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Blog

Credit Reports and Credit Scores: the Importance of Periodic Reviews

By Blog
For many, credit information is a mystery until applying for a loan/lease, credit card or mortgage.  Often by that time, negative and/or erroneous information on one’s credit report will have already caused problems resulting in possible denials of credit or higher interest rates due to creditor perceived risk.  Because your credit report is a means for creditors, landlords and others to know your creditworthiness, it is important to review the reports periodically to check for mistakes or negative information as well identity theft, which has become more common in recent years.  Not addressing such issues may mislead creditors, ruin your credit…
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A Brief Guide to IRAs, Individual 401(k)s and Self-Employed SEP IRAs

By Blog
During the tax filing season we get a lot of questions concerning how much individuals can contribute to different types of retirement savings accounts. While we always recommend that you check with your accountant before making contributions, you can use this article as a brief guide to some of the finer points of making and deducting contributions to IRAs, Individual 401(k)s and Self-Employed SEPs. We have specifically limited our discussion to retirement vehicles that are available either to all individuals or self-employed individuals with no employees. Individual Retirement Accounts (IRAs) You have until your tax return filing deadline, not including…
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social security

Getting Spousal Social Security Benefits if Your Last Names Do Not Match

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Aging reality hits you when you reach your “FRA,” or Full Retirement Age as defined by the Social Security Administration. Although the FRA was 65 for the longest time, it is now creeping up based on your year of birth. Currently, FRA is 66 for folks born in 1943-1954 and it will rise gradually to 67 for folks born in 1960 and later. So, three months before my 66th birthday, I tried to sign up for spousal benefits – deciding  to delay my benefits until age 70, which is still a grandfathered provision for us 1951ers. As good as the…
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cybersecurity

Identity Theft Prevention & Cybersecurity Best Practices

By and Blog
Years ago, careful watch over your wallet and important documents was sufficient protection against identity theft and fraud. Unfortunately, those days are long gone, as such theft is growing exponentially, and cybersecurity breaches impact millions of people each year. Each individual must take action in order to keep his or her information safe. It is a mistake to assume that the safeguards your financial institutions (banks, credit cards, financial advisor, etc.) have in place are all that is needed to protect you. Please note that this post is about preventative measures. If you have already been hacked, we recommend following…
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yield curve

The Many Uses of Margin Loans

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Margin refers to an investor’s use of leverage relative to his or her own assets. In other words, it’s “borrowing from your broker,” with your portfolio assets serving as collateral for the loan. How it Works Per the Federal Reserve's Regulation T, each marketable security in your investable account is given a “maintenance rate” which stipulates the maximum borrowing rate. For example, a maintenance rate of 50% indicates that an investor can borrow up to half of the security’s value. Note that retirement accounts are not eligible to be margined. Once you have activated the ability to take margin on…
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Taxation of Employee Benefits When States of Employment and Domicile Differ

By Blog
For many, working in one state and living in another is a common situation.  For example, a 2013 report cited by the New York Times estimates that nearly 400,000 people commute from New Jersey to New York each day.  For those commuters, filing an income tax return in both states each year is the norm.  The typical process is to withhold and pay tax in the state where you work while you also file in your resident state and claim a credit for taxes paid to the non-resident state.  For those who cross state lines to work, there is also…
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tax law changes

Trump and Year-End Income Tax Planning

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With respect to individual income taxes, President-Elect Donald Trump has proposed to compress and lower tax rates, as well as limit itemized deductions. His proposal would reduce individual tax brackets from seven to three for ordinary income and amend the capital gains brackets accordingly.  For joint filers, this means that (i) income under $75,000 would be subject to a 0% capital gains rate and a 12% ordinary income rate, (ii) income between $75,000 and $225,000 would be subject to a 15% capital gains rate and a 25% ordinary income rate, and (iii) income over $225,000 would be subject to a…
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roth ira conversion

Important Changes to New Jersey Estate and Trust Law

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Repeal of New Jersey Estate Tax.  On October 14th, Governor Christie signed into law a bill eliminating New Jersey’s state estate tax.  Below are the highlights: Beginning January 1, 2017, the New Jersey estate tax exemption will increase from $675,000 to $2,000,000. This means that the increased exemption will be available for individuals dying in 2017. Beginning January 1, 2018, the New Jersey estate tax will be eliminated in full. The NJ inheritance tax still remains. The NJ inheritance tax is a death tax imposed on transfers to beneficiaries who are not charities or spouses, children, grandchildren, or parents of…
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investing mistakes

What Should I Do With My Old 401(k)?

By Blog
It’s a question that comes up often – what should I do with my old 401(k)? There is no one-size-fits-all answer, and responses provided by financial advisors will be increasingly scrutinized if the Department of Labor’s (DOL) fiduciary rule is enacted. The rule mandates that advisors providing retirement advice act in the best interest of the client, which is called a fiduciary responsibility. The purpose is to protect retirement funds from professionals looking to profit at the expense of investors’ interests and ensure that the advice investors receive is right for them. Sontag Advisory, which has been a fiduciary since…
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tax-loss harvesting

A Closer Look at Tax-Loss Harvesting

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Tax-loss harvesting (TLH) is an important practice that can improve the after-tax returns of investors’ portfolios.  Below, we discuss the benefits, best practices, and limitations of TLH. What is it? Tax-loss harvesting is the process of selling a security at a loss, then using the proceeds from that sale to purchase a similar security.  The realized loss can now be used to offset existing or future realized gains as well as a limited amount of what is considered “ordinary income” for IRS purposes.  The concept behind TLH is to generate a tax deduction without negatively impacting the returns of your…
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