Axiom | Vol 279

Excellent Jobs Report Encourages Markets

Meet The Axiom®’s Guest Editor: Mark Strey, CFP®, CMFC®

I’m Mark Strey, a Wealth Manager, CFP®, on the Annex Wealth Management team. In addition to meeting with clients, I also partner with many of our Wealth Managers across our branches to help and support clients with situations that have added complexities or unique challenges.

My areas of specialty include planning around: employer stock options, deferred compensation, net unrealized appreciation (NUA), real estate and business sale transactions, large investment concentrations, and other complex tax planning needs around Roth IRA conversions, estate planning and legacy planning. What I love most about my role here at Annex is that there is always something new to learn and teach to others.

My wife and I currently reside in Lake Country with our 18-month-old Golden Retriever pup Annie Jo. During the summer months, we love spending our weekends boating and being with friends on the lake. Other activities we enjoy include hunting, fishing and spending as much time outside as possible.

Excellent Jobs Report Encourages Markets

An excellent jobs report – accompanied by some very good earnings reports – shows an economy with lots of life left in it. What does this mean for portfolio construction into the holidays? Annex Wealth Management’s Dave Spano and Derek Felske discuss.

Poll Recap | Let’s end this debate once and for all! Candy Corn…the best or the worst Halloween candy?

Is it candy? Is it corn? Is it a chalky wax?

Turns out, the majority of our readers aren’t a fan.

But it goes deeper. The majority of poll respondents describe their relationship to Candy Corn as something like this…

It’s Halloween night and the kids are asleep. You’ve been waiting all day to eat some of their candy, put your feet up and watch TV in peace. You inspect their haul and find they’ve cleaned out all of the goodies besides… the Candy Corn. A wave of horror washes over you. It’s just not good. Where are the Twix? The Reese’s? You’d even take a popcorn ball at this point. For a majority of you, you sigh and shove a handful of the sickly tricolored candles in your mouth, defeated.

In last week’s poll, no one described candy corn as “superior to all other candy,” but almost 1/3 of you named it in your top five.

That’s the good news for candy corn.

The majority you don’t like it – with a third of you admitting you’ll eat it if it’s all that’s left, and more than a third of you harboring feelings of genuine dislike.

The moral of the story – either you love it or you hate it. Or, there’s nothing left in the candy bowl, so it wins by default.

Understand Your Charitable Planning Options

Since March of 2020, COVID-19 has affected the lives of everyone. It has impacted many of us financially. Charities are especially bearing the brunt of this moment of uncertainty, counting on donations more than ever. Are there ways to help these organizations and realize some tax advantages in doing so?

The CARES Act, which passed in March 2020, along with the Consolidated Appropriations Act of 2021, have both made changes to encourage more giving in this time of need. Here are the two changes you should know about:

For those that itemize their deductions, the maximum deductible cash donation to qualified charities increased to 100% of adjusted gross income (AGI). This is a significant change compared to the previous limit of 60% of AGI.
For those that use the standard deduction, an additional $300 for single taxpayers or $600 for married couples filing jointly can be deducted for cash donations to qualified charities.

In this week’s MoneyDo, we suggest you review your financial situation to understand how to be tax efficient with your charitable gifts.

It’s important to first understand the difference between itemized deductions and the standard deduction. For tax year 2021, the Internal Revenue Code allows us to deduct from income the larger of the standard deduction ($25,100 for married couples) or the total of all other deductions, called itemized deductions. Itemized deducations include state and local taxes, mortgage interest, medical expenses, and charitable donations.

As noted above, normally, we can deduct up to 60% of our income for cash donations. In 2021, we can deduct up to 100% of income. If you choose to take advantage of this change, we suggest meeting with your financial planner because there are other tax strategies that should be executed along with such a large donation. Taxpayers should note donor advised funds and supporting organizations are not eligible for this increased donation deduction.

If your itemized deductions, including your planned gift, are smaller than the standard deduction, fear not. The CARES Act allows a $600 “above the line” deduction for married couples filing jointly who make cash donations to charity. This means you can deduct up to $600 AND take the standard deduction.

In addition to these expanded donation deductions for tax years 2020 and 2021, there continue to be standard charitable planning strategies that can help maximize the tax efficiency of your donation:

Donations of Appreciated Securities – by donating securities directly to a charitable organization or donor advised fund, you avoid recognizing capital gain and paying taxes on the sale of those securities; thereby eliminating a future tax if and when the securities would have been sold.
Qualified Charitable Distributions (QCD) – once you are 70½, you can donate up to $100,000 annually from your IRA directly to charity. Upon attainment of age 72 when you have a required minimum distribution (RMD), the QCD will satisfy the RMD without having to recognize the amount as income. Between ages 70½ and 72 when there is no RMD, you can use a QCD to further reduce the balance in your IRA. This reduction in IRA balance helps decrease future RMD amounts.
Donor Advised Funds – a donor advised fund (DAF) allows for donations to the fund and tax deduction in the year the contribution was made. DAFs allow the donor to direct donations to qualified charities over time as they please. People often “front load” several years of donations to itemize their deductions in the year they make the large DAF contribution.

Consider the extra tax benefits surrounding charitable donations in 2021 along with the typical strategies available to make your philanthropic efforts as tax efficient as possible.

“My favorite part about the Axiom is how it showcases the various members of our team. There are many people that I have the luxury of working with that don’t directly participate in meetings on a daily basis. It’s impossible for any one person to know everything, thus Annex’s commitment to education and staying current on proposed changes benefits everyone. The work the Team does behind the scenes and the value that adds to our company is what truly sets Annex apart from the rest of the industry.”

– Guest Editor: Mark Strey, CFP®, CMFC® | Wealth Manager
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This week’s Ask Annex comes from Amy, who asks:

“Do your “Women & Wealth” workshops offer something that your other workshops don’t?”

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We asked Annex Wealth Management’s Deanne Phillips, CFP®, CDFA®, ABFP:

Great question, Amy. The short answer is – yes. At Annex, we understand that everyone’s story, and what’s important to them, is different. What we’ve discovered through time is that many women share similar questions, values, and concerns about their future.

“Women & Wealth” is designed to address the specific needs and concerns we’ve heard women express to us. Recent research indicates that only about half (52 percent) of females feel confident in their investing ability, and less than 2/3 (61 percent) of women report having a good understanding of their investments and holdings.i

Obviously, taxes, inflation and interest rates don’t behave any differently for one person than another. But how we react to those forces is subject to our own questions and confidence. That’s where Women & Wealth comes in. Check out our webpage to learn more about upcoming events – and stay tuned! 2022 is going to be bigger than ever!