How to Make the Most of Your Credit Card Rewards

ST. CROIX INSIGHTS

How to Make the Most of Your Credit Card Rewards

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
woman on vacation paying with a credit card

Each year, I get four free Marriott nights with my credit cards, and I feel great about my credit card reward points — a common response I hear today and one I’ve even said myself.

It all started about a year and a half ago. I was being productive on Facebook, minding my own business, and stumbled upon some reels about credit cards and “transferable currency.” Intrigued, I started watching these reels intermittently for a few months. I knew there was something valuable there, but I wasn’t ready to delve into it. So, I mentioned it to Mrs. Anderson, suggesting she investigate it. Smart leaders delegate, right?

After a month or two, she started watching the reels and realized we could significantly improve our credit card rewards strategy. We shifted our mindset to view our rewards as transferable currency, enabling us to enjoy substantially reduced travel expenses with our current spending level — making our regular Marriott four-night stays look like child’s play. Less than 1% of people take the time to truly understand how their spending and credit card reward programs work.

To Dave Ramsey’s followers: yes, this strategy only works if you pay off your credit cards each month, which we do. We live within our means and integrate our normal spending with credit cards to maximize rewards. If you can’t stick to a monthly spending budget with cash or a debit card, you won’t be able to with a credit card, regardless of what research says.

There is an entire sublanguage and learning curve around credit card reward programs. With prices for everything skyrocketing, why not dive deep and figure out how to maximize credit card rewards to reduce travel expenses?

For business owners, the concept of transferable currency becomes even more valuable due to your increased monthly spending and the ability to obtain a host of credit cards not available to non-business owners.

How’s it going for us? This past April, we attended a two-day credit card convention in Milwaukee, Wisconsin. I can’t believe I attended such an event, but I did. It’s truly a subculture with its own language. There are so many learning opportunities, and it’s not just about what’s in your wallet. I had no idea there are strategies around which credit cards to have—some are actually better and even preferred.

And it can’t be stressed enough: this strategy only works if you pay off your cards each month.

Travel is a big priority for us. Any way to extend our travel budget and get upgrades for flights and hotels, I’m going to figure it out. It didn’t take long to rack up a million transferable currency points and put them to good use!

I have no financial affiliation with any of the following Facebook groups: Travel on Points, Award Travel 101, and The Points Guy. I follow these groups for ideas and advice.

We follow a budget for savings, spending, and giving. It’s not surprising when I approach this subject and see the deer-in-the-headlights look. Yet, I’m hooked. I see the value, and I believe you can too.

Key Credit Card Terms You Should Know

To better navigate the world of credit card rewards, it’s essential to understand some key terms:

  • Purchase Annual Percentage Rate (APR): The annualized interest rate that you are charged for borrowing money through your credit card.
    • Purchase APR: The interest rate applied to purchases made with the card.
    • Balance Transfer APR: The interest rate applied to balances transferred from another card.
    • Cash Advance APR: The interest rate applied to cash advances taken out using the card.
    • Penalty APR: A higher interest rate that may be applied if you miss payments or violate other terms of your credit card agreement.
    • Introductory APR: A lower interest rate offered for a limited time as an incentive for new cardholders.
  • Credit Limit: The maximum amount of credit that a financial institution extends to a client.
  • Balance Transfer: Moving debt from one credit card to another, usually to take advantage of a lower interest rate.
  • Cash Advance: A service provided by credit card issuers allowing cardholders to withdraw a certain amount of cash, often at a higher interest rate.
  • Minimum Payment: The smallest amount you can pay by the due date to keep your account in good standing. Paying only the minimum payment means your balance accrues interest.
  • Rewards Program: A program offered by credit card issuers where cardholders earn points, miles, or cashback on purchases.
  • Transferable Currency: Rewards points or miles that can be transferred between different loyalty programs or redeemed in various ways.
  • Statement Credit: A credit applied to your account balance, often used as a way to redeem rewards.
  • Foreign Transaction Fee: A fee charged for purchases made outside of your home country, typically a percentage of the transaction amount.
  • Credit Utilization Ratio: The ratio of your credit card balances to your credit limits, which is a key factor in your credit score.
  • Interest-Free Period: The time between the purchase date and when interest begins to be charged, provided the balance is paid in full by the due date.
  • Late Payment Fee: A fee charged when a payment is not received by the due date.
  • Grace Period: The period during which you can pay your credit card balance without incurring interest charges.
  • Variable Interest Rate: An interest rate that can change based on an underlying index or benchmark.
  • Fixed Interest Rate: An interest rate that remains constant throughout the term of the credit card agreement.

Understanding these terms will help you make informed decisions and maximize the benefits of your credit card rewards program.

 

Each year, I get four free Marriott nights with my credit cards, and I feel great about my credit card reward points — a common response I hear today and one I’ve even said myself.

It all started about a year and a half ago. I was being productive on Facebook, minding my own business, and stumbled upon some reels about credit cards and “transferable currency.” Intrigued, I started watching these reels intermittently for a few months. I knew there was something valuable there, but I wasn’t ready to delve into it. So, I mentioned it to Mrs. Anderson, suggesting she investigate it. Smart leaders delegate, right?

After a month or two, she started watching the reels and realized we could significantly improve our credit card rewards strategy. We shifted our mindset to view our rewards as transferable currency, enabling us to enjoy substantially reduced travel expenses with our current spending level — making our regular Marriott four-night stays look like child’s play. Less than 1% of people take the time to truly understand how their spending and credit card reward programs work.

To Dave Ramsey’s followers: yes, this strategy only works if you pay off your credit cards each month, which we do. We live within our means and integrate our normal spending with credit cards to maximize rewards. If you can’t stick to a monthly spending budget with cash or a debit card, you won’t be able to with a credit card, regardless of what research says.

There is an entire sublanguage and learning curve around credit card reward programs. With prices for everything skyrocketing, why not dive deep and figure out how to maximize credit card rewards to reduce travel expenses?

For business owners, the concept of transferable currency becomes even more valuable due to your increased monthly spending and the ability to obtain a host of credit cards not available to non-business owners.

How’s it going for us? This past April, we attended a two-day credit card convention in Milwaukee, Wisconsin. I can’t believe I attended such an event, but I did. It’s truly a subculture with its own language. There are so many learning opportunities, and it’s not just about what’s in your wallet. I had no idea there are strategies around which credit cards to have—some are actually better and even preferred.

And it can’t be stressed enough: this strategy only works if you pay off your cards each month.

Travel is a big priority for us. Any way to extend our travel budget and get upgrades for flights and hotels, I’m going to figure it out. It didn’t take long to rack up a million transferable currency points and put them to good use!

I have no financial affiliation with any of the following Facebook groups: Travel on Points, Award Travel 101, and The Points Guy. I follow these groups for ideas and advice.

We follow a budget for savings, spending, and giving. It’s not surprising when I approach this subject and see the deer-in-the-headlights look. Yet, I’m hooked. I see the value, and I believe you can too.

Key Credit Card Terms You Should Know

To better navigate the world of credit card rewards, it’s essential to understand some key terms:

  • Purchase Annual Percentage Rate (APR): The annualized interest rate that you are charged for borrowing money through your credit card.
    • Purchase APR: The interest rate applied to purchases made with the card.
    • Balance Transfer APR: The interest rate applied to balances transferred from another card.
    • Cash Advance APR: The interest rate applied to cash advances taken out using the card.
    • Penalty APR: A higher interest rate that may be applied if you miss payments or violate other terms of your credit card agreement.
    • Introductory APR: A lower interest rate offered for a limited time as an incentive for new cardholders.
  • Credit Limit: The maximum amount of credit that a financial institution extends to a client.
  • Balance Transfer: Moving debt from one credit card to another, usually to take advantage of a lower interest rate.
  • Cash Advance: A service provided by credit card issuers allowing cardholders to withdraw a certain amount of cash, often at a higher interest rate.
  • Minimum Payment: The smallest amount you can pay by the due date to keep your account in good standing. Paying only the minimum payment means your balance accrues interest.
  • Rewards Program: A program offered by credit card issuers where cardholders earn points, miles, or cashback on purchases.
  • Transferable Currency: Rewards points or miles that can be transferred between different loyalty programs or redeemed in various ways.
  • Statement Credit: A credit applied to your account balance, often used as a way to redeem rewards.
  • Foreign Transaction Fee: A fee charged for purchases made outside of your home country, typically a percentage of the transaction amount.
  • Credit Utilization Ratio: The ratio of your credit card balances to your credit limits, which is a key factor in your credit score.
  • Interest-Free Period: The time between the purchase date and when interest begins to be charged, provided the balance is paid in full by the due date.
  • Late Payment Fee: A fee charged when a payment is not received by the due date.
  • Grace Period: The period during which you can pay your credit card balance without incurring interest charges.
  • Variable Interest Rate: An interest rate that can change based on an underlying index or benchmark.
  • Fixed Interest Rate: An interest rate that remains constant throughout the term of the credit card agreement.

Understanding these terms will help you make informed decisions and maximize the benefits of your credit card rewards program.

Reflections on The Treasure Principle: Aligning Faith and Finances

ST. CROIX INSIGHTS

Reflections on The Treasure Principle: Aligning Faith and Finances

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Open Bible on a wooden board near the river.

We have a few topics in our lives that have become taboo to discuss – religion, politics, and money. That’s just the shortlist. Now add a combination of God and money. Oh boy. That’s a topic that makes 99% of people squirm in their chairs. As those who know me well are aware, I’m not afraid to bring up or discuss these types of topics; after all, that’s why you hire me! These taboo topics impact our daily walk of life.

Even for me, at times, money has been complicated.

I believe most people experience three phases of money and possessions:

  1. Acquisition
  2. Accumulation
  3. Cleanout

Many people reach a point of maturity where they realize they have too much stuff; it causes too much stress, and they wonder why it took them so long to realize that. After all, it’s just physical material stuff. Material possessions, I’d argue, give us a false sense of financial security – all this man-made stuff that can be taken away by someone else, stolen, burned, or just deteriorated over time.

It’s taken some time, deep thought, mindful debate with myself, reading, and maturity to realize that none of the “stuff” you and I own are truly ours. We cannot take any of our earthly treasures with us. The truth is, God owns it all. We own nothing. While we are here on earth, we are just caretakers. It’s pretty simple. The Bible actually discusses money more than any other topic. I think it’s simple why – God gave us free will, and just look around us today to see what is happening. Money can truly corrupt oneself.

I believe God knew we couldn’t serve two masters – God and money. He knew we needed to dethrone the money idol. I can personally tell you, the best way I do this is to give money away (after all, it’s not mine). All of our earthly treasures are TEMPORARY. And while I know this in my heart, I still struggle with it at times.

To take an excerpt from Randy Alcorn’s The Treasure Principle, “In Matthew 6, Jesus fully unveils the foundation of what I call the Treasure Principle. It’s one of His most neglected and misinterpreted teachings:

Do not store up for yourselves treasure on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also. (vv.19-21)”

I’m a true believer in “show me your bank account or credit card statements and I’ll show you your priorities.” But money isn’t the only treasure we can give. We can give time, wisdom, and roll up our sleeves.

It’s so easy in our daily walk of life to think earth is our forever home. But it’s not. “Our citizenship is in heaven,” Philippians 3:20.

It’s surprising how, as humans, we don’t have this conversation more about our own mortality, and how we can be impactful with our limited time on earth.

The Treasure Principle talks about God, money, and how to be impactful in our daily walk of life. It’s not all about how much stuff I can accumulate; I believe it’s about how I can be impactful with the treasures I’ve been given as a manager of God’s treasures.

And I think as one has more years behind than ahead, you start to think about life differently. The bottom line is all of our earthly treasures will be left behind, and I believe our heavenly treasures will be waiting for us that I’ve sent forward.

If you found these reflections on The Treasure Principle thought-provoking or if you’re seeking guidance on how to incorporate these ideals into your own financial planning journey, I invite you to reach out to me. Let’s continue this conversation and explore how we can align your faith with your finances for a more fulfilling life. Your comments and inquiries are always welcome. Together, we can navigate the path towards stewardship and purpose.

 

We have a few topics in our lives that have become taboo to discuss – religion, politics, and money. That’s just the shortlist. Now add a combination of God and money. Oh boy. That’s a topic that makes 99% of people squirm in their chairs. As those who know me well are aware, I’m not afraid to bring up or discuss these types of topics; after all, that’s why you hire me! These taboo topics impact our daily walk of life.

Even for me, at times, money has been complicated.

I believe most people experience three phases of money and possessions:

  1. Acquisition
  2. Accumulation
  3. Cleanout

Many people reach a point of maturity where they realize they have too much stuff; it causes too much stress, and they wonder why it took them so long to realize that. After all, it’s just physical material stuff. Material possessions, I’d argue, give us a false sense of financial security – all this man-made stuff that can be taken away by someone else, stolen, burned, or just deteriorated over time.

It’s taken some time, deep thought, mindful debate with myself, reading, and maturity to realize that none of the “stuff” you and I own are truly ours. We cannot take any of our earthly treasures with us. The truth is, God owns it all. We own nothing. While we are here on earth, we are just caretakers. It’s pretty simple. The Bible actually discusses money more than any other topic. I think it’s simple why – God gave us free will, and just look around us today to see what is happening. Money can truly corrupt oneself.

I believe God knew we couldn’t serve two masters – God and money. He knew we needed to dethrone the money idol. I can personally tell you, the best way I do this is to give money away (after all, it’s not mine). All of our earthly treasures are TEMPORARY. And while I know this in my heart, I still struggle with it at times.

To take an excerpt from Randy Alcorn’s The Treasure Principle, “In Matthew 6, Jesus fully unveils the foundation of what I call the Treasure Principle. It’s one of His most neglected and misinterpreted teachings:

Do not store up for yourselves treasure on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also. (vv.19-21)”

I’m a true believer in “show me your bank account or credit card statements and I’ll show you your priorities.” But money isn’t the only treasure we can give. We can give time, wisdom, and roll up our sleeves.

It’s so easy in our daily walk of life to think earth is our forever home. But it’s not. “Our citizenship is in heaven,” Philippians 3:20.

It’s surprising how, as humans, we don’t have this conversation more about our own mortality, and how we can be impactful with our limited time on earth.

The Treasure Principle talks about God, money, and how to be impactful in our daily walk of life. It’s not all about how much stuff I can accumulate; I believe it’s about how I can be impactful with the treasures I’ve been given as a manager of God’s treasures.

And I think as one has more years behind than ahead, you start to think about life differently. The bottom line is all of our earthly treasures will be left behind, and I believe our heavenly treasures will be waiting for us that I’ve sent forward.

If you found these reflections on The Treasure Principle thought-provoking or if you’re seeking guidance on how to incorporate these ideals into your own financial planning journey, I invite you to reach out to me. Let’s continue this conversation and explore how we can align your faith with your finances for a more fulfilling life. Your comments and inquiries are always welcome. Together, we can navigate the path towards stewardship and purpose.

Building Your Wealth: A Step-by-Step Approach

ST. CROIX INSIGHTS

Building Your Wealth: A Step-by-Step Approach

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Back view of extended family exploring the best place for their picnic in autumn. Copy space. Man is aiming at distance.

It’s time to start enhancing your wealth one step at a time. But how do you accomplish this? Break it down and take it slowly. It doesn’t happen in one day.

It starts with small decisions that build up over time to create a big impact. Reflect on your relationship with money. How do you feel about it? Are you secure and confident, or do you experience worry and insecurity? Understanding your attitudes towards money is important before making any financial moves.

Once you understand where you are coming from, it will be easier to begin to shift your thinking. Money is just a means to be able to do the things that you enjoy. If you aren’t enjoying your life, no amount of money is going to change that.

1. Define your values. What is it that sets you on fire and gets you up in the morning? What do you look forward to at the end of the day or the week? What truly brings you joy and happiness in this world? Maybe when you think about all of this you realize that the best things in life are free for you. In that case, wonderful. However, the fact of the matter is that life costs money. Even just spending time with those you love usually involves a meal, a destination, or some type of entertainment.

2. Cut out the unnecessary stuff. Do you have a junk drawer at home? The one with miscellaneous pens, rubber bands, and free giveaways? Why is it that we hang onto so much that has no value? We live in a culture that loves stuff. It somehow became a sign that someone has ‘made it’ when they have a bigger house, more toys, and a flashier lifestyle. But what in your life could you do without? I’m guessing a lot of it.

3. Reframe your thoughts. When you think about saving vs. spending, shift your mindset. Would you rather get an expensive coffee drink with a flavor shot and whipped cream on top every day of the week or retire to a house on the water where nobody knows your name? Life is full of trade-offs. If we don’t begin considering future consequences in our present decisions, we’ll never have contentment down the road.

4. Finally, discuss with others. Yes, some consider it taboo to talk about personal topics like money. But we should feel encouraged to engage in open conversations with trusted advisors and peers. Sharing experiences and insights can provide valuable perspectives and help you navigate financial challenges more effectively.

Wealth accumulation is not just about amassing money; it’s about aligning our financial decisions with our long-term goals and aspirations. By taking small steps today, we can create a brighter and more prosperous future for ourselves and our loved ones.

Reach out for a free consultation if you want to discuss your current financial strategies or future plans. 

 

It’s time to start enhancing your wealth one step at a time. But how do you accomplish this? Break it down and take it slowly. It doesn’t happen in one day.

It starts with small decisions that build up over time to create a big impact. Reflect on your relationship with money. How do you feel about it? Are you secure and confident, or do you experience worry and insecurity? Understanding your attitudes towards money is important before making any financial moves.

Once you understand where you are coming from, it will be easier to begin to shift your thinking. Money is just a means to be able to do the things that you enjoy. If you aren’t enjoying your life, no amount of money is going to change that.

1. Define your values. What is it that sets you on fire and gets you up in the morning? What do you look forward to at the end of the day or the week? What truly brings you joy and happiness in this world? Maybe when you think about all of this you realize that the best things in life are free for you. In that case, wonderful. However, the fact of the matter is that life costs money. Even just spending time with those you love usually involves a meal, a destination, or some type of entertainment.

2. Cut out the unnecessary stuff. Do you have a junk drawer at home? The one with miscellaneous pens, rubber bands, and free giveaways? Why is it that we hang onto so much that has no value? We live in a culture that loves stuff. It somehow became a sign that someone has ‘made it’ when they have a bigger house, more toys, and a flashier lifestyle. But what in your life could you do without? I’m guessing a lot of it.

3. Reframe your thoughts. When you think about saving vs. spending, shift your mindset. Would you rather get an expensive coffee drink with a flavor shot and whipped cream on top every day of the week or retire to a house on the water where nobody knows your name? Life is full of trade-offs. If we don’t begin considering future consequences in our present decisions, we’ll never have contentment down the road.

4. Finally, discuss with others. Yes, some consider it taboo to talk about personal topics like money. But we should feel encouraged to engage in open conversations with trusted advisors and peers. Sharing experiences and insights can provide valuable perspectives and help you navigate financial challenges more effectively.

Wealth accumulation is not just about amassing money; it’s about aligning our financial decisions with our long-term goals and aspirations. By taking small steps today, we can create a brighter and more prosperous future for ourselves and our loved ones.

Reach out for a free consultation if you want to discuss your current financial strategies or future plans. 

5 Tips for Financial Wellness from a Financial Planner

ST. CROIX INSIGHTS

5 Tips for Financial Wellness from a Financial Planner

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Back view of extended family exploring the best place for their picnic in autumn. Copy space. Man is aiming at distance.

Financial planning is a deeply personal process, as it involves securing not only your present but also your future, along with the well-being of those who depend on you. To navigate this journey effectively, it’s important to integrate various aspects of life that can help you achieve your financial goals. Consider these five tips from a financial advisor, yours truly.

1. Prioritize by learning to say no. This world is full of constant demands. Fill your schedule, then add some more. Get a full-time job, volunteer, raise a family, have a social life, post about it on social media, connect with old friends, keep up with your health, cook meals, run errands, stay clean, the list goes on. How can we possibly balance everything? Surely something must give. One of the best pieces of advice I’ve ever gotten was to say no to things to create a better yes for yourself. With this extra time, you’ll be able to focus on and invest in what really matters to you.

2. Practice generosity. As difficult as it can be at times, put others first. If you are in a good place both physically and mentally, you have the capacity to give and serve others. Generosity doesn’t always have to equate with money; this can be as simple as saying an extra “thank you” today. It can be as complex as starting a nonprofit organization to contribute to a cause you care about. No matter how you do it, you won’t regret the time and resources you gave to better the life of someone else.

3. Appreciate. If you’re reading this right now, you are incredibly blessed. You have access to technology, the knowledge to read, and a mind to process and comprehend thoughts. That is pretty cool. Your body is capable of a lot. Appreciate the things around you – the changing seasons, the simple pleasures, and the things that keep you going each day (even if that means the coffee pot at work). Embracing gratitude for the everyday blessings will help enhance our overall outlook and contentment.

4. Embrace planning. There are many areas of your life that will go better if you just plan them out. Budget for each month. Write down your goals. Make to-do lists. Keep track of the events you have coming up. Plan for life. While remaining flexible to life’s changes, having a plan guides us towards our desired outcomes.

5. Love. Seriously — in every single way. Loving wholeheartedly and nurturing relationships across various avenues of your life is vital. Love the people around you even when they are hard to love. Look in the mirror, smile, and love yourself.

From prioritizing your commitments to fostering meaningful connections and embracing gratitude, these tips serve as a roadmap to not only secure your financial future but also enhance your overall well-being.

Reach out and let me know how I can help you reach your financial goals.

Brett

 

Financial planning is a deeply personal process, as it involves securing not only your present but also your future, along with the well-being of those who depend on you. To navigate this journey effectively, it’s important to integrate various aspects of life that can help you achieve your financial goals. Consider these five tips from a financial advisor, yours truly.

1. Prioritize by learning to say no. This world is full of constant demands. Fill your schedule, then add some more. Get a full-time job, volunteer, raise a family, have a social life, post about it on social media, connect with old friends, keep up with your health, cook meals, run errands, stay clean, the list goes on. How can we possibly balance everything? Surely something must give. One of the best pieces of advice I’ve ever gotten was to say no to things to create a better yes for yourself. With this extra time, you’ll be able to focus on and invest in what really matters to you.

2. Practice generosity. As difficult as it can be at times, put others first. If you are in a good place both physically and mentally, you have the capacity to give and serve others. Generosity doesn’t always have to equate with money; this can be as simple as saying an extra “thank you” today. It can be as complex as starting a nonprofit organization to contribute to a cause you care about. No matter how you do it, you won’t regret the time and resources you gave to better the life of someone else.

3. Appreciate. If you’re reading this right now, you are incredibly blessed. You have access to technology, the knowledge to read, and a mind to process and comprehend thoughts. That is pretty cool. Your body is capable of a lot. Appreciate the things around you – the changing seasons, the simple pleasures, and the things that keep you going each day (even if that means the coffee pot at work). Embracing gratitude for the everyday blessings will help enhance our overall outlook and contentment.

4. Embrace planning. There are many areas of your life that will go better if you just plan them out. Budget for each month. Write down your goals. Make to-do lists. Keep track of the events you have coming up. Plan for life. While remaining flexible to life’s changes, having a plan guides us towards our desired outcomes.

5. Love. Seriously — in every single way. Loving wholeheartedly and nurturing relationships across various avenues of your life is vital. Love the people around you even when they are hard to love. Look in the mirror, smile, and love yourself.

From prioritizing your commitments to fostering meaningful connections and embracing gratitude, these tips serve as a roadmap to not only secure your financial future but also enhance your overall well-being.

Reach out and let me know how I can help you reach your financial goals.

Brett

Changes to the Estate and Gift Tax Exclusions Are (Maybe) Coming

ST. CROIX INSIGHTS

Changes to the Estate and Gift Tax Exclusions Are (Maybe) Coming

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Back view of extended family exploring the best place for their picnic in autumn. Copy space. Man is aiming at distance.

The rules governing estate and gift tax exclusions are undergoing potential changes. You need to be aware of these to ensure you maximize your tax benefits.

The 2017 Tax Cuts and Jobs Act (TCJA) significantly increased the lifetime estate and gift tax exemption, which currently stands at $13.61 million per individual and $27.22 million for married couples in 2024.

However, these provisions are set to sunset at the end of 2025, reverting to lower 2017 levels. This could potentially reduce the exemption to around $7.5 million per individual and $14.5 million for married couples by 2026, depending on inflation.

NOTE: Keep in mind that this situation is subject to change, depending on factors like the 2024 election outcomes or legislative amendments.

Given this uncertainty, families interested in preserving and passing on their wealth should be proactive in reviewing their estate plans. Waiting until the last minute could result in missed opportunities to minimize estate taxes.

The annual gift tax exclusion also increased in 2024 due to inflation, reaching $18,000 per recipient. This presents an opportunity for individuals to transfer assets tax-free, further maximizing tax benefits.

Here is an example to show a basic way to take advantage of the increased annual gift exclusion:

John and Sarah have three children and five grandchildren. In 2024, they decide to utilize the increased annual gift tax exclusion to transfer wealth to their descendants.

Using the $18,000 per recipient annual gift tax exclusion, John and Sarah can collectively gift $18,000 to each of their eight descendants, totaling $144,000 per year. Over the course of 2024, they can transfer a total of $288,000 to their children and grandchildren without dipping into their combined $27.22 million gift tax exemption.

To leverage the current higher exemptions and potentially avoid future tax implications, individuals should consider gifting strategies.

Questions to ponder include:

  • Can you afford to gift a significant amount to leverage the increased tax exclusion?
  • What assets and how much should you consider gifting?
  • Are your intended recipients prepared to receive these gifts, or should there be controls in place, such as trusts?

If you decide to proceed with gifting, there are various options available, including setting up trusts:

  • Spousal Lifetime Access Trust (SLAT): This trust allows your spouse to receive distributions if needed, providing added flexibility. It’s essential to plan and draft the trust properly to ensure its legitimacy.
  • Trust for Non-Spouse Beneficiaries: This type of trust, benefiting children or grandchildren, offers different setups, including keeping the trust-owned assets with income tax consequences falling on the trust creator. This arrangement reduces the creator’s estate without counting as a gift to the trust heirs.

For individuals whose wealth is primarily tied up in business ownership, gifting business interests may be an option. Discounts for lack of marketability and control could apply, reducing the amount of lifetime exclusion used upon gifting. Valuation methods should adhere to IRS guidelines, often requiring a qualified appraiser’s assessment.

For those with significant brokerage accounts, gifting securities to trusts or outright to recipients is another possibility. Publicly traded securities make determining fair market value straightforward. It’s essential to consider the basis in these securities, as the recipient inherits the donor’s basis for tax purposes. Holding onto low-basis securities may be advantageous for a step-up in basis upon the owner’s death.

Gifting property is also an option, typically requiring a property appraisal to establish fair market value. Similar to securities, considering the basis in the property is important, as the recipient assumes the donor’s basis for tax purposes. Some trusts may allow for substituting trust-owned assets with personal assets later on, capitalizing on a potential basis step-up.

Overall, understanding the implications and exploring various gifting strategies can help individuals maximize tax benefits while ensuring their estate planning aligns with their goals and circumstances.

As your financial advisor, I’m here to provide guidance and support as you navigate these important decisions regarding estate planning and gifting strategies. Whether you’re considering leveraging the current tax exclusions or exploring various options to pass on wealth to your loved ones, don’t hesitate to reach out. My expertise and personalized advice can help you make informed choices tailored to your financial goals and objectives. Let’s work together to ensure your wealth transfer plans align with your overall financial strategy. It’s everyone working in concert—your Estate Planning Attorney, CPA, Financial Advisor, and you—to navigate this ever-changing landscape.

 

The rules governing estate and gift tax exclusions are undergoing potential changes. You need to be aware of these to ensure you maximize your tax benefits.

The 2017 Tax Cuts and Jobs Act (TCJA) significantly increased the lifetime estate and gift tax exemption, which currently stands at $13.61 million per individual and $27.22 million for married couples in 2024.

However, these provisions are set to sunset at the end of 2025, reverting to lower 2017 levels. This could potentially reduce the exemption to around $7.5 million per individual and $14.5 million for married couples by 2026, depending on inflation.

NOTE: Keep in mind that this situation is subject to change, depending on factors like the 2024 election outcomes or legislative amendments.

Given this uncertainty, families interested in preserving and passing on their wealth should be proactive in reviewing their estate plans. Waiting until the last minute could result in missed opportunities to minimize estate taxes.

The annual gift tax exclusion also increased in 2024 due to inflation, reaching $18,000 per recipient. This presents an opportunity for individuals to transfer assets tax-free, further maximizing tax benefits.

Here is an example to show a basic way to take advantage of the increased annual gift exclusion:

John and Sarah have three children and five grandchildren. In 2024, they decide to utilize the increased annual gift tax exclusion to transfer wealth to their descendants.

Using the $18,000 per recipient annual gift tax exclusion, John and Sarah can collectively gift $18,000 to each of their eight descendants, totaling $144,000 per year. Over the course of 2024, they can transfer a total of $288,000 to their children and grandchildren without dipping into their combined $27.22 million gift tax exemption.

To leverage the current higher exemptions and potentially avoid future tax implications, individuals should consider gifting strategies.

Questions to ponder include:

  • Can you afford to gift a significant amount to leverage the increased tax exclusion?
  • What assets and how much should you consider gifting?
  • Are your intended recipients prepared to receive these gifts, or should there be controls in place, such as trusts?

If you decide to proceed with gifting, there are various options available, including setting up trusts:

  • Spousal Lifetime Access Trust (SLAT): This trust allows your spouse to receive distributions if needed, providing added flexibility. It’s essential to plan and draft the trust properly to ensure its legitimacy.
  • Trust for Non-Spouse Beneficiaries: This type of trust, benefiting children or grandchildren, offers different setups, including keeping the trust-owned assets with income tax consequences falling on the trust creator. This arrangement reduces the creator’s estate without counting as a gift to the trust heirs.

For individuals whose wealth is primarily tied up in business ownership, gifting business interests may be an option. Discounts for lack of marketability and control could apply, reducing the amount of lifetime exclusion used upon gifting. Valuation methods should adhere to IRS guidelines, often requiring a qualified appraiser’s assessment.

For those with significant brokerage accounts, gifting securities to trusts or outright to recipients is another possibility. Publicly traded securities make determining fair market value straightforward. It’s essential to consider the basis in these securities, as the recipient inherits the donor’s basis for tax purposes. Holding onto low-basis securities may be advantageous for a step-up in basis upon the owner’s death.

Gifting property is also an option, typically requiring a property appraisal to establish fair market value. Similar to securities, considering the basis in the property is important, as the recipient assumes the donor’s basis for tax purposes. Some trusts may allow for substituting trust-owned assets with personal assets later on, capitalizing on a potential basis step-up.

Overall, understanding the implications and exploring various gifting strategies can help individuals maximize tax benefits while ensuring their estate planning aligns with their goals and circumstances.

As your financial advisor, I’m here to provide guidance and support as you navigate these important decisions regarding estate planning and gifting strategies. Whether you’re considering leveraging the current tax exclusions or exploring various options to pass on wealth to your loved ones, don’t hesitate to reach out. My expertise and personalized advice can help you make informed choices tailored to your financial goals and objectives. Let’s work together to ensure your wealth transfer plans align with your overall financial strategy. It’s everyone working in concert—your Estate Planning Attorney, CPA, Financial Advisor, and you—to navigate this ever-changing landscape.

5 Tips and Tricks for Filing Your 2023 Tax Return

ST. CROIX INSIGHTS

5 Tips and Tricks for Filing Your 2023 Tax Return

BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Latin American couple talking to a financial advisor about an investment - home finances concepts

As we approach the April 15 deadline for filing 2023 individual federal income tax returns, it’s essential to start preparing ahead of time. The IRS has provided some important reminders on steps you can take now to ensure a smooth filing process for your 2023 return.

Here are 5 tips from the IRS that I’d like to highlight for you:

  1. Utilize an IRS Online account: Take advantage of the IRS online platform available at www.irs.gov/account. This tool offers a range of helpful resources for the upcoming 2024 filing season, including access to key data from your latest filed tax return, account transcripts, electronic notices, and the ability to manage payment plans. This centralized hub can streamline your tax preparation process and keep you informed about your tax situation.
  2. Organize and update tax records: Maintaining organized tax records is crucial for accuracy and efficiency when preparing your tax return. Ensure you have gathered all necessary income documents, such as Forms W-2 and 1099-MISC, to avoid delays in processing and potentially uncover overlooked deductions or credits. This includes potential deductions for donation receipts and medical expenses, which can help reduce your taxable income. Remember, most income, including income from the gig economy and digital assets, is taxable and should be accounted for.
  3. Speed up refunds: Opt for direct deposit to receive your tax refund quickly and securely. Providing your bank’s routing and account information ensures a smooth process. Those opting for paper checks may encounter delays or issues such as non-receipt, so direct deposit is highly recommended to expedite your refund.
  4. Bookmark IRS.gov resources: Make IRS.gov your go-to resource for tax-related information and tools. The website offers user-friendly online tools available 24/7 to assist with filing and paying taxes, tracking refunds, and accessing account information. Bookmarking this site will provide easy access to valuable resources throughout the tax season.
  5. Consider consulting a tax professional: Tax professionals, including CPAs, enrolled agents, and attorneys, can provide invaluable assistance in navigating the tax system and ensuring compliance with tax laws. Choosing a reputable preparer who is skilled in tax preparation can help minimize errors and maximize tax benefits. Be sure to follow IRS guidelines for selecting a tax professional to avoid potential pitfalls.

Lastly, keep in mind that you can request an automatic six-month filing extension until October 15, 2024, by submitting Form 4868 if needed. However, remember that this extension applies only to filing and not to paying taxes. It’s important to make a good-faith estimate of your tax liability and pay any expected taxes by the April 15 deadline.

As your trusted financial advisor, I’m here to support you through the tax filing process and ensure you make informed decisions that align with your financial goals. Please don’t hesitate to reach out if you have any questions or need assistance along the way.

 

As we approach the April 15 deadline for filing 2023 individual federal income tax returns, it’s essential to start preparing ahead of time. The IRS has provided some important reminders on steps you can take now to ensure a smooth filing process for your 2023 return.

Here are 5 tips from the IRS that I’d like to highlight for you:

  1. Utilize an IRS Online account: Take advantage of the IRS online platform available at www.irs.gov/account. This tool offers a range of helpful resources for the upcoming 2024 filing season, including access to key data from your latest filed tax return, account transcripts, electronic notices, and the ability to manage payment plans. This centralized hub can streamline your tax preparation process and keep you informed about your tax situation.
  2. Organize and update tax records: Maintaining organized tax records is crucial for accuracy and efficiency when preparing your tax return. Ensure you have gathered all necessary income documents, such as Forms W-2 and 1099-MISC, to avoid delays in processing and potentially uncover overlooked deductions or credits. This includes potential deductions for donation receipts and medical expenses, which can help reduce your taxable income. Remember, most income, including income from the gig economy and digital assets, is taxable and should be accounted for.
  3. Speed up refunds: Opt for direct deposit to receive your tax refund quickly and securely. Providing your bank’s routing and account information ensures a smooth process. Those opting for paper checks may encounter delays or issues such as non-receipt, so direct deposit is highly recommended to expedite your refund.
  4. Bookmark IRS.gov resources: Make IRS.gov your go-to resource for tax-related information and tools. The website offers user-friendly online tools available 24/7 to assist with filing and paying taxes, tracking refunds, and accessing account information. Bookmarking this site will provide easy access to valuable resources throughout the tax season.
  5. Consider consulting a tax professional: Tax professionals, including CPAs, enrolled agents, and attorneys, can provide invaluable assistance in navigating the tax system and ensuring compliance with tax laws. Choosing a reputable preparer who is skilled in tax preparation can help minimize errors and maximize tax benefits. Be sure to follow IRS guidelines for selecting a tax professional to avoid potential pitfalls.

Lastly, keep in mind that you can request an automatic six-month filing extension until October 15, 2024, by submitting Form 4868 if needed. However, remember that this extension applies only to filing and not to paying taxes. It’s important to make a good-faith estimate of your tax liability and pay any expected taxes by the April 15 deadline.

As your trusted financial advisor, I’m here to support you through the tax filing process and ensure you make informed decisions that align with your financial goals. Please don’t hesitate to reach out if you have any questions or need assistance along the way.