- Are Employee Stock Purchase Plans (ESPP) Pre-Tax?
Employee stock purchase plans (ESPPs) are benefits offered by companies to help employees invest in company stock at a discount. These plans are designed to encourage ownership and align employee interests with those of the company. Understanding the tax treatment of ESPP contributions can help employees make the most of this benefit. Specifically, many may… read more…
- 4 Tax Benefits of Using an LLC for Your Rental Property
Forming a limited liability company (LLC) can offer significant tax advantages for real estate investors, including pass-through taxation and a special tax deduction associated with LLCs. Additionally, LLCs can provide a shield against personal liability, protecting your personal assets from legal claims associated with your rental properties. A financial advisor could also be a worthwhile… read more…
- What Are the Tax Consequences of Inheriting a CD?
If you inherit or plan to bequeath a certificate of deposit (CD) as part of your estate, there may be tax consequences to consider. Three kinds of taxes could apply: income, estate and inheritance. While the principal amount of the CD transfers without income tax issues, any interest earned after death and before transfer will… read more…
- Can Short-Term Capital Losses Offset Long-Term Capital Gains?
Whether you’re a novice making your first investment or an experienced investor managing a diverse portfolio, understanding capital gains and losses is fundamental for anyone who invests. Savvy investors may strategically count long-term losses against their long-term gains, eliminating or reducing their tax liability. This begs the question: can short-term losses offset long-term gains in… read more…
- Are Health Insurance Premiums Tax Deductible When You Retire?
Health insurance premiums can be tax deductible when you retire, but it depends on several factors such as your age, the type of health insurance plan that you have and whether you are self-employed or not. Even medicare premiums can be tax deductible if you qualify, so it’s just as important to have a tax… read more…
- I’m Going to Get $3,300 per Month From Social Security. How Can I Reduce My Taxes?
Approximately 40% of households pay taxes on their Social Security benefits, according to the Social Security Administration. If you do owe taxes on your benefits, managing them effectively could save you a lot of money. If you need help planning for Social Security or taxes in retirement, consider working with a financial advisor. However, there… read more…
- How to Avoid Overpaying Your Taxes
Getting a tax refund can seem like a financial windfall, but it means you’ve overpaid your taxes and given the government an interest-free loan. While some taxpayers prefer to receive a lump sum refund, others view tax overpayments as a missed opportunity to have their money work for them. That’s because the extra money paid… read more…
- What Are the Imputed Interest Tax Rules?
Imputed interest rules can turn even a simple act of generosity into a taxable event. This IRS regulation requires interest to be calculated and reported on certain transactions, even if no interest is explicitly stated. The regulation aims to ensure fair taxation on transactions involving deferred payments or below-market interest rates. As tax laws continue… read more…
- What Is a Gift Loan and How Does It Work?
A gift loan is essentially a loan with an interest rate well below the market average, or even no interest at all, which can be a strategic way to support family members financially or for estate planning purposes. As beneficial as these loans may appear, with their potential tax benefits and flexible repayment options, they… read more…
- What Is Net Investment Income and How Is It Taxed?
Net investment income (NII) is defined as the profit gained from investments after deducting certain related expenses. This includes various forms of income such as interest, dividends, rental income and capital gains. It’s essential to know not just what comprises NII, but also how it’s calculated and the tax implications it carries, especially for those… read more…
- 9 Common Tax Mistakes and How to Avoid Them
The more money you make, the higher your tax liability could be. And making a mistake in your filing can end up costing you more in fees and penalties. Here’s a roundup of common tax mistakes that could cost you money this tax season. A financial advisor who specializes in tax planning could also help… read more…
- How to Make a Charitable Gift From Your IRA
Each year, you can make a tax-free charitable gift from your IRA or certain other pre-tax retirement account. This is known as a qualified charitable distribution or a QCD. These distributions allow you to meet your annual required minimum distribution without paying taxes on that amount. To do so, you must transfer the assets from your… read more…
- Do I Have to Worry About Taxes if I Loan a Family Member $45,000?
It’s common for family members to lend money amongst themselves, and many choose to charge less than market interest rates as a favor to loved ones. However, the IRS does care about these transactions so there are some things to think about as you’re planning such a loan. While the IRS does afford a break… read more…
- How Does the IRS Verify Cost Basis?
The IRS expects taxpayers to keep the original documentation for capital assets, such as real estate and investments. It uses these documents, along with third-party records, bank statements and published market data, to verify the cost basis of assets. This is an issue that will come up if the IRS has reason to believe that… read more…
- Do I Have to Worry About the Gift Tax If I Give My Son $75,000 Toward a Down Payment?
Unless you have given away more than $13 million in your lifetime, a $75,000 gift will not trigger the federal gift tax. Using this for a down payment also does not affect the result. A financial advisor with estate planning expertise can help you navigate the gift and estate taxes. Connect with a fiduciary advisor… read more…
- What Is a Graduated Income Tax?
A graduated income tax is the same thing as a progressive income tax system, where you pay a larger percentage of tax on your income as you earn more money. This system works differently from the flat tax system, in which everyone gets taxed at the same percentage of their income. Here’s a breakdown of… read more…
- What Is a Flat Income Tax and How Does It Work?
A flat income tax system is one where everyone is taxed at the same rate, no matter how much money they earn throughout the year. Many people argue that it is a fair way to tax everyone in an equal manner because an alternative progressive system sees you paying a higher percentage of tax as… read more…
- My Dad Left Me $450k in an IRA, But I’m in the 32% Tax Bracket. How Should I Structure My Withdrawals?
There are a couple of different sets of rules around inherited IRAs and you’re subject to theleast flexible. While there are more options for a spouse or someone who’s chronically ill ordisabled, a minor child, or someone not more than 10 years younger than the deceased IRAowner, you have just 10 years to withdraw the… read more…
- How to Avoid Prohibited Transactions With Your Self-Directed IRA
A self-directed IRA is a retirement savings plan that allows you to decide what investments will be made. These accounts can hold a variety of investments and provide opportunities that you may not have with other accounts. However, there are certain rules you must follow with a self-directed IRA, like the prohibited transactions rule. Violating… read more…
- I’m Selling My House to Downsize for Retirement, and I’ll Net $620k. Do I Have to Pay Capital Gains Taxes?
When you sell your primary home, the IRS allows you to exclude a significant portion of the profit from your taxes. This exclusion – $250,000 for single filers and $500,000 for married, joint filers – is large enough that many sellers don’t end up paying federal taxes on the capital gains from a home sale.… read more…
- What Documents Do I Need to File My LLC Taxes?
If you are the owner of an LLC and want to file the correct tax return for your business, the job starts with gathering the right documents. You’ll need records to validate all your business’s income, deductions, expenses and other figures reported across various forms. The tax forms you’ll use vary depending on whether you… read more…
- Tax Planning for Ultra-High-Net-Worth Individuals and Families
Proper tax planning is essential for managing and preserving wealth. For ultra-high-net-worth individuals and their families – people with $30 million in investable assets – efficient tax management requires an in-depth understanding of tax laws, methodical utilization of tax benefits and strategic planning. The support of a specialized financial advisor is often beneficial in ultra-high-net-worth… read more…
- Tax Strategies for Short-Term Rental Properties
Renting out properties on a short-term basis can be a good way to generate an additional income stream without a significant investment of time. You can also take advantage of the short-term rental tax loophole if you meet certain requirements. This loophole is designed to extend tax benefits to investors who rent out property on… read more…
- 529 Plan Tax Deductions for Every State
Opening a 529 plan is a tax-advantaged way to set aside money for college. The money you contribute can grow tax-deferred and qualified withdrawals are tax-free. While there is no federal tax break for making 529 plan contributions, you may… read more…
- Temporary Tax Plan Could Boost Your Standard Deduction By Up to $4,000
A House panel has passed a bill that would temporarily expand the standard tax deduction used by the majority of taxpayers by $2,000 per person for the next two years. The Tax Cuts for Working Families Act (H.R.3936) recently approved by… read more…