Despite the recent gyrating stock market, the economy is still doing quite well based on many indicators. Since October 2018, the stock market is down over 10 percent and in some sectors down almost 20 percent. Does this mean we are entering a recession? A recession is technically defined as a period where Gross Domestic Product (GDP) declines in two consecutive quarters. GDP is the total revenues earned by a country for a given period of time. Based on the factors mentioned below, many of the current economic indicators do not point towards a recession in the near future. That’s not to say a recession will not occur at some point.

The Tax Cuts and Jobs Act (TCJA), passed on December 22, 2017, lowered taxes on both individuals and businesses by expanding the tax brackets, introducing the Qualified Business Income deduction, and lowering the corporate tax rate. Also included in the TCJA was the introduction of the Opportunity Zones under IRS Codes 1400Z-1 and 1400Z-2. The Opportunity Zones offer generous tax breaks that were introduced to “spur private investment in distressed communities” by either lowering or completely eliminating capital gains depending on how long you hold the qualified investment.

According to Forbes, there are over 44 million Americans with student loan debt totaling a staggering $1.5 trillion. The only other debt larger than student loans is mortgage debt. Student loan debt creates a drag on the economy by reducing the amount of take-home pay young adults have to spend on housing, retirement, household formation, and general living expenses. This money-squeeze is especially acute for the Millennial generation because they possess the greatest amount of student loan debt. In an effort to accelerate student loan repayment and also encourage borrowers to start contributing towards their retirement, one unknown company applied for and received an IRS Private Letter Ruling (PLR) on August 17, 2018 allowing that company to match employee student loan payments, similar to what most companies do with 401k plans.

This is a great question because there is a misconception among homeowners that if you refinance your existing home mortgage, you will be subject to the new mortgage rules and not be able to deduct as much as you could before. This is incorrect. The Tax Cuts and Jobs Act (TCJA) which was passed in December 2017 did reduce the amount of mortgage interest a homeowner could deduct on their taxes to $750,000, down from $1 million (plus $100,000 of interest on a home equity line of credit), but that only affects new mortgages made after December 2017. The TCJA initially eliminated the deductibility of home equity line interest, but the IRS issued clarification on (February 21, 2018) stating that homeowners can still continue to deduct home equity loans as long as the loan is used to “buy, build or substantially improve the taxpayer’s main home and second home.” If you had a mortgage prior to the passage of TCJA, you are grandfathered into the old rules and can still deduct mortgage interest up to the old limit of $1 million, even if you refinance your loan.

Cannabis stocks are the hottest stocks of 2018. Every year a new investment becomes the next best thing and all of a sudden everyone wants to invest in it. This cycle happens all the time. Last year, everyone wanted to buy cryptocurrencies. As a result, Bitcoin (the most notable cryptocurrency) skyrocketed to over $20,000 and then plunged over 50 percent (Bitcoin is currently trading at $6,300). Not long before that, investors were enamored with gold. The first page of nearly every consumer investment related website (i.e. CNBC, Yahoo Finance, et.) talked about how gold would hit $2,000 an oz because the assumption was that the U.S. dollar was losing value and would no longer be the currency of choice. Since then the U.S. dollar has strengthened against almost every single currency (hard and soft) and gold has lost its luster. Gold is now trading at $1,185 per oz, down 35 percent from its peak. The Wall Street Journal occasionally publishes a quiz to test the reader’s knowledge of such manias, and there are plenty of examples. Bottom line is that it’s ok to get caught up in the excitement and buy these types of investments, but as with any investment, you must be diversified.

In short, the PSLF program allows borrowers to have their federal student loans entirely forgiven if they make 120 qualifying (not consecutive) payments while they work in a non-profit/government sector job. The PSLF program was created in 2007 and the first cohort of individuals with 120 qualifying payments became eligible last year for the generous loan forgiveness program. Some people are concerned whether the PSLF program will get cut under Donald Trump’s presidency. Others have heard that some borrowers were denied relief even if they met the 120 qualified payments. There have been no official announcements from the Department of Education or the White House on changes to the PSLF program. The media has inaccurately reported that the Tax Cuts and Job Act (TCJA) defunded the PSLF program, but that is not true; there is no mention of the PSLF program in the text of the passed TCJA bill. While the 2019 federal budget proposed by President Trump does eliminate the PSLF program, the budget proposes an alternative more “streamline[d]” solution to borrowers: the streamlined version would “cap a borrower’s monthly payment at 12.5 percent of their discretionary income” and the debt would be forgiven after 15 years. Graduate debt would be forgiven after 30 years. More importantly, this would only affect “loans originating on or after July 1, 2019,” hence, current borrowers would be grandfathered in.

I am fanatical about protecting my credit score because one minor error can cost me thousands. This is exactly what happened to one of our newest clients. Liam was in escrow to buy his first dream house. He had his down payment ready to go, was prequalified through his lender and had an excellent interest rate since his credit score was over 750; the table was set and everything was going great, until a late credit report filing.

This is an important year for California as we head to the polls in November to vote on a number of key propositions. While there are 12 propositions, only 11 of them are actually on the ballot for vote; Proposition 9, which would have split California into three states, was removed from the ballot in July 2018.

Recently, the New York University (NYU) School of Medicine announced that all current and future medical school students will receive full tuition scholarships, “regardless of their need or merit.” This is great news, not only for medical students, but for higher education and society as a whole, because according to the American Association of Medical Colleges, doctors are graduating with approximately $300,000 of student loan debt. Hopefully the move by NYU will motivate other universities, including non-medical, to pursue similar programs to lessen the burden on young adults just starting out their careers.

There is a new 20 percent tax cut for small businesses that is part of the 2017 Tax Cuts and Jobs Act (TCJA) which was passed on December 27, 2017. It’s called the Section 199A Qualified Business Income Deduction. Since the passage of the TCJA, there have been hundreds of articles on the topic, some in favor of the act and others opposed. Some taxpayers are excited about the lower tax rates and others are nervous about how their taxes will change. Most importantly, small businesses are utterly confused as to whether they qualify for the generous Section 199A deduction, which is considered the biggest tax cut of all. This article breaks down each section of the 199A and helps readers determine if they qualify.