Navigating the Tax Environment Securities offered through HD Vest Investment ServicesSM, Member SIPC Advisory services offered through HD Vest Advisory ServicesSM 6333 N. State Hwy. 161, Suite 400, Irving, TX 75038 (972) 870-6000

Today’s Discussion Why are taxes important? What tax laws are driving tax rates? What is my potential tax liability? Which financial areas should I review? What are my next steps? Why taxes are important What tax laws are driving tax rates What is my potential tax liability What are financial areas you should review What are my next steps Before we get started I would like to ask you a questions “Why do taxes matter” Get feedback from the audience:

Why are taxes important? A Question For You? Why are taxes important?

Why Taxes Are Important Every dollar you spend on federal, state, county, city and school district taxes is a dollar you cannot save or spend yourself. Every dollar you spend on Federal, State, County, City and School District taxes is a dollar you do not have to save or spend yourself

Result of the Tax Law Changes http://taxfoundation.org/article/tax-freedom-day-2015-april-24th As you can see taxes are the number one expanse for Americans.

Tax Freedom Day 2015 http://taxfoundation.org/sites/taxfoundation.org/files/docs/TFD-2015.png The average for all Americans is April 24th As you can see taxes are the number one expense for Americans. When Is My State’s Tax Freedom Day? The total tax burden borne by residents of different states varies considerably due to differing state tax policies and the progressivity of the federal tax system. This means a combination of higher-income and higher-tax states celebrate Tax Freedom Day later: Connecticut (May 13), New Jersey (May 13), and New York (May 8). Residents of Louisiana will bear the lowest average tax burden in 2015, with Tax Freedom Day arriving for them on April 2. Also early are Mississippi (April 4) and South Dakota (April 8).

Changes Over Time Source:http://taxfoundation.org/article/tax-freedom-day-2015-april-24th The latest ever Tax Freedom Day was May 1, 2000, meaning Americans paid 33 percent of their total income in taxes that year. A century earlier, in 1900, Americans paid only 5.9 percent of their income in taxes, meaning Tax Freedom Day came on January 22. The last time Tax Freedom Day was this late in the year was 2007 (April 25).

What Laws are Driving Tax Rates American Taxpayer Relief Act of 2012 Passed by Congress on January 2013 Since 2013 gridlock has halted most new legislation Continued many of the Bush Era tax cuts Patient Protection and Affordable Care Act Commonly called “Obama Care” PPACA is aimed at reducing the number of uninsured Americans and reducing the overall cost of healthcare The Act created several new taxes that have phased in over the last few years So what is the legislation that causing these tax changes? They are the: American Taxpayer Relief Act of 2012 Passed by Congress on January 1, 2013 Partial resolution to the tax side of the “Fiscal Cliff” Continued many of the Bush Era tax cuts Patient Protection and Affordable Care Act Commonly called “Obama care” PPACA is aimed at reducing the number of uninsured Americans and reducing the overall cost of healthcare The Act created several new taxes that start this year

What Is My Potential Tax Liability? Ordinary income tax rates The highest federal marginal tax rate is 39.6% Capital gains rates The highest federal capital gains rate is 20% Qualified-dividend tax rates The highest qualified dividend rate is 20% Let’s start with ordinary income tax rates. The American Taxpayer Relief Act increased the top marginal tax rate to 39.6 % The top Capital gains rate has increased to 20% The top qualified dividend rate has also increased to 20%

2015 Numbers? PEP and Pease phase outs $285,250 for single, $309,900 for married filling jointly Alternative minimum tax rates are established $53,600 for single, $83,400 for married filling jointly Medical expenses must exceed 10% of AGI floor to be deductible Federal estate tax applicable exclusion, gift tax lifetime exclusion base is set at $5,430,000 Estate and gift tax rates are 40% Annual exclusion gift limit is $14,000 PEP and Pease $285,250 for single, $309,900 for married filling joint Alternative Minimum Tax rates are established $53,600 for single, $83,400 for married filling joint Medical expenses must exceed 10% of AGI floor to be deductible Federal estate tax applicable exclusion, gift tax lifetime exclusion base is set at $5,430,000 Estate and gift tax rates are 40% Annual exclusion gift limit is $14,000 As you can see there have been significant tax changes that have impacted Americans over the last several years

Medicare Tax Rules 0.9% increase for wages or self-employment income over threshold 3.8% new tax rate on investment income when MAGI exceeds threshold New tax is in addition to current income taxes Tax on investment income also applies to trusts and estates Applies to “high-income taxpayers” Single – MAGI is greater than $200,000 Joint – MAGI is greater than $250,000 Threshold is not indexed for inflation The Medicare tax changes are part of the Affordable Care and Patient Protection Act. The new Medicare surtax is the tax that is on addition to current taxes. On your sheet if you are above the thresholds on the screen Under the capital gains section and dividend section I need you to circle the +3.8%. Now that is an additional 3.8% in addition to the base rate that you checked based on your income CCH Analysis of the Post 2012 Net Investment Income and Additional Medicare Taxes

Medicare Tax Changes Net investment income includes: Taxable interest Dividends Capital gains Annuity income Income from passive activities Net investment income does not include: Exempt interest Retirement plan distributions Income from an active trade or business If you are subject to the new tax on the left hand side of your worksheet you have a Medicare Tax section. The Medicare tax applies to Taxable interest Dividends Capital gains, Annuity, income, Income from passive activities If you have any of those sources of income and are subject to the additional tax, We should meet now to talk about tax mitigations strategies. Those strategies can be very different depending on your individual situation CCH Analysis of the Post 2012 Net Investment Income and Additional Medicare Taxes

Planning Strategies Review your portfolio now, especially if you are a higher-income taxpayer Long-term capital gains rates are historically low Should you reposition? Assess your holdings of dividend-paying stocks Should tax-deferred allocations favor dividend-paying stocks? Plan for Medicare taxes (if applicable) Schedule an appointment for projections . Schedule an appointment to consider portfolio changes that may lessen exposure. Review your portfolio now, especially if you are a higher income taxpayer Long-term capital gains rates are historically low Should you reposition? Assess your holdings of dividend-paying stocks Should tax-deferred allocations favor dividend-paying stocks? Plan for 2013 Medicare taxes (if applicable) Schedule an appointment for projections Schedule and appointment to consider portfolio changes that may lessen exposure

Which Dates Are Important April 15 October 15 November 8th December 31 This year is special with the election that makes tax planning potentially more important with new leadership in Washington

Why Taxes and Financial Services Together Many Americans feel that April 15 is the date at which you need to have your tax planning done. Actually April 15th is the tax filing deadline for the actions you took in the prior year. December 31st is the end of the tax year. Many of the strategies to help reduce your overall tax burden need to be implemented before the end of the year to have an impact on how much you owe next April 15th With the election cycle here 2016 is a year for tax planning FOR INTERNAL USE ONLY

Financial Check Up 8 Wealth Management Issues® Investment Management Cash Flow and Debt Management Family Risk Management Retirement Planning Education Planning Legacy and Estate Planning Business Planning Special Situations The 8 Wealth Management Issues® (8 WMIs) process is a framework by which you can systematically address your ' financial needs. I want you to understand that I am able to help you with issues other than taxes, investment management and retirement planning. The H.D. Vest 8 Wealth Management issues include: Investment Management Issues Cash Flow and Debt Management Issues Family Risk Management Issues Retirement Planning Issues Education Planning Issues Legacy Planning Issues Business Planning Issues Special Situations Planning issues Generally I find that my clients have weakness in two or more areas. If you see any of these that you feel you and your family need to address, check that on your worksheet and we can meet to talk about it.

Our Planning Process Evaluate your current tax situation Establish goals and objectives Create a plan Evaluate strategies and alternatives Implement the plan What I do in my practice is follow a disciplined approach when it comes to your taxes and overall plan First we create financial statements for you, because it is hard to get where you want to go if you do not know where you are. Second we evaluate you tax situation for 2013 because the tax changes could have a large potential impact on your plan. Next we establish your goals and objectives,. Plans are what you want to accomplish and we have to listen to you. Based on your goals and objectives, I evaluate strategies and alternatives and show you our options Together we create a plan and together we implement the plan

Schedule an appointment to review your 1040 Analyst® report. Your Next Step Schedule an appointment to review your 1040 Analyst® report. In conclusion now is the time to take meet to talk about these tax changes. I think there are going to be many taxpayers who are will be unprepared and surprised next tax season how these changes have effected their family. Now is the time to schedule a meeting, go over your tax situation and make adjustments so that you are not surprised next tax season. There is also a good chance by making changes today you could end up owing Uncle Sam less of your hard earned money.

Investments are subject to market risks including the potential loss of principal invested. HD Vest Financial Services and its affiliates (collectively, “HD Vest, Inc.”) do not provide legal, tax or accounting services. You should consult your tax and legal professional regarding the tax and estate planning implications of any investments. HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name. Securities offered through HD Vest Investment ServicesSM, Member SIPC Advisory services offered through HD Vest Advisory ServicesSM 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038 972-870-6000