Securities offered through HD Vest Investment ServicesSM, Member SIPC Advisory services offered through HD Vest Advisory ServicesSM

6333 N. State Hwy. 161, Suite 400, Irving, TX 75038 (972) 870-6000

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Navigating the Tax Environment

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Today’s Discussion

• Why are taxes important?

• What tax laws have recently changed?

• What are the impacts of these changes?

• Which financial areas should I review?

• What are my next steps?

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A Question For You?

Why are taxes important?

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Why Taxes Are Important

Every dollar you spend on federal, state, county, city and school district taxes is a dollar you cannot save or spend yourself.

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Result of the Tax Law Changes

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Tax Freedom Day 2014

Result of theTax Law Changes

2012 Taxes 2013 Taxes77% of Americans faced a tax increase

http://www.huffingtonpost.com/2013/01/02/fiscal-cliff-raise-taxes_n_2395559.html

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Why Have Taxes Increased

• American Taxpayer Relief Act of 2012– Passed by Congress on January 2013– Partial resolution to the tax side of the

“Fiscal Cliff”– Continued many of the Bush Era tax

cuts

• Patient Protection and Affordable Care Act– Commonly called “Obama Care”– PPACA is aimed at reducing the number

of uninsured Americans and reducing the overall cost of healthcare

– The Act created several new taxes that start this year

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What Changed?

• Ordinary income tax rates– The highest federal marginal tax rate is 39.6%

• Capital gains rates– The highest federal capital gains rate is 20%

• Qualified-dividend tax rates– The highest qualified dividend rate is 20%

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What Changed?

• Phase-out of itemized deductions– $254,200 for single, $305,050 for married filling jointly

• Alternative minimum tax rates are established– $52,800 for single, $82,100 for married filling jointly

• Medical expenses must exceed 10% of AGI floor to be deductible

• Federal estate tax applicable exclusion, gift tax lifetime exclusion base is set at $5,340,000– Estate and gift tax rates are 40%– Annual exclusion gift limit is $14,000

Medicare Tax Changes

• 0.9% increase for wages or self-employment income over threshold

• 3.8% new tax rate on investment income when MAGI exceeds threshold– New tax is in addition to current income taxes– Tax on investment income also applies to

trusts and estates

• Applies to “high-income taxpayers”– Single – MAGI is greater than $200,000– Joint – MAGI is greater than $250,000– Threshold is not indexed for inflation

11CCH Analysis of the Post 2012 Net Investment Income and Additional Medicare Taxes

Medicare Tax Changes

• Net investment income includes:– Taxable interest– Dividends– Capital gains– Annuity income– Income from passive activities

• Net investment income does not include:– Exempt interest– Retirement plan distributions– Income from an active trade or business

12CCH Analysis of the Post 2012 Net Investment Income and Additional Medicare Taxes

Planning Strategies

Review your portfolio now, especially if you are a higher-income taxpayer

– Long-term capital gains rates are historically low• Should you reposition?

– Assess your holdings of dividend-paying stocks • Should tax-deferred allocations favor

dividend-paying stocks?

– Plan for Medicare taxes (if applicable) • Schedule an appointment for projections .• Schedule an appointment to consider

portfolio changes that may lessen exposure.

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Which Dates Are Important

• April 15

• October 15

• December 31

Why Taxes and Financial Services Together

FOR INTERNAL USE ONLY

Financial Check Up

8 Wealth Management Issues®

1. Investment Management2. Cash Flow and Debt

Management 3. Family Risk Management 4. Retirement Planning 5. Education Planning 6. Legacy and Estate

Planning 7. Business Planning 8. Special Situations

Our Planning Process

• Evaluate your current tax situation

• Establish goals and objectives

• Create a plan

• Evaluate strategies and alternatives

• Implement the plan

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Your Next Step

Schedule an appointment to review your 1040 Analyst® report.

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Investments are subject to market risks including the potential loss of principal invested.

HD Vest Financial Services and its affiliates (collectively, “HD Vest, Inc.”) do not provide legal, tax or accounting services. You should consult your tax and legal professional regarding the tax and estate planning implications of any investments.

HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name.

Securities offered through HD Vest Investment ServicesSM, Member SIPCAdvisory services offered through HD Vest Advisory ServicesSM 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038 972-870-6000