Chapter News

2018 Tax Reform and What it Means to You
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 itemize.

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:

• Objective: 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.
• Objective: 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 predecessor.”

VA Promotes STEM Education With Benefits Expansion
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:

·        are 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:

• biological or biomedical science,
• physical science,
• science technologies or technicians,
• computer and information science and support services,
• mathematics or statistics,
• engineering; engineering technologies or an engineering-related field,
• a health profession or related program,
• a medical residency program,
• an agriculture science program or natural science program, or
• other 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 program.