For many, the expenses of college or technical school can be overwhelming. But, with financial aid programs, tuition, room and board, books, and other college-related costs can become more affordable. To determine if your student qualifies for financial aid, you must fill out the Free Application for Federal Student Aid, or FAFSA, by the deadline.

You must file your FAFSA earlier to receive your aid before the start of the school year. You only need to complete your FAFSA once for all types of aid you may be eligible to receive. Remember that

FAFSA deadlines vary for federal, state, and institutional financial aid. You need to remember the two most important dates are the open date, usually October 1, and June 30, the closing date.

The federal government gives students a deadline of June 30 after the school year in which they need aid. For instance, June 30, 2023, for the 2022-23 school year or June 30, 2024, for the 2023-24 school year to file the FAFSA. Check on state and institution deadlines as they may differ from the federal deadline.

Documents you need for the FAFSA- Before applying for the FAFSA, you’ll need information from these documents:

• Your tax returns and W-2 forms
• Records of untaxed income, such as child support and interest income
• Records of assets, like savings accounts and investment accounts
• Social Security numbers of your student and both parents

How to Submit the FAFSA– Once you’re ready to apply for the FAFSA, follow these steps:

1. Visit http://www.fafsa.gov
2. Create a Federal Student IDA or FSA IDA.
3. Answer each question thoroughly and accurately.
4. List the colleges, technical schools, or universities your student is considering.

Be sure to submit the FAFSA before the deadline, June 30, 2023. However, the earlier you submit your FAFSA, the better your chance of receiving specific financial aid, such as grants.

Next steps after the FAFSA is submitted- Once you complete your FAFSA application online, the Department of Education will take 3 to 5 days to process it. Here’s what happens next:

1. A student summary report (SAR) estimates what your family is expected to contribute (expected family contribution or EFC) towards your student’s education.

2. FAFSA shares your SAR report with up to 10 schools.

3. The financial aid office considers the SAR information to calculate your student’s financial aid:

• The Cost of Attendance (COA)- The COA estimates tuition, fees, room and board, books and supplies, etc.
• Your Expected Family Contribution (EFC)- The EFC is based on a unique formula that involves your family’s taxed and untaxed income, assets, and benefits.
• The financial aid office will subtract the EFC from the COA to determine the amount of need-based financial aid your student needs and how much they may receive.

4. Your student receives their FAFSA award letter.

You can modify FAFSA information– If you receive no aid or see errors, you can correct and resubmit your information. Or, if you need more financial assistance due to a change in your family’s situation, you can update the FAFSA before the corrections deadline.

Your financial professional can help- Your financial professional may provide assistance with completing  the FAFSA and answer any questions. They can help you design a strategy for funding your student’s higher education.

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 Fresh Finance.

LPL Tracking # 1-05367581

Sources:

https://www.nerdwallet.com/article/loans/student-loans/fafsa-deadline

https://studentaid.gov/help/fafsa

In tax lingo, your principal residence is the place where you legally reside. It’s typically the place where you spend most of your time, but several other factors are also relevant in determining your principal residence. Many of the tax benefits associated with home ownership apply mainly to your principal residence — different rules apply to second homes and investment properties.

Here’s what you need to know to make owning a home really pay off at tax time.

Deducting mortgage interest

One of the most important tax benefits that comes with owning a home is the fact that you may be able to deduct any mortgage interest that you pay. If you itemize deductions on Schedule A of your federal income tax return, you can generally deduct the interest that you pay on debt resulting from a loan used to buy, build, or improve your home, provided that the loan is secured by your home. In tax terms, this is referred to as “home acquisition debt.” You’re able to deduct home acquisition debt on a second home as well as your main home (note, however, that when it comes to second homes, special rules apply if you rent the home out for part of the year).

For mortgage debt incurred prior to December 16, 2017, up to $1 million of home acquisition debt ($500,000 if you’re married and file separately) qualifies for the interest deduction. If your mortgage loan exceeds $1 million, some of the interest that you pay on the loan may not be deductible.

For mortgage debt incurred after December 15, 2017, up to $750,000 of home acquisition debt ($375,000 if you’re married and file separately) qualifies for the interest deduction. If your mortgage loan exceeds $750,000, some of the interest that you pay on the loan may not be deductible.

A deduction is no longer allowed for interest on home equity indebtedness. Home equity used to substantially improve your home is not treated as home equity indebtedness and can still qualify for the interest deduction.

For more information, see IRS Publication 936.

Mortgage insurance

You can generally treat amounts you paid during 2021 for qualified mortgage insurance as home mortgage interest, provided that the insurance was associated with home acquisition debt, and was being paid on an insurance contract issued after 2006.

Qualified mortgage insurance is mortgage insurance provided by the Department of Veterans Affairs, the Federal Housing Administration, the Rural Housing Service, and qualified private mortgage insurance (PMI) providers. The deduction is phased out, though, if your adjusted gross income was more than $100,000 ($50,000 if married filing separately).

Starting in 2022, amounts paid for qualified mortgage insurance are generally not deductible.

Deducting real estate property taxes

If you itemize deductions on Schedule A, you can also generally deduct real estate taxes that you’ve paid on your property in the year that they’re paid to the taxing authority. However, for 2018 to 2025, individuals are able to claim an itemized deduction of up to only $10,000 ($5,000 for married filing separately) for state and local property taxes and state and local income taxes (or sales taxes in lieu of income taxes). Previously, there were no dollar limits.

If you pay your real estate taxes through an escrow account, you can only deduct the real estate taxes actually paid by your lender from the escrow account during the year. Only the legal property owner can deduct real estate taxes. You cannot deduct homeowner association assessments, since they are not imposed by a state or local government.

AMT considerations

If you’re subject to the alternative minimum tax (AMT) in a given year, your ability to deduct real estate taxes may be limited. That’s because, under the AMT calculation, no deduction is allowed for state and local taxes, including real estate tax.

Deducting points and closing costs

Buying a home is confusing enough without wondering how to handle the settlement charges at tax time. When you take out a loan to buy a home, or when you refinance an existing loan on your home, you’ll probably be charged closing costs. These may include points, as well as attorney’s fees, recording fees, title search fees, appraisal fees, and loan or document preparation and processing fees. You’ll need to know whether you can deduct these fees (in part or in full) on your federal income tax return, or whether they’re simply added to the cost basis of your home.

Before we get to that, let’s define one term. Points are certain charges paid when you obtain a home mortgage. They are sometimes called loan origination fees. One point typically equals one percent of the loan amount borrowed. When you buy your main home, you may be able to deduct points in full in the year that you pay them if you itemize deductions and meet certain requirements. You may even be able to deduct points that the seller pays for you. More information about these requirements is available in IRS Publication 936.

Refinanced loans are treated differently. Generally, points that you pay on a refinanced loan are not deductible in full in the year that you pay them. Instead, they’re deducted ratably over the life of the loan. In other words, you can deduct a certain portion of the points each year. If the loan is used to make improvements to your principal residence, however, you may be able to deduct the points in full in the year paid.

What about other settlement fees and closing costs? Generally, you cannot deduct these costs on your tax return. Instead, you must adjust your tax basis (the cost, plus or minus certain factors) in your home. For example, you’d increase your basis to reflect certain closing costs, including:

• Abstract fees
• Charges for installing utility services
• Legal fees
• Recording fees
• Surveys
• Transfer or stamp taxes
• Owner’s title insurance

For more information, see IRS Publication 530.

Tax treatment of home improvements and repairs

Home improvements and repairs are generally nondeductible. Improvements, though, can increase the tax basis of your home (which in turn can lower your tax bite when you sell your home). Improvements add value to your home, prolong its life, or adapt it to a new use. For example, the installation of a deck, a built-in swimming pool, or a second bathroom would be considered an improvement. In contrast, a repair simply keeps your home in good operating condition. Regular repairs and maintenance (e.g., repainting your house and fixing your gutters) are not considered improvements and are not included in the tax basis of your home. However, if repairs are performed as part of an extensive remodeling of your home, the entire job may be considered an improvement.

Exclusion of capital gain when your house is sold

If you sell your principal residence at a loss, you generally can’t deduct the loss on your tax return. If you sell your principal residence at a gain you may be able to exclude some or all of the gain from federal income tax.

Generally speaking, capital gain (or loss) on the sale of your principal residence equals the sale price of your home less your adjusted basis in the property. Your adjusted basis is the cost of the property (i.e., what you paid for it initially), plus amounts paid for capital improvements, less any depreciation and casualty losses claimed for tax purposes.

If you meet all requirements, you can exclude from federal income tax up to $250,000 ($500,000 if you’re married and file a joint return) of any capital gain that results from the sale of your principal residence. Anything over those limits is generally subject to tax. In general this exclusion can be used only once every two years. To qualify for the exclusion, you must have owned and used the home as your principal residence for a total of two out of the five years before the sale.

For example, you and your spouse bought your home in 1981 for $200,000. You’ve lived in it ever since and file joint federal income tax returns. You sold the house yesterday for $350,000. Your entire $150,000 gain ($350,000 – $200,000) is excludable. That means that you don’t have to report your home sale on your federal income tax return.

What if you fail to meet the two-out-of-five-year rule? Or what if you used the capital gain exclusion within the past two years with respect to a different principal residence? You may still be able to exclude part of your gain if your home sale was due to a change in place of employment, health reasons, or certain other unforeseen circumstances. In such a case, exclusion of the gain may be prorated.

Additionally, special rules may apply in the following cases:

• If your principal residence contained a home office or was otherwise used partially for business purposes
• If you sell vacant land adjacent to your principal residence
• If your principal residence is owned by a trust
• If you rented part of your principal residence to tenants, or used it as a vacation or second home
• If you owned your principal residence jointly with an unmarried individual

Note : Members of the uniformed services, foreign services, and intelligence community, as well as certain Peace Corps volunteers and employees may elect to suspend the running of the two-out-of-five-year requirement during any period of qualified official extended duty up to a maximum of ten years.

Consult a tax professional for details.

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 #1-940125

Opportunities outside the U.S. offer plenty of potential, but plenty of risk too

As the world becomes increasingly interconnected, more and more investors are considering adding international investments to their long-term asset allocation plan.

Here are five significant reasons why investors should consider international investments to their long-term asset allocation mix.

#1: Diversification

One of the primary reasons investors should consider an allocation to international investments is for diversification purposes. By investing in assets from different countries and regions, investors can reduce the impact of regional economic or political events on their portfolio.

Diversification can also help mitigate risk and volatility, as different markets tend to move independently of one another. This means that a well-diversified portfolio of international investments can help investors pursue more stable long-term returns.

#2: Potential for Higher Returns

Another reason investors should consider international investments is for the potential for higher returns. By investing in economies with higher growth rates, investors can potentially earn higher returns than they would in their home country.

For example, emerging markets may offer higher growth rates due to their young populations, increasing middle classes, and rapidly developing economies. While higher returns come with higher risk, a well-diversified international portfolio can help manage this risk while still capturing the potential for higher returns.

#3: Different Economies and Currencies

Investing in international markets also provides exposure to different economies and currencies. This can be beneficial for investors looking to hedge against inflation, currency fluctuations, or other risks in their home market.

For example, if an investor is concerned about inflation in their home market, they may choose to invest in international markets where inflation is less of a concern. Additionally, exposure to different currencies can help diversify a portfolio, as currencies tend to move independently of each other.

#4: Unique Investment Opportunities

International investments also provide access to unique investment opportunities that may not be available in an investor’s home market.

For example, international investments may offer exposure to industries or sectors that are not well-represented in the home market.

Additionally, international investments can provide exposure to companies with different business models or growth prospects than those in the home market.

By investing in international markets, investors can broaden their investment universe and potentially find new investment opportunities that they may not have otherwise discovered.

#5: Spread Political and Economic Risk

Finally, investing in international markets can help spread political and economic risk. By diversifying investments across different countries, investors can manage their exposure to any one country’s political or economic risks.

This can be especially important for investors who live in countries with volatile or uncertain political and economic conditions. International investments can provide a hedge against these risks, potentially leading to a more stable and consistent investment experience.

Your Financial Professional

International investments can offer a range of benefits to investors, but international investing does come with plenty of risks too. A well-diversified portfolio can help manage these risks while still working towards the potential for higher returns.

As such, investors should consider adding international investments to their long-term asset allocation plan – so long as such investments are consistent with your overall risk tolerance and financial plan.

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.

Investing in foreign and emerging markets securities involves special additional risks. These risks include, but are not limited to, currency risk, geopolitical risk, and risk associated with varying accounting standards. Investing in emerging markets may accentuate these risks.

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.

Asset allocation does not ensure a profit or protect against a loss.

This article was prepared by FMeX.

LPL Tracking #1-05368781