- I’m Not Sure How Giving to Charity Can Reduce My Taxes. Is It Really Worth It?
Donating money to charities you care about feels good. It can also lower your tax bill by reducing your taxable income in an amount equal to the amount you give. A number of rules and restrictions govern how much you can give and how you can do it, though. Understanding how this works so you… read more…
- I’m Selling My Home and Netting $750k to Downsize for Retirement. Do I Have to Pay Capital Gains Taxes?
Suppose you sell your primary home and make a $750,000 profit. Will you owe capital gains tax on that profit? The short answer is yes. Depending on a handful of factors, you may owe tens of thousands of dollars to over a hundred thousand dollars. Your exact tax liability could vary drastically, so knowing what… read more…
- How Foreign Real Estate Property Is Taxed in the U.S.
One of the most common mistakes made by Americans overseas is the belief that they don’t have to pay taxes. Selling real estate abroad can create tax obligations in the United States. U.S. citizens and residents are required to report worldwide income, which includes profits from foreign property sales. Depending on the situation, capital gains… read more…
- How Creating an S Corporation Can Reduce Your Self-Employment Taxes
Creating an S Corporation can potentially reduce self-employment taxes by allowing business owners to split their income into salary and distributions. While salary is subject to employment taxes, distributions (such as payments that are made to shareholders from a portion of company profits) can potentially be exempt from those taxes. Here’s what you need to… read more…
- Common Tax Breaks for Retirees
Imagine evenings spent on a sandy beach, weekends filled with family gatherings and afternoons engaged in hobbies. This could be your retirement life. However, if you’re not properly prepared for taxes, they may end up taking more than you planned for your fixed income. Luckily, the federal tax code comes to your aid with an… read more…
- Do You Have to Pay Taxes on Grant Money?
Receiving grant money can be an exciting opportunity, whether it’s to fund your education, support a research project, or help launch a new business. However, many recipients find themselves wondering about the financial implications—specifically, do you have to pay taxes on grant money? The answer isn’t always straightforward, as tax obligations can vary depending on… read more…
- How Can Estimated Taxes Be Paid?
If you earn income that isn’t subject to regular paycheck withholding, estimated taxes can quickly become a source of stress and confusion. Missing a payment or choosing the wrong method can lead to penalties, interest and an unpleasant surprise at tax time. Understanding how estimated taxes can be paid (and which options make the most… read more…
- How to Avoid the Social Security Tax Torpedo
While retirees may be chagrined to discover that taxes don’t end when they leave the workforce, an unseen threat looms behind the U.S. tax code. The Social Security tax torpedo is as destructive as it sounds, blowing up the budgets of unsuspecting retired folks eagerly awaiting their first Social Security check. However, having a clear… read more…
- How a Solo 401(k) Is Taxed and What Is Deductible?
Investing in a solo 401(k) is a common retirement savings plan for self-employed individuals or small business owners. Let’s break down how it works, gets taxed and what potential deductions you can take. As with all retirement plans, how much you can save will depend on your specific circumstances. Therefore, getting personalized advice from a… read more…
- How Roth IRA Contributions Are Taxed
Roth IRAs offer a tax-advantaged way to save for retirement, and they’re a popular choice among investors. However, understanding how Roth IRA contributions are taxed is crucial for making informed financial decisions. Let’s break down the marginal tax rate, compare Roth IRAs to traditional IRAs, delve into the taxation of Roth IRA contributions and examine… read more…
- Do I Need to Worry About the Gift Tax If I Pay $30,000 Toward My Child’s Wedding?
Imagine your child is getting married and you want to help pay for their wedding. You’ve been saving for years and now have $30,000 set aside for their big day, which you plan to hand over in the form of a check. However, before you pass along that much cash, it’s important to understand the… read more…
- What Are the Income Limits for the Premium Tax Credit?
Managing your financial health promptly can seem challenging without the right guidance. The premium tax credit is a refundable tax credit in the United States that’s designed to help eligible individuals and families with low or moderate income afford marketplace health insurance. Its primary purpose is to offset the cost of health insurance premiums for… read more…
- What Is Unearned Income and How Does It Work?
Unearned income, also known as passive income, is derived from sources other than employment or business operations and can act as a financial safety net during times of job loss or financial crisis. It can also be a significant source of income during retirement. Unearned income is sometimes taxed differently than earned income. You might… read more…
- Can My Capital Gains Push Me Into a Higher Tax Bracket?
It’s nice to see the total value of your investments growing over time, but are you aware that significant growth can put you in a higher tax bracket? This is one way that many people end up owing a lot more tax than they anticipate. Long-term capital gains can’t push you into a higher tax… read more…
- Stock Market Losses: This Tax Break Could Save You Money Throughout Your Lifetime
Losing money in the stock market stings, but capital losses don’t have to be all bad news for your finances. A tax rule known as the capital loss carryover offers a major long-term tax break investors can use strategically to reduce what they owe the IRS for years, or even decades, into the future. The… read more…
- How Rental Income Is Taxed in Retirement
Retirement involves thoughtful planning and strategic financial decisions. Rental income taxation plays a significant role in retirement planning. Understanding how it works, the benefits, potential risks and uses can help retirees make informed decisions. A financial advisor can help you determine what your taxes could potentially be based on your individual situation, including where you… read more…
- Ways to Reduce Your AGI
When it comes to your finances, understanding the various components that make up your taxable income is crucial. Adjusted gross income (AGI) is a key element of that equation. It’s essentially your total income from all sources after you’ve made certain deductions and adjustments. However, there are a number of ways to reduce your AGI… read more…
- Gross Income vs. Taxable Income: What’s the Difference?
They may sound similar, but it’s critical to understand the difference between gross income and taxable income. While gross income encompasses all the money you earn from various sources throughout the year, your taxable income comprises only the portion of your gross income that’s subject to taxes after deductions. A financial advisor can help you… read more…
- Do I Have to Pay Capital Gains Tax Immediately?
Understanding when to pay capital gains tax is important for both individual investors and businesses. This tax is applied to the profit, or capital gain, made from selling assets like stocks, bonds, property and precious metals. It is generally paid when your taxes are filed for the given tax year, not immediately upon selling an… read more…
- Tax Benefits of Owning a Home
The financial implications of owning a home go beyond just pride of ownership, as it can offer potential tax benefits. In the U.S., owning a home can lead to significant tax benefits, which might include deductions for mortgage interest, property taxes and home sale exclusion, among others. A financial advisor can help you determine how… read more…
- 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…