CEE Fund

Introduction to Tax PlanningOr

“Keeping More of What You Earn”

CEE Fund2014 Tax Rates

Ordinary Income Tax Rates & Applies to Salary

Income

$0 to $9,075 10%

$9,076 to $36,900 15%

$36,901 to $89,350 25%

$89,351 to $186,350 28%

$186,351 to $405,100 33%

$405,101 to $406,750 35%

$406,751 and over 39.6%

Income

$0 to $18,150 10%

$18,151 to $73,800 15%

$73,801 to $148,850 25%

$148,851 to $226,850 28%

$226,851 to $405,100 33%

$405,101 to $457,600 35%

$457,601 and over 39.6%

Married Filing JointSingle Filing Joint

Strategy: Get married & have children!

CEE FundCapital Gains Rates

Applies to Investment Gains/Profits Must hold for 12 months and 1 day or Short Term

Capital Gains rates apply STCG rates equal Ordinary Income Tax Rates

Strategy: Market Time vs. Buy & Hold Ask your parents to transfer appreciated assets to you, who then sells

Income

0% to 15% Brackets 0%

> 15% but < 39.6% bracket 15%

Top Bracket 20%

CEE Fund

Tax Deductions Medical, State Taxes, Property Taxes, Home Mortgage

Interest, Home Equity Interest, Investment Interest Expense, Charity, Professional Fees, Casualty Losses

A $100 expense that is deductible saves $30.00 in taxes and actually costs you $70.00 if you are in the 30% tax bracket

Strategy: Bunch your deductions in 1 year Deduct the fees of your advisor

CEE Fund

Tax Credits

Includes:______________

A $100 expense that qualifies for a tax credit actually costs for “0” since your taxes are reduced by $100

CEE FundItemized Deductions

You may not have sufficient Itemized Deductions If you don’t, claim the Standard Deduction

$ 6,200 for Single$ 12,400 for Married Filing Joint

Each person whom you provide > 50% of Financial Support can be claimed as a dependent

Each dependent is worth $_______

Deductions & Exemptions are “phased out” as your income exceeds $275,000 Single or $300,000 Married Filing Joint

Exemptions/Dependents

CEE Fund

AMT: Alternative Minimum Tax

A parallel tax system designed to assure that everyone pays some level of tax

Impacts those with high income tax deductions

CEE Fund

Year Estate Tax Exemption Top Estate and Gift Tax Rate

Gift Tax Exemption

2005 $1,000,000 49% $1,000,0002006 $1,000,000 49% $1,000,0002007 $2,000,000 45% $1,000,0002008 $2,000,000 45% $1,000,0002009 $3,500,000 45% $1,000,0002010 $5,000,000 35% $1,000,0002010 Unlimited 0% $1,000,0002011 $5,000,000 35% $5,000,0002012 $5,120,000 35% $5,120,0002013 $5,250,000 40% $5,250,0002014 $5,340,000 40% $5,340,000

Gift & Estate Tax Chart

CEE Fund

Saving for RetirementWhy Should You Worry About it Now?

IRA Roth IRA 401k/403b SEP IRA Simple IRA Personal Savings

IRACEE Fund

$5,500 Maximum Contribution per year

$6,500 Maximum Contribution per year (if over age 50)

May be tax deductible* today Single – MAGI less than $70,000Married – MAGI less than $116,000

Taxed upon withdrawal once age 59 ½ plus

*Even if covered by a qualified plan at work

CEE FundRoth IRA

Not tax deductible today but tax free upon withdrawal at age 59 ½ plus

$5,500 Maximum contribution $6,500 Maximum contribution over age 50

Income Phase out for Contributions

Single < $129,000Married < $191,000

Which one is better?

CEE FundEmployer Retirement Plans

401k/403b/TSP Includes:

Pretax 401kRoth 401k$17,500 Max Contribution$23,000 Max Contribution over age 50

* No income limits on Roth 401k Contributions

CEE FundThe Miracle of Compound Interest

Strategy: Be sure your parents don’t run out of money!

$4,000/Year saved at 6% interest - Now Value in 20 years: $147,142 Value in 30 years: $316,232

$4,000/Year saved at 6% interest for only 10 years – Part time Value in 20 years: $94,419 Value in 30 years: $169,090

$4,000/Year saved at 6% starting 10 years from today – Later Value in 20th year: $52,723 Value in 30th year: $147,142

$1,000,000 in 40 years requires: $6,461 saved per year for 40 years at 6% $3,860 saved per year for 40 years at 8%

$1,000,000 in 20 years requires: A nice inheritance from Mom & Dad!