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2017 Year-end Tax Planning

posted Nov 1, 2017, 11:13 PM by Tim Isbell   [ updated Nov 2, 2017, 7:35 AM ]

This November, far more than most years, is a smart time to start tax planning because Congress is working hard on a major change to the tax code. And it may become effective in 2018, which complicates tax planning for 2017. We have some information about what's in the tax package, but everything is subject to change before the end of the year. Even so, now is the time to start thinking about and preparing to respond. Substantial money is at stake for individual taxpayers. 

Here are six key elements that Congress has penciled into the current version:

  1. Tax rates will go down in 2018. 
  2. Tax bracket thresholds will change.
  3. The Standard Deduction will double. The combination of this and #2 will cause many people who now file the 1040 long form (the one where you can itemize deductions) to move to the 1040A or 1040EZ (the two short forms where you do not itemize deductions).
  4. State and local taxes will no longer be deductible on the federal tax forms.
  5. The maximum amounts that people can invest each year in tax-advantaged retirement accounts (401k, 403b, 457, etc.) will go down.
  6. Termination of the ministers housing allowance tax break. This change is not likely to remain in the law, but it's under consideration. While it may come at some point, it will be subject to legal challenges.

If the above items remain in the bill and the change is effective for 2018, here are some strategies to consider and discuss with a tax professional: 
  • Pull some generosity and charitable contributions from 2018 back into 2017. See also Tax-Smart Donations.
  • Pull some mortgage payments from 2018 back into 2017.
  • Pull property tax payments from 2018 back into 2017.
  • Pull estimated state and local income tax payments from 2018 back into 2017.
  • Pull payments of some 2018 college tuition bills back into 2017 to take advantage of the American opportunity tax credit (which is only available using the 1040 long form).
  • Defer whatever income you can from 2017 to 2018.
  • In 2017, maximize contributions to tax advantaged retirement programs. 
  • Retired ministers who now can withdraw 403b money tax-free for housing may have to pay tax at their income rate on these withdrawals. So if you are tapping your 403b a little each year and taking advantage of this tax break, you may want to take as much as possible in 2017.

Note: I am not a tax professional. I am posting this material as a way to encourage readers to think about these areas and talk with a tax professional. 

Tim Isbell

Two Fresh Prayer Tips

posted Oct 14, 2017, 7:57 PM by Tim Isbell

I just added two tips to an existing web page. One helps in those times when we want to pray but our mind is stuck on something else. The other is a way to use a ready-made prayer, such as the Lord's prayer or one from our childhood, to link us with the past and future me's. Give them a try. If you're a pastor, use one for a Prayer-Time Teachable Moment before your pastoral prayer in the next worship service.

To check these out, click on Prayer Tips for All and jump down to items 1.5 and 1.6.


Beyond Conversion - the personal journey toward Christlikeness

posted Sep 25, 2017, 7:36 PM by Tim Isbell

More than anything I've written, this post captures seven decades of thinking deeply about a life spent following Jesus. And it captures the enlightenment from decades of processing this subject with wiser and more thoughtful Christians than myself. Perhaps most important, this post explains the central truth God has taught me over a lifetime of imperfectly following Jesus.

So, if you self-identify as a Christian but wonder, "Isn't there more?" there probably is. This post describes the "more" I've found.

Or maybe you reject Christian faith because you notice hypocrisy among so many self-identified Christians. I notice this, too. If that's you, please read this post. It describes the authentic Christian life that lies beyond conversion. I'm hoping it intrigues you enough to look again, or deeper, at Christian faith. If you don't find the post attractive, lay it aside - even better, click on contact Tim and tell me your thoughts. 

Here's a snippet about the post: After conversion to Christian faith, nobody follows God perfectly. Willpower and other human strategies do not produce hearts that beat like Jesus’ heart. But God’s redemptive loop does; it leads us to an increasingly intimate relationship with Jesus where our hearts beat more and more like his. For more about authentic Christian faith, check out Beyond Conversion - 1.

Blessings, Tim

Greg Gates on Growing Small Churches

posted Sep 12, 2017, 2:26 PM by Tim Isbell

On a recent Friday morning at a local Denny’s Restaurant in Santa Clara, a dozen pastors listened while Pastor Greg Gates, lead pastor at The Point in San Jose, CA, unpacked his advice on how to help a small church grow. We knew his church grew nicely in recent years, so a month earlier we asked him to give us some thoughts on how this happened.

The first thing Greg pointed out was that he has now served in three of the most unchurched and de-churched demographics in the United States: the Portland-Auburn Maine area, the Albany-Schenectady New York area, and the San Jose California area (the heart of Silicon Valley).

Then he passed out a list of characteristics that would “almost guarantee that a small church would grow to 80% capacity or 100 people (whichever is less) in five years.”

I was intrigued and asked Greg if I could post his list on my site to help other small church pastors. He agreed, so I made a web page for it in the Resources section. But to make it easy for you to use Greg's list in a meeting, here's a direct link to the Google Doc version: Growing Small Churches.



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Snapshot of Joy in Heaven

posted Aug 30, 2017, 8:58 PM by Tim Isbell

I haven't written anything about what life will be like in heaven. I have told a few children that "In heaven, the crayons are always sharp." And I've used a few lines with the same limited theological content with adults.

But my good friend, George Larsen, wrote a blog post last fall describing an aspect of joy in heaven. And it contains a great YouTube video illustration. He wrote it on the one-year anniversary of his wife's passing. That post is worth a wider reading, and I wanted something on this topic on my site, so here it is. Just click on Joy in Heaven.



The case for index funds just got stronger

posted Jun 9, 2017, 9:47 AM by Tim Isbell

Consider four facts:

1. In 2015 only 40% of active managers beat the Russell 1000 (A large-cap U.S. stock index). The number for 2016 was just 20%.

2. Of the active managers who beat the indexes in one year, only about 5% did so for three consecutive years.

3. The entire net gain in the U.S. stock market since 1926 is attributable to the best performing 4% of listed stocks. The other 96% collectively matched the returns of one-month Treasuries.

4. 58% of the CRSP common stocks (US Total Market Index) have lifetime holding period returns less than those of one-month Treasuries.

For more on the implications of these four facts, check out The Case for Index Funds

Credit Card Minimum Payments

posted May 21, 2017, 6:52 PM by Tim Isbell

Assume your credit card balance is $5,000 at an 18% annual rate. Every month the credit card company requires a minimum payment of 4% of the current balance, or $20, whichever is greater. At this rate, how long do you think it takes to erase the debt? 

Click the link to find out, and to access a free calculator that you can use to analyze your own credit card debt.

Tim Isbell

Two new tools for couples

posted Apr 29, 2017, 4:54 PM by Tim Isbell   [ updated Apr 30, 2017, 2:29 PM ]

Because of recent premarriage counseling projects, I added two new resources to the Advice for Couples toolbox.

The first is "Responding to Conversation Bids." It explains how best to respond when your partner tries to open a conversation with you. Research shows that your response is crucial to the long-term success of the relationship

The second is "The Mathematics of Love." This one offers and explains an equation to help couples understand how conversations spiral into trouble. It suggests, surprisingly, that couples with low "negativity thresholds" are more likely to have lasting relationships than those with higher thresholds.

To access these resources, click on the above link and browse down in the table to locate these two new resources - then click on them. You may also find other useful tools there, too.

Blessings, Tim

My favorite financial podcasts, blogs, and enews

posted Apr 11, 2017, 1:25 PM by Tim Isbell   [ updated Apr 19, 2017, 11:08 PM ]

I like to listen to podcasts while walking or doing another exercise, and when driving to and from appointments. One category I enjoy is finance and economics. So I decided to post a list of my favorite financial podcasts, and as long was at it I decided to include my favorite financial and economics blogs and e-news sources.

I use BeyondPod to manage my podcasts, and Feedly to manage my blogs. Of course, your current podcast and blog manager will also work just fine. Both BeyondPod and Feedly are available on Google Play. If you are an Apple user, I'm sure you have sources for these, too.

So here's my list:

  • 50 Things that Made the Modern Economy (podcast)
  • Planet Money (podcast)
  • Freakonomics Radio - the Hidden Side of Everything (podcast)
  • Robert Shiller Feeds (occasional blogs)
  • McLean's Weekly Roundup (newsletter)
  • Vanguard Blog (blog)
  • The Kiplinger Letter (newsletter)
For links to and a short description of each of these, just click on my Resources/Links. You'll find this podcasts, blogs, and e-news section near the bottom of the page - or you can jump there quickly by just clicking on this section in the Table of Contents.

Tax tip for 70-year-olds

posted Apr 5, 2017, 8:37 AM by Tim Isbell

A couple of years ago I posted about Tax-Smart Donations. It included the wisdom of using some or all of your Retired Minimum Distributions (RMD) for charitable contributions. For readers unfamiliar with this part of growing older, in the year Americans reach the age of 70.5 we must begin withdrawing money from Traditional IRAs. The IRS sizes the mandatory withdrawal based on the balance in our account on the previous December 31. Since this money was not taxed when went into the account nor as it grew through the years, every dollar we withdraw in retirement is taxed at the ordinary income rate. 

For those of us seniors who know we're going to give money to charity this year, there is a tax advantage to giving it directly from our RMD because these dollars do not add to our taxable income - and therefore, are not taxed. Because it is not a deduction, but a reduction in income, the benefit applies as much to those filing the short form as those filing the long form! For the details on this, check out Tax Smart Donations. The very last section deals with donating from an RMD.

So, why am I writing about it again? Because the first time I wrote about giving from an RMD, I was too young to make use of it. I'm old enough now to use it - so I am. And I revised the web page to reflect what I learned.



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