In Part 1 of this series, we took a deeper dive into IRMAA planning and minimizing tax on your Social Security benefits. You play a large role in shaping your retirement years in terms of lifestyle and financial health. Think of taking advantage of the many techniques to lower your tax during your retirement years as another aspect of self-care. By treating your financial health and well-being as carefully as you treat your mental and physical well-being, you can ensure that you have resources to attain your financial goals and support yourself in the style for which you’ve planned. In my practice, I see a wide range of client behavior surrounding retirement – from no planning to thoughtful, long-range planning. Looking ahead, whether you’re working with your tax professional and financial team or whether you’re planning on your own, pays off enormously.
Please read on for some additional tips and techniques for tax savings involving charitable giving, Roth IRA conversions, and minimizing capital gains taxes – and two more examples.
December 1, 2021
Video Interview with Michael Kitces: Opening the Back Door to the ROTH IRA
Back in the spring of 2021 Editor-in-Chief, Dominique Molina, sat down with Michael Kitces from Kitces.com to discuss creative ways to use the ROTH IRA when developing tax planning strategies. This exclusive video interview is jam-packed with a variety of recommendations and suggestions highlighting the flexibility you gain in your planning when including the ROTH IRA as a tool! Sit back, relax, and enjoy the show!Read More
Using Split-dollar Life Insurance as a Tax Loophole
I’m no fan of needlessly complicating people’s tax situations, and I often remind readers to consider administrative overhead and compliance costs in addition to tax savings when evaluating tax strategies. The following strategies work best for high-net-worth taxpayers and medium to large “small businesses.” I’m not talking about people who think they are high-net-worth, but if even after the estate tax exemption was doubled, you have to file an estate tax return (Form 706), this is you. If your individual or business net worth is in or is approaching the double-digit millions, this may not apply to you – yet. Keep reading anyway because it may be only a matter of time before you can use it or one of your “I wanna be a playa” clients comes to you asking about this strategy because they saw it on TikTok. Keep reading to learn more on how to save.Read More
Joint vs. Separate Filing – New Advantages with the 2021 Stimulus
COVID-19 has affected every aspect of our lives, and tax filing status is no exception. Couples who have filed jointly for their entire marriage may find that for 2021 it is more beneficial to file separately. This is in large part thanks to the many stimulus bills the Congress passed in 2020 and 2021. The addition of Economic Impact Payments (EIP) and the associated Recovery Rebate Credits (RRC) have complicated what was once a simple tax calculation to now include these additional factors. In some scenarios, a couple would pay more tax filing separately than if they filed jointly, but because of pandemic-related credits, end up with more money in their pockets. Filing separately is not without its own potential headaches, though. Keep reading to find out when to switch your filing status.Read More
Health Expenses: A Commonly Ignored Portion of the ERC Leaves Relief Money on the Table
The Employee Retention Credit (ERC) is a huge benefit for businesses, but it is often incredibly difficult to maximize fully. Practitioners must perform a complex interplay of wages between PPP, grants, or other wage credits. They must know the voluminous rules of the ERC program itself, the other programs that may enter into the equation, and the related portions of the Tax Code. With so much to consider, a particularly powerful tool can easily be missed: the ERC health expenses. Many are surprised when someone asks about health programs since they do not realize these benefits count as ERC qualified costs. Some ERC claims ignore health costs entirely or only capture the employee portions. Deductions for health costs are in the payroll data, but employer costs are typically not in pay records. By reviewing all the qualifying health expenses and available methods for allocating costs, you can really increase your ERC. Keep reading to learn more!Read More