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A Time to Heal

turnturnEight years ago, when Barack Obama was elected president, I heard a clip on the radio. a caller to the Rush Limbaugh show asking for his reaction. “I hope he fails,” were his words. Those words stung me, and stuck with me. Is it possible for a president to succeed and yet, the country be worse off? More important, can a president fail, and the country still be better off? In the end, I was left agreeing with senator Al Franken and forced myself to dismiss this as the rant of one person.

Now, the 2016 election is behind us. My history of comments and Tweets would show that my preferred candidate didn’t win. But as I reflect back to that 8 year old quote, I want to move on, and I want to hope for healing. I want to hope that somehow we are better off in 4 years. That there are more jobs, better jobs, for those that want them. That people of every demographic are able to say that no matter how they felt about who won the election, progress was made, the US is a safer place, that people are respected, and that we worry about the future just a bit less that we did before.

I know that readers expect posts about finance, the economy, taxes, etc. Trying to avoid politics is harder than it should be. Our finances are inextricably linked to what those in our government are doing. I hope, for all our sake, they act wisely.

2017 Tax Rates Announced

Wow, it’s that time again. The 2017 tax rates have just been announced by the IRS.

The tables aren’t the actual tax you pay on gross income, but on taxable income which is gross less a number of items, including the personal exemption which remains at $4,050 in ’17 and the standard deduction which rises to single $6,350 or joint $12,700, with an additional $1,250 for aged or blind.

Also, note that the IRA and 401(k) deposit limits haven’t changed for 2017.

I’ll be referring back to this article over the next year whenever the tax table is part of the conversation. Check out the new rate table and start planning for 2017.

2017-tax-rates

A Failure to Communicate

A brief anecdote that I’ve been meaning to share.

I was at the airport getting my ticket at the counter, and I heard the agent at the next line asking a traveler when his passport expires. He had no idea what she was asking, and said so. “No understand.” The agent repeated the question, once, twice, and then shouting, “What is the expiration date of your passport?!” The man had obvious signs of being in the high tech field, logos I recognized, which had me thinking he was an engineer. But he was Asian, and obviously wasn’t understanding this word no matter how loud the agent shouted.

I felt compelled to do something, so I walked over, looked at him and said,”Sorry. When passport no good?” He repeated my words, looked at the passport and immediately found the date the agent couldn’t see. The passport was put down in front of the agent, the man’s finger pointing, and with a grin, he said,”expiration date.” He then turned back to me and held his arms out, I leaned in and hugged this stranger I just helped. I won’t forget this, or the look on the agent’s face. She seemed unhappy this issue was resolved. I think about that situation now and then, and I’m reminded how sometimes a bit of patience and understanding is all it takes.

Splitting the Restaurant Bill

Years ago, I was on a business trip. The people I was meeting with were coming to town well after dinner, so I was on my own. The hotel had a nice little happy hour, and I was making small talk with a number of people that I learned were there for the same reason, a real estate conference. They worked for the same company, but hadn’t known each other as they were from different parts of the US. The happy hour came to an end, and I was thinking of where I’d be eating when the group said I was welcome to join, they knew me as well as anyone else there.restaurant

I was at dinner with 11 Realtors, long before I had my license, but I had always found the industry interesting. We were ordering drinks when I heard someone tell the waitress, “We’d like separate checks.” I knew this would pretty awful for the waitress, and tried to talk the group out of it. The first objection was easy to address, what if someone had an extra drink? I said I only planned to have one, but even if two people decided to get two drinks each, my share would be less than $2 extra. Then, how, exactly, do we split the check? I thought realtors knew a bit of math, at least the easy stuff. With 12 people, I said it would be easy, we each pay 10% of the check, resulting in 120% of the money including a decent tip. As a group, they weren’t having it. Funny thing, in the end the range from low to high was about $2, not as if a dieter ordered a $12 salad, and someone else, a $40 steak.

When you go out with friends, how do you split the bill? Separate checks, 50/50, or do you do the math to nearest penny?

A Tough Endgame

As I was doing my mother in law’s taxes, over three years ago, I wrote, Mom – You don’t itemize, describing her tax return a bit and the fact that her medical deductions weren’t enough to flow to her itemized deductions, and so she remained a Standard Deduction filer. Since her taxable income put her below the threshold to hit the 25% bracket, I took advantage of the Roth IRA conversion to “top off” that 15% bracket.

It was all going well. Then her situation deteriorated to the point that independent living no longer worked for her. At more than $70,000 per year, the cost qualifies as a medical deduction. It’s a memory care facility, and passes the IRS test for what help the resident needs. The result is that from not coming close to itemizing, mom will now blow through the medical deduction exclusion (7.5% of AGI) as well as the standard deduction.

It’s all about the endgame. To handle our finances in the most tax efficient way possible require a knowledge of not just today’s tax code, and a guess as to tomorrow’s, but also an estimate of how long we’ll be on earth. Recently, a friend was asked what he did for a living before he retired. He responded that he worked as an actuary for an insurance company. The follow on question was simple, “So you could tell me when I’ll die?” I jumped in, and answered, “No, but if there were 1000 of you, he’d tell you, with scary accuracy, how many will be alive after 10 years.” Yes, I’m great at cocktail parties. But that’s the punchline. Man plans, God laughs.

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