Perryman Financial Advisory

PFA recognized by D Magazine

Perryman Financial Advisory — Wed, 29 Oct 2014 17:20:46 +0000

PFA recognized in D Magazine (Nov 2014) as Top Wealth Managers and Best Financial Planners in Dallas

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It’s not too late for 2012 contributions

Perryman Financial Advisory — Sat, 30 Mar 2013 15:14:11 +0000

There’s still time to potentially lower your tax bill for 2012 by contributing to a traditional IRA, a SEP-IRA if you’re self-employed, or a Health Savings Account (HSA). Provided you qualify, you can make your tax-deductible contribution to these accounts right up until the filing deadline, April 15. Don’t forget to specify that your contribution is for the 2012 tax year.

The 2012 contribution limits are:

IRA — $5,000 if you’re under age 50, $6,000 if you were 50 or older by December 31, 2012.
SEP-IRA — The lesser of 20% of your 2012 compensation if you are self-employed, 25% for other employees, or $50,000.
HSA — $3,100 for individuals, $6,250 for families ($1,000 catch-up contribution if you were 55 or older by December 31, 2012).

You also can contribute to a 2012 Roth IRA up to the filing deadline, but keep in mind that you won’t get a tax deduction. The benefit of a Roth IRA comes when you can withdraw the money tax free in retirement, provided certain conditions are met.

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7 Major Tax Changes In The Fiscal Cliff Law

Perryman Financial Advisory — Fri, 22 Feb 2013 17:30:26 +0000

From the edge of the “fiscal cliff,” Congress took a step back and approved the American Taxpayer Relief Act (ATRA), a hodgepodge of tax extensions and modifications. But the agreement postponed decisions on spending cuts and failed to continue a 2% “payroll tax holiday” for employees. Moreover, upper-income taxpayers will have to shoulder a greater burden going forward. Here are seven noteworthy changes for individuals.

1. Individual Tax Rates. Across-the-board tax hikes are averted and the “marriage penalty” is eased. Nevertheless, ATRA creates an “extra” top tax rate of 39.6% for single-filers with income above $400,000 and joint-filers with income above $450,000. When you add in the new 3.8% Medicare surtax for certain upper-income investors, which begins in 2013, your effective top tax rate can reach 43.4%!

2. Capital Gains And Dividends. The “Bush tax cuts” for capital gains and dividends are generally preserved. The maximum tax rate remains 15% for net long-term capital gain and qualified dividends (0% for investors in the lowest tax bracket). Otherwise, the tax rate for capital gains would have soared to 20% (10% for investors in the lowest tax bracket). Even worse, dividends would have been taxed at ordinary income rates. But the upper crust still pays a steep price: a maximum 20% tax applies to single-filers with income above $400,000 and joint-filers with income of more than $450,000.

3. Alternative Minimum Tax. The onerous alternative minimum tax (AMT), which has steadily been casting a wider net each year, is overhauled. Under ATRA, exemption amounts have been increased and nonrefundable personal credits can be used to offset AMT liability in full. In addition, the exemption amounts will be indexed for inflation in the future. Because the changes are retroactive to the 2012 tax year, it’s been estimated they will save as many as 60 million taxpayers from the clutches of the AMT.

4. Itemized Deductions And Personal Exemptions. Two other “back-door” tax increases may affect taxes of wealthier individuals. Due to the revival of the “Pease rule,” most itemized deductions are reduced by 3% of the amount of adjusted gross income (AGI) above a specified threshold, beginning in 2013 (but the overall reduction can’t exceed 80%). At least ATRA establishes higher thresholds of $250,000 for single-filers and $300,000 for joint-filers. A comparable provision begins to phase out the tax benefits of personal exemptions at the same thresholds.

5. Education Tax Breaks. ATRA generally extends several valuable tax incentives relating to higher education. Significantly, it allows parents to claim the maximum $2,500 American Opportunity Tax Credit (AOTC) for another five years, subject to a phaseout based on modified adjusted gross income (MAGI). It also extends the above-the-line deduction for tuition and fees, also phased out based on MAGI, through 2013. This deduction may be claimed in lieu of a higher education credit. The tuition deduction extension is retroactive to 2012. Finally, ATRA permanently extends enhancements for Coverdell Education Savings Accounts (CESAs), the tax exclusion for employer-provided education assistance and the student loan interest deduction.

6. Extensions Of Other Rules. Besides those already mentioned, ATRA extends a host of other tax provisions for individuals, many of them retroactive to the beginning of 2012 (i.e., for provisions that technically expired). Most of the extended tax breaks are limited by dollar amounts. The list includes:

Optional state sales tax deduction (in lieu of state income tax)
Enhanced child tax credit, dependent care credit and adoption credit (and tax exclusion for adoption program assistance)
Credit for energy-saving at home
Monthly tax exclusion for certain commuting benefits
Deduction for mortgage insurance premiums
Deduction for classroom expenses of educators
Tax exclusion for mortgage debt forgiveness
Tax benefits for donating real estate for conservation purpose
Tax-free distributions of IRA funds to charity by those age 70 ½ or over

7. Estate And Gift Taxes. At long last, there’s greater certainty in estate planning. Beginning in 2013, the unified estate and gift tax system permanently retains a $5 million exemption and will be indexed annually for inflation ($5.25 million in 2013), instead of plummeting from $5.12 million in 2012 to $1 million. The top estate tax rate, which was scheduled to jump from 35% in 2012 to 55% in 2013, is bumped up to 40%. ATRA also retains the provision allowing “portability” of estate tax exemptions between spouses and coordinates various other aspects, including implementation of the generation-skipping tax.

These are just some of the highlights of the fiscal cliff law. We will be offering further guidance on the tax law changes, but please don’t hesitate to call us about how the changes affect you personally.

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How To Teach Your Children About Money

Perryman Financial Advisory — Wed, 09 Jan 2013 03:11:04 +0000

It’s never too early to start teaching your kids the right and wrong ways to manage money. When I was a kid, my parents afforded me a small allowance that grew each year, granted there were associated chores that had to be finished in order to receive my allowance. These days, I hear more and more stories about parents that hand out money like it does grow on trees. How do you think these kids will fend when they grow up and are forced to manage their finances with the idea that money isn’t earned? Or that money doesn’t have to be saved? It’s important to instill knowledge and properly prepare your children early on in life in order to lead them down the path of financial success. Let’s discuss the major ways in which you can influence your child – even at a very young age – to properly manage money.

The first tip isn’t what about your children should do, it’s about what YOU should. How will your children ever learn the do’s and don’ts of proper money management if you as a parent don’t understand them? Lesson #1 is being a positive and influential money role model for your children. Take advantage of everyday activities to talk and teach your kids about what you’re doing with your money and why it’s important. Think of a trip to the grocery store as an opportunity to explain price comparison and value. Opening bills can be a great opportunity to talk about borrowing, earning, sharing and debt. Use every opportunity possible to spark up conversations that your kids will understand and learn from.

The second tip to cover is teaching your kids about earning their money. Remember how I said I used to have an allowance? Well I still do – it’s call an income. Looking back, I never realized at the time how valuable my chores and allowance were at showing me that I had to work for my money. But, those values stuck, and I’ve always felt a strong passion for earning what I have. Start an allowance early and build from there. Create a budget together – list all of their expenses and how they’re going to afford them. Opening a checking or savings account can teach them about fees, account maintenance, and even interest. If you’re struggling with your kids going to school and unable to work, make sure you teach them about loans and debt.

I know, I know, trying to teach a five year old about a retirement plan is sure to be a failure, so start small. Teach them about savings first. Do they have a new toy in mind that they’d like to buy? Make them save up to buy it and teach them the value of saving and spending. Once they get a little older, start explaining the importance of investments and how retirement works. Teach them the basics of investing and start with small ventures like broad-based index funds and IRAs. Have them do some research and find out about the different ratings and performance levels of specific investments. Giving them a solid knowledge foundation to work from is better than throwing them to the wolves when they’re forced to start saving for the future.

Finally, what shouldn’t you do when it comes to teaching your kids about money? The best tip I’ve ever heard is to have patience – you know how kids can be, don’t force them to take your advice. As we all know, sometimes learning from our mistakes can be the best form of learning. With that said, don’t be a lifeline for them to always fall back on. They’ll never learn from their mistakes if you constantly help them in recovering. Instead, help them strategize how to get out of their mistakes and what to do in the future. It’s important for your children to make their own decisions, especially when it comes to their finances. Your job isn’t to set goals for them, it’s to give them the knowledge, education and preparation necessary for them to be able to make their own calculated goals and assessments – something I’ll always value that my folks gave me.

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Top 5 Places to Retire Outside the U.S.

Perryman Financial Advisory — Wed, 09 Jan 2013 03:09:53 +0000

While it may sound sensational or romantic, retiring in a foreign country also has more pragmatic benefits, leading to a rise in the population of Americans choosing to spend their golden years in other countries. Whether it’s the draw of low costs of living, inexpensive and accessible health care, warmer climate or the charm of a distant locale, many of the following foreign locales already have large pools of retired expats, and as more and more baby boomers start retiring, coupled with a constricted economy and burgeoning medical expenses, this trend is projected to continue.
Check out the highlights of the five countries, and perhaps you’ll see retirement as a whole new adventure — an adventure certainly well-lived.

Panama
One of the most popular countries for Americans to retire to is Panama, and this tiny country packs a lot of appeal. Known for its friendly locals, stunning beaches and beautiful mountains, Panama uses a dollar-based currency and has a relatively low cost of living. With access to good and inexpensive health care, retirees also get discounts on everything from their medical care to entertainment.

Belize
In addition to its tropical Caribbean climate and enviously warm waters, Belize has a stable economy bolstered by its Retired Persons Incentive Program, fast making it a hot destination for expat American retirees. Belize also offers outstanding health care, and since English is the official language, you can get your medical care in a language you can comfortably understand.

Italy
When it comes to the European hemisphere, Italy has long been a favorite retiree destination. Known for its reverence for culture, fine wine and food, Italy sets a warm and relaxing pace, making it one of the most popular European retirement locations. While the cost of living isn’t dirt cheap, it’s not bad, either, and Americans who retire to the Italian countryside or stately cities tend to live well. Health care is also affordable, especially for retirees.
Costa Rica
Panama’s neighbor, Costa Rica has a long history of medical tourism, and the facilities are both top-rate and numerous — so much so that the life expectancy is higher than in other developed nations. With one coast on the Caribbean and one on the Pacific, the climate is nothing if not tropical. In lovely Costa Rica, money also goes a long way, with the going rate for a hair cut running at about $3, cheap real estate and even tax benefits for retired individuals. What’s more, this nation is already home some 50,000 U.S. citizens, so finding friends can be easy in certain expat-heavy regions.

South Africa
Though it’s by far the most distant foreign land on this list, South Africa’s vibrant culture appeals to those who enjoy a bit of excitement in their otherwise financially comfortable lifestyle. Outside of the big cities, impressive homes can be purchased inexpensively, and the outstanding health care system pairs well with the favorable tax laws.

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