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Monday, August 6, 2018

Back-to-School Checklist: A Reminder to Reassess your Financial Planning (Part 1)

The ever-present rush of a new school year is upon us.  For many families, this is the last week of summer. This is a great time to assess your current financial situation, long-term, and short-term goals.  This week, we are discussing topics that are likely addressed at some point but may not be considered until the time is of the essence.  While you are preparing your student to embark on a new school year, why not allow the back-to-school season to prompt you to better prepare for financial planning?

College Planning

College attendance and tuition are continuously increasing.  Regardless of your child’s current age, many parents worry about paying for college.  In fall 2017, some 20.4 million students were expected to attend American colleges and universities, constituting an increase of about 5.1 million since fall 2000 (source).  For the 2015–16 academic year, the average annual price for undergraduate tuition, fees, room, and board was $16,757 at public institutions, $43,065 at private nonprofit institutions, and $23,776 at private for-profit institutions. Charges for tuition and required fees averaged $6,613 at public institutions, $31,411 at private nonprofit institutions, and $14,195 at private for-profit institutions (source). 

Furthermore, current expenditures for public elementary and secondary schools are projected to increase 22 percent, to $627 billion, from 2007–08 to 2020–21, a period of 13 years (source).  Now is a good time to sit down with your child and assess what their educational goals are and what will be required to sustain them through a secondary and/or post-secondary education.  Federal student loans are widely used to fund college tuition and expenses, however, planning for college ahead of time may allow your student to reduce or mitigate the necessity of a loan.  Grants and scholarships are great ways to get money for college for free. Click here to search available grants and scholarships that may be helpful to your child.  Many states, including Nevada, offer 529 college savings plans for the use of college expenses and K-12 tuition of the beneficiary, tax-free.  Click here to find 529 savings institutions and incentives.  Whether your child is in kindergarten or in high school, college planning provides an opportunity to guarantee their education. 


With only five months left in the calendar year (yes, we went there), thinking about your 2018 taxes before the rush, prepares you for what is to come.  The most recent and widely discussed legislative act, the Tax Cuts and Jobs Act of 2017, is known as the largest tax overhaul in 30 years.  Due to its novelty, its effects are still being discussed by taxpayers.  Below are some key points that may affect your 2018 tax return.

  • Eliminated deductions – the tax overhaul eliminated various deductions that were available to taxpayers previously; be aware of what is no longer deductible! 10 deductions that will be eliminated in 2019.  Many of these deductions will return after the bill sunsets in 2025.
  • The personal exemption is eliminated. The exemption returns after 2025.
  • Child Tax Credit - increased up to $2,000 per child, and the first $1,400 would be refundable, meaning the credit could reduce your tax liability below zero and you would still be able to receive a tax refund. The cut off for the tax credit would increase from $110,000 to $400,000 for married couples filing jointly. The expanded credit ends after 2025.
  • Mortgage deductions - for new mortgage holders, the deductible limit dropped to $750,000 for new debt incurred after Dec. 31, 2017. Also, homeowners may not claim a deduction for existing and new interest on home equity debt, beginning Jan. 1, 2018. The mortgage deduction changes expire after 2025.
  • Estate taxes - the top rate of 40 percent applies to estates valued at more than $11.2 million ($22.4 million for couples). The increased levels expire after 2025.

Although 2018 has not ended yet, it is a great time to plug in some numbers, research the current tax laws and see what your potential liability may be for the year.

Awareness and understanding of these topics better equip you with sustainable planning tools that may provide a clear ‘expectation’ of what is to come!  Stay tuned for Part 2 of this checklist to be released next week! 

-by Laura Bown, J.D. with Tiffany Ballenger Floyd, Esq. (Nevada & California Estate Planning Attorney), © 2018, Phillips Ballenger, PLLC

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