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Post-Election and Financial Planning Webinar Recording!

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Thank you to those who attended our recent Post-Election and Financial Planning Discussion on Tuesday, November 10th as we discussed navigating the election landscape and the financial road beyond.

Our team of advisors enjoyed the opportunity to connect with you and we hope you took away some valuable knowledge and insight.

If you still have any questions, please do not hesitate to reach out to us at Ciccarelli@CAS-NaplesFL.com. 

If you enjoyed the webinar and would like to watch it again, we have a recording below.

Thank you again and have a wonderful day!

Is Now the Time to Refinance?

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By Jasen M. Gilbert, CFP®

Home is where the heart is, but it often involves one of the more important financial decisions many people will make in their lifetime; deciding to refinance your home’s mortgage. It is quite common for people to refinance their 30- and 15-year loans. Just because you had a certain interest rate at the time of taking out your initial loan does not mean you are stuck at that rate forever. According to the Mortgage Bankers Association, the typical American homeowner will refinance their mortgage every 4 years. They also found that refinancing activity is about 50% higher than it was a year ago. 

Refinancing a mortgage means paying off an existing loan and replacing it with a new one. There are many reasons why homeowners refinance:

  • obtain a lower interest rate
  • shorten the term of their mortgage
  • convert from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa
  • To tap into home equity to raise funds to deal with a financial emergency, finance a large purchase, or consolidate debt

Currently, mortgage interest rates for 30- and 15-year fixed-rate mortgages (FRMs) are at all-time lows. On Friday, November 06, 2020, according to Bankrate’s latest survey of the nation’s largest mortgage lenders, the benchmark 30-year fixed mortgage rate is 3.060% with an APR of 3.790%. The average 15-year fixed mortgage rate is 2.620% with an APR of 3.310%. Many consumers are taking advantage of the lower rates to lower their monthly payments, which means they can spend, save, or pay down debt. 

When the mortgage and real-estate conditions change, it can be beneficial for borrowers to have a loan that meets their financial needs and goals. If your financial situation has changed since you took out the initial loan, and you plan on remaining in the home for several years, it may help to look at refinancing. When you have a longer loan term, such as a 30-year FRM, you often end up paying more in just the interest of the loan. When you refinance at a time when rates are low, you may be able to shorten the length of the loan and also save some money on interest. A lower interest rate on your mortgage means smaller monthly payments, and more of your payments going toward paying off the principal of your loan. 

Also, with the consideration of taxes, starting in the tax year of 2018, couples filing jointly can deduct the interest on up to $750,000 of qualified home residence loans; couples filing separately can deduct interest on up to $375,000 of qualified debt.  The amount decreased from $1M ($500,000 for couples filing separately) under the Tax Cuts and Jobs Act.  If you secured your loan before Dec. 16, 2017, the previous limits apply to your deduction. For taxpayers who are able to itemize their deductions, their after-tax cost of the mortgage may be even less.

However, there are also some potential obstacles to consider before refinancing. Refinancing loans have closing costs just like a regular mortgage and they can take quite a bit of time and paperwork to get approved. There is generally no guarantee on how much you will save, and sometimes the savings may be minimal, depending on your financial situation. If mortgage rates are 1% less than your current rate, it may make sense to consider your refinance options.

If you are considering refinancing a mortgage, or are wondering if it may align with your future financial goals, it may be a good idea to discuss with your Ciccarelli Advisory Services financial advisor first.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Is The 4% Withdrawal Rule Becoming Obsolete?

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By Steven T. Merkel CFP®, CHFC®

October is National Retirement Security Month, which provides a great opportunity for you to reflect on your retirement goals and consider if your current financial plan aligns with those goals. One of the most important considerations you will make in regards to your retirement plan is determining a “safe” portfolio withdrawal rate. Your withdrawal rate reflects how much you can take from your portfolio yearly, and a “safe” rate aims to prevent you from depleting your savings early. You have worked hard for your savings, and you deserve to have the retirement of your dreams, but the wrong withdrawal rate may interfere with your vision for the future.

First, you and your financial advisor will need to assess your portfolio to determine when can you retire comfortably. Health and longevity, your personalized spending rate, life situations, types of investments, and risk tolerance are going to factor into how much you will need. One of the more popular savings calculation tools has been the 4% Rule.

The 4% Rule was created using historical data on stock and bond returns over 50 years, from 1926 to 1976 by financial advisor William Bengen. At the time of the study in 1994, it was generally considered that a 5% withdrawal rate was sufficient. He found that even during difficult market situations, no historical case existed in which a 4% annual withdrawal exhausted a retirement portfolio in less than 33 years. The rule also allows retirees to increase the rate to keep pace with inflation. That may include setting a flat annual increase that aligns with the Federal Reserve’s target inflation rate. However, the study has been updated, and Bengen has increased the safe withdrawal rate to 4.5% when holding a more diversified portfolio.

Bengen’s study was conducted nearly 30 years ago, and it may not capture the full picture of today’s retirement situations.

Assuming you have a diversified portfolio, which may include multiple sources of income such as:

  • Social Security
  • Pensions
  • Annuities
  • 401K/IRA
  • Real Estate Rental Income
  • Savings

We need to take into consideration the interest rate environment has changed quite a bit since the 1990s. In 1998, the 10-year bond yield was between 4.41% to 5.6%. In 1994 it was even higher. Therefore, back then, if you followed the 4% rule you would likely not run out of money.

Today, the 10-year bond yield is currently at ~0.7% and will likely remain there for some time. At this rate, $1 million will only generate $7,000 a year in risk-free, pre-tax income. Even with the maximum social security payment of $2,900 a month, that’s still only $41,800 a year in income. The 4% rule assumes that you will withdraw the same amount each year, adjusted for inflation, with stark rigidity. Any increase in spending completely throws it off the calculation.

The rule was created to be applied to a hypothetical portfolio invested in 50% stocks and 50% bonds. Your portfolio may not follow this exact allocation, and you may change your investments during your retirement. Your retirement is as unique as you, and your withdrawal rate may need to follow a different path. It may be more beneficial to adopt a personalized spending rate, based on your situation, investments, and risk tolerance, and then regularly update it.

It may also help to meet with your financial advisor regularly to review your budget and withdrawal plan to prevent any bumps in the road. 

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC, and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

How Do Elections Really Impact Our Economy?

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By Patrick W. Ryan, CFP®, AWMA®

Whether you love election time or are feeling a bit exhausted by the constant coverage, most of us can agree that the US Presidential Election has a strong influence over the nation and the world. Every four years, the “election effect” shifts our attention and often unconsciously changes our decision making. Even if you decide to swear off news coverage completely, the “election effect” can still unknowingly impact your life through economic conditions.

The markets and presidential elections are so closely intertwined, that since 1932, an incumbent US President has never failed to win re-election unless a recession has occurred during their time in office. The strong correlation between the two factors does not necessarily provide crystal ball predictability to the current election, but it does demonstrate how market conditions could have an impact on how people cast their vote.  

While the Federal Reserve holds the majority of power over monetary policy such as interest rates and alterations in the money supply, and the President has to work within the limits of our system, presidential candidates hold a great deal of power in their influence, how they present themselves in their campaign, and the verbiage used. The euphoria created by campaign rhetoric tends to impact how voters spend and invest their money. 

Since voters tend to become invigorated before an upcoming election with the promise that their selected candidate will improve the economy in their own way, investors also tend to assume better times ahead. In fact, in a 2004 peer-reviewed study in the Graziadio Business Review, financial analyst Marshall Nickles, EdD, found that the stock market often has made major dips about two years before presidential elections and has risen through the end of election years. He revealed, for the period from 1941 through 2000, Stock market lows have occurred surprisingly close to mid-year congressional elections or approximately two years before presidential elections.

However, some disagree with the claim that elections provide a clear picture of the overall performance of the current market. Keith Lerner, the chief market strategist at Truist/SunTrust Advisory, explained that Elections matter, but other factors matter more,” he says. “From the market’s perspective, progress or lack thereof on [coronavirus] vaccines are going to be more impactful than who’s in the White House over the next year — or several years.”

Looking at historical averages, other factors outside of the election cycle, such as wars, bear markets, and recessions, which also tend to occur within the first 2-years of a presidential term, can have a stronger effect on the economy. The influence of these outside factors may skew data and make it difficult to use elections as a predictor of overall economic growth or decline. 

In general, the economy works in cycles, with periods of expansion and contraction. Factors such as gross domestic product (GDP), interest rates, total employment, and consumer spending, can help to determine the current stage of the economic cycle. The presidential election is just one factor within many which can impact our economy.

During these uncertain times, it can be helpful to reach out to your advisor to make sure that your plan for a lifetime is on track with your current needs and financial goals. Our team is here to assist. 

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Tax Proposal Changes: Tax Cuts and Jobs Act on the Chopping Block

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Kim Ciccarelli Kantor , CFP®, CAP®

The November 3rd general election is rapidly approaching. Although the Covid-19 pandemic is still a major issue in the fiscal policy debate, all eyes are also on the Tax Cuts and Jobs Act (TCJA) which could have major changes. Some provisions of the TCJA are scheduled to expire at the end of 2025 but could be impacted much sooner if there is a change of administration. To fully understand the extent of the proposed changes it is helpful to compare them to the TCJA provisions under the current administration.

Income Taxes

Current position:  the tax brackets include 10%, 12%, 22%, 24%, 32%, 35% and 37%.

Proposed changes: would raise the top tax bracket back to 39.6% from 37% for taxable income >$400,000 as well as make some small changes to the other six brackets.

Capital Gains

Current Position: 20% + 3.8% Medicare surtax = 23.8%. The 23.8% rate applies to individuals with taxable income greater than $441,500.

Proposed Changes: eliminate the 20% tax rate on long-term capital gains and apply the top ordinary income tax rate (39.6% rate + 3.8% Medicare surtax) for individuals with taxable income >$1,000,000.

Itemized Deductions

Current Position: The standard deduction was increased to $12,000 for single filers and $24,000 for married couples filing jointly in 2018 and indexed for inflation. For 2020, the standard deduction is $12,400 for single filers and $24,800 for married couples filing jointly.

Proposed Changes: Cap full itemized deductions for single filers and married couples filing jointly to those with blended tax rates of up to 28%. Individuals would receive full itemized deductions if the blended tax rate is < or = 28%. For blended rates >28%, itemized deductions will be gradually lowered

Step-Up in Basis at Death

Current Position: full step-up in basis at death on non-retirement-based assets.

Proposed Changes: repeal the step-up in basis at death.

Estate and Gift Tax

Current Position: estate tax exemption amount is $11,580,000 per individual, indexed for inflation. Gift tax exemption amount is $11,580,000 per individual, indexed for inflation.

Proposed Changes: estate tax exemption may be lowered to either the pre-TCJA exemption of $5,600,000 or the pre-2010 exemption of $3,500,000. The Gift tax exemption may be lowered to either the pre-TCJA exemption of $5,600,000 or the pre-2010 exemption of $1,000,000.

Pease Limitation

Current Position: tax law has repealed the Pease limitation

Proposed Changes: tax proposal would reinstate the Pease limitation for individuals with taxable income >$400,000. The Pease limitation was enacted in 1992 to limit the amount of itemized deductions available for high-income earners. It starts reducing taxpayers’ itemized deductions once they reach a certain threshold adjusted gross income (AGI) amount. Itemized deductions are lessened by 3% for every $1 above the threshold amount. The reduction is limited to 80% of your total itemized deductions.

The election is still five weeks away and it is not clear which presidential candidate and which political party will be setting the tax laws but it is never too early to start evaluating what could change. Our team will continue to monitor tax legislation and will keep you up-to-date as information unfolds. 

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Charitable Gifting with the CARES Act

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By Kay Anderson, CFP®

On March 27th, 2020, the Coronavirus Aid Relief and Economic Securities Act (CARES Act) was signed by the President to provide relief to the nation during the worldwide pandemic. The primary goal was to provide timely economic assistance for individuals, families, small businesses, and organizations that would be most impacted. 

The CARES Act provides opportunities to support those charitable organizations close to your heart with some timely additional tax benefit if completed before year-end. 

For those using a standard deduction: a cash donation up to $300 per taxpayer ($600 for a married couple) to a qualified organization is available as an “above the line” adjustment reducing adjusted gross income (AGI), and thereby reducing taxable income. A donation to a donor-advised fund does not qualify for this new deduction. 

For those itemizing: Both individuals and corporations that itemize can deduct a much greater amount of their 2020 contributions. Individuals can elect to deduct donations up to 100% of adjusted gross income (up from the previous limit of 60%). Corporations may deduct up to 25% of taxable income (up from the previous limit of 10%). 

The deduction is available for cash gifts directly to a charitable organization. Gifts of appreciated securities and those made to a donor-advised fund or private foundation are still deductible at the prior limits. 

To preserve retirement account assets and reduce taxable income for 2020, the required minimum distribution was waived for the year. Those over the age of 70 ½ are eligible to complete a Qualified Charitable Deduction (QCD) allowing individuals to donate a maximum of $100,000 from a qualified account directly to a charity of choice. 

An individual over the age of 59 ½ may take a cash distribution of up to $100,000 from a qualified account with no penalty. With the increased deduction of up to 100% of AGI, subsequently donating the cash to a qualified charitable organization will offset any tax attributable to the distribution. 

Should you have any questions or would like to review your options for charitable and tax planning, please reach out to your advisor team. We welcome your call. Stay healthy and stay safe! 

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

5 Steps to Help You Embrace Digital Life

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By Anthony J. Curatolo, Advisor

The COVID-19 pandemic has transformed our lives and changed the way we work, communicate, and function daily. Amid the chaos and confusion of this ongoing crisis, one unifying force has emerged, allowing us to continue to remain connected: online communications. However, not everyone is on board the “tech-train”. Lack of knowledge, accessibility, and training has left many, primarily older adults (55+), outside the digital-loop. This has been termed the technological-gap.

Closing the technological gap could allow you to have greater control over your life, finances, and provide relief during these isolating times, but where does one begin?

  1. Understand your technological needs

If you have ever made the mistake of going to the grocery store without a list on an empty stomach, you will understand that an over-abundance of choice without a clear plan can have unpredictable results. The tech market is constantly releasing new smart devices, which can be overwhelming, but it’s likely just a few key pieces can fulfill the majority of your needs. Making a list of areas you need more assistance or improvement could help you hone in your devices.

2. Identify what you do and don’t know 

Einstein may have put it best when he said “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the problem and five minutes thinking about solutions.” If you have a baseline of your abilities, you can then work to establish which gaps need to be filled. After determining the devices you need, compile your current skill level for each one. Even if it’s just knowing how to turn it on; that’s a start.

3. Evaluate the resources available to you 

The recent Special Issue on Mobile Technology for the Journal of Interactive Learning Research found that older adults (55+) are actively exploring and utilizing the internet and social media to learn from others at increasing rates. The internet has made it easier than ever to gather a myriad of resources on any subject at any time. The majority of major tech companies have both customer service lines and online help sites that can assist around the clock. AARP also has an online database with workshops and tutorials providing complementary technology training.

4. Focus on the small steps

It’s not a race! It’s ok to feel intimated by the vastness of new and emerging tech. No one learns everything at once. If you’re struggling with your smart device, just focus on learning one app at a time until you feel comfortable. Filter out the unnecessary information, the extra features that you may never use, and just concentrate on the important aspects. This isn’t a school exam, so use as many handwritten notes or guides as you need.

5. Give feedback 

Companies want you to use their products. That is their end-goal. If you have tried to learn how to use a device, and unexpected issues keep emerging than it is most likely the product design that is flawed, not you. With how fast the tech industry moves, companies can release patches and fixes in a matter of days if they know there is an ongoing issue.

There is no shame in being a beginner. At some point even the most talented inventors and innovators were beginners. The technology available today can connect you to your friends and family and potentially allow you to have greater control over your life. Our team is here to support you and your family as we continue to navigate these turbulent times.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

It’s Not Too Late!

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Jill Ciccarelli Rapps, CFP

At this point, many are aware that under the Cares Act, you have an option not to take your annual required minimum distributions this year. This includes distributions that would be necessary on inherited 401Ks or IRAs. This rule typically does not apply to defined benefit plans or if you are taking substantially equal payments from on IRA because you were younger than 59 ½ at the time you started your withdrawals.  

There may be many benefits for not taking your distributions this year such as: allowing your IRA to recoup from the volatile markets; lowering your federal and state tax income for 2020; increasing your deductible medical expenses; and possibly lowering your future Medicare premiums in 2022.

If you already took your distribution this year, can you roll it back into your qualified plan? 

Normally, you have 60 days to do a tax-free rollover, and if you take your IRA distribution out in January, you would be out of luck. However, under Notice 2020-51, the IRS has now extended the rollover time till August 31, 2020. Any RMD’s that were taken in January 2020 are now covered under this guidance.

What if you received your distributions monthly and have been receiving them since January?  

Generally, under the tax law, you cannot make more than one rollover from your IRA’s within one year. Notice 2020-51 temporarily waives the one-rollover every 12 months. You may be able to get all these distributions back into your qualified plan by August 31, 2020. This could also pertain to anyone that may have already completed a 12-month rollover in the last 365 days.  

Could you withhold taxes from your distributions to meet your tax payments for the year?

Here is an example of how this may work; if you took a $50,000 distribution, and you withheld $15,000 for taxes on January 15th of this year, you could return the $35,000 to your tax-deferred account and add another $15,000 out of your pocket to make up for the amount that was withheld. To recover your taxes that were withheld ($15,000), you may consider reducing your tax withholding on other income and lower your scheduled estimated tax by this amount or apply for a refund on your 2020 return. Be sure to check with your CPA if you roll back your distributions to be sure you do not incur any penalties.

What if you received a required minimum distribution in the form of stock?

If you sold the shares, you may not be able to recontribute the proceeds and treat it as a rollover since it violates the little-known rule that when doing an IRA rollover, you must rollover the same property that you originally received from the account. Notice 2020-51 does not seem to waive the same-property requirement for IRA rollovers.

What are the chances that Congress will waive the RMD’s again for 2021?   

Tax experts suggest it is unlikely we will have bigger tax surprises, but depending on the elections, the length of the country’s economic challenges, and the stock market’s performance – who knows, maybe we could see another “gift” from the IRS come our way!

Sources:

The Kiplinger Tax Letter vol. 95, No. 14

Ed Slot, IRA Consultant Rockville Centre, N.Y.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

New Form of Identity Theft Amid COVID-19

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By Lynn A. Ferraina, Advisor

Over the past months, all of our lives have been upended by the pandemic, and we have had to adjust our daily routines and behavior to limit our exposure. Now, almost everything we do, from work, school, shopping, and social activities is online. While this makes commutes much more manageable, it also provides more opportunities for cybercriminals to target you and your family.

Fears of the pandemic and confusion about stimulus checks sent to millions of Americans have created new opportunities for scammers.  The Federal Trade Commission says it received four times as many complaints about identity fraud in the first few weeks of April 2020 than it had received in the previous three months combined.

Even more insidious is that the perpetrators of these cybercrimes will often target one of the most vulnerable individuals: children. In 2017, more than 1 million children had their identities stolen. This is often done through a type of fraud referred to as synthetic identity theft.

Synthetic identity theft is a type of fraud in which a criminal combines real and fake information to create a new identity. The real information used in this fraud is usually stolen. This information is used to open fraudulent accounts and make fraudulent purchases.

To better understand how to protect yourself and your family from this unique and dangerous type of fraud, it may be beneficial to first understand how it typically occurs. In most cases, synthetic identity theft happens when;

  1. A fraudster purchases a social security number on the dark web. This could be obtained through a data breach or a loose piece of mail. Younger individuals are the ideal targets since most are not undergoing regular credit checks.
  2. The social security number is then blended with a purchased identity and a false address and zip code. This allows the scammer to make it appear as if it is a real person.
  3. Credit cards and accounts are opened under false identities. They may even apply for retail rewards programs and register the identity with open-source websites such as white pages. The goal is to trick the big-three credit bureaus (Equifax, Experian, and TransUnion) into believing they are a real person.
  4. They will then purchase login info for someone else’s credit card, add the identity on the card as an “authorized user” and quickly build credit.
  5. Finally, the scammer has created an entire synthetic identity that can be used to take out loans, open accounts, and transfer money wherever they wish. In some cases, scammers will put up to 25 of these “synthetic identities” on one credit card.

The complexity to these scams can be overwhelming and knowing that your children or grandchildren may be targeted is a frightening prospect, but there are ways you could help;

  1. Don’t provide unnecessary information on forms. If asked to provide your social security number on a form, ask why it is needed, and what it will be used for. If the organization does not provide clear reasoning, opt-out.
  2. Monitor your credit history as well as the credit history of your children closely. If you can, sign up your entire family for credit monitoring through a verified service. If there is any unusual activity, you can immediately notify your bank.
  3. Properly dispose of old documents that contain personal information. Shred whenever possible and do a sweep of your home or office space to dispose of any unnecessary documents. 
  4. If you are concerned about your child’s social security number or identity may have been compromised, you may want to consider freezing it until they reach legal age. Rules regarding this vary by state, so check your state’s laws regarding consumer report identity freezes.

If you have any concerns about the safety and security of your financial information you should discuss this with your advisor so you can work together to alleviate any concerns. 

Sources:

Doug Shadel, AARP Washington State Director Article: Digital Fromsteins. AARP the Magazine. June, 2020.

https://www.kiplinger.com/article/business/t048-c000-s002-another-epidemic-identity-theft.html

https://www.safety.com/synthetic-identity-theft/#:~:text=Keep%20your%20personal%20documents%20secure,in%20a%20lockbox%20or%20safe.

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

Have YOU Received Your Stimulus Check?

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By Paul F Ciccarelli CFP®, CHFC®, CLU®

On June 3, the U.S. Treasury announced that it had delivered 159 million EIPs (Economic Impact Payments). Of the Economic Impact Payments, 120 million were sent by direct deposit, 35 million by check, and 4 million payments were made in the form of a pre-paid debit card.

There has been some uncertainty regarding the specifics of the EIP. We have narrowed down some of the details regarding the Economic Impact Payments. 

How is your Payment determined? 

Payment amounts vary based on income, filing status, and family size. If you filed a 2019 tax return, the IRS used information from it about you, your spouse, your income, filing status, and qualifying children to calculate. If you haven’t filed your 2019 return or it has not been processed yet, the IRS used the information from your 2018 return. 

The Payment is not included in your gross income. Therefore, you will not include the Payment in your taxable income on your Federal income tax return or pay income tax on your Payment.

You are eligible to receive a stimulus check if:

· You are a single US resident and have an AGI under $99,000.

· You file as the head of a household (considered unmarried with at least one dependent) and earn less than $146,500.

· You file jointly without children and earn under $198,000.

· You are the parent of a child aged 16 or younger.

Those payment brackets are as follows: 

  • Eligible individuals will receive up to $1,200.
  • Eligible married couples will receive up to $2,400.
  • Eligible individuals will receive up to $500 for each qualifying child.

Payments are automatic for individuals who receive Social Security retirement, Disability (SSDI), Survivor Benefits, non-taxable veteran’s benefits. If you receive veteran’s disability compensation, a pension, or survivor benefits from the Department of Veterans Affairs, or your income level does not require you to file a tax return, then you need to submit information to the IRS to receive an Economic Impact Payment. The form can be found accessed at www.freefilefillableforms.com.  

How You Will Receive Payment May Vary:

If you received a direct deposit of your refund based on your 2019 tax return (or 2018 tax return if you haven’t filed your 2019 tax return), the IRS has sent your Payment to the bank account provided on the most recent tax return. If you filed your 2019 or 2018 tax return but did not receive your refund by direct deposit, your Payment will be mailed to the address the IRS has on file.

If you receive an Economic Impact Payment debit card, it will arrive in a plain envelope from “Money Network Cardholder Services.” Please go to EIPcard.com for more information.

What to Do If You Have Not Received Your Payment: 

If you received IRS Notice 1444 in the mail notifying you that payment has been made and you have not received your payment, you can request a payment trace by the IRS. If you file taxes and have not received your payment you should confirm that the information the IRS has for you is correct. 

You can check on your Economic Impact Payment status HERE.

New details and information regarding the Economic Stimulus Package are being released every day. It may be beneficial to schedule some time to discuss any ongoing financial concerns with your advisor. Our team will continue to monitor the situation, and keep you informed. 

Sources:

https://www.irs.gov/newsroom/economic-impact-payments-what-you-need-to-know

https://home.treasury.gov/news/press-releases/sm975

Investment advisory services offered through Ciccarelli Advisory Services, Inc., a registered investment adviser independent of FSC Securities Corporation.  Securities and additional investment advisory services offered through FSC Securities Corporation, member FINRA/SIPC and a registered investment adviser. 9601 Tamiami Trail North, Naples, FL. 239-262-6577.

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