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Thomas Skiffington,  CRS, GRI, CRB, ABR, ePro, CLHMS, SRES, RECS, CDPE, ECOBROKER
Thomas Skiffington, CRS, GRI, CRB, ABR, ePro, CLHMS, SRES, RECS, CDPE, ECOBROKER
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Perkasie, PA 18944
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Tom's Blog

Tips for Managing Your Year-End Taxes

December 20, 2013 4:24 pm

(BPT) - The close of every year seems to bring its own uncertainty from a tax-planning perspective. Last year featured the expiration of certain temporary tax provisions and the commencement of automatic federal government spending cuts. In October the President and Congress temporarily agreed on funding the government and increasing the national debt limit. But these issues may reappear in 2014 and could result in tax law changes that affect income-tax and financial planning.

For now, the best approach is to focus on how to limit your exposure to the many new or increased taxes in 2013 and beyond.

1. Manage higher taxes

Many taxpayers will be faced with higher tax bills in 2013 as a result of:

* The temporary reduction in the Social Security tax from 6.2 percent to 4.2 percent that expired at the end of 2012. This means an increase of $2,000 in taxes for $100,000 of wages.

* The tax rate on wage income that increased from 35 percent in 2012 to 40.5 percent in 2013. The tax rate on interest income that increased from 35 percent to 43.4 percent and the tax rate on capital gains and dividends that rose from 15 percent to 23.8 percent for high-income taxpayers.

* The Affordable Care Act, which was passed in 2010, that increased the Medicare tax from 1.45 percent to 2.35 percent for high-income taxpayers starting in 2013.

Strategies that can help minimize these taxes:

* Avoid a transaction, such as selling stock, which would push you into a higher tax bracket.

* Accelerate any deductions that you control, for example, pay your January mortgage in December to get the interest deduction in 2013.

Note that tax considerations are only one factor when determining whether to buy, hold or sell an investment.

2. Understand the new investment income tax.

The new 3.8 percent tax on investment income was created under the Affordable Care Act and became effective in 2013. The income threshold for this tax is $200,000 for individuals and $250,000 for joint filers.

For those affected, there are short-term and long-term strategies that can help minimize this tax burden.

A short-term strategy involves trying to manage your tax position to keep below the threshold for the 3.8 percent tax or to minimize investment income in any year where you will exceed the threshold.

A long-term strategy is to consider investment options that avoid the tax or change the types of investments you hold to include more that are not subject to the tax.

People who think they cannot be affected by high-income thresholds need to understand that the income amounts are not indexed for inflation. Over time, more and more taxpayers will be subject to the tax - even if their real or inflation-adjusted earnings are the same.

3. Consider converting retirement assets.

Recent increasing tax rates created a unique opportunity to accelerate gain and pay taxes at lower rates. Individuals who converted assets from a traditional before-tax IRA to an after-tax Roth likely benefitted.

After-tax Roth IRAs generate tax-free income, subject to you holding the account for five tax years and reaching age 59.5. If you have a traditional 401(k) or IRA, you can convert that asset to a Roth IRA by paying the tax on the gain or before-tax value of the asset. While any conversion tax liability in 2013 will need to be paid with your 2013 income tax return, it may make sense to convert some funds to a Roth IRA and diversify your retirement assets from a tax perspective. In addition to possibly paying tax on the gain at lower rates, a Roth IRA offers other benefits, such as not being subject to age 70.5- required minimum distributions, and limiting the impact of Medicare surcharges and the 3.8 percent investment tax.

4. Contribute to an IRA.

Many individuals do not realize they can contribute to an IRA each year regardless of their income or whether they have a retirement plan at work. The only requirements for making a contribution to an IRA are that you have earned income of at least the amount contributed and you have not reached age 70.5.

While you have until the due date of your income tax return in April of 2014 to make your 2013 IRA contribution, delaying the contribution until then results in you losing some of the opportunity for tax-favored growth. So consider making your 2013 contribution now and your 2014 contribution in January 2014. Depending on your income, you may be able to contribute directly to a Roth IRA and enjoy tax-free growth. Even if you earn too much to contribute directly to a Roth IRA, you can fund a traditional IRA and then convert some or all of the funds to a Roth IRA.

Prudential Financial, its affiliates and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances.

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Keep Wintering Pests Out of Your House

December 20, 2013 2:24 am

I recently talked about keeping cold from freezing your pipes, but there's something else that could be invading your home. The National Pest Management Association says many pests enjoy spending winter inside a warm house, and rodents alone will invade an estimated 21 million homes in the U.S. this winter.

More than just a nuisance, there are real threats posed by many of the pests that like to share our homes the NPMA says. Mice and rats can spread diseases like salmonella and hantavirus and can contaminate food.

Rodents can also bring other pests like fleas, ticks and lice indoors and can cause serious structural damage to a home by chewing through wood and electrical wiring.

Beyond rodents, other winter pests include ants, spiders and cockroaches, which can trigger allergies and asthma attacks, spread disease, transmit bacteria, contaminate food and in some cases, bite.

Missy Henriksen, vice president of public affairs for the NPMA says an infestation by one or more of these pests can lead to serious health and property concerns if they go undetected or are left uncontrolled.

Fortunately, the NPMA has a few tips to prevent pests from coming indoors on firewood, foliage and family pets - or gaining entry through small crevices in a home's exterior:

  • Seal cracks and holes on the outside of the home.
  • Store items that are kept in garages, basements and attics in plastic, sealed containers rather than cardboard boxes to prevent rodents from nesting inside.
  • Keep branches and shrubbery trimmed away from the home.
  • Store firewood at least 20 feet from the home and five feet off the ground.
  • Install door sweeps on exterior doors and repair damaged screens.
  • Screen vents and openings to chimneys.
  • Store food in airtight containers and dispose garbage regularly.
  • If you suspect an infestation, contact your local pest professional.

For more information or to find a pest professional visit: www.pestworld.org.

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Get 'Tired' for Winter

December 20, 2013 2:24 am

When it comes to staying safe on the road, your tires matter. Upgrading to sturdy winter tires for the icy months is a surefire way to improve your safety—and mobility—on the road.

"Winter driving is all about preparation, and the key to being ready for winter is taking the necessary steps to be safe before getting behind the wheel," says Ian Law, chief instructor of the ILR Car Control School in Ontario, Canada.

Beyond properly equipping vehicles, he offers advice for motorists who will be faced with potentially slippery driving conditions this winter:

  • Match your driving speed to the current conditions. If conditions are challenging due to a slippery road surface or reduced visibility, decrease your speed. A slower driving speed allows more time for a necessary response.
  • Additional factors to consider when adjusting speed are the condition of the vehicle, its tires and your driving abilities. Always keep the posted speed limits in mind, and understand that those limits indicate the maximum speed when weather conditions are good.
  • Plan ahead and try to anticipate potentially dangerous situations. When approaching a curve or potentially slick area of the road, use the brakes effectively. The brakes should be applied only before a curve and on a straight section of the road.
  • Be alert to other vehicles. Maintain enough distance between your vehicle and the one ahead of you. If someone else seems to be following too close to your vehicle, perhaps slow down to allow them to pass – rather than speeding up to achieve a safe, distance between vehicles.
  • If visibility is poor, remember to use your lights. This helps other drivers to see you when approaching or when following. You should always turn your lights on when your windshield wipers are on.
  • Set the vehicle cabin to a comfortable temperature. This can be a challenge during winter, but it is imperative to be comfortable when driving. Cabin comfort includes keeping the windows free of frost, ice and snow.
  • Avoid overconfident driving, and avoid overestimating the vehicle's capability simply because it is equipped with anti-lock brakes, four-wheel drive, traction control or other safety devices. Do not allow good judgment and smart driving to be overtaken by a false sense of security provided by vehicle technology.
  • Before driving in inclement weather, be sure that your vehicle is properly maintained. Make sure your windshield wipers work properly; have the correct level of antifreeze for heating and defrosting the vehicle; keep plenty of gas in the tank; and always use required safety devices such as seatbelts.

Source: www.goodyear.com

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Word of the Day

December 20, 2013 2:24 am

Lease. Contract that conveys the right to use property for a period of time in return for a consideration, usually rent, paid to the property owner. 

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This Winter, Avoid Home Heating Fires

December 20, 2013 2:24 am

Home heating fires are the second leading cause of home fires. According to an October 2013 report from the National Fire Protection Association, "More than one-third (37 percent) of reported home heating fires began in and were confined to a chimney or flue."

Using the Pine Mountain Creosote Buster every 40 fires helps prevent dangerous chimney fires by reducing creosote buildup. Creosote will often build up FAR UP in the chimney... far enough that you generally won't see it in the darkness. So even if you keep a tidy fireplace, the creosote danger can be there lurking out of sight.

Some home-heating fire statistics:

  • In the U.S., there are 27 million households with wood burning fireplaces and 7 million households with wood or pellet stoves.
  • Fifty-nine percent of consumers who burn indoor fires believe their chimney should be cleaned at least once per year, but less than half (41 percent), actually do so.
  • Top three reasons for NOT having their chimney cleaned: expense (58 percent), time (51 percent), and laziness (48 percent).
  • Of those who have cleaned their chimney, 69 percent used a professional chimney sweep. Thirty-eight percent used a chimney cleaning log.

Chimney Fire Facts from the National Fire Protection Association
 

  • Home heating fires are the second leading cause of all home fires in the U.S., with 38 percent of those involving the fireplace or chimney.
  • More than half (57 percent) of home fireplace, chimney and chimney connector fires involve failure to clean as a factor contributing to ignition.
  • Leading factors for fire deaths in fires involving fireplaces, chimney and chimney connectors are: heat source too close to combustibles (51 percent), unclassified misuse of material or product (36 percent), unclassified operational deficiency (17 percent), and leak or break (16 percent). These sum to more than 100 percent because fires can be coded with multiple factors contributing to ignition.
  • Fireplaces, chimneys and chimney connectors accounted for 16,160 injuries (not limited to fire or burn injuries) reported to hospital emergency rooms in 2012.

Warning Signs of Chimney Fires

  • A loud crackle, pop or rumbling sound like a freight train.
  • Shooting flames or dark smoke billowing from the top of the chimney, that can be seen outside.
  • Smoke inside the home and an intense, strong smell.
  • A chimney fire can occur without your knowledge due to creosote being built up high in the chimney. Some fires can burn slowly in the chimney at incredibly high temperatures and can cause severe structural damage.

Chimney Safety Tips from the National Fire Protection Association

  • Burn only dry, well-seasoned wood.
  • Use artificial logs according to manufacturer's recommendations.
  • Use only newspaper and kindling wood to start a fire.
  • Never use flammable liquids, such as lighter fluid, kerosene or gasoline to start a fire.

Pine Mountain adds:

  • Supervise children around an open fire.
  • Never leave a fire unattended.
  • Make sure there are working smoke and carbon monoxide alarms in every bedroom and on each floor of the home.

Source: Pine Mountain

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Does a Diesel Generator Make Sense for Your Home?

December 18, 2013 10:24 pm

I recently added a new organization to our massive pool of resources - the Diesel Technology Forum. This non-profit educational organization is raising awareness about the economic value and essential uses of diesel engines.

For example, diesel-powered generators provide emergency power to protect supplies of food, water, medicines and fuelduring natural disasters, days of peak grid demand and in remote or isolated locations.

According to the Forum, today's prime power diesel generators emit 26 times less particulate matter than their predecessors a decade ago, greatly reducing air quality implications for diesel-powered generators use in communities looking for clean energy alternatives.  

The Forum promotes numerous attributes of diesel fuel backup generators, including:

  • Quick start-up 10 seconds or less: Other fuel sources may take up to two minutes, which may be too long in many emergency situations and out of compliance with state and federal laws.
  • Power density/fuel efficiency: Due to diesel fuel's chemical structure, more energy is released per unit than any other source of commonly used power. For the same size engine, a diesel can produce twice the kilowatts of a gas generator.
  • Continuous strength: Diesels provide a steady supply of power and can handle wide swings in power use. A diesel generator does not "flicker" or dip in output when appliances like a large air conditioner turn on. Gas and turbine engines can slow when strained, causing failure of the electrical equipment. To compensate, users may install unnecessarily oversized generators, causing significant inefficiencies and fuel consumption.
  • Disaster utility: When a disaster like an earthquake strikes, the first fuel source turned off by utilities is natural gas. Diesel generators have their own storage for clean diesel fuel, which is generally available and replenishable.
  • Portability: In addition to stationary units, diesel generators of various sizes and capabilities are highly mobile.
  • Durability: Some high quality engines last 20,000 - 30,000 hours before their first overhaul - the equivalent to 1.5 million miles in an automobile.

Learn more at www.dieselforum.org.

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Bacteria Lurking in Your Home Plumbing

December 18, 2013 10:24 pm

(BPT) - Many people are already familiar with the benefits of soft water for their skin and hair and how it significantly reduces energy consumption and increases the life of heaters, appliances and home plumbing. But what most people are totally unaware of is the ability for soft water to prevent microbial contamination in plumbing, thus minimizing the consumer's exposure to pathogenic bacteria such as Legionella, which can cause Legionnaire's disease. This research was discovered by the School of Sustainable Engineering at Arizona State University.

The piping used in home plumbing, whether it is copper or PVC, has very smooth interior surfaces which don't permit bacteria to settle and grow. However, over time, hard water results in scale formation on the interior surfaces of those pipes and that provides a perfect home for bacteria. This problem can be rather widespread as nearly 90 percent of American homes have hard water - water containing high levels of calcium and magnesium, according to The U.S. Geological Survey.

The Arizona State University researchers found that microbial biofilms do not form on pipes that have no scale on them but can grow on both regular pipes filled with hard scale and soft scale. Soft scale is created with some forms of water conditioning. This converts the water hardness minerals into a form of scale that remains in an amorphous mass within the plumbing. Hard scale forms crystals that adhere strongly to the plumbing surface. Both hard and soft types of scale showed a similar tendency to support the growth of microbial films in the research.

The only solution is to remove the scaling in the pipes entirely and only a traditional water softener can do that. These work by running the incoming hard water through a resin filter that traps the calcium and magnesium in the water - as well as any iron, manganese or radium ions - and replaces them with sodium ions. Many of the alternative water conditioners do not completely remove these harmful hard minerals.

The occurrence of biofilms can cause serious hygienic problems in water systems. The development of biofilms depends on a variety of factors such as water flow rates as well as the different plumbing materials. When pathogenic microbes inhabit these biofilms, home plumbing ends up being an ideal home with a direct line of contact with humans. Colonization of plumbing by disease-causing bacteria is well-documented, especially in hospital buildings and hotels. Once in the piping, the bacteria can be distributed through the showerheads. The hot water and steam created are then inhaled along with the bacteria, increasing the risk of exposure to consumers.

This study is the first one to demonstrate the significant benefits of traditional water softeners to prevent the development of biofilms in home plumbing. You can test your water yourself to check for hardness with home water testing kits or you can have a water treatment professional do the testing. The Water Quality Association has a webpage enabling searches by company name, state or ZIP code. For more information on water softening, visit www.saltinstitute.org.

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7 Carjacking-PreventionTips Every Driver Should Know

December 18, 2013 10:24 pm

While there is no guaranteed way to avoid being carjacked, you can still take certain precautions to reduce or minimize the potential of the crime happening to you.

Here are seven carjacking tips every driver should keep in mind:

  1. Beware of "golden opportunities" for carjackers. Drivers should exercise a heightened awareness of carjacking "hotspots" -- namely, anywhere a driver stops or is forced to slow down, the Los Angeles Police Department warns. This includes stop lights, intersections, parking garages, gas stations, car washes, ATMs, residential driveways, as well as highway exits and on-ramps.
  2. Drive defensively and with company. Keep windows rolled up, avoid driving alone (especially at night), and drive in the center lane. Also avoid tailgating: When stuck in traffic, at a light, or at a stop sign, keep at least one-half car length open between you and the car in front of you. This will allow you to maneuver the car in case of an emergency, police at Youngstown State University explain.
  3. Try to keep valuables out of sight. Especially this time of year, it's very common for criminals to spy on you while you're filling your car with Christmas presents, so be aware of your surroundings. The golden rule is to keep attractive items out of plain view, so try to keep them in your trunk, not in the back seat.
  4. Try not to get stranded in an unfamiliar location. A stranded driver makes for an easy carjacking target, so make sure to regularly maintain your car and try to keep a full tank of gas. Also, keep doors locked and windows shut, no matter how short the distance or how "safe" the neighborhood.
  5. Take safety precautions after minor accidents. If you are involved in a minor accident and/or you think your vehicle might have been struck intentionally (a "bump and rob"), motion the other driver to follow you to the nearest police station or open business in a well-lit and densely populated area. This is important particularly at night or in remote areas like empty highways.
  6. Careful where you park. Park in well-lit, high-traffic areas; avoid parking near obstructions such as Dumpsters, large vans or trucks, or anything else that could limit your visibility. Darkness and desolation are a carjacker's best friend.
  7. Don't argue with a carjacker. If a carjacker threatens you with a gun or other weapon, don't put up a fight. Some police officers even suggest deliberately crashing your car into an immobile object (such as a fire hydrant or stop sign) to draw people's attention to your situation. Flee from your car as soon as possible. Be sure to get a description so you can file a detailed report to police.
  8. As evidenced by the mom who fought off a carjacker, when faced with a genuine carjacking threat, it's important to have a plan. New Year's Day is a popular day for car theft, so be careful during this holiday season.

Source: Findlaw.com

 

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Word of the Day

December 18, 2013 10:24 pm

Net lease. Lease requiring the tenant to pay all the costs incurred in maintaining a property, including taxes, insurance, repairs, and other expenses normally required of the owner.

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Q: How Long Do Bankruptcies and Foreclosure Stay on a Credit Report?

December 18, 2013 10:24 pm

A: They can remain on your credit record for seven to 10 years.

However, a borrower who has worked hard to reestablish good credit may be shown some leniency by the lender. And the circumstances surrounding the bankruptcy may also influence a lender's decision. For example, if you went bankrupt because you were laid off from your job, the lender may be more sympathetic. If, however, you went through bankruptcy because you overextended personal credit lines and lived beyond your means, it is unlikely the lender will readily give you a break.

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