Tax

When it comes to your investments, the capital gains tax applies to more accounts, transactions and profits than you might realize.

One of the elements of a strategic tax plan can include utilizing Roth IRAs, which offer tax-free qualified withdrawals. However, when you convert a pre-tax account is crucial, as each dollar converted is taxed as ordinary income.

Albert Einstein once said, “The hardest thing in the world to understand is the Income Tax.” Beyond being complicated, there is no way to avoid Uncle Sam’s share of your appreciated assets.

All tax-deferred savings come along with a tax liability. Over time, contributions, employer matches and investment returns can create a snowball effect when it comes to the dues you owe Uncle Sam.

Here, past podcast guest, Wade Pfau, highlights how to strategize the withdrawal order between your three tax buckets (taxable, tax-deferred, tax-exempt) by utilizing two different distribution methods: The adjusted gross income (AGI) threshold strategy versus the incremental average tax rate method.

Amidst recent tumultuous market activity, one strategy you might consider deploying to negate losses is tax-loss harvesting; However, there are instances when this might only bring you a neutral outcome, or even cause you further loss.

Amidst market volatility, I believe there’s always some form of opportunity. Today, that comes in the form of tax planning and the option to maximize “discounted” Roth conversions.

Amidst today’s market volatility, selling securities at a loss to offset capital gains is one strategy that can help minimize taxes, especially after a market sell-off.

According to the Social Security administration, about 56 percent of individuals will owe federal taxes on their benefits, and determining if that includes you, as well as how much you could owe, draws down to pinpointing your provisional income.

In case you missed it, the U.S. House of Representatives recently passed a new retirement security bill (SECURE Act 2.0), which is a revamp of the 2019 SECURE Act that overhauled various retirement tax rules.

We preach on the importance of tax efficiency at Howard Bailey, and one of my favorite go-to financial websites is taking that a step further, specifically in the realm of index funds.

While new tax provisions proposed by the Biden administration might still be up in the air, there is one thing we can be certain of in the realm of tax planning: The expiration of the Tax Cuts and Jobs Act (TCJA) in 2026.