Mistakes to Avoid When Investing

When it comes to your money, the word “mistake” is not something you ever want to hear. But if you’re not that savvy at investment strategies, you could end up hearing that word more than you’d like. If you want to spare yourself the frustration of potentially losing your own money, there are some mistakes you want to avoid when investing.

Incurring Too High of Fees

No matter what you invest in, you have to be aware of which costs are acceptable to pay and which are way too high. Pay close attention to the fees you pay on each of your investments and what they are going towards. Understand whether you are paying a commission or investment management fee. Depending on your unique situation, one may be more advantageous than the other.

Ignoring Inflation

If you ignore inflation and don’t account for the changing values of interests and tax rates, you may end up only earning as much as you would have earned back when you first made the investment. It’s essential to account for inflation costs in order to increase your investment value instead of basically keeping it the same.

Ignoring Tax Consequences

Depending on how and where you hold your assets and investments, you could significantly reduce the amount of taxes you have to pay to the Federal, State, and local governments.

• For example, holding high dividend yield blue-chips in a tax-deferred retirement account may help you keep more of the capital.

Investing in Things You Don’t Understand

If you can’t explain to a friend how your investment works and how it earns you money in a few simple sentences, you should not be making that investment. You can’t be successful in things you don’t understand. If you are dead-set on using a certain investment strategy, employ the help of a professional investment specialist.

*Investing in stocks involves risks, including loss of principle.The information in this blog article is not intended as tax, legal, investment, or retirement advice or recommendations, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.

Let American Investment Planners, LLC be your resource. Our financial advisors are ready to sit down and discuss your financial goals for your investments and beyond. To schedule an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Things You Didn't Know Were Tax Deductions

There’s not a person on Earth who doesn’t want to do everything in his or her power to

receive the biggest tax return possible. That’s why we all list deductions when filing. While you’re probably aware that the major deductions are mortgage interests, charitable contributions, and medical expenses, there are probably also a few things you didn’t know were tax deductions.

Sales Tax

You can deduct your state sales tax or state income tax from your federal income tax. This mostly applies to bigger purchases, so while we wouldn’t really try to deduct the sales tax from your online shopping habits, you can definitely check the IRS itemized purchase chart and deduct the sales tax on an engagement ring or car.

Medical Expenses

If your healthcare premiums exceed 7.5% of your adjusted gross income, you can claim

them as an itemized deduction on your income tax return. If you’re self-employed and pay for your own health insurance, you may be able to claim 100% of your premium costs. The amount would simply come off your adjusted gross income rather than be listed as a deduction.

Teacher’s Supplies

Basically every teacher buys classroom supplies using money from their own pockets, and the IRS understands that. K-12 educators can claim up to $250 spent on materials that gets subtracted from your income, so you don’t necessarily have to itemized the costs.

Babysitter Costs

If you hired a babysitter to watch your children while you volunteered at a recognized

charity for no pay, you can list that expense as a charitable contribution. You just have to be able to prove that the babysitter was performing his or her duties while you were volunteering.

Non-Typical Business Expenses

If you make purchases for your business, they can count as deductions — even if they’re a bit strange. For example, bodybuilders have been able to claim body oil they use during competitions.

Unsure if one of your expenses can count as a deduction? Ask a tax expert! American Investment Planners, LLC offers professional tax preparation services to individuals and businesses across the country. Let us make your tax season less taxing! To schedule an appointment with one of our tax professionals, please call (516) 932-5130, or email info@americaninvestmentplanners.com.

The Worst Tax Mistakes You Can Make

We wouldn’t be surprised if you told us you’ve had to look over your taxes a dozen times

to make sure everything is correct — and we don’t blame you. When you navigate your taxes on your own, it’s easy to make mistakes. However, some mistakes are much worse than others. In order to avoid getting into hot water with the IRS or waste more time filing, make sure to avoid these tax mistakes.

Entering the Wrong Names or Numbers

It’s very easy to accidentally write the wrong last digit of your spouse’s Social Security number or write an “h” that looks like an “n” and make your dependent child’s name seem like someone else’s. Make sure you have every name and number right on our tax return before submitting it.

Picking the Wrong Filing Status

There are only five statuses you can use: Single, Married Filing Jointly, Married Filing

Separately, Head of Household, and Qualifying Widow(er). Each status has its own rules for deductions, credit eligibility, and tax amount, so getting your status wrong could have major consequences.

Not Paying Tax on Your Social Security Income

If you’re receiving income from Social Security, a pension, and/or investments, you need to pay taxes on that. Even if you aren’t able to pay them, make sure you file that income to avoid getting slammed with penalties and/or interests from the IRS.

Being Too Aggressive With Deductions

Obviously, you want to get the most money possible back on your return, but be careful with how many deductions you list. Writing too many in without having the proper receipts or records can result in your getting audited by the IRS — which is never a good thing.

Meeting with a tax professional can ensure you don’t get caught in any sticky situations with the IRS and save you from having to spend more time fixing mistakes. American Investment Planners, LLC offers professional tax preparation services to individuals and businesses across the country. Let us make your tax season less taxing! To schedule an appointment with one of our tax professionals, please call (516) 932-5130, or email info@americaninvestmentplanners.com.

Tax Tips for the Self-Employed

Taxes can be complicated enough when you work for another person or company, but they you enter a whole new ballpark when you’re self-employed — leaving people with a lot of questions. If you’re wondering what differences apply to you as a self-employed person around tax season, these are a few tips that may help.

When it comes to special taxes:

You need to include Schedule SE and pay a self-employment tax rate which is 15.3%.

This accounts for 12.4% for social security and 2.9% for Medicare.

When it comes to the amount of income taxed:

All the profits of your business are subject to Medicare tax. However, only the first $127,200 of your earned income is subject to Social Security. This applies to the combination of your income as an employee and your business’ profits, so once it reaches the maximum amount, you’ll only pay the Medicare portion of those taxes.

When it comes to deducting expenses:

If you have an expense from your business, you can deduct it. This includes office supplies, costs of goods sold, advertising, licenses, equipment, insurance, utilities, etc. You can also deduct the cost of business travel as well as 50% of business meals.

When it comes to your home office:

As long as there is a designated place in your home that is used solely to conduct business and managerial activities, you can claim a home office for deductions related to rent/mortgage expenses, phone use, cleaning, etc.

When it comes to incorporating your business:

If your small business is unincorporated, like many are, you’ll have to use other incomes to

make up for any money lost in your business. To avoid this, you can set your business up as an LLC (limited liability company) or S-Corporation. Once it grows in revenue, size, and success, you can change it to a C-Corporation and take advantage of corporate tax rates and employee benefit plans.

The best way to navigate self-employed taxes is to speak to a tax expert. American Investment Planners, LLC offers professional tax preparation services to individuals and businesses across the country. Let us make your tax season less taxing! To schedule an appointment with one of our tax professionals, please call (516) 932-5130, or email info@americaninvestmentplanners.com.

Financial Moves to Make When Having a Baby

Congratulations, you’re have a baby! We’re sure you’re beyond excited to begin this next chapter in your life and welcome your little one in the next few months, but before you start shopping for the perfect crib and clothes, make sure you’re making these important financial moves to prepare for your baby.

Create an Emergency Fund

If you don’t already have one, start saving money in an emergency fund. The last thing you’d want to have happen is to get landed with a bunch of unexpected baby bills and have no way of paying them.

Create Better Money Habits

A baby is expensive, so you’re going to have to change your spending habits to accommodate the new things you’ll have to buy. For example, you’ll have to stop going out to dinner twice a week because you’ll need to spend that money on diapers and baby food.

Get the Right Health and Life Insurance

In order to avoid having to pay a lot out of pocket for doctors visits, make sure you have the right health insurance coverage. And, although it’s a bit morbid to think about, make sure you have the proper life insurance coverage in case something should happen to you or your partner down the line.

Plan Your Will and Estate

Even if you don’t want to think about it, you have to be prepared for a future that may not have you in it. Properly planning your will and estate and setting up trusts for your child can ensure that they will have a comfortable future if anything happens to you or your partner.

Start a 529 Account

The sooner you start adding to a 529 account, the more money you’ll be be able to save up for your child’s college education, and the fewer student loans he or she will have to take out to pay for college years from now.

American Investment Planners can assist with everything you need from 529 plans to helping manage your cash. We are here to make everything as simple as possible. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

What Can a 529 Plan Be Used For?

As college acceptance letters keep rolling in, you're probably beginning to focus on how exactly you're going to pay for everything your child's education will cost. If you invested and saved in a 529 plan, you're saving your child the hassle of dealing with student loans. But what exactly can a 529 plan be used for? Potentially, more than you think.

Tuition

This one is a given. The money saved in your 529 plan can be used to cover your child's tuition throughout their full-time or part-time college careers at accredited institutions. Being accredited just means that the college has passed a review process — which most institutions have — but it's always a good idea to double check with the financial aid office.

Confirmed Books and Supplies

Any college student you speak to can attest to the fact that college textbooks can be wildly expensive. You can use the funds in your 529 plan to purchase books, online access codes, and lab supplies that are required for your child's classes.

Confirmed Room and Board

If your child lives on campus, you can use your 529 plan to pay for their dorm as long as the money goes straight to the university. However, if your child lives off campus, you can only use your 529 plan to pay for their rent up to the equivalent of a dorm cost.

• For example, if room and board on campus costs $8,000, you can only put that amount towards off-campus rent using the 529. Any rent higher than that will have to be paid for using other methods.

Computers (Sometimes)

You can use your 529 plan to purchase a computer as long as it will be primarily used by your child while they are in school. So if you purchase a laptop for them to take notes on in class, that's fair game. But if you purchase a desktop set for your home office, even if your student will use it sometimes, that doesn't count as a qualified purchase to use the 529.

Planning for college is a lot easier with the help of a financial advisor. American Investment Planners can assist with everything you need from 529 plans to helping with student loans. We are here to make everything as simple as possible. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Ways to Save on Child Care

As a parent, you probably want to spend as much time as possible with your children. But in today’s world that typically requires both parents to work, you’re probably forced to seek other forms of childcare. And if there’s one thing that’s true about outside childcare, it’s that it can drain your wallet. Luckily, there are a few ways to save on child care so you don’t have to give an arm and a leg to ensure your baby’s well-being.

Take Advantage of Flex Accounts

Some employers offer Flexible Spending Accounts (FSA) that set aside money to specifically to be used for child care. You can set aside up to $5,000 before taxes to be used for daycare, preschool, and some summer camp programs.

Apply Your Child Care Tax Credit

If your employer doesn’t offer a FSA, you can itemize child care costs up to $3,000 per child per year or up to $6,000 per family. Once you have calculated your expenses, a percentage of that can be applied towards a tax credit that gives you some of your money back.

Talk to HR

More and more companies are recognizing the high expenses of child care on working parents and are helping their employees cover the costs. Talk your your HR director to see if your company offers any benefits such as child care cost reimbursements.

Choose a Daycare Over a Nanny

While nannies offer personalized care for your child, they typically cost much more than a daycare service would. Daycares still offer a safe, nurturing environment for your child at a fraction of the cost.

Share Child Care

If you can’t find a daycare service to fit your needs and schedule and have to hire a nanny, try to see if you can split the costs with someone. If a friend or coworker also needs child care, have the nanny watch both of your children. It may cost a bit more for multiple kids, but splitting the costs is less expensive than paying them all on your own.

Hire a Teen Babysitter

If you just need someone to make sure your kids are doing their homework and playing nicely after school, hire a local teenager from your neighborhood to watch them rather than spending more money on a nanny or child care service, especially if your kids are a bit older.

American Investment Planners can assist with everything you need from 529 plans to helping manage your cash. We are here to make everything as simple as possible. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

The Documents You Need to Gather Before Filing Your Taxes

As tax season rolls on and we get closer and closer to the deadline date, you should

be getting together all the information you need to give your tax expert. But what exactly

do you have to hand over in order to file your taxes properly while simultaneously getting

the best return possible? We’re glad you asked! While not everything on this list will apply

to every taxfiler, it can help you figure out what you need to gather before filing your taxes.

Your Income Information:

• Your W-2
• 1099-SSA for Social Security income
• 1099-R for pension, IRA, or annuity income
• Documents of alimony you receive — including the Social Security number of the payee
• 1099-B or 1099-S for income from stock sales or other investments
• A complete record of all your business income if you’re self-employed
• Documents of rental income if you own investment property

Your Expense Information

• 1098 reporting your paid mortgage interest and property taxes
• 1098-T of educational expenses
• 1098-E reporting any paid student loan interest
• Documents proving charitable contributions
• 1095-A, 1095-B, or 1095-C reporting any health insurance premiums you’ve paid

Third Party Finance Documents

• Expenses for rental properties including marketing, repairs, maintenance, utilities, and insurance costs
• Records of paid alimony
• Records of mileage driven for business, employment, medical or charitable activities — including records of toll and parking payments
• Sales tax paid on major purchases — especially a new car

Personal, Non-Financial Documents

• Social Security numbers of all household members
• Copies of your past year’s income tax returns
• Income information of your dependent children
• Your ex-spouse’s Social Security number if you receive or pay alimony or child support

Like we said, this isn’t a definitive list of what you’ll need, but it should definitely help get

the ball rolling as you continue to gather all your information to file your taxes.

American Investment Planners, LLC offers professional financial planning services to

individuals and families across the country. Whether you need help filing your taxes or

deciding how to spend your rebate, our financial advisors are here to help. To schedule

an appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.