CEE Fund Introduction to Tax Planning Or “Keeping More of What You Earn”

CEE Fund 2014 Tax Rates Ordinary Income Tax Rates & Applies to Salary Income $0 to $9,07510% $9,076 to $36,90015% $36,901 to $89,35025% $89,351 to $186,35028% $186,351 to $405,10033% $405,101 to $406,75035% $406,751 and over39.6% Income $0 to $18,15010% $18,151 to $73,80015% $73,801 to $148,85025% $148,851 to $226,85028% $226,851 to $405,10033% $405,101 to $457,60035% $457,601 and over39.6% Married Filing JointSingle Filing Joint Strategy: Get married & have children!

CEE Fund Capital Gains Rates  Applies to Investment Gains/Profits  Must hold for 12 months and 1 day or Short Term Capital Gains rates apply  STCG rates equal Ordinary Income Tax Rates Strategy: Market Time vs. Buy & Hold Ask your parents to transfer appreciated assets to you, who then sells Income 0% to 15% Brackets0% > 15% but < 39.6% bracket15% Top Bracket20%

CEE Fund Tax Deductions  Medical, State Taxes, Property Taxes, Home Mortgage Interest, Home Equity Interest, Investment Interest Expense, Charity, Professional Fees, Casualty Losses  A $100 expense that is deductible saves $30.00 in taxes and actually costs you $70.00 if you are in the 30% tax bracket Strategy: Bunch your deductions in 1 year Deduct the fees of your advisor

CEE Fund Tax Credits Includes:______________  A $100 expense that qualifies for a tax credit actually costs for “0” since your taxes are reduced by $100

CEE Fund Itemized Deductions  You may not have sufficient Itemized Deductions  If you don’t, claim the Standard Deduction $ 6,200 for Single $ 12,400 for Married Filing Joint  Each person whom you provide > 50% of Financial Support can be claimed as a dependent  Each dependent is worth $_______ Deductions & Exemptions are “phased out” as your income exceeds $275,000 Single or $300,000 Married Filing Joint Exemptions/Dependents

CEE Fund AMT: Alternative Minimum Tax  A parallel tax system designed to assure that everyone pays some level of tax  Impacts those with high income tax deductions

CEE Fund YearEstate Tax ExemptionTop Estate and Gift Tax Rate Gift Tax Exemption 2005$1,000,00049%$1,000, $1,000,00049%$1,000, $2,000,00045%$1,000, $2,000,00045%$1,000, $3,500,00045%$1,000, $5,000,00035%$1,000, Unlimited0%$1,000, $5,000,00035%$5,000, $5,120,00035%$5,120, $5,250,00040%$5,250, $5,340,00040%$5,340,000 Gift & Estate Tax Chart

CEE Fund Saving for Retirement Why Should You Worry About it Now?  IRA  Roth IRA  401k/403b  SEP IRA  Simple IRA  Personal Savings

IRA CEE Fund  $5,500 Maximum Contribution per year  $6,500 Maximum Contribution per year (if over age 50)  May be tax deductible* today  Single – MAGI less than $70,000  Married – MAGI less than $116,000  Taxed upon withdrawal once age 59 ½ plus *Even if covered by a qualified plan at work

CEE Fund Roth IRA  Not tax deductible today but tax free upon withdrawal at age 59 ½ plus $5,500 Maximum contribution $6,500 Maximum contribution over age 50  Income Phase out for Contributions Single < $129,000 Married < $191,000 Which one is better?

CEE Fund Employer Retirement Plans 401k/403b/TSP Includes:  Pretax 401k  Roth 401k  $17,500 Max Contribution  $23,000 Max Contribution over age 50 * No income limits on Roth 401k Contributions

CEE Fund The Miracle of Compound Interest Strategy: Be sure your parents don’t run out of money! $4,000/Year saved at 6% interest - Now  Value in 20 years:$147,142  Value in 30 years:$316,232 $4,000/Year saved at 6% interest for only 10 years – Part time  Value in 20 years: $94,419  Value in 30 years: $169,090 $4,000/Year saved at 6% starting 10 years from today – Later  Value in 20 th year: $52,723  Value in 30 th year:$147,142 $1,000,000 in 40 years requires:  $6,461 saved per year for 40 years at 6%  $3,860 saved per year for 40 years at 8% $1,000,000 in 20 years requires:  A nice inheritance from Mom & Dad!