how can you protect yourself from the dangers of online scams? Here are some tips that will help you steer clear of trouble.
Never click on a link in an email to get to a retail or financia
l company's website, even if the email itself looks legitimate, as these are easy to spoof. Instead, launch your web browser and navigate to the website by typing the correct URLinto the browser navigation bar.
The same rule applies to text messages you receive with links to companies you do business with. The tactic is the same as email phishing, just using a different method for entrapping you.
Make sure any website in which you're entering financial information has the https: prefix. The "s" is short for "secure socket layer,"which means the site has implemented security m
easures to protect your data.
Keep your web browser updated. Web companies update browsers whenever a known bug or threat appears. It's not foolproof, but it can help.
When shopping online, use third-party payment systems, such as PayPal, Venmo, ApplePay, and Zelle. These apps allow you to make your purchases without revealing your financial data to the online merchant. That way, if the merchant gets hacked or is a fake site, your data will be safe.
When shopping online, use third-party payment systems, such as PayPal, Venmo, ApplePay, and Zelle. These apps allow you to make your purchases without revealing your financial data to the online merchant. That way, if the merchant gets hacked or is a fake site, your data will be safe.
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As we head toward the holiday season and the beginning of a new decade, all of us at DMG Advisor Group wish you and yours a safe, prosperous and happy New Year!
Hal Schwartz
DMG Financial Advisors Group
Chief Investment Officer
Managing Partner
MAIN OFFICES
TOLL FREE 800.983.4448
Denver Metro 303.470.5664
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Last Minute Tax Savings
Things to do now to lower the pain in April 2020
Turns out the 2017 Tax Cuts and Jobs Act was a mixed bag for tax-paying Americans, with the biggest benefits going to corporations and those in the upper tax brackets. Investors and small business owners also benefitted.
Just in case you're feeling left out of Tax Reform's bonanza, consider these last-minute tax-strategies:
- Max out your contributions to any qualified plans you own. In 2019, your max contributions are:
- 401(k): $19,000 with an additional $6,000 catch-up provision for those 50-plus.
- Simple retirement accounts: $13,000, with an additional $3,000 catch-up provision.
- IRAs (both traditional and Roth): $6,000 with an additional $1,000 catch-up provision.
If you itemize your deductions (which fewer Americans do now), then consider these measures:
- Talk to your investment advisor about taking investment losses you've sustained this year to offset your capital gains taxes. You can deduct up to $3,000 a year against ordinary income. Losses over that amount can be shifted to next year.
- Charitable gifts are still deductible to those who itemize, but you need to document your gifts very carefully. Cash is easiest to track. Another tax-advantaged way to donate is to gift stocks and mutual funds, especially those that have appreciated. You'll avoid capital gains while being able to deduct the fair-market value of the gift.
- If you have a dependent in college, there are a variety of tax breaks available by pre-paying college tuition and other qualifying expenses. Programs such as 529 plans, which vary from state to state, can also help you prepare to pay a child's college expenses.
- If you have a small business, pay next-year's business expenses in advance, and push off any income for a few weeks into the new tax year.
- As always, seek the advice of your tax advisor for recommendations based on your situation.
Looking Ahead to 2020
On tax day 2018, many wage-earning American taxpayers discovered a painful surprise: Because their payroll withholding had been adjusted by their employers to reflect the new brackets, wage-earners actually saw their tax savings with each paycheck throughout the year. As a result, their tax refunds were less than in years past. Or, as in the case of an additional 5.4% of tax filers in 2018, they owed money. That's because filers failed to update their withholding properly to reflect lost deductions. It may be too late now to make up for significant under-withholding in 2019, so check out the tax tables for 2020 below to make sure you're better prepared for the year ahead.
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Mind Where You Go
Scammers know how to trick you into going to the wrong site line
Scammers are talented at convincing unwitting consumers that a fake site is actually the real deal. So take care when you go online to make sure you are on the right site.
How do you do that?
Pay careful attention to the URL, that is, the web address, that displays in the browser navigation bar. Take a look at the images below at these two spoofs of legitimate websites. Their appearances might have been convincing but the fake is revealed by the URL address. For instance, the Amazon.com link shows an extra "n," and the Apple Store URL shows that the link is actually going to azurewebsites.net, and not apple.com.
When in doubt about a website, place your cursor at the end of the URL in the navigation bar, click your mouse, and see what displays. If it's any address other than the right one, leave the site.
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Visit Us Online
Our website has lots of resources and timely information about financial products and strategies that may help you meet a wide range of your goals for yourself, your loved ones and your family.
Check us out online at dmgadvisorgroup.com
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Copyright 2019. DMG Advisor Group LLC. Main office: 7114 West Jefferson Ave., Suite 305, Lakewood, Colorado 80235 800-983-4448, 303-470-5664. Securities and advisory services offered through Stephen A. Kohn & Associates, Ltd., (SAKL) member FINRA/SIPC/MSRB. SAKL is separately owned and other entities and/or marketing names, products or services referenced here are independent of SAKL. Neither SAKL, nor its representatives, offer tax or legal advice. Visit us online at dmgadvisorgroup.com
Federal income tax laws are complex and subject to change. The information in this newsletter is based on current interpretations of the law and is not guaranteed. Neither the company nor its representatives give legal or tax advice. Please consult your attorney or tax advisor for answers to specific questions. To best serve you, we need to be kept current on your personal situation. Please let us know if you have any changes in your financial status including employment changes, raises, promotions, change of objectives, or in your personal status such as marriage, divorce, birth of a dependent, or change of address.
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