Cyber Security Lesson for Your Kids

Here’s one more New Year’s Resolution you might add to your list: Training your children to be aware of internet/online security or cyber security. As many are aware, cyber security is the protection of assets and data from electronic attack. This includes protecting your personal computers, mobile phones and tablets.

In today’s world, it is not uncommon for younger children to have mobile phones and/or tablets. Nor is it uncommon for your kids to download a new app onto their mobile devices often without parental knowledge, or for your kids to be using your personal home computer to make an internet purchase with your credit card. With hackers always trying to find new ways to obtain your personal and financial data, you and your kids are continually and unknowingly at risk of a cyber-attack.

In helping to combat cyber-attacks and to inform taxpayers about this risk, the IRS has become a strong resource for information relating to securing personal information. Education is key to prevention. The IRS recently posted on their site, Tax Tip 2019-171 – Adults can pass on these tips to teach teens online safety which is a good source of information to help parents teach their children about the risks of the internet and ways to minimize and prevent such risks. Taking a few minutes reviewing this information with your kids should help to protect your family’s personal data and assets.

2019 and 2020 Tax Facts

? For 2019, the standard deduction for a single individual is $12,200 and for a married couple is $24,400. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes) AND real estate taxes limited to $10k per year, mortgage interest, charitable contributions, and medical expenses in excess of 7.5% of income.

? Starting in 2018, personal exemptions are no longer deductible.

? The maximum earnings subject to social security taxes is $137,700 for 2020, up from $132,900 in 2019.
? The standard mileage rate is $.58 per business mile as of January 1, 2019, up from $.545 for 2018.

? The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $19,500 in 2020, up from $19,000 in 2019. And if you’ll be 50 or older by December 31st, you can contribute an extra $6,500 into your 401(k) or 403(b) account this year, up from and $6,000 in prior years.

The maximum annual contribution to your IRA is $6,000 in 2019 and 2020, up from $5,500 for 2015 through 2018. And if you turn 50 by December 31st, you can contribute an extra $1,000 that year. You have until April 15, 2020 to make your 2019 IRA contributions.

Upper Limits on Conforming Mortgages Increasing for 2020

By Bob Cahill

Big changes for 2020! The?Federal Housing Finance Agency announced the conforming limit for one to four unit properties is increasing.??For a complete list by states/counties please?click here.

Investopedia defines Conforming Loans as:

What Is the Conforming Loan Limit?

The conforming loan limit is the dollar cap on the size of a mortgage that the?Federal National Mortgage Association?(colloquially known as Fannie Mae) and the?Federal?Home Loan Mortgage Corporation?(aka Freddie Mac) will purchase or guarantee. Mortgages that meet the criteria for backing by the two quasi-government agencies are known as “conforming loans.”

Higher limits to conforming mortgages might allow you to refinance out of a Jumbo into a Conforming and qualify for a lower fixed interest rate on your mortgage debt.? Every homeowner with a mortgage should want to minimize the interest they pay over time.

RE: 2020

Personal financial planning is an ongoing process.? The good news is that financially speaking, 2019 was another really good year. The stock markets once again hit all time highs.? Real estate prices around the country continue to increase.? And interest rates and inflation both remain near historic lows.

Hello 2020.? Who knows how financially friendly this year will be – especially with Trump entering the fourth year of his Presidency and national elections slated for November. For that reason, here are nine? prudent steps you can take to keep your personal finances moving on the right track:

  • REset your retirement savings: Most people find it easier to max out their retirement contributions by budgeting a set amount each month.? Instruct your employer to withhold $1,625 per month for your 401(k) or 403(b) plan to ensure that you hit the “salary deferral” max of $19,500 for 2020.? Are you self-employed?? If so, you can sock away up to $57,000 next year into a SEP, Keogh or Solo 401(k), which equals $4,750 per month.? And if you’ll be 50 or older by December 31st, the maximum 2020 contribution jumps to $26,000 for 401(k) and 403(b) salary deferrals and $63.500 for Solo 401(k)’s.
  • REfinance your home mortgage:? Back in 2012, my wife and I locked in a fifteen-year fixed-rate mortgage at 2.875% with no points.? While mortgage rates may no longer be quite that low, according to our go to mortgage guru Bob Cahill of Leader Bank, there are still a variety of? mortgage products currently available to people looking to purchase a new home or perhaps even refinance an existing mortgage.
  • REduce your personal debt: There is still easy access to plenty of debt for most people.? Remember, leverage equals risk.? Make 2020 a year to pay down some of your personal debt.? Perhaps you might also delay the purchase of a new car, scale down your awesome vacation, or settle for a 60 inch flat screen TV.
  • REvise your savings and debt reduction goals: Take a few minutes to set (and also write down) new savings goals including how much you’d like to put away towards your retirement, a child’s education, and/or the down payment on a home, and also to reset how much you plan to pay down your student loans, personal debt, and home mortgage by the end of the year. (Please watch Alex Oliver’s recorded webinar on Game of Loans: Income Based Repayment Versus Refinancing.)
  • REbalance your investment portfolio: Warren Buffet said it best by stating, “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.”? During 2019, the stock market once again hit another all time high.? By rebalancing your portfolio to its original or updated asset allocation, you lock in gains from the sectors that performed the best and move money into sectors that underperformed and soon enough might be poised to catch up. (Please register for Alex Oliver’s 1/28/20 webinar on: Stock Markets in 2020: What to Expect.)
  • REcalculate how much your retirement savings will be worth when you retire: With the market indexes still near all time highs, now’s a great time to take a look at how much buying power you can expect to have upon retiring.? (Please watch Alex Oliver’s recorded webinar on: How to FIRE: Strategies for Becoming Financially Independent and Retiring Early.)
  • REvisit your life and disability insurance needs: As you move through your career and your life, your life and disability needs change. Give some thought to how much of these insurances you need versus how much you currently get through your employer’s benefit package and how much coverage you’ve already purchased for your personal policies.
  • REview your overall health insurance costs: Consider switching to a qualified high deductible health insurance plan that allows you to contribute to a Health Savings Account (HSA). HSAs provide for the only opportunity I know of that allow for tax-deductible contributions and tax-free withdrawals. The maximum contribution for 2020 is $3,550 for individuals and $7,100 for people with family plans. Anyone 55 or older can add an additional $1k. Many people with HSAs choose to let the money contributed into their account grow tax-deferred, and instead pay for their family’s healthcare costs out of their household checking account. (Please register for Alex Oliver’s 2/21/20 webinar on Health Savings Accounts.)
  • REsolve errors on your credit report: Each year, you’re entitled to three free credit reports, so there’s no excuse to not look at this important financial report annually, especially since errors are not uncommon.? Order your free report at

You can also listen to a radio interview I had with Boston radio personality George Knight a few years back on this topic.

Tax and Financial Planning Calendar for January 2020

Month Income Taxes Saving and Investing
  • 4th quarter 2019 estimates due 1/15/20
  • Expect to receive W-2s and 1099s by January 31, 2020
  • Review your withholdings for 2020, and, if necessary, file a new W-4 Form with your employer to adjust your withholding
  • Prepare a W-2 for your Nanny by January 31st if you paid the nanny more than $2,100 in 2019
  • Contact your MDTAXES CPA to set up your tax prep appointment
  • Establish a savings and debt reduction goals for the year
  • Try to increase your monthly contributions to your 401(k) or 403(b) plans.? The maximum annual contribution for 2020 is $19,500.? Anyone 50 or older can contribute an extra $6,500
  • Automatically transfer $500 per month from your checking account into a Roth or Traditional IRA ($583.33 if 50 or older), and $1,250 per month into a 529 Account for each of your children or grandchildren