McKee Financial

McKee's Weekly Newsletter 11-16-2020

It’s funny how as a child becoming a teenager seems like a huge milestone, then driving, then college, and cheaper auto insurance, but some of us stop getting excited after the cheaper auto insurance milestone.  I’d like to point out some additional milestones that are potentially more exciting than the joys of shaving, gas money & tuition. 

Unforgettable Birthdays

Birthdays may seem less important as you grow older. They may not offer the impact of watershed moments such as getting a driver’s license at 16 and voting at 18. But beginning at age 50, there are several key birthdays that can affect your tax situation, health-care eligibility, and retirement benefits.

50 Taxable distributions from IRAs and qualified employer retirement plans before age 59½ are generally subject to a 10% early distribution penalty (20% for certain SIMPLE plan distributions) on top of any federal income taxes due. But if you are a qualified public safety employee you can take penalty-free withdrawals from your qualified retirement plan after leaving your job if your employment ends during or after the year you reach age 50.

 

55 — If you're not a qualified public safety employee, you can take penalty-free withdrawals from your qualified retirement plan after leaving your job if your employment ends during or after the year you reach age 55.

 

59½ — And all withdrawals from qualified retirement plans and IRAs are penalty-free after you reach age 59½, whether or not you're still employed. Ordinary income taxes generally apply to these distributions. (Withdrawals taken prior to age 59½ may be subject to a 10% federal income tax penalty.)

 

62 — You are eligible to start collecting Social Security benefits, although your benefit will be reduced by up to 30%. To receive full benefits, you must wait until “full retirement age,” which ranges from 66 to 67 depending on the year you were born.

 

65 — You are eligible to enroll in Medicare. Medicare Part A hospital insurance benefits are automatic for those eligible for Social Security. Part B medical insurance ­ben­efits are voluntary and have a monthly premium. To obtain coverage at the ­earliest possible date, you should generally enroll about two to three months before turning 65.1

 

72 — You must start taking minimum distributions from most tax-deferred retirement plans or face a 50% penalty on the amount that should have been withdrawn. Annual required minimum distributions are calculated according to life expectancies determined by the federal government.

 

Source: 1) U.S. Department of Health and Human Services

 

The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the ­purpose of ­avoiding any ­federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the ­purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2020 Broadridge Investor Communication Solutions, Inc.


Source: http://www.mckeefinancialresources.com/Unforgettable-Birthdays.c1043.htm

 

What Is the Capital Gain Tax?

Capital gains are the profits realized from the sale of capital assets such as stocks, bonds, and property. The capital gains tax is triggered only when an asset is sold, not while the asset is held by an investor. However, when a mutual fund sells shares of its holdings during the year, mutual fund investors could be charged capital gains. (A fund’s capital gains distribution is not taxable if the fund is held in a tax-deferred account.)

There are two types of capital gains: long term and short term; each is subject to different tax rates. Long-term gains are profits on assets held longer than 12 months before they are sold by the investor. The American Taxpayer Relief Act of 2012 instituted a long-term capital gains tax rate for taxpayers of up to 20%. Short-term gains (on assets held for 12 months or less) are taxed as ordinary income at the seller’s marginal income tax rate.

The Tax Cuts and Jobs Act, signed into law in December 2017 established “breakpoints” for application of these rates as under current law, except the breakpoints will be adjusted for inflation. For 2020, the 0% breakpoint will be up to $80,000 (up from $78,750 in 2019) for married taxpayers filing jointly, up to $53,600 (up from $52,750 in 2019) for head of household, and up to $40,000 (up from $39,375 in 2019) for all other filers (except estates or trusts). The 15% breakpoint will be $496,600 (up from $488,850 in 2019) for married taxpayers filing jointly, $469,050 (up from $461,700) for head of household filers, and  $441,450 (up from $434,550 in 2019) for all other filers (except estates or trusts). The 20% breakpoint will be $496,600 (up from $488,850 in 2019) for married taxpayers filing jointly, $469.050 (up from $461,700 in 2019) for head of household filers, and $441,450 (up from $434,550 in 2019) for all other filers (except estates or trusts).

The taxable amount of each gain is generally determined by a “cost basis” — in other words, the original purchase price adjusted for additional improvements or investments, taxes paid on dividends, certain fees, and any depreciation of the assets. (If you received the property by gift or inheritance, different rules apply to determine your starting basis.) In addition, any capital losses incurred in the current tax year or previous years can be used to offset taxes on current-year capital gains. Losses of up to $3,000 a year may be claimed as a tax deduction for married joint filers and $1,500 for married separately filers.

If you have been purchasing shares in a mutual fund over several years and want to sell some holdings, instruct your financial professional to sell shares that you purchased for the highest amount of money, because this will reduce your capital gains. Also be sure to specify which shares you are selling so that you can take advantage of the lower rate on long-term gains. Otherwise, the IRS may assume that you are selling shares you have held for a shorter time and tax you using short-term rates.

Capital gains distributions for the prior year are reported to you by January 31, and any taxes owed on gains must be paid by the due date of your income tax return.

Higher-income taxpayers should be aware that they may be subject to an additional 3.8% Medicare unearned income tax on net investment income (unearned income includes capital gains) if their adjusted gross income exceeds $200,000 (single filers) or $250,000 (married joint filers). This is an outcome of the Patient Protection and Affordable Care Act.

 

The information in this newsletter is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the ­purpose of ­avoiding any ­federal tax penalties. You are encouraged to seek guidance from an independent tax or legal professional. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the ­purchase or sale of any security. This material was written and prepared by Broadridge Advisor Solutions. © 2020 Broadridge Investor Communication Solutions, Inc.

 

Source: http://www.mckeefinancialresources.com/What-Is-the-Capital-Gain-Tax.c1283.htm

 

Interesting Economic Facts

 

MORE BONDS THAN STOCKS - As of 6/30/20, the US stock market was $33 trillion in size. As of 6/30/20, the US bond market was $50 trillion in size (source: Wilshire, SIFMA).

 

BULLS - 56% of investors surveyed as of 11/11/20 are “bullish” on US stocks for the upcoming 6 months, the highest percentage recorded in this weekly survey since 1/03/18 (source: Amer. Assoc. of Individual Investors).

 

WIND AT THEIR BACK - Every US president since 1993 – Clinton, Bush, Obama and Trump – began his first year in the White House with total control of Congress, i.e., Presidents Clinton and Obama began with Democrats controlling both the House and the Senate, and Presidents Bush and Trump began with Republicans controlling both the House and the Senate (source: Congress).

 

DELAYED - The split in the Senate is 50-48 favoring the Republicans with the remaining 2 seats to be determined on 1/05/21 in 2 Georgia runoffs. Republicans are the incumbents in both races. In the event of a 50-50 split on any Senate vote, the Vice President would cast the tiebreaking vote on that legislation (source: Congress).

 

MANY CAN’T WAIT - An American worker may begin receiving a monthly Social Security retirement benefit as early as age 62, albeit at a reduced level from what is available at one’s “full retirement age.” Just under 50% of American “blue-collar” workers take their retirement benefits at age 62, while only 38% of “white-collar” workers begin their retirement benefits early (source: Center for Financial Security, December 2019).

 

NOT COMING BACK - In the 6 months from 2/29/20 to 8/31/20, 163,735 US businesses have closed their doors, including 97,966 businesses (60%) that are likely closed for good (Source: Yelp Economic Average).

 

PRETTY GOOD - 95% of apartment households nationwide had paid their November rent as of 10/27/20 (source: National Multifamily Housing Council Rent Payment Tracker).

 

CALM BEFORE THE STORM? - 46,570 homes have been foreclosed on by lenders nationwide YTD through 10/31/20. That’s down from the 143,955 foreclosures in calendar year 2019 and 230,305 foreclosures in calendar year 2018 (source: Attom Data Solutions)

 

WOULD YOU? - A joint venture between a US pharmaceutical company and a German biotech company has produced a COVID-19 vaccine that is believed to be 90% effective. That conclusion was based on a “phase 3” clinical trial that included 43,538 participants, of which just 94 individuals have developed the COVID-19 virus. The US government has a contract with the joint venture for 100 million doses of the vaccine when it’s ready, along with an option to purchase an additional 500 million doses. The vaccine is administered in 2 doses given 3 weeks apart. The US population of 331 million would require 662 million doses (source: Financial Times).

 

NO HELMET - 58 of 368 FBS college football games scheduled this season through 11/08/20 (16% of all games) were postponed or cancelled due to the COVID-19 virus (source: Associated Press, Ralph D. Russo).

 

...and for the History Lovers... This Week in History

 

November 16, 1992

Eric Lawes, while using a metal detector to search for a friend's lost hammer near Hoxne, Suffolk, England, discovers the Hoxne Hoard, the largest hoard of Roman silver and gold ever found in Britain, and the largest collection of 4th and 5th century coins found anywhere within the bounds of the former Roman Empire

 

November 17, 1931

Charles Lindbergh inaugurates Pan Am service from Cuba to South America in the Sikorsky flying boat American Clipper.

 

November 18, 1936

The main span of the Golden Gate Bridge in San Francisco is joined.

 

November 19, 1863

Lincoln delivers the "Gettysburg Address" at the dedication of the National Cemetery at the site of the Battle of Gettysburg.

 

November 20, 1981

Microsoft Windows 1.0 released.

 

November 21, 1904

Motorized omnibuses replace horse-drawn cars in Paris.

 

November 22, 1995

The first feature-length film created entirely with computer generated imagery - Toy Story - premiers.

 

 

Notable Dates in October

 

“Just for Fun” Dates in November

November is Banana Pudding Lovers Month—who knew? Here are some more wacky celebrations to look forward to:

  • Nov. 1: National Cook for Your Pets Day

  • Nov. 3: Zero-Tasking Day

  • Nov. 9: National Scrapple Day

  • Nov. 16: National Button Day

  • Nov. 21: World Hello Day

  • Nov. 23: Fibonacci Day

 

Source: https://www.almanac.com/content/november-holidays-fun-facts-folklore

Pumpkin Pie is one of my favorites for Thanksgiving & I decided this year to do a quick online search of THE BEST PUMPKIN PIE recipe.  The recipe below has been shared online almost 40,000 times and has a 5 star rating. 

Cool thing about this site, it does the calculations for you.  The default on this recipe is 8, but if you click “print” towards the bottom of the recipe it gives you the option to change the number of servings up updates the amount of ingredients required for your group.

Side note: I do realize I offered the Blue Ribbon Pumpkin Pie recipe about a month ago, but this one looked too good not to share with everyone.

 

THE BEST PUMPKIN PIE RECIPE

Award-winning creamy pumpkin pie recipe has a secret ingredient to make it extra special!

I spent most of my life making the pumpkin pie recipe on the back of the Libby’s pumpkin can.  It is a yummy recipe and produces a classic pumpkin pie. But it might just be a tad boring.  Most of my kids reach for any other pie but pumpkin so I set out to change it.

Last year, I made a simple perfect pumpkin pie using sweetened condensed milk. This year I decided to up the ante and really change up the classic pumpkin pie recipe. The result was pumpkin pie perfection.

HOW TO MAKE THE BEST PUMPKIN PIE RECIPE:

So what makes this the best pumpkin pie recipe? Two ingredients — Cream Cheese and Butter. Instead of using evaporated canned milk, we add cream cheese and butter. Duh. Why have I not thought of this before? The creamy cheese and butter add a touch of rich creaminess to the pumpkin pie. My son, Carson, who will NOT even touch pumpkin pie, is in hog heaven with this pie.

The cream cheese and butter also softens the strong pumpkin flavor. Don’t you worry…it is still a perfectly pumpkin flavored pie but is much creamier than the original. When paired with a buttery flaky pie crust and fresh whipped cream, it just screams holiday.

This Best Pumpkin Pie Recipe actually just won 1st Place in the Pumpkin Pie Bake-Off competition — Pumpkin Pie Bake-Off.  What a fun surprise!

The best pumpkin pie recipe starts with a homemade all-butter pie crust.  Click here for the recipe. I include step-by-step instructions on how to make butter pie crust. I use a deep-dish pie pan for this recipe since there is plenty of filling.

There’s nothing like homemade whipped cream. It begins with heavy whipped cream, whipped until soft peaks form. Powdered sugar is added to sweeten it.

Course: Dessert

Cuisine: American

Keyword: pumpkin pie

Prep Time: 20 minutes

Cook Time: 55 minutes

Total Time: 1 hour 15 minutes

Servings: 8

Author: Melissa Stadler, Modern Honey

Ingredients

Pumpkin Pie Filling:

  • 1 - 8- ounce pkg. Cream Cheese softened

  • 1 - 15 ounce can Pure Pumpkin Puree

  • 1/2 cup Butter melted

  • 2 teaspoons Vanilla

  • 3 Eggs

  • 3 1/4 cups Powdered Sugar

  • 1 teaspoon Cinnamon

  • 1 teaspoon Nutmeg or 1 teaspoon Pumpkin Pie Spice

  • 1/4 teaspoon Salt

  •  

  • All-Butter Pie Crust Recipe

  •  

Homemade Whipped Cream:

  • 2 cups Heavy Cream

  • 1/2 cup Powdered Sugar

Instructions

  • Make pie crust recipe according to recipe directions. Find the recipe for an all-butter pie crust here. Let dough chill in refrigerator, tightly wrapped.

  • In mixing bowl, beat cream cheese for 5 minutes until light and fluffy, scraping down the sides often with spatula. The whisk attachment works the best to whip the cream cheese.

  • Add pumpkin and mix for another 5 minutes.

  • Add melted butter and vanilla and mix for 1 minute.

  • Add eggs one at a time, mixing well after each addition.

  • Add powdered sugar, cinnamon, and nutmeg or pumpkin pie spice and salt.

  • Preheat oven to 400 degrees.

  • Place pie dough in a deep-dish pie pan.

  • Pour pumpkin pie filling into pie crust and place pie plate on baking sheet. Depending on the size of your pie pan, you may have some extra filling.

  • Bake for 15 minutes. Lower the temperature of the oven to 350 degrees and bake for an additional 42 - 48 minutes. Watch the crust carefully to make sure it isn't becoming too brown. Cover with pie cover or foil to prevent browning.

  • Let chill in refrigerator for 4 hours.

  • Top with freshly whipped cream.

 
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