- Is Social Security Included in Your AGI?
Social Security benefits are included in your adjusted gross income (AGI) if your combined income, which consists of half of your Social Security benefits and other sources of income, exceeds a certain threshold. This can affect the taxation of those benefits and your eligibility for various tax credits and deductions, which in turn can impact… read more…
- MAGI vs. AGI: What’s the Difference?
Adjusted gross income (AGI) and modified adjusted gross income (MAGI) are two ways to calculate what your income might be for tax purposes. Both these figures directly influence your tax obligations, qualifying for certain tax benefits and deductions. Therefore, knowing when each applies can support your tax-saving strategies and inform financial decisions. Consulting with a… read more…
- What Does It Mean If Something Is Tax-Advantaged?
Tax-advantaged investments can help you keep more of your returns. These investments include accounts, plans or assets that offer specific tax benefits. They let you reduce your tax burden by deferring taxes, lowering what you owe or, in some cases, avoiding taxes altogether. You may want to work with a financial advisor who can help… read more…
- Tax Efficiency of ETFs: What Benefits Do They Offer?
The tax efficiency of exchange-traded funds (ETF) derives from their unique structure and trading mechanisms. Unlike mutual funds, the trading of ETFs does not trigger capital gains taxes until the investment is sold. This factor can prove advantageous for investors wanting to minimize the impact of taxes on their investment returns. Imagine an investor who… read more…
- Are Legal Fees You Pay Tax-Deductible?
Whether you’re hiring an attorney for personal reasons or to help with business-related issues, legal fees can quickly add up. Many individuals and businesses wonder whether these expenses can be deducted on their tax returns. While personal legal fees are generally not tax deductible, legal fees related to business often are. To ensure compliance and… read more…
- How to Convert Rental Property to a Primary Residence
Converting a rental property into a primary residence is a significant financial move with potential tax implications that necessitate careful planning. By leveraging tools like Section 121 of the IRS code and 1031 exchanges, homeowners can navigate the complexities of this process. However, understanding the intricacies of these laws is crucial. Here’s how to convert… read more…
- What Are Section 199A Dividends?
When it comes to maximizing investment income, few tax benefits are as overlooked, or as valuable, as the Section 199A dividend deduction. This special provision allows certain investors to deduct up to 20% of qualified dividends from their taxable income, potentially saving thousands in taxes each year. For those who invest in real estate investment… read more…
- Pros and Cons of Taking a Foreign Tax Credit vs. Deduction
For U.S. citizens with foreign income, knowledge of foreign tax credits and deductions is a crucial aspect of financial planning. These mechanisms are designed to prevent double taxation, which is when someone pays both foreign and domestic taxes on the same income. There are both pros and cons of foreign tax credits vs. deductions, and… read more…
- What Is the Limit on Taking the Foreign Tax Credit?
Double taxation can occur when laws from two distinct countries require the same income to be taxed. The Foreign Tax Credit (FTC) is a non-refundable tax credit designed to alleviate this burden for U.S. citizens who earn income abroad by offsetting taxes paid to foreign governments and reducing a taxpayer’s U.S. tax liability. A financial advisor… read more…
- What Is Non-Passive Income?
Non-passive income, also known as active or earned income, refers to the money that you earn through your active efforts, typically by trading your time and expertise for compensation. This is the inverse of passive income, which is earned with minimal effort or active involvement. However you earn your income, a financial advisor can help… read more…
- Is Your Retirement Income Taxable?
Retirement income often comes from multiple sources, including pensions, 401(k)s, IRAs, annuities and investment income such as dividends and capital gains, each with its own tax treatment. Social Security benefits, IRA withdrawals and pension income can also all follow different tax rules. This can complicate things when it comes to making financial decisions. If sorting… read more…
- IRS to Use AI to Ramp Up Audits on Wealthy Americans: What You Should Know
Earlier this month, the IRS announced that it will begin using AI to identify tax returns for examination and audits. This is, as the agency wrote in its announcement, part of an effort to shift attention toward high-earners, large corporations and complex partnerships. Among other changes, the agency will use “improved technology as well as Artificial… read more…
- The Tax Consequences of Transferring Stock to a Trust
Transferring stock to a trust can be a powerful way to protect your wealth, streamline estate planning and ensure your assets are managed according to your wishes. Whether you’re focused on avoiding probate, providing for loved ones or planning for future tax efficiency, moving shares into a trust can offer meaningful long-term benefits. However, the… read more…
- This Little Known Tax Credit Helps Low-Income Workers Catch Up on Retirement Contributions
Retirement has gotten harder for low-income Americans. In July, the Government Accountability Office studied the impact of tax-advantaged retirement accounts. In doing so, they found that the disparity in retirement savings between low-income and high-income workers between ages 51 and 64 grew significantly between 2007 and 2019. This means people nearing retirement today are in… read more…
- Definition of a Household Employee and How to Pay Them
Household employees like nannies, housekeepers and landscapers make our busy lives easier, but paying them comes with tax and additional obligations that can’t be ignored. Failure to comply can lead to IRS audits and penalties, among other problems. To avoid trouble, you need to understand who is and isn’t a household employee, decide how you’re… read more…
- Passive vs. Non-Passive Income: What’s the Difference?
Effective financial planning centers on two main types of income: passive and non-passive. Knowing how each type applies to your financial situation, and how each is taxed, can improve overall tax planning and money management. With this knowledge, you can make more strategic decisions and potentially reduce your tax liability. Talk to a financial advisor… read more…
- What Are the Tax Consequences of Being Added to a Deed?
Property deeds are not just pieces of paper, they hold the power to impact your fiscal situation considerably. Property deeds are legal documents that provide proof of ownership. When you extend ownership rights by adding someone to your property deed, there are tax implications and potential risks associated with the transaction. A financial advisor can… read more…
- The IRS Is Cracking Down on These High-Income Earners. Are You One of Them?
The IRS recently announced a major tax enforcement initiative that will increase scrutiny on high-income earners, partnerships and people with foreign bank accounts. The agency said the effort would “restore fairness to [the] tax system” by focusing on wealthy taxpayers who have seen sharp declines in audit rates over the past decade. A financial advisor… read more…
- How to Report 401(k) and IRA Rollovers on Your Taxes
Understanding the ins and outs of 401(k) and IRA rollovers isn’t a walk in the park. The maze of tax implications surrounding these rollovers might seem intimidating to many. However, deciphering the process of reporting these rollovers on your taxes is critical to maintaining the tax-deferred status of your retirement savings and steering clear of… read more…
- How Foreign Dividends Are Taxed
In today’s globalized economy, investing in foreign stocks and companies has become increasingly common for investors seeking diversification and higher returns. While these international investments can offer lucrative opportunities, they also come with a complex web of tax implications, particularly when it comes to foreign dividends. Understanding how foreign dividends are taxed is crucial for… read more…
- How Much Are Taxes on $1 Million?
Acquiring $1 million in a lump sum is no simple matter and figuring out the amount of taxes due on it is also complicated. The answer depends on several factors, including the source of the money, where you live and whether Social Security and other FICA taxes apply. Individual circumstances make all the difference. The… read more…
- Tax Planning for Ultra-High-Net-Worth Individuals and Families
Proper tax planning is essential for managing and preserving wealth. For ultra-high-net-worth individuals and their families, defined as those with $30 million in investable assets, efficient tax management requires an in-depth understanding of tax laws, thoughtful use of available tax benefits and careful long-term planning. The support of a specialized financial advisor is often beneficial… read more…
- Do You Pay Taxes on Dividends Reinvested?
Investing in dividend stocks can create a nice stream of passive income. Instead of receiving payouts as cash, you can also use dividends to increase your holdings by reinvesting them to purchase additional shares of stock. Among other benefits, reinvesting dividends can help you avoid brokerage fees. However, even when you don’t receive dividends as… read more…
- What High Earners Need to Know for Trump-Era Tax Expirations
In 2017, the Trump administration spearheaded a comprehensive series of tax cuts. Called the Tax Cuts and Jobs Act (TCJA), the law reduced corporate taxes by about 40% and household taxes by varying degrees for most individuals. While the corporate tax cut is permanent, most of the individual tax reductions will end in 2025 or… read more…
- How Is Net Unrealized Appreciation (NUA) Taxed?
Net unrealized appreciation (NUA) tax treatment refers to the taxation of gains on employer stock within a retirement plan when the stock is moved to a taxable account or distributed as a lump sum. Rather than taxing the full value of the stock as ordinary income, only the original cost basis is taxed at ordinary… read more…