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Friday Financial Five – March 3, 2017

Friday, March 03, 2017


Few specifics on the Trump tax strategy

President Trump addressed Congress and while he is focused on tax policy that will lead to job growth, individuals are interested how the tax reform targeted for later in the year will affect them. Steven Mnuchin, the U.S. Treasury Secretary, says the very popular deductions for mortgage interest and charitable donations will not be touched. Other deductions would appear to be on the table, to make up for the reduced tax rates for individuals and corporations. If nothing else, this could simplify the tax preparation process.

New factors may be helping markets

Two newer economic realities may help explain the continued strength of investment markets. The first is the seismic shift in retirement funding. Traditional pensions, traditionally invested heavily in fixed income holdings to pay out pensioners, are being replaced by contributory retirement plans. Younger workers, who in the past would have had investment dollars into those fixed income holdings within the pension, may now tilt toward stocks. Those employees who are auto-enrolled into 401(k) plans usually invest in target date funds, which heavily favor stocks for younger employees. Another factor is the continued decrease in the cost of investing. Commissions on stock trades and internal mutual fund expenses continue downward, including E-trade’s announcement this week that they’re cutting costs. Increased auto stock investing at a lower expense leads to more money buying equities on a continuous basis.

Reducing the chance of an IRS audit

The probability of being audited by the IRS is less than one percent, especially for those outside of the country’s top earners. There are ways to reduce the chances of a visit from the IRS, aside from filing a perfectly accurate return each year. Make sure that related returns are matching, such as alimony payments from one person to another. Unreimbursed business expenses or large business losses increase scrutiny. Finally, the aforementioned charitable and home mortgage interest deductions can’t be considered excessive in relation to income. 

March 15th deadline for business filings

For business owners, the Ides of March represent the deadline for filing a business tax return. The IRS provides a helpful calendar, including instructions for S-Corp owners that would like to file a 6-month extension. Each S-Corp shareholder and each partner for companies filing as partnerships should have a K-1. For those hoping to elect S-Corp status in 2017, March 15th is the deadline to file form 2553.

Former Patriot gets six years for Ponzi scheme

Will Allen, a former player for the New England Patriots, was sentenced to six years on prison for his involvement in financial fraud. This was newsworthy as Allen got twice the normal sentencing for cases of this kind. In other news combining athletics and fraud, Brian Ourand, formerly of SFX Financial, admitted to taking hundreds of thousands of dollars from boxer, Mike Tyson. While it’s clear he lacks scruples, he also apparently doesn’t value operational body parts. He’ll pay $1 million in restitution and fines and faces almost three years in prison.


Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected]


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