In the world of investing, risk and reward go hand-in-hand. To help manage risk and reward, investors often utilize a portfolio diversification strategy that mitigates risk while working toward accumulation across asset classes. Diversification mitigates the potential for unsavory pitfalls while offering a variety of suitable outcomes. In this article, we explore portfolio diversification by using concepts related to chocolate to make it more understandable – and palatable.

An assortment of chocolates and asset classes

When tasting different chocolate flavors, one may revel in the variety of experiences each offers. Some might prioritize white chocolate for its creamy sweetness, while others find the aromatic bitterness of dark chocolate satisfying. Like chocolate tastings, investment portfolios inherently cater to personal preferences. Each investor has goals, objectives, risk tolerance, and time horizon. Portfolio diversification helps tailor these individual tastes to their portfolio's holdings. Much like a box of assorted chocolates, equities, bonds, real estate, commodities, private investments, and other asset types may be included in the portfolio. Each asset type behaves differently under various market conditions, just like every chocolate provides a different flavor profile. Finding the right mix of different investment types can generate optimal results.  

Balancing chocolate flavors

Similar to how chocolates have varying balances of sugar, cocoa, milk, and other ingredients, allocating investments in a portfolio also requires a balance. Too much emphasis on a single asset class can expose the portfolio to unnecessary, concentrated risk – just like consuming excessive amounts of a single type of chocolate may become less enjoyable or lead to negative impacts. By contrast, a diversified portfolio containing various investment types works together to pursue a consistent overall return. Like the chocolate connoisseur who consistently updates their chocolate selections, investors must frequently review, rebalance, and adjust their portfolios. The capital markets never remain the same; as some investments become less attractive or risky, investors must adapt their portfolio asset mix in response to these changes.  

Cocoa bean and investment strategy origins

  In the chocolate world, the cocoa beans' origins can come from different parts of the world: Africa, Central America, and South America. Each region produces cocoa beans that add a distinct flavor to the chocolate, enriching the overall experience. Similarly, a diversified portfolio containing investment strategies across different geographies and economies may offer growth opportunities and manage risk. Investors must work with their financial professionals to determine if foreign investments are suitable for their situation. In conclusion, portfolio diversification can be as sweet as a box of assorted chocolates. Diversification enables investors to spread risk across different investments and asset classes based on individual risk tolerance, goals, and time horizons. Finding a suitable investment mix can be satisfying, just like the joy of discovering your favorite piece of chocolate in a chocolate box.     Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. This article was prepared by Fresh Finance. LPL Tracking #516734-03

Getting close to retirement is exciting, but it often brings a little worry about your financial future. The closer you get, the more you may be concerned with the rising living costs and if your finances are on track to allow you to live as planned when retirement comes. Whether your retirement is within the next couple of years or the next five, the new year is the perfect time to make financial resolutions to help you toward your retirement goals. Below are just a few financial resolutions to consider this year.

Work on Fully Funding Your Emergency Fund

While an emergency fund is crucial when working, it is equally important when you retire. Emergencies will happen when you least expect it, and if you find yourself on a tighter budget during retirement, your emergency fund will be more crucial than ever. A good rule of thumb is to have three to six months of expenses saved up, which should be able to cover sudden house repairs or medical expenses.¹

Continue to Save

Even if your savings are where you want them to be, you want to keep saving so that your money will continue to grow, and you will have a buffer for emergencies or higher-than-normal inflation rates. A good rule of thumb is to place between 5 and 10% of your gross income into yearly savings. If you are able to put in more, that is even better and may help you save a little on your end-of-year taxes as well.¹

Make a Pre-Retirement and Post-Retirement Budget

One excellent resolution to make to help you stay on your desired financial track is preparing and sticking to a budget. Ideally, you will want to make a budget for your current financial situation and what your post-retirement situation may look like. This way, you will know how much more you need to save. Consider using a budgeting app or spreadsheet software that allows you to record actual expenses so that you are able to see where your budget may need adjusting.²

Pay Off Your Debt

Ideally, you will want to retire as debt-free as possible. Without the stress or debt payments, you will likely have more funds to live comfortably in retirement and have less stress about money. If you have a lot of high-interest debt, you may consider consolidating it into a low-interest loan with terms allowing it to be paid off before you retire. You may also want to consider taking advantage of zero-interest balance transfers so that you are able to pay down the debt faster without accruing more interest.²

Sign Up for Credit Monitoring Software

Another resolution to make is signing up for credit monitoring software. Identity theft is increasing, and becoming a victim of it may lead to significant financial problems and low credit scores. Credit monitoring software will also help you to keep an eye on your debt and offer insight into its financial management.¹     Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by WriterAccess. LPL Tracking #502472-04 Footnotes: ¹5 financial resolutions for 2023 and how to accomplish them, Fortune, https://fortune.com/recommends/banking/financial-resolutions-for-the-new-year/ ²10 financial New Year’s resolutions to set now and achieve in the new year, CNBC, https://www.cnbc.com/select/financial-new-years-resolutions/

If one of your New Year's resolutions involves enhancing and expanding your investment portfolio, look no further. In a true New Year's Eve countdown tradition, ask yourself these 10 questions to help review your investment plans.

10. What's My Investment Timeline?

Not every investment is appropriate for every timeframe. Someone who hopes to retire in the next few years might seek very different investments compared to someone who is just starting in the workforce. Someone investing funds in a young child's college account may want a different asset mix than someone establishing a family trust to benefit their children and grandchildren. Consider your goals and timeline before selecting individual investments for each account type, such as a 401(k), individual retirement account (IRA), 529, or taxable funds.

9. What Are My Financial Weaknesses or Blind Spots?

Another key part of investing success may involve recognizing—and controlling—your weaknesses and blind spots. If you know you tend to panic-sell when stocks go down, you may want to invest in accounts that restrict frequent trading or require a waiting period before transaction executions. Those who struggle with paperwork may wish to streamline their investment portfolio by having fewer accounts.

8. What Do I Want To Do With My Investments?

This strategy is another way of assessing investment goals. Knowing what you would like to achieve—whether a comfortable retirement, a new car, or a paid-for college education for your children—may allow you to work backward from that point and set relevant goals.

7. What Is My Risk Tolerance?

If you have an unlimited risk tolerance, you might not need to invest—instead, you might foolishly bet it all on the lottery. However, those not comfortable with that level of risk have available investment options ranging from the more stable to the ultra-risky. Finding an investment mix for your risk tolerance may go a long way toward easing frazzled nerves when the market takes a dip.

6. Am I Diversified Enough?

Another key part of risk tolerance involves diversification. Putting all your money into a single stock or sector, from crypto to energy to tech, may leave you vulnerable to volatility. Make sure that your assets are spread among various investments to avoid major swings in value potentially.

5. When Do I Sell This Investment and Why?

When you analyze specific investments and their role in your portfolio, it might be a good idea to consider what would cause you to sell the asset, such as a rise or drop in price. Perhaps a change in the company's structure? Whatever your reasons, articulating them may help you stick to your plan.

4. What if My Investment Becomes Worthless?

Many stocks that made up the S&P 500 and Dow Jones index at inception no longer exist. Diversification might help prevent one bad investment from wiping out your entire portfolio. Still, it may be a good idea to consider what would happen and how you would respond if the value of your investment dropped to zero.

3. Why Do I Still Own This Investment?

Periodically, you should review your portfolio to make sure everything you invested in is something you still want to own. If you are holding onto a loser and do not have any reasons to support continuing to own the stock, it may be time to sell.

2. Do I Know What I'm Investing In?

One question is whether you invest in something you know about or simply invest in what the media tell you. If you have specific knowledge of a particular industry, you may know better than others about whether an investment is good.

1. Should I Manage My Investments?

A typical investor might be unable to beat the management results of some full-time financial professionals. Unless you have the time, knowledge, inclination, and emotional fortitude to manage your investments, it may be worth considering leaving investment management to a financial professional.     Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.   S&P 500 Index: The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks. Dow Jones Industrial Average (DJIA): A price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. This article was prepared by WriterAccess. LPL Tracking #1-05337702.

Charitable giving is an excellent way for businesses to help others while taking advantage of additional tax breaks. Billions of dollars are given each year in the U.S. to a wide range of charities providing valuable community services. While large corporations may be responsible for a large portion of the donated funds, small businesses also make a large impact with their contributions.

3 Ways Small Businesses Can Donate to Charities

While cash donations are one of the most common ways to give to charities, small businesses may also provide support in other ways.

1. Volunteering

Instead of donating money, your business will be able to make an impact by donating their time to a local charity, such as a soup kitchen or homeless shelter.¹

2. Host a Charity Drive

If you see a need in their local community, consider helping by starting a drive to collect needed items, such as a holiday toy drive or canned food drive.¹

3. Take Advantage of Local Sponsorship Opportunities

Local youth organizations and groups are often looking for sponsorship. Consider sponsoring a sports team or local community event. You will also get a little advertising and community goodwill out of your involvement.¹

Tips for Small Business Giving

While there are no set rules on how or how much you should give to charity, below are a few helpful tips to help your business get started.

Find a Cause That is Meaningful to Your Company or Employees

All types of charities are looking for support, which means it is easy to find one that resonates with your business culture and employees. This way, you will be more personally connected to your contribution, which will mean something to you and your employees.²

Research Charities You Are Interested In

Take some time to learn about the different charities you may wish to contribute to. Through some research, you will be able to find out how much of the contributions go into their programming, what kind of services they provide to the community, and the impact your donation may have. This will give you a clearer picture of how you are helping through your contribution.²

Build a Relationship With Your Chosen Charities

Even if you only contribute to your charity once a year, you want to stay connected and find out other ways you are able to assist throughout the year. This is a great way to stay connected with your community, network, and build relationships with other businesses.²

Get Your Employees Involved

Have your employees volunteer with the charity or offer contribution matching for employees who donate independently. This will help your employees connect with the charity and provide the charity with much-needed assistance throughout the year.² It is important to remember that every dollar counts for charities, so even if your business only contributes a small amount, it will still be making a huge impact on the community. Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by WriterAccess. LPL Tracking #1-05377994

Footnotes:

¹ “Small Business Guide to Charitable Giving and Tax Deductions,” Business News Daily, https://www.businessnewsdaily.com/10470-small-business-guide-charity-donations.html ² “Six Best Practices For Small Businesses To Give Charitably,” Forbes, https://www.forbes.com/sites/krisputnamwalkerly/2018/12/17/6-best-practices-for-small-businesses-to-give-charitably/?sh=60dcdffa2c98

What is an estate tax return?

When you die, you will leave behind all your property (everything you own) and debts (everything you owe). All this is called your estate. After the debts have been paid, the various items left in your estate will be transferred to your heirs and beneficiaries, but first the federal government will take its share through estate taxes (gift and estate tax and generation-skipping transfer tax). The personal representative of your estate must file an estate tax return with the IRS if the value of your gross estate at death together with the value of all taxable gifts you made during life is more than a certain amount ($12,060,000 plus any deceased spousal unused exclusion amount in 2022). The federal estate tax return (Form 706) lets the IRS know how the estate taxes are calculated and how much tax is owed. Generally, the estate tax return must be filed within nine months after your death, but an automatic six-month extension is available if Form 4768 is filed on or before the due date for filing Form 706. An additional six months may be granted for good cause shown. The late filing penalty is 5 percent of the taxes due per month, up to 25 percent. This is in addition to any late payment penalty. An estate tax return may also need to be filed with your state. This discussion focuses on the federal return only. Contact your state for information regarding its state death taxes. Caution: The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act introduced a new portability feature, which allows a surviving spouse to take advantage of the unused applicable exclusion amount of a predeceased spouse who died after December 31, 2010. Normally an estate valued at less than the available exclusion amount would not be required to file an estate tax return; however, a return will now be necessary for nontaxable estates in order to record the amount of a decedent's unused exclusion amount for a surviving spouse who may want to use it later. Tip: If you are the owner of a closely held business, your personal representative may be able to defer payment of estate taxes owed on that interest for up to 15 years.

How do you calculate estate tax liability?

Calculating estate taxes is similar to calculating income taxes. It is basically a four-step process:

• Determine what is taxable
• Determine what isn't taxable
• Calculate the tentative estate tax
• Subtract allowable credits from the tentative tax The calculation looks something like this:

	Gross Estate (reduced by qualified conservation easement exclusion)
-	Funeral and administration expenses, claims and losses, charitable transfers, marital transfers, and state death taxes
=	Taxable estate
+	Adjusted taxable gifts
=	Cumulative taxable transfers
	Tax on cumulative taxable transfers
-	Gift tax payable on adjusted taxable gifts (as reduced by unified credit)
=	Tentative tax
-	The unified credit (or applicable credit amount), pre-1977 gift tax credit, foreign death tax credit, and credit for tax on prior transfers
=	Final estate taxes payable

How do you file an estate tax return?

The following explains how to fill out Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return and the various attachments. Caution: This discussion here is for information purposes only. Do not attempt to complete an estate tax return based solely on the information provided here. Please consult Form 706 and the instructions to Form 706 for further information. You may also wish to consult an attorney or tax professional before filing an estate tax return. Part 1 — Decedent and Executor This section is looking for identifying information about the decedent, including name, Social Security number, domicile at time of death, year domicile was established, date of birth, and date of death. The executor's or administrator's name, address, and Social Security number must also be supplied. Additional questions ask whether the decedent left a will, the name and location of the court where the will was probated or the estate was administered, and the case number. Part 2 — Tax Computation This section is completed last as it contains information from other sections of the return and the applicable Schedules. After adding adjusted taxable gifts and subtracting allowable deductions from the gross estate, you will calculate a tentative tax (or gross estate tax). The estate taxes will then be reduced by available credits. When all the calculations are complete, the number on the bottom line of this section is what the estate owes the IRS. Part 3 — Elections by the Executor Generally, the value of your gross estate is the fair market value of all property on the date of your death. However, if your estate qualifies, your personal representative may elect the alternate valuation date that allows the gross estate to be valued six months after the date of death or on the date an asset is disposed of, whichever is earlier. The purpose of the alternate valuation date is to permit a reduction of the tax liability if the value of the estate's property has decreased since the date of death. Special use valuation may also be available for certain farm and closely held business real property. This election allows the property to be valued at its actual value, rather than at its fair market value. Certain other elections may be made on this part of the form as well. Part 4 — General Information This section includes information about the decedent's occupation and marital status, along with information about the surviving spouse and the beneficiaries of the estate, such as children and grandchildren. There are also questions about whether gift tax returns have been filed and what types of property were owned by the decedent. Part 5 — Recapitulation This is the section where the gross estate and allowable deductions are calculated. Totals from various schedules are entered to make this calculation. Every line must be filled in, even if the entry is 0. Do not enter anything in the Alternate Value column unless the alternate valuation date is elected. Attach the appropriate Schedule for each item in Part 5. Part 6 — Portability of Deceased Spousal Unused Exclusion Amount (DSUEA) An election to transfer the unused applicable exclusion amount of the decedent to the surviving spouse can be made here. Also, the DSUEA received by the decedent from a predeceased spouse and applied against lifetime gifts are listed and a total calculated in Part 6. Schedule A — Real Estate Provide the address and legal description of all real estate owned by the decedent. If the estate is liable for a mortgage, report the full value of the property in the value column without subtracting the mortgage liability. Show the amount of the mortgage in the description column. The amount of the unpaid mortgage is subtracted on Schedule K. Schedule B — Stocks and Bonds Report all stocks and bonds owned by the decedent, including the face amount of bonds, number of shares of stock, unit value, and value as of the date of death (or alternate valuation date, if elected). Schedule C — Mortgages, Notes, and Cash Use Schedule C to report mortgages, promissory notes, and cash items held by the decedent at the time of death. Include a description of each item (e.g., the amount of a mortgage, its unpaid balance and the origination date, the borrower and the lender, the location of the mortgaged property, the interest rate). Cash on hand should be reported, as well as the balances of any checking or savings accounts held by the decedent. Schedule D — Insurance on the Decedent's Life Schedule D must be completed if there is insurance on the decedent's life, regardless of whether it is included in the gross estate. If the decedent possessed any incidents of ownership at death, those policies must be reported, whether the proceeds are payable to the estate (or for the benefit of the estate) or to any other beneficiary. Schedule E — Jointly Owned Property All jointly owned property must be reported on Schedule E, regardless of whether the property is included in the gross estate. For the purposes of this form, jointly owned property includes property of any type in which the decedent held an interest as a joint tenant with right of survivorship or as a tenant by the entirety. Schedule F — Other Miscellaneous Property Schedule F covers all property included in the gross estate that is not listed elsewhere, such as tangible personal property, business interests, and insurance on the life of another. This schedule must be attached, even if there is no miscellaneous property to report, because it contains questions that must be answered about art, collectibles, bonuses, awards, and safe deposit boxes. Schedule G — Transfers during Decedent's Life The following transfers should be reported on Schedule G:

• Gift taxes paid on gifts made by the decedent or the decedent's spouse within three years before death
• Transfer of life insurance policies made within three years before death
• Transfer of life estate, reversionary interest, or power to revoke within three years before death
• Transfers with retained life estate where the decedent retains the right to designate a beneficiary of the property transferred
• Transfers taking effect at death
• Revocable transfers

Schedule H — Powers of Appointment If the decedent possessed any powers of appointment, Schedule H must be completed. A power of appointment means that you have the power to determine who will own or enjoy the property subject to the power. The power must be created by someone other than the decedent. If you answered Yes to line 13 of Part 4, then General Information, Schedule H must also be completed. Schedule I — Annuities Annuities owned by the decedent are reported on Schedule I. Any annuity must be included in the gross estate if it meets the following requirements:

• It is receivable by a beneficiary following the death of the decedent by virtue of surviving the decedent
• It is under contract or agreement entered into after March 3, 1931
• It was payable to the decedent, either alone or in conjunction with another, for the decedent's life, or a period not ascertainable without reference to the decedent's death, or for a period that did not end before the decedent's death
• The contract or agreement is not an insurance policy on the life of the decedent

Many retirement plan benefits constitute annuities, and Schedule I is the proper place to list these benefits. Schedule J — Funeral Expenses and Expenses Incurred in Administering Property Subject to Claims Various deductible expenses and fees associated with managing the estate are itemized on Schedule J. Items to be reported on this form include funeral expenses, executor's fees, attorney's fees, certain interest expenses incurred after the decedent's death, and miscellaneous expenses incurred in preserving and administering the estate. Schedule K — Debts of the Decedent, and Mortgages and Liens Debts of the decedent on the date of death are deducted on Schedule K. Debts of the estate incurred after the date of death are not reported on Schedule K. Schedule L — Net Losses during Administration and Expenses Incurred in Administering Property Not Subject to Claims Losses that will not be claimed on a federal income tax return are itemized on Schedule L. These items include losses from thefts, fires, storms, shipwrecks, or other casualties that occurred during the settlement of the estate. Expenses other than those listed on Schedule J are also reported on Schedule L, whether these expenses are estimated, agreed upon, or paid. Schedule M — Bequests, etc., to Surviving Spouse Property interests passing to the surviving spouse are reported on Schedule M. This item includes property interests the spouse receives by any of the following methods.

• As the decedent's heir, donee, legatee, or devisee
• As the decedent's surviving joint tenant or tenant by the entirety
• As beneficiary of life insurance on the decedent's life
• Under dower or curtesy or similar statute
• As a transferee of a transfer made by the decedent at any time
• As beneficiary of a trust created and funded by the decedent, provided the trust contains certain specified provisions for the spouse

Only property that is included in the decedent's gross estate can be claimed as a deduction using Schedule M. Schedule O — Charitable, Public, and Similar Gifts and Bequests Charitable gifts deducted from the gross estate are itemized on Schedule O. You must also provide a statement that shows the values of all legacies and devises for both charitable and noncharitable use, the date of birth of all life tenants or annuitants, a statement showing the value of all property that is included in the gross estate but does not pass under the will, and any other important information. Schedule P — Credit for Foreign Death Taxes If death taxes are being paid to any foreign country, these amounts must be reported on Schedule P to claim a credit against the gross estate. All amounts paid or to be paid for foreign death taxes must be entered in United States currency. Schedule Q — Credit for Tax on Prior Transfers If the decedent received property from a transferor who died within 10 years before or 2 years after the decedent, a partial credit is allowable for the taxes paid by the transferor's estate. This credit is calculated using Schedule Q. Schedule R — Generation-Skipping Transfer (GST) Tax Schedule R is used to calculate the generation-skipping transfer (GST) tax that is payable by the estate. GST tax is typically imposed on property transferred to an individual who is two or more generations below the decedent. For purposes of Form 706, property interests being transferred must be includable in the gross estate before they are subject to the GST tax. Schedule U — Qualified Conservation Easement Exclusion A portion of the value of land that is subject to a qualified conservation easement may be excluded from a decedent's gross estate. Schedule U is used to make this election. Schedule PC — Protective Claim for Refund Schedule PC can be used to preserve the estate's right to claim a refund based on the amount of an unresolved claim or expense that may not become deductible under Section 2053 until after the limitation period ends.

Where can you get help filing an estate tax return?

There are many professionals who can assist you in filing an estate tax return, including your attorney, your tax professional, or your financial advisor. In addition, there are now software products designed to guide you through the process of filling out an estate tax return.   Important Disclosures:  Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial. This article was prepared by Broadridge. LPL Tracking #1-05139754

The new year is fast approaching, and it is a good time for small business owners to make some financial resolutions to help lead them toward a solid financial path. Whether your business is just starting or you have been running it for decades, the new year is the time to review your financial situation and set some resolutions to help you with your future financial goals. Not sure where to get started? Here are a few business resolutions, no matter what type of business you own.

Don't Let Talks of Recession Derail Your Business Plans

There are ups and downs with everything in life, including business. While recent talks of a potential upcoming recession have many business owners worried about their financial future, it is important to remember that if your business plan is solid, it should be able to weather the ebb and flow that comes with economic fluctuations. As a business owner or entrepreneur, you are a natural risk-taker. If you feel confident that growing your business is the proper path, you shouldn't let the fear of recession hold you back.¹

Maintain a Solid Relationship With Your Current Customers

New customers help you build and grow your company, but current customers serve as your existing support system. It is sometimes easy to forget them in the quest to obtain new customers. Always remember that it is usually cheaper to retain your current customers than to acquire new ones. So, while investing some money into developing new customers is essential, investing in your existing customers is also wise since the return on investment might be higher.²

Take Care of Your Employees

A solid team of experienced employees is crucial to maintaining your current customers and acquiring new ones. Unfortunately, recent years have shown us that it is getting harder to find employees. With so many companies looking to fill positions, it is crucial to be competitive and focus on keeping your current employees happy and productive. One way to do this is by creating a positive work environment, which may include flexible work schedules, help with continuing education, and other employee incentives.¹

Keep Your Marketing Plan Moving Forward

If you are seeing a downturn in business, you may be tempted to cut your marketing costs to save money, but this path could end up hurting your business more in the long run. Resolve to keep your marketing plan in full force. When companies keep their marketing effort going, they often come out of a recession stronger than companies that don't. Marketing is about focusing on the long-term return on investment. When you weaken your marketing plan, the return may take longer.²

Make Networking a Priority

Networking is great for acquiring new customers, vendors, and employees. One connection may result in several more, meaning more exposure and growth. For your resolution, consider setting a monthly goal of how many new connections you want to make. Resolve to attend networking events in your area regularly.²     Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by WriterAccess. LPL Tracking #502472-05 Footnotes ¹ Ten New Year’s Resolutions For Small Business Owners https://www.forbes.com/sites/rohitarora/2022/12/31/ten-new-years-resolutions-for-small-business-owners-in-2023/?sh=4b37095726e5 ² 8 New Year's resolutions for small businesses: Pick a daily priority, prepare for emergencies https://www.usatoday.com/story/money/usaandmain/2021/12/29/small-business-8-new-years-resolutions/9033124002/

The holidays are nearly upon us – a time of giving, goodwill to others, and embracing traditions. For many people, giving to a charity or organization that aligns with your values provides a sense of fulfillment. If you itemize deductions on your income tax return, you can deduct gifts made to charities. Here are six year-end giving strategies to spread holiday cheer with the additional gift of potential tax benefits.

1. Making cash gifts

If you give cash, you may deduct up to 60% of your adjusted gross income (AGI). Giving cash also provides the charity better flexibility when it comes to spending the money to help the people, animals, or the environment. Two disadvantages of giving a cash gift are liquidating a stock, bond, or other appreciated asset and being responsible for the generated capital gains tax, and you also don’t always know how the money is necessarily being used.  

2. Donating Stocks, Bonds, or other appreciated securities

If you are considering donating the earnings from appreciated stocks, bonds, real estate, or other appreciated non-cash assets directly to your charity of choice you may want to think about giving the appreciated asset directly to the charity over giving cash after selling them. This may be a beneficial strategy as it allows you to avoid the capital gains tax so long as you adhere to the rules. In addition, you would be eligible for a charitable income tax deduction up to the fair market value of the security you donate, up to 30% of your AGI. A financial professional can help you with the nuances of this type of giving strategy.  

3. Donor-advised fund (DAF)

A DAF is a fund managed by a third party that handles charitable donations given to a specified charity. Donors become eligible for an immediate tax deduction in that calendar year. They can give anonymously, knowing that the money can grow tax-free, and may be able to bypass capital gains taxes. There are various ways to give, including cash, stocks, bonds, and other appreciated assets. There are a couple of things to consider when deciding on a DAF. Initially, there may be a high start-up cost. Funds are not eligible for donor benefits, for example, scholarships and tickets, and there is limited control regarding grant-making. Being a DAF donor also gives you the authority to recommend grants from the fund to charitable organizations you support over time.  

4. Bunch your charitable gifts

Bunching your donations is a tax strategy where you make a multi-year contribution in a single year to maximize your itemized deduction for the year in which you make your donations. The strategy is to make your itemized deductions (including charitable donations) large enough to exceed the standard deduction amount. Bunching charitable gifts involves timing and the amount you plan to give. This has become a popular strategy after the Tax Cuts and Jobs Act of 2017 that nearly doubled the standard deduction through 2025. You have to remember that your donations must be to qualifying charitable organizations, generally non-profits with tax-exempt status under section 501(c)(3) of the IRS code.  

5. Contribute restricted stock

If you contribute directly to a public charity, including sponsors of donor-advised funds, the donor can qualify for an income tax deduction for the full fair market value (FMV) of the securities in an amount up to 30% of the donor’s adjusted gross income, with a five-year carryforward for any excess not deductible in the year of the contribution. When giving stock as opposed to the after-tax proceeds from selling the stock, the charity receives the full value of the appreciated stock and the donor is not subject to capital gains tax on the appreciation in the stock.  

6. Combine tax-loss harvesting with a cash gift

Tax-loss harvesting involves using capital losses to offset capital gains up to $3,000 of ordinary taxable income. Donors who itemize their deductions can then claim a charitable deduction for donating cash from the sale proceeds. But, to use this method, you have to understand when to apply it. Tax-loss harvesting only works on taxable investments. Several retirement accounts, for example, IRAs and 401(k)s are tax-deferred and therefore are not eligible to be used to offset taxable gains. Also, if you are somebody that just invests in mutual funds or exchange-traded funds (ETFs), tax-loss harvesting may be more difficult because to use tax-loss harvesting, the whole fund has to be down, therefore limiting its tax-saving capability.  

Year-End Giving, Your Financial Professional, and You

Charitable giving and the potential tax benefits are often complex and decisions not carefully weighed could impact you and your financial goals. Consider consulting a financial professional before making any financial decisions that could put a damper on your holiday cheer this year.     Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The tax-loss harvesting and other tax strategies discussed should not be interpreted as tax advice and there is no representation that such strategies will result in any particular tax consequence. Clients should consult with their personal tax advisors regarding the tax consequences of investing and charitable giving. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by LPL Marketing Solutions   Sources: Using Restricted Stock and Other Equity Awards for Tax-Smart Giving (fidelitycharitable.org) Donor-Advised Fund Definition, Sponsors, Pros & Cons, Example (investopedia.com) What is a Donor-Advised Fund? | NPTrust 5 Situations to Consider Tax-Loss Harvesting - TurboTax Tax Tips & Videos (intuit.com)     LPL Tracking # 490957

Determining how your income impacts Social Security (SS) taxes is important for tax planning. Factors that determine how much pay SS tax you pay, depending on your circumstances, include:

• If you have income from working in retirement.
• If you are self-employed.
• If you receive interest, dividends, or other taxable income.

You may pay SS tax if you:

• File an individual federal tax return, and if your combined income is between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
• File a joint federal tax return, and you and your spouse have a combined income between $32,000 and $44,000; you may have to pay income tax on up to 50% of your benefits. If you have more than $44,000 in income, up to 85% of your benefits may be taxable.
• Are married and file a separate tax return, you may have to pay SS taxes.

Source: SSA.gov There are strategies to help you reduce SS taxes by minimizing your adjusted gross income (AGI). Depending on your situation, you may have these options available to you:

1. Minimize withdrawals from tax-advantaged vehicles. Withdrawals from your IRA or 401(k) will be considered income and subject to taxes. Decreasing the frequency or only taking the minimum amount, for example, the required minimum distribution (RMD), can help reduce your AGI.
2. Keep your income below the SS tax threshold. If your AGI is under $25,000 as an individual or under $32,000 combined income when filing jointly, you may be SS tax-exempt. Due to the complexities of taxation, visit your tax professional about your situation.
3. Use a Roth IRA conversion strategy. Roth IRAs have tax-free distributions and no RMDs. Use this strategy to convert IRAs, 401(k)s, and other tax-deferred vehicles to tax-free income in retirement. You will need to pay taxes at the rollover transfer, so you should consult your tax professional before converting your IRA, 401(k), or other tax-advantaged accounts to understand your situation.

Earnings on the Roth IRA that accumulate after the rollover will be eligible for tax-free withdrawal when the Roth IRA has been open for at least five years and you are at least 59½.

4. Donate to charity. Your RMDs can be donated, eliminating the income from your AGI for the donation. Another strategy called a qualified charitable distribution (QCD) allows you to distribute funds from your IRA to an eligible charity (a 501(c)(3) organization) if you’re age 70 1/2 or older.

 

5. Reduce your business income. Reducing your pass-through income by increasing business deductions and expenses can help lower SS taxes. You can maximize your retirement savings using specific strategies and lower your taxable income simultaneously. Work with your financial and tax professionals for business planning to determine which tax-saving strategies are appropriate for your situation as a business owner.

 

6. Maximize your capital losses. If you’ve invested and lost value, you may want to sell the investment and realize the loss so you can claim it on your taxes through a tax-loss-harvesting strategy. The tax write-off may provide a deduction on your taxes. Your financial and tax professionals can help you understand how capital losses work and if you qualify.

  While there is no way to eliminate paying taxes, your financial and tax professionals can help determine strategies that may save you money depending on your circumstances. Important Disclosures The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change. Traditional IRA account owners should consider the tax ramifications, age and income restrictions in regards to executing a conversion from a Traditional IRA to a Roth IRA. The converted amount is generally subject to income taxation. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy. This article was prepared by Fresh Finance. LPL Tracking # 1-05359383   Sources: https://faq.ssa.gov/en-us/Topic/article/KA-02471#:~:text=You%20must%20pay%20taxes%20on,income%E2%80%9D%20of%20more%20than%20%2432%2C000. https://www.bankrate.com/retirement/avoid-paying-taxes-on-social-security-income/#htm https://money.usnews.com/money/retirement/social-security/articles/how-to-minimize-social-security-taxes https://www.sdfoundation.org/news-events/sdf-news/new-laws-for-qcds-changes-for-cgas-and-smart-charitable-strategies-for-2023/#:~:text=Eligibility%20for%20making%20a%20QCD,liability%20for%20future%20estate%20taxes.

When it comes to your estate plan, you don’t just have it drafted and put away until it is time for your loved ones to manage your lifetime of affairs. As your world changes year by year, it is critical that you review your estate plan and update it to stay aligned with your long-term financial goals. Here is an eight-step year-end estate planning checklist to help you organize and prioritize your estate planning strategy.  

1. Have you reviewed your will?

Reviewing your will as part of your year-end estate planning checkup is essential. As each year comes to a close, our life changes. These changes may impact your future financial plans and goals regarding your estate management should you die or become incapacitated. There are generally four types of wills that people choose from:  

• Attested Written Will – This is the most common type of will. It is typed, printed, and signed by the testator and two witnesses.
• Holographic (Handwritten) Will – This will is handwritten and signed by the testator, and witnesses are recommended.
• Nuncupative (Oral) Will – Typically, these are instructions by someone too sick to create a written will on how they want their personal property distributed. Nuncupative wills are not legal in most jurisdictions. However, in those which they are legal, a set number of witnesses must write down the wishes of the incapacitated individual as soon as possible.
• Joint Will – A type of the last will and testament where two (or more) people, generally a married couple, transfer the entire estate to a surviving spouse when the first spouse dies. Upon the death of the second spouse, the children inherit everything.

 

2. Have you met your financial gift limit?

In 2023, the annual gift tax exclusion (or gift tax limit) is $17,000 per recipient without having to pay taxes on those gifts. Any gifts above that amount must be reported to the IRS on your 2024 tax return (form 709). There are exceptions to this rule, and a financial professional can help you learn how it could impact your financial strategy.  

3. Have you reviewed your retirement and life insurance beneficiaries?

Reviewing your retirement and life insurance beneficiaries is important as people may get married or divorced, they may die, or a child or sibling may suddenly become a risk through addiction or an inability to manage money properly. In these or other relevant circumstances, you may want to modify the beneficiaries in your accounts. Beneficiaries typically don’t need to pay taxes on the life insurance death benefit they receive, especially if they receive it as a lump sum. If the beneficiary chooses to receive their payout as an annuity instead, any interest accrued may be subject to taxes.  

4. Are your HCP and POA documents up-to-date and in a safe place?

A health care proxy (HCP) is a document that names someone to express your desires and make health care decisions should you become incapacitated. Examples include medical directives, living wills, or advance health care directives. Some states provide a statutory or standardized form, while others allow you to draft your own. A durable power of attorney (POA) for your finances names an individual who can make financial decisions should you become incapacitated. If you don’t have one it may be necessary for the court to appoint one. Only about one-third of adults 55 and older have a power of attorney.  

5. Have you reviewed and revised (if necessary) an inventory of your assets?

It’s essential to keep an up-to-date inventory list, for example, the value of your home, other real estate interests, cars, jewelry, and other physical assets. You should also consider reviewing your recent financial statements, including your bank, retirement and brokerage accounts, and any safety deposit boxes.  

6. If you own any trusts, are they accurate and up-to-date?

The creation of trusts helps to preserve wealth, alleviate some of the tax burden, avoid probate, and provide your family and beneficiaries a less stressful way to access your estate after you are gone.  

7. Have you talked with your family about changes to your estate plan?

Establishing lines of communication regarding your estate plan and financial goals is an often overlooked strategy that can help preserve your wealth. According to NASDAQ, 70% of families lose their wealth by the 2nd generation and 90% by the third. These are overwhelming statistics driven in part by a lack of communication.  

8. Have you reviewed your estate plan with your financial professional?

The details of your estate plan and any modifications can fundamentally impact your financial strategy and end-of-life goals. As the year is winding to a close, schedule an appointment with your financial professional to review all the numbers, beneficiaries, potential tax consequences, and any needed updates.     Important Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.   This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.   All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.   This article was prepared by LPL Marketing Solutions   Sources: Generational Wealth: Why do 70% of Families Lose Their Wealth in the 2nd Generation? | Nasdaq The Ultimate Guide to Financial Power of Attorney | Take Care (getcarefull.com) Living Wills, Health Care Proxies, & Advance Health Care Directives (americanbar.org) Is Life Insurance Taxable? | Progressive   LPL Tracking # 492091