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Tax Strategy and Planning Tips

What Everyone Ought to Know about Donating to Charity

What Everyone Ought to Know about Donating to Charity

Thinking of spreading some holiday joy this season by donating to a cause that’s near and dear to you?   The holiday season is a time when many people feel inspired to give to causes they want to support. But if you don’t donate to charity regularly, or if you’re having trouble figuring out which charity to give to, the process can be a little overwhelming.   Here are some big to keep in mind to make the most of your charitable giving this year.   1. The...more

Getting Ready to File Your Taxes? Don't Miss This Checklist

Tax season is upon us again. April 15th may be the official deadline to file, but it's now time to start gathering everything you'll need so you aren't scrambling in the eleventh hour.   Whether you're planning on doing your taxes yourself or turning your paperwork over to a CPA, there are certain documents you need to make the filing process as easy (and accurate) as possible—and certain things you need to know to net yourself the biggest possible savings.   Here's your tax...more

Year End Tax Tips

Year End Tax Tips

I've illustrated some easy steps you can take to try and reduce your liability: Retirement plan contributions. Be sure to make any necessary contributions to tax-deductible retirement plans. Many plans require deposits to be made by year end. Salary reduction contributions such as 401(k), 403(b), 457, SIMPLE, SARSEP. The plans today now have 'catch up' provisions for those over 50. If you need to know specifics on how much you can legally put into the plan and how much you should...more

Help, I Didn't Pay Enough Quarterly! Tax Bill Rescues for the Self-Employed

SUMMARY: Sole proprietors face financial challenges, but when those include underpaying quarterly taxes they're asking for trouble with IRS. If you've paid too little, or missed quarterly payments, here's how to bring your tax bill back under control. There's no question about the rules for some 18 million Americans who've made something good for themselves in the world of self employment. Professionals who earn a decent living at what they do, working for themselves, face quarterly taxes....more

Using a Credit Shelter Trust to Reduce or Eliminate Estate Taxes

At the time when couples are celebrating the beginning of their lives together, the last thing most are thinking about is death and estate taxes. However, as married couples accumulate wealth over the years, many make the common mistake of not establishing a proper estate plan to protect the wealth that they have built. Most couples understand that they can transfer assets at death to the surviving spouse, estate tax free. However, what they may not understand is that this can lead to a tax...more

10 Tax Strategies to Consider

If you're looking for ways to reduce your income tax bill, consider the following strategies: Contribute the maximum amount to your 401(k) plan. Your contributions, up to a maximum of $14,000 in 2005 (individuals over age 50 may also be able to make an additional $4,000 catch-up contribution), are deducted from your gross pay, so you won't pay current income taxes on the contributions (although you still pay Social Security and Medicare taxes). In addition, earnings and capital gains on your...more

The Clock Is Running: Time to Revisit Your Tax Strategies

Even after a succession of federal tax cuts since 2000, Americans still bear a substantial tax burden. In fact, the nonprofit Tax Foundation estimates that the average person will still need to work 70 eight-hour days this year to pay federal taxes alone, compared to the 84 days they had to work in 2000 to cover federal tax obligations. State and local taxes are expected to cost the typical taxpayer an additional 37 days of work in 2005, versus 39 days in 2000. As these numbers indicate, lower...more

How Can a Family Limited Partnership Prepare for IRS Scrutiny?

The IRS has often challenged FLPs (Family Limited Partnerships), contending they were created solely for the purpose of avoiding estate tax. The tax courts have generally rejected these challenges, recognizing that most FLPs are formed for legitimate business purposes. But lately, the IRS has had some success in the courts. Although this recent success has been touted as the FLP's death knell, it has in fact provided guidance on how an FLP can survive an IRS challenge. Here are some...more

Non-Qualified Deferred Compensation Plans

The frequent changes in the tax law limiting the benefits of 401(k) plans and other tax-qualified benefit plans for higher compensated individuals have placed additional burdens on plan sponsors to provide these individuals with substitute benefits. One offshoot of these changes is that nonqualified deferred compensation plans have been the subject of renewed interest among both employers and employees. A nonqualified deferred compensation plan is relatively easy to operate since it is not...more

More Tax Planning Tips

Sell those losers. If you have securities that have taken a bath now may be the time for some year end tax loss harvesting. This will help offset some of the gains that we've had for the year. (It's so nice to have gains, isn't it?) Give Birth. Today there are all types of credits, exemptions and deductions for little ones. Betsy & I often refer to Hannah & Sammy not as kids, but as Curtain Climbers, Tricycle Motors, and Rugrats. Whatever you call them, they are such a blessing...more

Tax Considerations

Refunds Too Large If you are getting more than $1,000.00 back in tax refunds each year combining federal and state you are missing a great opportunity to increase your wealth. When the government uses your money all year long you lose the interest the money could have earned all year long, this is an example of an 'opportunity cost.' Change your estimated payments or your W-4 withholding to put more in your checkbook each month and save that newfound money. Income Increases If you get...more

Don't Get Pushed Into a Higher Tax Bracket

This is a cautionary tale of one retiree who suffered a loss of income in her later years. Although the story is fictional, its lessons are significant and could save you and your spouse money at a time when you may need it most. A few years ago, John and Mary Rodgers were enjoying a comfortable retirement together. Their annual income of $80,000 from Social Security, pensions, and withdrawals from John's IRA was enough to cover their living expenses and allow them to pursue leisure activities...more

Another Tax Season Is Here

Even if you use a professional tax preparer to do your taxes, at the end of the day, you are ultimately responsible for the accuracy of your tax return. For this reason, you may still want to make a note of the most important points written up in this article and scan your tax return before sending it in to the tax authorities. If you do prepare your own taxes, I would highly recommend purchasing a tax software package. After discounts and rebates, it probably won't cost you more than $40 to...more

1031 Exchanges: A Tax-Deferred Real-Estate Strategy

When the time comes to sell your real estate, some owners of highly appreciated real estate could be staring at a substantial capital-gains tax bill. A section of the Tax Code may help you convert your appreciated property into an income stream while deferring up to 100% of the capital-gains tax that would otherwise be due on the sale. This transaction, known as a '1031 exchange,' is named for a section of the Internal Revenue Code that authorizes this exchange. With a 1031 exchange, you can...more

Careful Planning May Help Non-Citizens Avoid Tax Traps

One of the most important estate tax planning tools available to married couples is the unlimited marital deduction. The deduction allows one spouse to pass an unlimited amount of property to the other spouse without incurring any federal estate or gift taxes. It permits the deferral of estate taxes on the property until the surviving spouse disposes of it, either by gift or at death. The estate of the surviving spouse is then entitled to $1,500,0001 estate exempt amount and excess amounts...more

Tax-Efficient Investing: A Wise Choice

Taxes can take a chunk out of your investment returns; yet, many investors don't give much thought to taxes when they make investment decisions. While investment decisions shouldn't be based entirely on tax considerations, tax-efficient investing may make a significant difference in your net gain. Employing some of the following strategies could help you retain more of your potential investment earnings and lessen your tax obligation. Invest in Stocks for the Long Term Following a buy-and-hold...more

Do You Have a Tax Problem?

Everyone who has a job has a tax problem. The harder you work to get ahead and build your income, the more taxes you pay. In order to have the maximum cash at retirement, you need to find a way to minimize taxes. Many people think that tax shelters are only for the wealthy. Yet thousands of wage earners fail to take advantage of a tremendous tax shelter that's right under their noses! In the early 80's, Congress made it possible for wage earners to contribute to an Individual Retirement...more

Tax-Efficient Investing: A Wise Choice

Taxes can take a chunk out of your investment returns; yet, many investors don't give much thought to taxes when they make investment decisions. While investment decisions shouldn't be based entirely on tax considerations, tax-efficient investing may make a significant difference in your net gain. Employing some of the following strategies could help you retain more of your potential investment earnings and lessen your tax obligation. Invest in Stocks for the Long Term Following a buy-and-hold...more

Strategies to Minimize Taxes: Municipal Bonds

The tax-free income from municipal bonds can provide higher after-tax returns compared to corporate or treasury bonds for investors in higher tax brackets. For investors in the federal marginal tax bracket of 28% or higher, municipal bonds may provide a higher after-tax return. However, investors need to be aware of the risks associated with municipals; credit risk, term risk, liquidity risk, maturity risk, tax risk, and geographic risk. Credit Risk While lower grade bonds provide...more

Strategies to Minimize Taxes: Tax Efficient Asset Allocation

Some general advantages with owning taxable bonds in a qualified account over holding municipal bonds in a taxable account are as follows: Less risk of negative impact due to tax law changes No AMT exposure No geographic risk Better credit quality control Better liquidity Lower transaction costs During the non-IRA withdrawal stage the taxable bonds will generally produce higher pre-tax returns. During the withdrawal phase of IRA assets, municipals may provide a slight after-tax...more

Strategies to Minimize Taxes: Tax-Managed Index Funds

The most advanced products for tax-efficiency are tax-managed index funds (TMIFs). To keep taxes low, there are five primary techniques that TMIFs apply: low turnover, expanded securities trading range, dividend management, tax loss harvesting and avoidance of short term capital gain realization. Within a TMIF, realized taxable gain from stock turnover will be negligible due to low turnover, matching losses with gains, and "expanded trading range." The "expanded trading range" is a set...more

Strategies to Minimize Taxes: Variable Annuities

In isolation, there's nothing wrong with a variable annuity (VA). Their benefits include tax-deferred growth, professional money management, numerous investment options, and a contingent death benefit. Severe deficiencies become apparent when VAs are compared to low cost, tax-efficient investment products such as index funds. While the tax deferral feature of VAs is a benefit, it is a limited one compared to tax-efficient index funds, which typically retain 95% or more of their total...more

Strategies to Minimize Taxes: Keeping More of Your Investment Returns

You may have heard a common investment expression ?It's not what you make that counts. It's what you keep.? Minimizing taxes from investment activities is important because it's one of the few aspects of investing that an investor can gain virtually total control over. Paying attention to the tax consequences of investing can substantially increase long-term wealth and increase spendable income. This article will address various investment strategies and products for minimizing taxes...more

Time for a Tax Talk

While it may not be April 15 quite yet, it's not too early to start thinking about your income taxes. By planning ahead, you may be able to reduce the amount of money you?ll owe Uncle Sam for this year's taxes. Sometimes, paying expenses early can help by allowing you a bigger deduction. At other times, though, deferring income or deductions until next year may be more beneficial. Following are several commonly used tax strategies. You may be able to benefit from some of them in your...more

Changes in the tax code should change the way you think about real estate investments

There are few things in this world more confusing than IRS codes, IRS definitions, and IRS procedures. Fewer still are the changes to these codes that turn out to be beneficial to the taxpayer. An obscure and underutilized section of the tax code that has only been of practical use for the last 2 or 3 years happens to be one of these elusive favorable changes. It pertains to ?like/kind? tax deferred real estate exchanges for investment property. Many pro athletes have become involved in...more

Taxation of Retirement Plan Benefits

The purpose of this text is to explore the tax treatment of distributions from qualified retirement plans, whether they were established by the individual or by an employer. Tax deductible savings and tax deferred income Qualified retirement savings plans are savings plans that are encouraged by the tax laws, but which are subject to certain rules in order to be qualified for the tax benefits. Qualified plans give two important tax benefits not available in other types of investments...more

2013 Year End Tax Planning

As 2013 draws to a close, there's a bit of time to act before it's too late. There are a number of moves to consider making before the year is over. Stock Gains/Losses You might have gains on stocks that were sold in non-retirement accounts. These gains can be offset with a sale of stock that you hold that are below your purchase price. You are able to take losses up to $3000 more than your gains and offset ordinary income with this loss. If your trading has netted you a loss for the year,...more

IRA Money Flow Trends

By Justin Stoltzfus January 15, 2014 As individual taxpayers start to lay the groundwork for their annual filings in April, it's probably a good idea for the majority of filers with discretionary capital to go ahead and make their IRA contributions earlier this year. Individual retirement accounts are a critical vehicle for providing retirement funds for those who don't have significant pension or 401(k) investment vehicles. Anyone who's self-employed, or who isn't making a single job into a...more

Federal Savings Tools: Treasury myRAs Back Retirement Savings for the Average Worker

By Justin Stoltzfus. Parts of the financial world are abuzz over a plan to create government-backed?retirement savings plans. The Obama administration recently released a presidential memo that ordered the U.S. Treasury to start creating these kinds of accessible retirement investment products; myRAs will move with workers as they change jobs, and allow them to make capital gains from small contributions. Helping make small money count One of the big ideas behind the new program is that...more

8 Ways to Save on Taxes in 2014

By Paula Pant. Nobody enjoys paying more in taxes than they should. And most people understand that the best way to optimize their taxes is by learning as much as they can stomach about the tax code. But there's just one problem: tax law changes constantly. Old provisions expire. New deductions and credits are created. How can anyone keep up with all the changes? We can't give you an ultra-comprehensive summary of IRS codes within a single article. But we can point out a handful of tax laws...more

The Complete Guide to 2014 Tax Filing for Same-Sex Married Couples

By Paula Pant. March 8, 2014 In June 2013, the U.S. Supreme Court struck down the Defense of Marriage Act, otherwise known as DOMA. This decision revolutionizes tax-filing for married, same-sex couples. (Who thought taxes could be so revolutionary?) First, some background. In 1996, both houses of the U.S. Congress and President Clinton passed DOMA, a federal law that allowed states to refuse to recognize same-sex marriages performed in other states. What does that mean? Well, for...more

Stop! Before You Buy a House, Ask Yourself These 5 Questions

By Paula Pant March 19th, 2014 A home can be a wise purchase, but don't get in over your head. Too many people jump into buying a house without giving it enough thought, simply because it seems like the next "thing to do" on their life checklist. Unfortunately, many of these people become "house poor." Don't be like them. Instead, ask yourself the following critical questions to make sure that you're not just buying your dream home -- you're also making a financially-savvy choice. #1:...more

Should I Buy or Rent My Home? Six Crucial Factors You Should Consider

By Paula Pant March 5th, 2014 How many times have you heard this phrase: "I'm tired of throwing money away on rent." -- or -- "If you're renting, you're throwing money away." Our society holds a pervasive myth that rent is "throwaway" money. But the truth, however, is much more complex. As a homeowner, you'll "throw money away" on all types of expenses, ranging from property taxes to homeowner's insurance, from sprinkler systems to gutter cleaning, from power-washing to HVAC repair....more

Spring Cleaning Your Finances: How to Clear the Cobwebs that Muck up Your Monthly Budget

By Paula Pant March 25th, 2014 It's that time of year again! Temperatures are getting warmer (or trying to), days are longer, and you're starting to feel that urge to open up the windows and clean out the dust bunnies for a fresh new start. But while you're vacuuming and sweeping and polishing, don't forget another big area of your life that could also do with an annual overhaul: your finances. "Spring cleaning" your finances means first taking a big-picture look at your financial...more

Are You Leaving 70-90% of Your IRA to the IRS?

Are You Leaving 70-90% of Your IRA to the IRS?

In the past few months, we've shown you how simple mistakes and oversights in planning for the distribution of your family's IRAs (and other retirement plans) can cost you and your beneficiaries anywhere from a few thousand to millions of dollars in excess, unnecessary taxes. We've alerted you to the fact that many legal and financial professionals are not IRA experts, are not up to speed on important IRA tax issues, and that following their advice (or lack of advice) can cost you and your...more

Last-Minute Tax Tips to Maximize Your Savings

By Paula Pant April 15 is fast-approaching, and if you're like many people, chances are your tax prep is somewhere on the spectrum between mild disarray to frantic, panicked scrambling. There's just something about doing our taxes that makes many of us revert to slacker college student mode, waiting till the last minute to throw together that report we've known about for months. But there is hope. There are plenty of last-minute tax tips that can still save you a hunk of change, even in the...more

WAIT! Don't Roll That 401k Just Yet

To all retirees or recent job changers thinking about rolling their old 401k money out to a rollover IRA pay close attention; you may be able to save a whole lot in taxes!! How? By using what is called the Net Unrealized Appreciation (NUA) strategy. Let's review: What is the NUA strategy? It is a strategy that utilizes special tax treatment to help retirement plan participants who receive a lump-sum distribution that includes company stock to lower their taxes as low as 15% on that...more

Tax Bill Rescues for the Self-Employed

By James O'Brien There's no question about the rules for some 18 million Americans who've made something good for themselves in the world of self-employment. Professionals who earn a decent living at what they do, working for themselves, face quarterly taxes. If you expect to owe more than $1,000 to the IRS -- after figuring income-tax withholdings and credits -- then you're in the quarterly category of payers. In a sense, congratulations are in order: You've built up your business enough...more

Breaking The Inertia: Switching Advisors

Breaking The Inertia: Switching Advisors

It's easy to find advice on how to choose a financial advisor. You can search the internet or go to your local book store. I've even written an article on the subject recently. But what if choosing a new advisor isn't the problem. What if you are having trouble breaking away from your old advisor. Having been in the financial services industry for nearly eight years now, I've spoken with many investors. There are a couple of generalities that I find in these discussions. First, most...more

End-of-Year Tax Planning

By Paula Pant. April 15th isn't the only deadline you need to keep in mind when it comes to staying on top of your taxes. Truly savvy planners also watch for December 31st, which is the cutoff to make some clever moves to maximize your savings come tax-time. There's still time left to net yourself some savings on this year's tax bill. Squeeze in as many of these as you can before the calendar turns to 2015: Defer Your Income Any additional income has the potential to push you into the next...more

Additional Taxes Resources