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Taxes

Aug 04, 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. 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. 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. Read More...

Aug 04, 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). You can work with a financial advisor who specializes in taxes to craft a financial plan that takes advantage of your tax bracket. Read More...

Aug 11, 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. 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...

Sep 20, 2022 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 can help you clarify relevant issues so you can make good decisions. Read More...

Sep 14, 2022 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. Read More...

Sep 14, 2022 Tax planning is central to financial planning for professional athletes who play in multiple states. In addition to the usual round of state and federal taxes, pro athletes may also be subject to the jock tax. The jock tax is a special tax that applies to income earned outside of their home state or municipality. However, you don’t need to be an NBA player or NFL star to be subject to the tax because it's based on where you earn income. It's best to be safe and make sure you know your full tax liability at all times. Working with a financial advisor can help you understand and prepare for your tax liability from earning income in multiple places. Read More...

Sep 08, 2022 There’s a lot to consider when selling a business and tax planning is at the top of the list. When you sell a business or business assets at a profit, the IRS expects to receive a cut in the form of capital gains tax. That could potentially result in a larger-than-expected tax bill. If you’re in the initial stages of planning your exit, it’s important to know how to avoid capital gains tax on a business sale. For more help managing capital gains taxes or any other financial issues, consider working with a financial advisor. Read More...

Sep 07, 2022 Capital gains taxes are a tax on the profits you make on investments, which you might owe if you are investing through a taxable brokerage account. The good news is that there are strategies investors can use to eliminate or minimize those taxes. The right ways for you will depend on your long-term financial goals. If you're not sure what path to take to avoid taxes you can work with a professional financial advisor who can help you create a financial plan and provide the right ways to avoid these taxes.  Read More...

Sep 06, 2022 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...

Sep 06, 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...

Sep 01, 2022 A Taxpayer Identification Number (TIN) is a unique nine-digit number the Internal Revenue Service uses to identify individual taxpayers. A TIN can come in different varieties, including Social Security Number (SSN), Employer Identification Number (EIN), Individual Taxpayer Identification Number (ITIN) and Preparer Taxpayer Identification Number (PTIN). TINs are required any time taxpayers file tax returns and may also serve other purposes, including identifying people applying for jobs, loans and credit. Filing, paying and managing taxes is a key part of a solid financial plan. For help with your taxes or any other financial considerations, consider working with a financial advisor. Read More...

Aug 30, 2022 Taxes can be complicated and frustrating to many people. Not only is there a risk of not filing them correctly, but many miss out on strategies that can save them money. Fortunately, Certified Public Accountants (CPAs) help millions of Americans accurately file their tax returns every year. CPAs are licensed professionals in taxes, accounting and business. Working with one can simplify the tax filing process and eliminate stress from all things tax related. Many financial advisors are CPAs and they can also help you create a full financial plan that goes far beyond tax services.  Read More...

Aug 18, 2022 A financial windfall is something to celebrate. But if you don't play your cards right, the government will expect a major portion of the cash. The good news is that smart tax planning strategies can help you minimize your tax burden. Let's explore how to avoid taxes on a large sum of money. The ideas below are a great way to get your wheels turning. But consider speaking to a financial advisor for customized advice about your unique situation. Read More...

Aug 25, 2022 You are required to report and pay federal taxes on any interest income you receive from a savings account. The income is taxed as unearned, which means you’ll escape payroll taxes, but you will owe federal income tax on it at your regular rate. Banks and other financial institutions report your interest income on a form 1099-INT if it’s over $10.  Consider talking to a financial advisor to understand how savings account interest income may be taxed. Read More...

Aug 10, 2022 With interest rates rising, it's increasingly important to make sure you're taking advantage of all interest deductions you're entitled to so you can avoid paying more in taxes than you need to. Three interest deductions are particularly important, according to J.P. Morgan, which explains how to use those deductions. The bank also describes how to preserve interest deductibility when switching from a floating-rate loan to a fixed-rate loan. Consider working with a financial advisor as you coordinate your borrowing and your tax planning. Read More...

Aug 09, 2022 To get the Inflation Reduction Act passed in the Senate, Democrats dropped their attempt to kill a controversial tax provision that's known as the carried interest loophole. Also called the carried interest income classification, it has long been a target of progressive tax advocates as well as a cherished perk for many in the financial community. Opponents of this quirk in the tax code argue that it’s an unfair subsidy for wealthy investors. Proponents argue that it is effectively a funding mechanism that helps large investors allocate capital more efficiently. Here's what they are talking about. A financial advisor can help you take advantage of every tax break you are entitled to. Read More...

Aug 05, 2022 If you use PayPal, Venmo and other third-party payment networks, then you might get a 1099-K form from the IRS. This form reports transactions from third-party payment networks. And depending on how big your payment is and what it's for, you may have to file it with your taxes. A financial advisor can help lower your tax liability with a tax planning strategy. Read More...

Aug 04, 2022 If you’re like most taxpayers, you may not need either a tax preparer or a certified public accountant (CPA). There are exceptions, though. Maybe you’re self-employed, own a small business or have lived in several jurisdictions. In these cases you might need some help. If so, here’s your rule of thumb: Hire a tax preparer if you generally understand your finances and just want to make sure your taxes get done right. Hire a CPA if your financial questions extend beyond simply preparing and filing tax forms. For help with both taxes and other financial considerations, consider working with a financial advisor. Read More...

Jul 27, 2022 Donating real estate to charity can come with a myriad of benefits. Not only will you help out a worthy cause, but also take advantage of tax benefits that can lower your overall personal tax burden. The largest benefit is, arguably, the opportunity to avoid the capital gains tax by holding the property for longer than a year and donating it to a qualified charity. If you need help navigating charitable giving, consider working with a financial advisor who can help you craft an efficient plan to donate real estate to charity. Read More...

Jul 27, 2022 Earning a higher income can mean paying more in taxes at both the federal and state levels. You might assume that you’re stuck with a bigger tax bill because you earn more but that’s not always the case. There are a number of tax-saving strategies for high-income earners that can help to reduce what you owe. The key is knowing which ones to implement, based on your specific financial situation. A financial advisor can help you find the right tax strategies for you. Read More...

Jul 27, 2022 Working as an independent contractor or small business owner can bring tremendous freedom—but it can also bring headaches at tax time if you’re not careful. In addition to filing income taxes each April, you’re also required to set aside money for estimated quarterly taxes. That’s standard if you receive Form 1099s from clients versus a W-2 and expect to owe $1,000 or more in taxes for the year. You can work with a financial advisor who is also a CPA to help you figure out the right amount of taxes to set aside each year. Read More...

Jul 15, 2022 The IRS says that the average tax refund for returns filed in 2022 is $3,039. This is an increase of 7.5% when compared with 2021, which averaged $2,827. But for taxpayers expecting to get the same sizable refund next year, Jackson Hewitt urges them to do a midyear tax checkup to prepare for upcoming changes. Let's take a look at what a midyear tax checkup can do for you and four reasons why your tax refund in 2023 could be smaller. If you want to optimize your tax strategy, a financial advisor could help you lower your tax liability. Read More...

Jul 12, 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...

Jul 07, 2022 Backup withholding is money deducted for federal income taxes on some payments by banks and other payers. Backup withholding amounting to 24% of a payment may be required if a taxpayer who receives interest or dividend income provided an incorrect Social Security number to the bank or corporation that is paying the income. Money deducted from a payment as backup withholding can be credited to future income taxes. A financial advisor could help you optimize your investments to lower your taxes. Read More...

Sep 19, 2022 The gift tax is a tax levied on any unilateral transfer (a gift) from one person to another. The federal tax is aimed partially at making sure wealthy families don't use gifts to bypass the estate tax. The federal gift tax 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...

Jul 06, 2022 Investing is all about making your money work for you -- getting money without having to actually perform labor.  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...

Jul 06, 2022 Investors use irrevocable trusts to protect their assets from creditors, lawsuits and estate taxes. However, when you sell a home in an irrevocable trust, that can complicate your tax situation. This is a guide to how it works and whether you’ll have to pay capital gains tax on the sale of a home in an irrevocable trust. You can work with a financial advisor who can help you plan ahead and avoid unnecessary taxes.  Read More...

Jul 06, 2022 Filing taxes is one American pastime that many Americans dread. With so many complicated forms, rules and tax rates, most taxpayers need assistance to complete their returns. While some use software like TurboTax to file returns on their own, others turn to tax professionals to handle the process. We’re comparing the pros and cons of using TurboTax versus hiring a CPA, to help you decide which one is right for your taxes. If you need help tax planning or making the right financial decisions then you may want to speak with a financial advisorRead More...

Jun 23, 2022 A flexible spending account (FSA) allows you to save up money for medical expenses. You can use this tax-advantaged fund to pay for costs like copays, deductibles and pharmaceuticals. For the most part, you have to spend the money in your FSA by the end of each year. However, the IRS allows you to keep a certain amount from year to year. This is called your “carryover.” In 2022, this carryover is $570. For help with FSAs or any other financial planning concerns, consider working with a financial advisor. Read More...

Jun 15, 2022 One of the most popular and enduring government programs in U.S. history, Social Security has funded the lives of senior citizens for more than 80 years. As a result, today the senior poverty rate clocks in at a mere 9%. Yet research indicates that the trust funds providing Social Security benefits will deplete their reserves by 2034. In an effort to extend the program’s solvency, Democrats have recently introduced a new bill aiming to expand Social Security – at a cost. Read More...

Jun 01, 2022 Claiming one or more dependents on your taxes can yield some valuable tax benefits, including the ability to claim the child tax credit and the child and dependent care tax credit. Sharing equal custody of your child with someone else can add a wrinkle to your tax preparation plans. So who claims a child on taxes with 50/50 custody? The IRS has specific rules built into the tax code to determine which parent can claim a child as a dependent. Tax planning should be coordinated with financial and estate planning; that's where a financial advisor can offer valuable insight and guidance. 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 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 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...

Jun 24, 2022 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...

Aug 24, 2022 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...

Aug 26, 2022 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 W-2 and the W-4, 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...

Aug 19, 2022 Capital gains taxes can take a major bite out of your investment earnings if you don't manage your portfolio specifically for them. The strategies that allow you to minimize the capital gains tax include holding investments for the long term, using tax-deferred accounts and more. By becoming a tax-conscious investor, you can maximize your long-term returns for retirement or other financial goals. You may also want to consult with a financial advisor about your overall tax situation. Read More...

Sep 06, 2022 With the 2022 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 2022 tax year.  A financial advisor can help you with tax planning to best protect your assets. 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 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...

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