2018 Tax Reform and What it Means
No matter how you feel about the recent tax reform the president
signed into law in late 2017, it probably will have an impact on both your
paycheck and your 2018 annual tax return and beyond. Let’s cut through all the
political noise and see what the tax bill might mean to you.
The new tax tables lower the tax rate for every bracket (except
the very lowest) and effectively eliminate the marriage penalty. This means the
majority of taxpayers will see more money in their paycheck.
Standard deductions (what you deduct from taxable income if you
don’t itemize) are increasing substantially. Whether this works in your favor
will be determined by the amount you typically itemize and if your deductions
still are allowed. Taxpayers in high-tax states could see an increased tax
burden due to the elimination of the SALT (state and local taxes) deduction.
Other itemized deductions, like home equity loan interest and unreimbursed
employee expenses, also have been eliminated.
Taxpayer favorites like the mortgage interest, medical expense,
and charitable contribution deductions still are allowed (with some changes).
But unless your total for these allowable deductions is higher than your new
and improved standard deduction — if you’re a senior with high medical costs or
a generous giver, for instance — you might no longer find it beneficial to
What didn’t get much press was that personal exemptions are
eliminated. Historically, this deduction could be significant, especially for
large families. But wait! The child tax credit has been doubled to $2,000, and
a credit directly decreases your tax burden, not your taxable income. That’s a
plus, right? Yes, but the overall impact of these changes still might actually
raise your taxes, especially for families with dependents over age 17.
Freelancers, rejoice! Many small business owners will be able to
deduct a whopping 20 percent of their qualified business income, but how this
income and deduction is defined and calculated is extremely complex so run,
don’t walk, to your tax professional’s office on this one.
The only direct mention of the military in the new tax bill
relates to PCS moving expenses, which are the only type of moving expense
deduction still allowed.
Ultimately, the new tax bill’s impact can vary greatly based on
your family size, location, income, and many other circumstances. Check here for a list of tax calculators to
estimate your 2018 tax burden.
Managing Your Portfolio in Retirement
Achieving your various financial objectives necessitates
diversified accounts. Each account is a battle in the effort to win the
retirement war. Each account has an objective. Each objective has a specific
strategy. Identify the risks associated with each strategy. Counteract the
risks of each account with the strategies of the other accounts. The
theater-level operation of all your accounts working in concert determine your
financial status. Consider as examples:
immediate income. Strategy: a stable-value cash account. However, stable
value means no growth potential. The risk here is the inability to offset
taxes and inflation over time.
long-term growth. Strategy: investments in ownership (i.e., stocks).
However, ownership leads to short-term volatility. The risk here is the
inability rely on this for short-term income.
Note how each account has its own form of risk
that the other account mitigates.
If your retirement expenses are less than your
guaranteed income sources, your other assets are free to achieve other
objectives and those objectives may allow aggressive strategies.
If your retirement expenses are more than your
guaranteed income sources, you need both income and growth from your other
assets. This requires more finesse than just being more aggressive.
Physical Readiness – Then and Now
Here's how the services' fitness requirements
have changed over the years.
The Army is reviewing its fitness requirements
as the service grapples with rising obesity rates in the ranks.
Seventeen percent of active-duty soldiers were
classified as obese in 2015, according to service's 2016 “Health of the Force”
report. Leaders rolled out a new holistic health and fitness program in 2017 to
address the problem, which includes a possible new combat fitness test that
could replace soldiers' existing test.
Marines completed their own review in 2016 that
resulted in changes to their body composition and fitness standards. A year
earlier, Coast Guard leaders looked at rolling out the first-ever service-wide
fitness test. Coasties had been taking fitness test specific to their jobs, and
the commandant ultimately decided to keep it that way.
This isn't the first time military leaders have
worried about the possibility of troops' declining fitness. In 1960, the head
of the physical education department at the U.S. Military Academy at West
Point, N.Y., lamented the issue in a memo to the commandant of cadets, the
school's highest-ranking officer.
“We find ourselves now in a rather serious
predicament, one which is becoming more serious each year,” the memo states.
“Incoming cadets possess less physical ability than they did 20 or 30 years
ago. … At the same time, it is apparent that the officer of today and tomorrow
will need more physical coordination, strength, and stamina than his
VA Promotes STEM Education With Benefits
As a provision in the new Harry W. Colmery Veterans Educational Assistance Act of
2017 — more commonly known as the Forever GI Bill — the VA is
extending education benefits for veteran students seeking science, technology,
engineering, and math (STEM) degrees, effective Aug. 1, 2019.
The Edith Nourse Rogers STEM Scholarship is
intended to encourage veterans to pursue fields that often require more
resources than the 36 months of benefits the Post-9/11 GI Bill allocates. By
granting greater financial assistance, the talent pool of student veterans in
STEM concentrations can grow.
Students who have used up or nearly depleted
the entirety of their Post-9/11 GI Bill benefits ( learn more about GI bill eligibility and benefits)
will be able to apply to the VA for extended time and financial assistance.
This extension will pay eligible students up to nine additional months of
benefits or a maximum lump sum of $30,000.
The eligibility requirements for this expansion
are students who:
enrolled in a program of education leading to a post-secondary degree that
requires more than the standard 128 semester
credits hours (or 192 quarter credit hours); and are completing their
undergraduate degree in:
completed at least 60 standard semester credit hours (or 90 quarter hours)
in one of the above fields or
earned a degree in one of these fields and are currently pursuing a
or biomedical science,
technologies or technicians,
and information science and support services,
engineering technologies or an engineering-related field,
health profession or related program,
medical residency program,
agriculture science program or natural science program, or
subjects and fields identified as meeting national needs, and
Individuals who require the most credit hours
for their degree will be given precedence as well as individuals who were
already entitled 100 percent of the GI bill benefits.
It is important to note the expansion is not
transferable to dependents and Yellow Ribbon funds are not available under this