Every morning I rise at 5:15 a.m., read the news, check email, review my calendar, exercise and get ready for the day. And every morning I gripe to my poor wife about how badly news sources confuse its readers. At Sackett Financial Group, our mission statement is to provide reliable and insightful information for clients to make confident decisions. Our resolution for 2020 is to provide quarterly information that is reliable, insightful, understandable and actionable to assist clients to make confident and appropriate decisions. The articles will also be on our website. In 2019, we experienced the strongest U.S. economy we have seen in many years. But the month of December saw an unprecedented number of important economic events which will affect our economy for years ahead.
LEGISLATION AFFECTING TAX AND THE ECONOMY
- The U.S. House of Representatives voted for and approved Articles of Impeachment on President Trump.
- The SECURE Act was passed and will affect most individual and group retirement plans (see page 2 for more information).
- Phase 1 of a trade agreement with China was agreed upon and was signed in January 2020.
- USMCA, a comprehensive trade agreement with U.S., Canada and Mexico was finally approved by the House of Representatives, passed by the Senate and signed by the President in January 2020.
- The U.S. House of Representatives “Ways and Means Committee,” who write tax law, passed new tax legislation to reinstate unlimited deductions for State and Local Taxes (SALT) for 2020 and 2021. This tax law change will need approval by Congress and signed by the President before becoming law.
- In California, Assembly Bill 5 has created new rules for determining if a worker is classified as an independent contractor or an employee. California has developed a new ABC test which has created significant uncertainty, loss of employment, and several lawsuits. This bill is certain to go through revisions as lawmakers try to figure out how to make this work as intended.
- For 2019 and 2020, IRA contributions are limited to $6,000. For taxpayers 50 years or greater, you can add an additional $1,000 annually to decrease taxable income while also saving for retirement income needs.
- The tax credit for installing solar energy on your residence will decline in 2020 to 26%, from 30% in 2019.
- Effective January 1, 2020, all new residential building permits will require solar electricity be installed.
OTHER FINANCIAL NEWS
- Retail sales through brick and mortar stores increased significantly during this last Christmas season.
- The stock market rebounded in 2019 from a poor 2018.
- Unemployment remains at historic lows.
SECURE YOUR FINANCIAL FUTURE
I would encourage you to have a Financial Plan and update it regularly. My wife and I update our plan on the first Saturday of each year. It takes about 60 minutes and provides a clear roadmap for our financial choices. Every few years, we review our estate plan as well to make sure it is still correct and meets our objectives. Whether you prepare it yourself or have us take you through a comprehensive process, a sound plan is critical to financial success.
As always, I look forward to seeing you soon.