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Taxes

Mar 22, 2022 If you're like most people, you dread tax season. But if you're expecting a tax refund, you may have something to look forward to. If there's extra money coming your way from the IRS, you may be able to pay off some debt, build an emergency fund using a  high-interest savings account or work with a financial advisor to set investing and retirement goals. Most people will get their tax refund within three weeks of filing, but it varies based on how you file and how you get your refund. Let's break down the refund schedule and how long it takes for the IRS to issue refunds. Read More...

Jan 03, 2022 The federal income tax rates remain unchanged for the 2021 and 2022 tax years: 10%, 12%, 22%, 24%, 32%, 35% and 37%. The income brackets, though, are adjusted slightly for inflation. Read on for more about the federal income tax brackets for Tax Year 2021 (due April 15, 2022) and Tax Year 2022 (due April 15, 2023). Go beyond taxes to build a comprehensive financial plan. Find a local financial advisor today. Read More...

Jan 10, 2022 President Trump signed the Tax Cuts and Jobs Act into law in December 2017. This bill largely didn't affect individual income taxes until the 2018 tax year, which you filed in early 2019. How exactly the Trump tax plan affects you depends on your income, your current filing status and the deductions you take. But because of tax code changes, you might want to work with a financial advisor to optimize your tax strategy for your financial goals. Take a look at the following guide to help you better understand the main features of the new tax plan. Read More...

Apr 06, 2022 The start of a new year means it’s time to file your federal tax return. Many people stress about filing taxes, but there are a number of tax filing services to make the process easier. Two of the most well-known services are H&R Block and TurboTax. Each is known for offering a friendly user experience. In fact, they both provide information along the way so you understand what you're doing and they offer affordable filing options. This makes them both viable tax filing options, though which is best for you will vary based on your needs. If you have questions about how to minimize your taxes, consider working with a financial advisor. Read More...

Jan 12, 2022 Filing taxes yourself has never been easier. As long as you have internet access, you can submit your tax return from the comfort of your couch. Before you get started, however, you'll have to choose which online tax software to trust with all your financial details. That's not always easy. A financial advisor can help you take an extra step to align your tax strategy with your overall financial goals. Read More...

Jan 13, 2022 There are a number of ways to decrease your tax burden. The two most popular ones, though, are likely tax credits and tax deductions. While these may seem like they are the same thing, they are actually two very different mechanisms. A tax credit gives you a dollar-for-dollar reduction of the tax you owe, while a tax deduction lowers your taxable income for the year. Both, though, can save you some cash. For help with your tax strategy, consider working with a financial advisor. Read More...

May 20, 2022 Tax alpha, sometimes called alpha tax, measures how much an investor can add to their financial plan by optimizing efficient tax strategies. Essentially, tax alpha boils down to the ability of an investor to outperform reasonable returns by implementing tax strategies that lead to savings. Let's break down how to calculate tax alpha. A financial advisor can help optimize your portfolio to mitigate your tax liability. Read More...

May 06, 2022 Anyone whose income is less than the tax filing threshold is not required to file an income tax form with the IRS. For most taxpayers, this threshold is usually set at or around the standard deduction. However, it’s a good idea to file your taxes anyway. Low-income Americans often qualify for tax credits and refunds that can help them with their finances. Here’s what you need to know. Consider working with a financial advisor as you prepare taxes and do tax planning. Read More...

May 04, 2022 What do onesies, binkies of every size and color, swaddles plastered with fluffy animals, and tax credits have in common? If you had a child in the last year, they all play a significant role in your life. As any new parent can attest, diapers and bottles aren’t cheap, particularly with inflation on the rise. Luckily, the newly enhanced Child Tax Credit can provide an influx of cash to help with the expenses of having a child. Whether you had a newborn in 2021 or are a seasoned parent looking for financial resources, you may be eligible to claim a child tax credit. Here’s what you need to know. A financial advisor could help you create a financial plan for your family's needs and goals.  Read More...

May 03, 2022 Remote work has become more popular in recent years and is among the many trends that have accelerated due to the COVID-19 pandemic. While remote work is nothing new, the rise in the number of people working remotely has become an issue when it comes to collecting taxes. As a result, some states have adopted the convenience of the employer rule or something similar, which could result in double taxation for some employees. While there are some exceptions to the rule, employees working for employers that adopt the rule could owe quite a bit more at tax time. We’ll cover everything you need to know about the convenience of the employer rule as it continues to take shape. A financial advisor could help you create a financial plan for your tax planning needs and goals.  Read More...

May 03, 2022 When you work for someone else, your employer reports your income for you. But when you work for yourself, it’s your responsibility to report your own income. However, that process can be a challenge when you don’t receive a 1099 from one or more of your clients. Even if you don’t receive a 1099 from a client, you’re still expected to report any income you received to the IRS. Regardless of the reason you didn’t receive the form, it isn’t a free pass to avoid paying income tax. A financial advisor could help you create a financial plan for your home buying needs and goals.  Read More...

May 02, 2022 Money spent to improve your home can save on taxes. However, the improvements have to be of a certain type, and you can’t claim the deduction until you sell your home. Capital improvement deductions usually aren’t important to sellers whose gains are less than the amount of the capital gains exclusion. But they can save thousands on taxes for people who spend a lot to improve a home and sell it for more than they paid. A financial advisor can help you figure out how to make capital improvements work within your financial situation. Read More...

Apr 28, 2022 If you're wondering whether you can deduct your rent on your taxes, the short answer is yes. You can deduct rent if you live in a state that allows it. However, only 22 states offer this type of deduction. Here's what you need to know. A  financial advisor can help you create a financial plan to minimize your tax liability for your needs and goals. Read More...

Apr 26, 2022 If you have debt that is canceled by a lender, you may receive IRS Form 1099-C. Although you are no longer liable to repay the debt, you can’t simply forget about it. The IRS may consider the forgiven amount as taxable income, which means you may owe tax on the full amount that was forgiven. It is your responsibility as the borrower to report debt that was forgiven, so if you receive a 1099-C, be sure you accurately report any forgiven debt. Failure to do so could result in penalties and fees, so it’s important to familiarize yourself with this form and what it means. Consider working with a financial advisor as you find the most efficient ways to handle your finances. Read More...

Apr 21, 2022 A loss carryforward lets a taxpayer use a loss incurred in one year to reduce tax obligations in a future year. Businesses and business owners can carry forward net operating losses when expenses exceed income. Individual investors can carry forward capital losses after selling investments for less than they paid. For help with taxes and all other financial planning questions, consider working with a financial advisor. Read More...

Apr 19, 2022 Foreign investment in property is common these days, both by Americans investing abroad and the other way around. If you are part of the former group, you may at some point find that you have to sell your foreign property. Generally speaking, that means paying capital gains tax. But can those taxes be avoided? Like most tax questions, the short answer is “maybe.” You may have to pay some tax, but with the right moves, you can significantly lessen your tax burden. However, there are certain rules you must follow to ensure the best possible scenario. This is a particularly complex problem, so consider getting help; you can find a financial advisor using SmartAsset's free financial advisor matching service. Read More...

Apr 13, 2022 When a homeowner defaults on property taxes, the county may place a tax lien on the property. This could end in a tax sale with an investor paying the taxes to get the home. While tax sales can be profitable, they take a lot of research. However, savvy investors eager to take bigger risks may invest in tax sale properties. A financial advisor who serves your area can help you build an investing strategy around real estate. Read More...

Apr 13, 2022 If you sell stocks at a profit, you will owe taxes on those gains. Depending on how long you’ve owned the stock, you may owe at your regular income tax rate or at the capital gains rate, which is usually lower than the former. To pay taxes you owe on stock sales, use IRS Form 8949 and Schedule D. A financial advisor who serves your area can help you with tax planning for your investments and retirement. Read More...

Apr 13, 2022 Owe back taxes? There are different reasons why you may not have filed your tax return on time. Regardless of what caused you to fall behind, it’s important to get caught up as soon as possible in order to minimize any IRS penalties and fees that may apply. The process for how to file back taxes might seem a little overwhelming but it doesn’t have to be stressful. Here's what you need to know. A financial advisor could help optimize your financial plan to reduce your tax liability. Read More...

Apr 13, 2022 Selling an investment property at a loss may not be ideal but it may be necessary if you need cash or you simply no longer wish to own the property. Before selling rental properties or other investment real estate at a loss, it’s important to consider the tax implications. For instance, you might be wondering when can you write off loss on sale of investment property. The short answer is yes, if you understand how deducting capital losses works. A financial advisor could help you create a financial plan for your investment property  needs and goals. Read More...

Apr 13, 2022 Do U.S. citizens have to pay taxes on foreign income? The short answer is yes. Even if you bring in foreign income, you'll need to include that on your required annual tax return. And all U.S. citizens are required to file a tax return each year, regardless of their location. Here's what you need to know about paying taxes on foreign income. A financial advisor could help optimize your investments to reduce your tax liability. Read More...

Apr 12, 2022 If you’re self-employed, you must file quarterly taxes every few months. These are your estimated tax payments, making up for the fact that you don’t have an employer to withhold your taxes over the course of the year. Quarterlies can be a hassle, but skip them and you'll face a massive tax bill come April. Consider working with a financial advisor as you plan out your taxes and manage your cash flow. Read More...

Apr 11, 2022 Annuities can provide lifetime income for retirees and they can continue paying out after the purchaser passes away. If you’re married, for example, you may name your spouse as a beneficiary. Or if you have adult children, you might like them to inherit your annuity later. Passing on an annuity can have some tax implications, however. The tax rate on an annuity can depend on who inherits it and how the annuity is structured.  A financial advisor can help you navigate this and other financial conundrums. Read More...

Apr 11, 2022 Owning a home can yield some benefits at tax time if you’re able to deduct mortgage interest. If you paid interest on a mortgage loan, your lender should provide you with a Form 1098 Mortgage Interest Statement at the beginning of the year. There are several key pieces of information on this form that you’ll need to file your taxes and claim a deduction for mortgage interest payments. For more help with Form 1098 or any other financial considerations, consider working with a financial advisor. Read More...

Mar 31, 2022 From flexible work hours to not reporting to a boss, being self-employed comes with a lot of perks. However, with the freedom of working for yourself also comes responsibilities such as paying quarterly taxes. Here's a checklist and basic steps to pay quarterly taxes in 2022. If you need more help with taxes, consider working with a financial advisor. Read More...

Mar 30, 2022 You might know a lot about geometry or grammar. But most of us weren't taught how to file taxes in high school. Since taxes are an unavoidable part of life, you'll have to learn how to do this at some point. Let's walk through how to file your taxes for the first time. When you have enough income, a  financial advisor can offer specialized tax planning services to help minimize your tax liability. Read More...

Mar 25, 2022 With tax season in full swing and the April 18 filing deadline rapidly approaching, many Americans are once again wondering whether they should take a standard deduction or consider itemizing their deduction. If you're considering itemizing your deductions and up against the clock to get your taxes filed, here's a guide with last-minute deductions you might consider. A financial advisor could help you with tax planning, as well as other financial planning needs. Read More...

Mar 24, 2022 If you invested in gold and sold it for a profit, you are probably looking for ways to minimize your taxes. Smart tax planning is crucial for the success of your investments. And there are definitely ways to minimize capital gains taxes overall. Let's break down three common strategies that investors use to minimize capital gains taxes on gold. A financial advisor could help you optimize your investments to minimize your tax liability.  Read More...

Mar 24, 2022 When a loved one passes away, most families hold a funeral to mourn, remember the deceased's life and pay last respects. While these events are a good way to gather family and friends to honor the deceased, funerals can be expensive. So, it's no wonder that many people ask if funeral expenses tax-deductible. The answer depends on who is paying and what kind of estate is left behind. Here's how it works. Consider working with a financial advisor as you make an estate plan or update an estate plan. Read More...

Mar 22, 2022 Divorce settlements can be extremely complicated. While it makes eminent sense to work with a financial advisor as you plan your finances for a divorce, there are several key areas that can hold promise of avoiding or at least minimizing taxes on a divorce settlement. Before diving into specifics, it helps to get an overview of how divorce is treated by federal tax policy. Consider working with a financial advisor if you're facing the prospect of a divorce or are currently in the middle of it. Read More...

Mar 21, 2022 The Hope Credit, which is the previous and perhaps better known name of the American Opportunity Tax Credit, is a federal tax break that can help people pay for college or trade school. This credit offers up to $10,000 in tax credits per student over four years to cover qualifying educational expenses. Students pursuing degrees at accredited institutions may be eligible for the tax break, subject to income restrictions and other qualifications. To find ways to pay for education and get help with tax questions, consider working with a financial advisor. Read More...

Mar 15, 2022 Whether you have access to a workplace retirement account or not, everyone with earned income can contribute to their own IRA. However, depending on your income, work situation and the type of IRA chosen, your contributions may or may not be tax-deductible. There are several types of IRAs available and it's important to know whether IRA contributions are tax-deductible. A financial advisor may also be able to help with some of these questions. Consider using SmartAsset's free advisor matching tool today to find advisors who serve your area. Read More...

Mar 14, 2022 As with all investment types, you'll have to pay taxes on your mutual fund returns. Depending on when you bought or sold the mutual fund, you will have to pay capital gains taxes or ordinary income taxes. If you didn't sell the fund, you'll still need to pay taxes on any dividends paid out to you. You may also want to work with a financial advisor to help map out the tax obligations on your investment horizon. Read More...

Mar 10, 2022 A home equity loan is a loan using your house as collateral -- a somewhat risky move, but useful in some circumstances. Furthermore, you may be able to deduct the interest you pay on a home equity loan as long as you meet some requirements. Taxpayers who itemize deductions on their returns, spend the proceeds of a home equity loan to buy, build or substantially improve the property and don’t have too much total mortgage debt may qualify for this deduction. If you want help managing your finances, consider finding a professional using SmartAsset's free financial advisor matching service. Read More...

Mar 02, 2022 Capital gains tax applies when you sell an asset for more than you paid for it. While the IRS typically offers an exclusion for capital gains from the sale of a primary home, the rules are a little different when selling a property that you don’t live in full-time. Before unloading a vacation or rental property, it’s important to understand how capital gains on the sale of a second home work. A financial advisor may be able to help if you're selling your second home. Try using SmartAsset's free advisor matching tool today to find advisors that serve your area. Read More...

Feb 28, 2022 If you gain wealth of any kind, you must pay taxes on it. This includes physical property, money and debt forgiveness. Likewise, winning a bet counts as gaining wealth, which means you must report it to the taxing authorities. In 2018 a Supreme Court ruling struck down federal legislation that banned the practice nationwide. Today the legality of sports betting is both a federal and a state matter. This has allowed states to set their own rules. Here’s what you need to know. A financial advisor can help you manage and invest your monetary assets. Read More...

Feb 28, 2022 Current tax law does not allow you to take a capital gains tax break based on age. Once, the IRS allowed people over the age of 55 a tax exemption for home sales. However, this exclusion was closed in 1997 in favor of the expanded exemption for all homeowners. Beyond this, only retirement accounts allow for tax breaks related to age. Consider working with a financial advisor as you do tax planning. Read More...

Feb 25, 2022 A 401(k) plan is a powerful tax-advantaged tool for retirement savers. Employer matches offered by some plans make them even more potent. However, except in special cases you can’t withdraw from your 401(k) before age 59.5 Even then you’ll usually pay a 10% penalty. It’s even harder to tap 401(k) funds without paying regular income tax. However, there are strategies for getting some access to funds without triggering distribution taxes and penalties. If you're curious about your 401(k) withdrawals, it may also be a good idea to talk to a financial advisor. Try using SmartAsset's free advisor matching tool to find advisors that serve your area. Read More...

Feb 25, 2022 Tax rules on individual retirement accounts (IRAs) are different for inherited IRAs. Some differences are positive. For instance, someone who inherits an IRA doesn’t pay a penalty for early withdrawal before age 59 1/2. On the negative side, special rules for inherited IRAs may force beneficiaries to take the money out sooner than they’d like. That can trigger an unwanted income tax obligation and even increase taxes on other income by pushing the beneficiary into a higher tax bracket. Fortunately, there are ways to avoid or reduce the potential tax bite on an inherited IRA. A financial advisor may be a big help in walking you through your options. Try using SmartAsset's free advisor matching tool to find advisors that serve your area. Read More...

Feb 23, 2022 An annuity is an insurance company product that sometimes appeals to investors who are risk-averse or who have contributed the maximum to their retirement accounts. One advantage of an annuity is that there is no maximum contribution like 401(k)s or individual retirement accounts (IRAs) have. The earnings from an annuity also grow tax deferred. If you're thinking about using an annuity in retirement or just to generate extra income, you may want to work with a financial advisor first. SmartAsset's free advisor matching tool can match you with advisors that serve your area after you answer just a few questions. Read More...

Feb 23, 2022 A home equity line of credit (HELOC) and a home equity loan both free up cash by accessing the equity you have in your home. In both cases, the interest charges may be tax-deductible. The HELOC is a line of credit, usually with an adjustable interest rate, which will turn your equity into cash. It normally has a 10-year time period during which you can make draws up to your credit limit; the second 10-year period is the repayment period. A home equity loan also uses your home equity, with the loan amount distributed to you as a lump sum instead of a line of credit and typically has a fixed interest rate. A financial advisor help you decide if a HELOC is right for you. To find one quickly, use SmartAsset's free advisor matching tool today. Read More...

Feb 17, 2022 There's a lot of pride associated with owning property, whether it’s a primary home or a vacation bungalow. It's especially rewarding when real estate is properly compensated for. But while a high selling price may be exciting in the moment, it typically comes with a potential drawback. As a capital asset, any gains you make on the sale of your real estate are taxable. It's important to understand how capital gains apply to a home and how you can lower their sting. A financial advisor may be able to help you if you're selling property, so consider using SmartAsset's free advisor matching tool today. Read More...

Feb 17, 2022 Taxpayers preparing their federal returns for 2021 will be able to reduce what they owe by taking advantage of some significant credits, deductions and other tax breaks. Here are some of the most popular tax breaks you can potentially use on your 2021 return. A financial advisor can help you optimize a tax strategy for your investment needs and goals. Read More...

Feb 17, 2022 Most people use the terms real estate taxes and property taxes interchangeably. However, while both terms cover taxes paid on real estate, property taxes include other types of assets as well. Let's compare the differences between real estate tax vs. property tax, break down how they're calculated and explain when they qualify for a tax deduction. A financial advisor can help you optimize a tax strategy for your real estate investments and goals. Read More...

Feb 16, 2022 Real estate continues to be an appealing asset class for investors as property values rise. While many investors choose to invest in homes or apartment buildings, others prefer to invest in raw land. There are fewer maintenance costs with no tenants to deal with, but there is typically no rent being collected either. If you're looking to sell your land, you may owe capital gains taxes on the appreciation. Here's how to avoid capital gains taxes on a land sale. A financial advisor can help you optimize a tax strategy for your investment needs and goals. Read More...

Feb 16, 2022 An inter vivos gift occurs when you give someone assets without receiving anything in return. To be considered an inter vivos gift, you must give them this property while alive. If you give them this property after you die, it is considered a testamentary or post-mortem transfer. Let's break down key differences and what you need to know about gift taxes. A  financial advisor can help you figure out what your tax liability could be if you plan to give money or property to another person. Read More...

Feb 16, 2022 Accountants and certified public accountants (CPAs) are two types of financial professionals that both individuals and businesses may need. Even though their titles are often used interchangeably, they perform different services. CPAs can do everything accountants do, but accountants can't do everything CPAs do. CPAs can perform audits while accountants cannot. CPAs are professionally licensed, but accountants are not. If you're considering working with a CPA or an accountant, you may want to consult with a financial advisor first. Try using SmartAsset's free advisor matching tool to find advisors that serve your area. Read More...

Feb 16, 2022 When you sell your home, the IRS allows one major form of capital gains break. It's called the home sale exclusion, and it allows you to deduct a significant amount of the profit from your home sale to minimize or avoid capital gains taxes. If you're selling an investment property, you can use the process known as a “like-kind” exchange to lower your tax burden, but this process only applies to investment and rental properties. Here’s what you need to know. A financial advisor could help you optimize your investment and estate planning strategies to lower your tax liability. Read More...

Feb 16, 2022 If you own a home, you have paid an ad valorem tax. If you own a car, same thing. In fact, if you’ve ever bought anything in the United States, you have paid an ad valorem tax. These taxes are based on the value of some underlying asset. They are a very common form of taxation and long predate taxes on income or other earned wealth. Let's break down the basics. A financial advisor could help you put a tax strategy together for your investments and estate. Read More...

Feb 14, 2022 IRS Form 6251, titled Alternative Minimum Tax—Individuals, determines how much alternative minimum tax (AMT) you could owe. In order for wealthy individuals to pay their fair share of income tax, Congress mandated an alternative minimum tax in 1969. You have to pay the alternative minimum tax if you report taxable income greater than certain income threshold exclusions. If this applies to you, then your taxes are run through both the AMT and the traditional tax system, leaving you to pay whichever is higher. A financial advisor can assist you in creating a tax strategy to minimize your taxes. Read More...

Feb 14, 2022 The alternative minimum tax (AMT) was created to close loopholes and ensure that all U.S. taxpayers pay their fair share of taxes. When you pay an AMT, some or all of that additional tax is for future income that is being taxed due to differences in the rules. For those payments, a credit is issued that you can then use to cover future tax liabilities. For help designing an appropriate asset allocation and managing your portfolio's taxes, consider working with a financial advisor. Read More...

Feb 09, 2022 Privacy advocates can breathe at least a little bit easier: the IRS has backtracked its decision to require all IRS website users to register with third-party identification platform ID.me. Originally announced in November 2021 to take effect the next year, the IRS faced significant backlash from critics for its planned use of facial recognition software. As a result, taxpayers will no longer need to verify their identities through ID.me in order to use the IRS website portal, potentially lengthening what may prove to be an already long tax filing season. A financial advisor could help you formulate a solid tax plan that aligns with your long-term goals. Find a trusted advisor today. Read More...

Feb 03, 2022 Home prices have nearly doubled in the last 10 years - and that could mean you owe some serious taxes if you are selling your home. After bottoming out around $259,000 in 2011, the average sale price of a house has marched steadily upward to more than $453,000 at time of writing. Like many trends, the pandemic may have accelerated this but housing prices had already been rising for years. This has come as great news for homeowners looking to sell. They stand to make some real money. Unfortunately, with real money comes real taxes. If you sell real estate for a profit you will owe capital gains taxes on the money. Unfortunately, unlike the taxes held from wages, the IRS doesn’t take that money up front. You’ll have to calculate it and cut a check. There are ways to make that hurt less though. If you want help minimizing your tax bill from a home sale, consider working with a financial advisor. Read More...

Feb 02, 2022 The Earned Income Tax Credit and the Child Tax Credit are both programs designed to help alleviate poverty, but there are key differences. The EITC is a credit available to employed, low-income households. It is intended to boost the effective income of people who are employed. The CTC is a credit available to employed households with children. This credit is intended to help offset the costs of raising children. Both can be very valuable for qualifying taxpayers. If you want help navigating taxes, consider working with a financial advisor. Read More...

Jan 26, 2022 If incentive stock options (ISOs) are part of your compensation package, knowing what they are, what they can do for you and how their tax treatment is going to affect you in the future is important. At the very least, you have to determine how they will affect your federal income taxes when you exercise them. Otherwise, you could be in for a really serious surprise come tax time due to a possible trigger of the alternative minimum tax (AMT) when you exercise the ISOs. Consider working with a financial advisor to ensure you don't overpay on your investment taxes. Read More...

Jan 11, 2022 On Monday, Jan. 10, the Treasury Department announced that the IRS is facing significant challenges this year due to budget concerns and issues caused by the COVID-19 pandemic. Officials are warning that many taxpayers could see significant delays in receiving their tax refunds this year. There are millions of tax returns that the agency has yet to process and taxpayers may also find it difficult to get the support they need from the IRS, should they need it. With tax filing season just around the corner, it's important to make sure you're on top of your taxes and finances to put yourself in the best position to get a speedy refund. A financial advisor may be able to help. Check out SmartAsset's free advisor matching tool to find advisors in your area today. Read More...

Dec 27, 2021 Typically, you can expect to pay taxes when you earn your money, when you spend your money and even when your money grows. However, you and your loved ones may also be expected to pay taxes on your money when you give it away or pass it down upon your death. Gift taxes and estate taxes are only applied if your bequeathed assets exceed a certain dollar amount. Here’s a look at what the unified tax credit is, how it relates to gift or estate taxes and who this credit impacts. Consider working with a financial advisor as you coordinate your estate planning and tax strategy. Read More...

Dec 17, 2021 In addition to paying sales tax on the things you buy, you may also be required to pay taxes on its perceived fair market value later on. These personal and business taxes are assessed on certain tangible personal property items, depending on where you live and what you own. Here’s a look at what tangible personal property is and how it can affect your tax bill. Consider working with a financial advisor as you develop a tax strategy. Read More...

Dec 16, 2021 Earned income is generally recorded in two ways for federal tax purposes. There is W-2 income and 1099-MISC income. The former is for employees, either full- or part-time; the latter is for contract workers, sometimes known as a freelancers. Here's what you need to know to minimize your tax liability if you file a 1099-MISC. If you're unsure about filing taxes, engage the services of a financial advisor. Read More...

Dec 09, 2021 Winning or settling your lawsuit can be exhilarating. After you've received the settlement money and paid attorney fees, most people assume that the rest is theirs to keep. However, some settlements are subject to taxes. And, unfortunately, many people don't realize it until tax time the following year, after much of the money has been spent. To avoid a nasty, unexpected tax bill, this article will show you how to reduce or eliminate the likelihood that you'll have to pay taxes on a lawsuit settlement. If you suddenly come into a large amount of money, work with a financial advisor to make the most wise of your windfall. Read More...

Dec 08, 2021 If you are an employee of a business, you are required by the Internal Revenue Service (IRS) to fill out payroll tax forms that tell your employer how much tax to deduct from your income. This is the W-4. Your employer is also required to fill out a tax form in order to report your income and deductions to the IRS. That is the W-2. Let's look at these forms, the W2 and the W4, their similarities and differences and how and when you complete them. Consider working with a financial advisor as you seek to pay only what you actually owe and not a penny more. Read More...

Dec 02, 2021 We all know that only two things in life are truly certain: death and taxes. But just because taxes are an inevitable part of our society doesn’t mean you can’t limit how much you pay to Uncle Sam. Taxes on capital gains can eat up a significant portion of your earnings each year. Here are some common strategies for avoiding capital gains taxes and how you can implement them. It's wise to consult a financial advisor about how to minimize other taxes, besides capital gains. Read More...

Dec 01, 2021 With the 2021 tax deadline just around the corner it's not too soon to acquaint yourself with the relevant  federal tax brackets. The Internal Revenue Service (IRS) adjusts them annually for changes in the cost of living. Those changes may impact your tax payment strategy. With that in mind, here are the marginal tax rates for the 2021 year.  A financial advisor can help you with tax planning.  Find an advisor today. Read More...

Jan 18, 2022 Trusts pay taxes.  A trust is a legal entity that holds money and assets for future distribution or management. For example, you might create a trust for your children’s college education, putting money into it which they can withdraw when they go to school. Or you might put the family home into a trust, creating a legal entity that will own the property potentially indefinitely to ensure that it will always stay in the family. The intersection of trusts and taxes can be complicated, but working with a financial advisor will clarify relevant issues so you can make good decisions. Read More...

Nov 17, 2021 Inheriting a 401(k) can add a wrinkle to your financial plan from a tax perspective. Under 401(k) inheritance tax rules, any assets passed on from one person to another are taxable. The rules for inheriting retirement plans, including workplace plans and Individual Retirement Accounts, aren’t necessarily the same as the rules for inheriting real estate or other assets. If you anticipate inheriting a 401(k) from a parent, a spouse or someone else, it’s important to know your options for minimizing tax liability. A financial advisor can help you sort through those options so you make a good decision. Read More...

Nov 16, 2021 When investors want to diversify their portfolios, they often consider real estate. But if you’re interested in real property, you need to know the ins and outs of purchasing and selling. One method many investors rely on is called a 1031 exchange. By following the rules for this type of exchange, investors can defer their capital gains tax while working towards better and bigger properties. Understanding how a 1031 exchange works is crucial to its success, though. Here are a few example scenarios to help you get familiar with it. Read More...

Jan 20, 2022 Planning for retirement requires us to consider not only how to build wealth but how to protect it. Employers offer 401(k)s to address the first need, but careful planning can help us ensure our money stays with us. While you can’t get a 401(k) tax deduction, 401(k) plans make it possible to lower your taxable income. A  financial advisor could help you put a tax strategy together for your investments and retirement savings. Here’s how you can reduce your tax liability with your 401(k) and focus on savings. Read More...

Mar 18, 2022 An inheritance is a windfall that can absolutely help someone's financial situation -- but it can make your taxes tricky. If you inherit property or assets, as opposed to cash, you generally don’t owe taxes until you sell those assets. These capital gains taxes are then calculated using what’s known as a stepped-up cost basis. This means that you pay taxes only on appreciation that occurs after you inherit the property. A financial advisor could help ensure that you are filing your returns correctly. Let's break down how capital gains are taxed on inherited property. Read More...

Oct 26, 2021 Investors must pay capital gains taxes on the income they make as a profit from selling investments or assets. The federal government taxes long-term capital gains at the rates of 0%, 15% and 20%, depending on filing status and income. And short-term capital gains are taxed as ordinary income. Some states will also tax capital gains. A financial advisor could help you figure out your tax liability and create a tax plan to maximize your investments. Let's break down how capital gains are taxed by state in 2021. Read More...

Jan 21, 2022 One of the draws of investing is the money you could potentially make in a relatively shorter amount of time than earning it through a part-time or full-time job. But what some investors may initially neglect to take into account is the fact that investment gains mean investment income, and investment income means taxes on investment income. A financial advisor could help you create a tax plan to maximize your investments. Let's break down the tax rates for your capital gains in 2022 and 2021. Read More...

Oct 18, 2021 Value-added taxes (VAT), which are a type of consumption tax, are major sources of revenue for countries in the Organization for Economic Co-operation and Development (OECD), among other regions. According to the Tax Foundation, VAT actually contributed to one-third of the OECD countries’ tax revenue in 2019. In contrast, the U.S. relies more heavily on property and individual income taxes, with only approximately 17.6% of revenue coming from consumption taxes. Here’s what you should know about the VAT. Read More...

Oct 08, 2021 Normally when you hear the word tax haven, the typical places spring to mind. The Cayman Islands, Switzerland, Panama and the Bahamas are all tax havens, but over the course of the past decade South Dakota has joined their ranks as one of the world's top destinations for stashing assets and avoiding taxes. There are currently hundreds of billions of dollars worth of assets squirreled away in South Dakotan trusts that generate no tax revenue for the state or federal government, and these assets are functionally untouchable by anyone who may have a legitimate claim to them, such as creditors or ex-spouses. The state has been thrust into the spotlight recently with the leaks of the Pandora Papers that revealed a great deal about who actually uses these South Dakotan trusts. While tax havens like Switzerland may seem like a tool for the ultra wealthy, there are ways you can potentially take advantage of the Mount Rushmore State's auspices yourself -- even without being based there. If you're looking for help with tax planning, whether by taking advantage of South Dakotan trusts or otherwise, it may also be a good idea to speak with a financial advisor. Read More...

Sep 27, 2021 One of the major pieces of the COVID-19 relief package passed on March 11 by the Biden administration was an expansion of the Child Tax Credit. This included increasing the credit amount from $2,000 to $3,600 and creating monthly direct cash payments to those who qualified. Not everyone benefits from taking those payments, though. Let's break down why some taxpayers may want to opt out and how to do it. For more help with the Child Tax Credit, or with general financial planning for your family, consider finding a financial advisor with SmartAsset’s free financial advisor matching service. Read More...

Sep 23, 2021 A carbon tax is a tax levied on the emission of carbon dioxide into the atmosphere. Carbon taxes are seen as a way to reduce carbon emissions by encouraging businesses and consumers to switch to less carbon-intensive products and services, and also to encourage investors to pursue ESG strategies. Revenue raised by carbon taxes can be used to reduce other taxes, fund infrastructure improvements, pay for alternative energy research and provide cash dividends to citizens. Many countries, states and cities around the world have implemented carbon taxes and the practice is growing, although so far no nationwide carbon tax has been implemented in the United States. Read More...

Jan 18, 2022 The student loan interest tax deduction is for students and their parents who are repaying federal student financial aid. It's the "above the line" adjustment to your adjusted gross income (AGI) if you have paid interest to a qualified loan program during 2022. It can be taken whether you itemize deductions or take the standard deduction. Here's what you need to know about this deduction, when it can be applied and how to calculate your deduction. Read More...

Sep 15, 2021 House Democrats have proposed legislation that could end Trump tax cuts for the wealthy and corporations. If passed, this could implement some of the biggest tax increases in decades. But while these tax changes aim to make good on President Joe Biden's promises to tackle inequality, they are smaller-scale in an effort to win over moderate Democrat support. The new plan proposes raising the top capital gains tax rate from 20% to 25% instead of nearly doubling it to 39.6% as Biden had initially proposed. And the corporate tax rate would only go up to 26.5% instead of 28%. Let's break down how these tax changes could affect you. A financial advisor may be able to help with tax planning. SmartAsset's free advisor matching tool can match you with financial advisors in your area. Read More...

Sep 02, 2021 In some circumstances you can get a deduction or credit on your federal income taxes for taxes that you’ve paid to other non-U.S. governments. The foreign tax credit is one of these cases. If you live overseas, work overseas or otherwise do business outside of the U.S., it’s an important part of the tax code to know about. To understand your options for reducing your tax liabilities, whether your income is generated domestically or not, speak with a financial advisor. Read More...

Jan 18, 2022 Expat taxes aren’t easy. They depend on what you do for a living. They depend on where you do it, what taxes the local government charges, where you hold investments, which passports you hold and much more. For Americans who live overseas, however, the foreign earned income exclusion is a critical part of your annual filings. Here’s how it works. Given the complexity of expat taxes, it's only prudent to work with a financial advisor on your taxes. Read More...

Aug 25, 2021 A Section 121 Exclusion is an Internal Revenue Service rule that allows you to exclude from taxable income a gain of up to $250,000 from the sale of your principal residence. A couple filing a joint return gets to exclude up to $500,000. The exclusion gets its name from the part of the Internal Revenue Code allowing it. To get the exclusion a taxpayer must own and use the home as their main residence for a period adding up to two years out of the five years before it is sold. Consider working with a financial advisor to ensure you're getting all the credits, exemptions and deductions you're entitled to. Read More...

Jun 28, 2021 Seismic changes could be coming to the way America’s wealthiest investors are taxed. Under President Joe Biden’s $1.8 trillion American Families Plan, taxpayers whose incomes exceed $1 million would pay nearly twice the current long-term capital gains tax rate. While Biden’s tax proposal may have you looking to sell positions to stave off a hefty tax bill, a financial advisor can help you make sense of the potential changes and preserve your capital. Read More...

Jun 23, 2021 Investment tax must be paid on interest income and rent from investment property. You also pay investment tax on dividend and capital gains income from stocks, mutual funds and exchange-traded funds. Holding stocks and bonds in taxable accounts allows for a larger tax liability than if you hold the securities inside a retirement account with tax-deferred provisions. You may want to work with a financial advisor to determine the best mix of taxable and retirement accounts for your needs. Read More...

Jun 23, 2021 Dividends can be an important part of your income from investments, especially if you have significant fixed-income holdings. Internal Revenue Service Form 1099-DIV supplies you with all the information on your dividend income that you will use when you file your income taxes. Here are some instructions to assist you in preparing the dividend income portion of your federal tax return. Dividend reporting, though, can be tricky so consider working with a financial advisor as you create and maintain a tax-efficient portfolio. Read More...

Jun 21, 2021 Tax efficient investing allows investors to reduce, delay and otherwise manage taxes generated by investment activities, potentially improving after-tax returns. Investors can use a variety of methods to manage taxes efficiently, including selecting tax-advantaged investments, practicing tax-aware strategies and using IRAs, 401(k)s and other tax-deferring accounts. Sorting through the various ways to boost the tax efficiency of your investing can be confusing, which is why working with a financial advisor can help cut down on your tax bill. Read More...

May 21, 2021 The Internal Revenue Service (IRS) sends U.S. investors a myriad of tax forms every year. While the number and complexity of these forms can be off-putting and confusing, it's important that you understand them and what your responsibilities regarding these are. Here's an overview of common IRS investment tax forms and what you need to know about them. If you're uncertain about taxes on your investment consider working with a financial advisor. Read More...

May 21, 2021 Filing taxes may not be your favorite financial chore but it is a necessary one to stay in the good graces of the IRS. Why do I owe state taxes is a question you might have if filing your return has resulted in a tax bill rather than a refund. There are different reasons why you might owe state income taxes this year. Knowing what’s behind your state tax bill can help you plan ahead for next year so you don’t end up owing again. A financial advisor can help you avoid paying more than you need to the state and federal governments. Read More...

May 14, 2022 The gift tax is a tax levied on any unilateral transfer (a gift) from one person to another. This applies to any kind of taxable assets, including cash, securities and real estate. When the gift tax applies, it is the donor who pays, meaning that if you give a taxable gift you owe any applicable taxes. If you receive a gift, it is rare, if ever, that you owe taxes. It is exceedingly rare for someone to owe money due to the gift tax. This tends to apply only to the wealthiest of households due to the tax’s high exclusions. This is because the purpose of the gift tax is to prevent wealthy families from avoiding the estate tax by simply gifting all their money to each new set of heirs. Here’s what you need to know. Read More...

May 12, 2021 As part of your employee benefits package, you may have the option to own stock in the company you work for. You can own company shares inside your 401(k) but once you start taking distributions, those investments would be subject to capital gains tax. Applying net unrealized appreciation (NUA) to those distributions could help you to lock in a lower capital gains rate on the sale of company shares. If you have company stock in your retirement plan at work, NUA could help you save money on investment taxes. Working with a financial advisor can disclose a number of ways to save on your taxes. Read More...

Jan 18, 2022 The 2017 tax reform law ended the ability for most taxpayers to deduct expenses for working from home just in time for millions more people to begin working from in response to the Covid pandemic. Nowadays only a few select groups of salaried home-based workers can still deduct relevant expenses. However, even if you’re not one of these, there are still a few possible ways for you to get tax deductions from your expense for working from home. A financial advisor can help you find every deduction and credit you are entitled to. Read More...

Sep 01, 2021 President Joe Biden proposed doubling capital gains taxes for investors making over $1 million to fund his $1.8 trillion American Families Plan. This could compel some high-income investors to sell off assets before the tax hike takes effect. Others will look into alternative strategies to lower their taxes. Whether you're thinking about selling off investments or holding them, a financial advisor can help you optimize a tax strategy for your needs and goals. Read More...

Mar 31, 2021 The Trump tax bill - formally known as the Tax Cuts and Jobs Act (TCJA) - nearly doubled the standard deduction while also limiting some itemized deductions. From 2017 to 2018, the standard deduction rose from $6,350 to $12,000 for singles, from $12,700 to $24,000 for married couples filing jointly and from $9,350 to $18,000 for heads of household. Additionally, the bill capped state and local tax deductions at $10,000, lowered the mortgage interest deduction and eliminated deductions for casualty losses and miscellaneous expenses. Read More...

Apr 01, 2021 Losing a loved one is a tragedy that requires space to grieve, and the last thing a family needs at that time is to deal with unexpected costs. However, there are federal and state-level taxes that need to be handled if the decedent had an estate or property to pass on. Knowing the differences between estate tax and  inheritance tax can help you plan ahead of time and navigate the process more smoothly. Most importantly, there may be responsibilities both the estate and the beneficiary have to manage. So, to understand these crucial “ death taxes” and your possible role in them, let’s compare both. Read More...

Apr 26, 2021 The White House and the U.S. Treasury Department have outlined the goals of President Joe Biden's tax plan, which include provisions to raise corporate taxes and eliminate incentives that allow companies to move profits overseas. These moves would mark the first major tax hike since the early 1990s. As a presidential candidate in 2020, Biden had also called for raising taxes on those earning more than $400,000, while benefiting lower-income families with tax credits for health insurance, childcare, long-term elderly care and first-homebuyers. Let's break down what the various tax proposals of the Biden administration could mean for American corporations and you. Note:  This is a developing story, and we will continue to update the article as more information becomes available. Read More...

Feb 15, 2022 The U.S. is a federal republic, meaning that power is held by both the central federal government, located in Washington, D.C., and by the governments of every state and territory that make up the union. But the “division of powers” isn’t as simple as it seems - and neither is the division of finances, since states rely on the federal government for money and various programs to help them operate. With all this in mind, SmartAsset crunched the numbers to see which states are the most dependent on the federal government. Read More...

Mar 02, 2021 Many foreign countries have higher income tax rates than the U.S., and others impose value added tax (VAT) charges that the U.S. does not. These foreign assessments can produce significantly higher tax bills for American individuals and companies that do business overseas. However, there is a way to have profits earned outside the U.S. taxed at the regular IRS rates rather than the other country’s rates. To qualify for these savings, U.S. citizens and businesses can submit IRS Form 6166 to the other country’s taxing authorities. If you're earning money outside the U.S., you should consult a financial advisor with relevant experience to make sure you don't overpay. Read More...

Feb 17, 2021 Social Security benefits can provide an additional income stream in retirement alongside withdrawals from a 401(k), individual retirement account or brokerage account. Part of shaping a retirement plan around Social Security income means planning ahead for taxes. Social Security benefits are considered taxable for some retirees, though whether yours are can depend on your income. If you’re wondering, how you can avoid paying taxes on Social Security, there are some strategies you can try. Do you have questions about your overall tax situation? Speak with a financial advisor today. Read More...

Jan 06, 2021 Savings bonds can be a safe way to save money for the long term while earning interest. You might use savings bonds to help pay for your child’s college, for example, or to set aside money for your grandchildren. Once you redeem them, you can collect the face value of the bond along with any interest earned. It’s important to realize, however, that interest on savings bonds can be taxed. If you’re wondering, how you can avoid paying taxes on savings bonds there are a few things to keep in mind. Of course, one key thing to keep in mind is that a financial advisor can be immensely helpful in minimizing your taxes. Read More...

May 19, 2022 Owning  a rental property can help you to grow wealth long-term and diversify your income streams. Receiving regular rental income can help supplement withdrawals you might make from a 401(k) or an individual retirement account (IRA) in retirement or give you an extra cushion in addition to your regular paychecks if you’re still working. But rental income isn’t tax-free money; you do have to pay the IRS taxes on the income you earn. Capital gains tax can also apply when you sell a rental property. If you have questions about the taxes surrounding your real estate investments, a financial advisor may be able to help. Read More...

Mar 18, 2022 Inheriting a home or other property can increase the value of your estate -- but it can also result in tax consequences. If the property you inherit has appreciated in value since the original owner purchased it, you could be on the hook for capital gains tax should you choose to sell it. That could result in a large tax bill if there’s a sizable gap between the original purchase price and the price you’re able to sell the property for. There are some possibilities for how to avoid paying capital gains tax on inherited property which are worth considering if you’re the beneficiary of an estate or trust. A financial advisor could also help you create a tax strategy for your estate needs and goals. Read More...

Dec 01, 2020 Taxes can take a big bite out of your income, especially if you’re in a higher income tax bracket. And even with careful planning, it’s possible that you could still be hit with an unexpected tax bill. The good news is, there are things you can do to keep more of your hard-earned dollars in your pocket instead of handing them over to the IRS. If you’re interested in how to avoid paying taxes legally or at the very least, minimize your tax liability each year, these tips and strategies can help. Read More...

Apr 01, 2022 The satisfaction of receiving a year-end bonus may soon be tempered by the realization that income taxes will have to be paid on the extra money. Bonuses are treated as income and thus subject to taxation, but there are ways to manage and reduce the amount of taxes that will be owed. And as is the case with other income from an employer, the employer is required to withhold taxes from a bonus, reducing your take-home pay from the windfall. A financial advisor can help you optimize a tax strategy for your bonus and invest that money in your retirement and other financial goals. Read More...

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