Cooper Financial ServicesMichael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

May 2017Tax Benefits of Homeownership

Spring Cleaning Your Finances

Are you ready to retire?

How can I prepare financially for stormyweather?

Cooper Advisory NewsletterPlanning Your Financial FutureFour Ways to Double the Power of Your Tax Refund

See disclaimer on final page

The IRS expects thatmore than 70% oftaxpayers will receivea refund in 2017.¹What you do with atax refund is up toyou, but here aresome ideas that maymake your refundtwice as valuable.

Double your savingsPerhaps you'd like to use your tax refund tostart an education fund for your children orgrandchildren, contribute to a retirementsavings account for yourself, or save for a rainyday. A financial concept known as the Rule of72 can give you a rough estimate of how long itmight take to double what you initially save.Simply divide 72 by the annual rate you hopethat your money will earn. For example, if youinvest your tax refund and it earns a 6%average annual rate of return, your investmentmight double in approximately 12 years (72divided by 6 equals 12).

This hypothetical example of mathematicalcompounding is used for illustrative purposesonly and does not represent the performance ofany specific investment. Fees, expenses, andtaxes are not considered and would reduce theperformance shown if they were included.

Split your refund in twoIf stashing your refund away in a savingsaccount or using it to pay bills soundsunappealing, go ahead and splurge onsomething for yourself. But remember, youdon't necessarily have to spend it all. Instead,you could put half of it toward somethingpractical and spend the other half on somethingfun.

The IRS makes splitting your refund easy.When you file your income taxes and choosedirect deposit for your refund, you can decide tohave it deposited among two or even threeaccounts, in any proportion you want. Qualified

accounts include savings and checkingaccounts, as well as IRAs (except SIMPLEIRAs), Coverdell Education Savings Accounts,health savings accounts, Archer MSAs, andTreasuryDirect® online accounts. To split yourrefund, you'll need to fill out IRS Form 8888when you file your federal return.

Double down on your debtUsing your refund to pay down credit card debtor a loan with a high interest rate could enableyou to pay it off early and save on interestcharges. The time and money you'll savedepend on your balance, the interest rate, andother factors such as your monthly payment.Here's a hypothetical example. Let's say youhave a personal loan with an $8,000 balance, a12% fixed interest rate, and a 24-monthrepayment term. Your fixed monthly payment is$380. If you were to put a $4,000 refund towardpaying down your principal balance, you wouldbe able to pay off your loan in 12 months andsave $780 in interest charges over theremaining loan term. Check the terms of anyloan you want to prepay, though, to make surethat no prepayment penalty applies.

Be twice as nice to othersGiving to charity has its own rewards, but UncleSam may also reward you for gifts you makenow when you file your taxes next year. If youitemize, you may be able to deductcontributions made to a qualified charity. Youcan also help your favorite charity or nonprofitreap double rewards by finding out whetheryour gift qualifies for a match. With a matchinggift program, individuals, corporations,foundations, and employers offer to match giftsthe charitable organization receives, usually ona dollar-for-dollar basis. Terms and conditionsapply, so contact the charitable organization oryour employer's human resources departmentto find out more about available matching giftprograms.

¹IR-2017-01, irs.gov

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Tax Benefits of HomeownershipBuying a home can be a major expenditure.Fortunately, federal tax benefits are available tomake homeownership more affordable and lessexpensive. There may also be tax benefitsunder state law.

Mortgage interest deductionOne of the most important tax benefits ofowning a home is that you may be able todeduct any mortgage interest you pay. If youitemize deductions on your federal income taxreturn, you can deduct the interest you pay on aloan used to buy, build, or improve your home,provided that the loan is secured by your home.Up to $1 million of such "home acquisition debt"($500,000 if you're married and file separately)qualifies for the interest deduction.

You may also be able to deduct interest youpay on certain home equity loans or lines ofcredit secured by your home. Up to $100,000 ofsuch "home equity debt" (or $50,000 if yourfiling status is married filing separately) qualifiesfor the interest deduction. The interest you payon home equity debt is generally deductibleregardless of how you use the loan proceeds.For alternative minimum tax purposes,however, interest on home equity debt isdeductible only for debt used to buy, build, orimprove your home.

Deduction for real estate property taxesIf you itemize deductions on your federalincome tax return, you can generally deductreal estate taxes you pay on property that youown. For alternative minimum tax purposes,however, no deduction is allowed for state andlocal taxes, including real estate property taxes.

Points and closing costsWhen you take out a loan to buy a home, orwhen you refinance an existing loan on yourhome, you'll probably be charged closing costs.These may include points, as well as attorney'sfees, recording fees, title search fees, appraisalfees, and loan or document preparation andprocessing fees. Points are typically charged toreduce the interest rate for the loan.

When you buy your main home, you may beable to deduct points in full in the year you paythem if you itemize deductions and meet certainrequirements. You may even be able to deductpoints that the seller pays for you.

Refinanced loans are treated differently.Generally, points that you pay on a refinancedloan are not deductible in full in the year youpay them. Instead, they're deducted ratablyover the life of the loan. In other words, you candeduct a certain portion of the points each year.If the loan is used to make improvements to

your principal residence, however, you may beable to deduct the points in full in the year paid.

Otherwise, closing costs are nondeductible.They can, however, increase the tax basis ofyour home, which in turn can lower your taxablegain when you sell the property.

Home improvementsHome improvements (unless medicallyrequired) are nondeductible. Improvements,though, can increase the tax basis of yourhome, which in turn can lower your taxable gainwhen you sell the property.

Capital gain exclusionIf you sell your principal residence at a loss,you can't deduct the loss on your tax return. Ifyou sell your principal residence at a gain, youmay be able to exclude some or all of the gainfrom federal income tax.

Capital gain (or loss) on the sale of yourprincipal residence equals the sale price of yourhome minus your adjusted basis in theproperty. Your adjusted basis is typically thecost of the property (i.e., what you paid for itinitially) plus amounts paid for capitalimprovements.

If you meet all requirements, you can excludefrom federal income tax up to $250,000($500,000 if you're married and file a jointreturn) of any capital gain that results from thesale of your principal residence. Anything overthose limits may be subject to tax (at favorablelong-term capital gains tax rates). In general,this exclusion can be used only once every twoyears. To qualify for the exclusion, you musthave owned and used the home as yourprincipal residence for a total of two out of thefive years before the sale.

What if you fail to meet the two-out-of-five-yearrule? Or you used the capital gain exclusionwithin the past two years with respect to adifferent principal residence? You may still beable to exclude part of your gain if your homesale was due to a change in place ofemployment, health reasons, or certain otherunforeseen circumstances. In such a case,exclusion of the gain may be prorated.

Other considerationsIt's important to note that special rules apply ina number of circumstances, including situationsin which you maintain a home office for taxpurposes or otherwise use your home forbusiness or rental purposes.

Limit on deductions

You are subject to a limit oncertain itemized deductions ifyour adjusted gross incomeexceeds $261,500 for singletaxpayers, $313,800 formarried taxpayers filing jointly,$156,900 for married taxpayersfiling separately, and $287,650for head of householdtaxpayers. This limit does notapply for alternative minimumtax purposes, however.

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Spring Cleaning Your FinancesThe arrival of spring often signifies a time ofrenewal, a reminder to dust off the cobwebsand get rid of the dirt and grime that have builtup throughout the winter season. And whilemost spring cleaning projects are likely focusedon your home, you could take this time toevaluate and clean up your personal financesas well.

Examine your budget..and stick with itA budget is the centerpiece of any goodpersonal financial plan. Start by identifying yourincome and expenses. Next, add them up andcompare the two totals to make sure you arespending less than you earn. If you find thatyour expenses outweigh your income, you'llneed to make some adjustments to your budget(e.g., reduce discretionary spending).

Keep in mind that in order for your budget towork, you'll need to stick with it. And whilestraying from your budget from time to time is tobe expected, there are some ways to helpmake working within your budget a bit easier:

• Make budgeting a part of your daily routine• Build occasional rewards into your budget• Evaluate your budget regularly and make

changes if necessary• Use budgeting software/smartphone

applications

Evaluate your financial goalsSpring is also a good time to evaluate yourfinancial goals. Take a look at the financialgoals you've previously set for yourself — bothshort and long term. Perhaps you wanted toincrease your cash reserve or invest moremoney toward your retirement. Did youaccomplish any of your goals? If so, do youhave any new goals you now want to pursue?Finally, have your personal or financialcircumstances changed recently (e.g.,marriage, a child, a job promotion)? If so, wouldany of these events warrant a reprioritization ofsome of your existing financial goals?

Review your investmentsNow may be a good time to review yourinvestment portfolio to ensure that it is still ontarget to help you achieve your financial goals.To determine whether your investments are stillsuitable, you might ask yourself the followingquestions:

• Has my investment time horizon recentlychanged?

• Has my tolerance for risk changed?• Do I have an increased need for liquidity in

my investments?

• Does any investment now represent too large(or too small) a part of my portfolio?

All investing involves risk, including the possibleloss of principal, and there can be noassurance that any investment strategy will besuccessful.

Try to pay off any accumulated debtWhen it comes to personal finances, reducingdebt should always be a priority. Whether youhave debt from student loans, a mortgage, orcredit cards, have a plan in place to pay downyour debt load as quickly as possible. Thefollowing tips could help you manage your debt:

• Keep track of your credit card balances andbe aware of interest rates and hidden fees

• Manage your payments so that you avoid latefees

• Optimize your repayments by paying offhigh-interest debt first

• Avoid charging more than you can pay off atthe end of each billing cycle

Take a look at your credit historyHaving good credit is an important part of anysound financial plan, and now is a good time tocheck your credit history. Review your creditreport and check for any inaccuracies. You'llalso want to find out whether you need to takesteps to improve your credit history. Toestablish a good track record with creditors,make sure that you always make your monthlybill payments on time. In addition, you shouldtry to avoid having too many credit inquiries onyour report (these are made every time youapply for new credit). You're entitled to a freecopy of your credit report once a year fromeach of the three major credit reportingagencies. Visit annualcreditreport.com for moreinformation.

Assess tax planning opportunitiesThe return of the spring season also meansthat we are approaching the end of tax season.Now is also a good time to assess any taxplanning opportunities for the coming year. Youcan use last year's tax return as a basis, thenmake any anticipated adjustments to yourincome and deductions for the coming year.

Be sure to check your withholding — especially ifyou owed taxes when you filed your mostrecent tax return or you were due a largerefund. If necessary, adjust the amount offederal or state income tax withheld from yourpaycheck by filing a new Form W-4 with youremployer.

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Cooper Financial ServicesMichael Butler, CFA® InstitutePresident/Financial Advisor3190 Whitney AvenueBuilding 6, Suite 2Hamden, CT 06518203-248-1972cfs@cooperfinservices.comwww.cooperfinservices.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2017

IMPORTANT DISCLOSURES

Cooper Financial Services, Inc. doesnot provide investment, tax, or legaladvice. The information presentedhere is not specific to any individual'spersonal circumstances. Securitiesoffered through our affiliateBroker/Dealer, CFS Securities, Inc.,Member FINRA & SIPC.

To the extent that this materialconcerns tax matters, it is notintended or written to be used, andcannot be used, by a taxpayer for thepurpose of avoiding penalties thatmay be imposed by law. Eachtaxpayer should seek independentadvice from a tax professional basedon his or her individualcircumstances.

These materials are provided forgeneral information and educationalpurposes based upon publiclyavailable information from sourcesbelieved to be reliable—we cannotassure the accuracy or completenessof these materials. The information inthese materials may change at anytime and without notice.

How can I prepare financially for stormy weather?Floods, tornadoes, torrentialrain, lightning, and hail arecommon events in many partsof the country during thespring and may result in

widespread damage. Severe weather oftenstrikes with little warning, so take measuresnow to protect yourself and your property.

Review your insurance coverage. Make sureyour homeowners and auto insurance coverageis sufficient. While standard homeownersinsurance covers losses from fire, lightning, andhail, you may need to buy separate coveragefor hurricanes, floods, earthquakes, and otherdisasters. Consult your insurer or insuranceprofessional, who can help determine whetheryou have adequate coverage for the risks youface.

Create a financial emergency kit. Collectfinancial records and documents that may helpyou recover more quickly after a disaster. Thiskit might contain a list of key contacts andcopies of important documents, includingidentification cards, birth and marriagecertificates, insurance policies, homeinventories, wills, trusts, and deeds. Make sureyour kit is stored in a secure fireproof and

waterproof container that is accessible andeasy to carry. The Emergency Financial FirstAid Kit, available online at ready.gov, offers anumber of checklists and forms that may helpyou prepare your own kit, as well as tips toguide you through the process.

Protect your assets. Take somecommonsense precautions to safeguard yourhome, vehicles, and other possessions againstdamage. For example, to prepare for a possiblepower outage, you might want to install anemergency generator and a sump pump with abattery backup if you have a basement orgarage that is prone to flooding. Inspect youryard and make sure you have somewhere tostore loose objects (e.g., grills and patiofurniture) in a hurry, cut down overhanging treelimbs, and clean your gutters and down spouts.Check your home's exterior, too, to make surethat your roof and siding are in good condition,and invest in storm windows, doors, andshutters. In addition, make sure you know howto turn off your gas, electricity, and watershould an emergency arise. And if you have agarage, make sure your vehicles are parkedinside when a storm is imminent.

Are you ready to retire?Here are some questions toask yourself when decidingwhether or not you are readyto retire.

Is your nest egg adequate?

It may be obvious, but the earlier you retire, theless time you'll have to save, and the moreyears you'll be living off your retirementsavings. The average American can expect tolive past age 78.* With future medical advanceslikely, it's not unreasonable to assume that lifeexpectancy will continue to increase. Is yournest egg large enough to fund 20 or more yearsof retirement?

When will you begin receiving SocialSecurity benefits?

You can receive Social Security retirementbenefits as early as age 62. However, yourbenefit may be 25% to 30% less than if youwaited until full retirement age (66 to 67,depending on the year you were born).

How will retirement affect your IRAs andemployer retirement plans?

The longer you delay retirement, the longer youcan build up tax-deferred funds in traditionalIRAs and potentially tax-free funds in Roth

IRAs. Remember that you need taxablecompensation to contribute to an IRA.

You'll also have a longer period of time tocontribute to employer-sponsored plans like401(k)s — and to receive any employer match orother contributions. (If you retire early, you mayforfeit any employer contributions in whichyou're not fully vested.)

Will you need health insurance?

Keep in mind that Medicare generally doesn'tstart until you're 65. Does your employerprovide post-retirement medical benefits? Areyou eligible for the coverage if you retire early?If not, you may have to look into COBRA or anindividual policy from a private insurer or thehealth insurance marketplace — which could bean expensive proposition.

Is phasing into retirement right for you?

Retirement need not be an all-or-nothing affair.If you're not quite ready, financially orpsychologically, for full retirement, considerdownshifting from full-time to part-timeemployment. This will allow you to retain asource of income and remain active andproductive.* NCHS Data Brief, Number 267, December 2016

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