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Financial Recordkeeping – How Long Do I Keep This??

How organized is your recordkeeping? Do you have any idea how long you should hold onto some of those documents? This article should help.

Three Reasons You May Not Want to Convert to a Roth IRA

In today’s historically-low tax rate environment, converting money from traditional IRAs to Roth can make sense, but not always. Keep your eyes open.

Options For a Spousal Inherited IRA

What options do you have if you have a spousal inherited IRA? There are three, much better options than other non-spouse beneficiaries.

Turns Out You CAN Be A Little Bit Pregnant

Remember back in junior high (or whenever it was) during health class (or sex ed, or whatever they called it for you) – how it was explained that pregnancy is a black or white thing: “nobody gets just a little bit pregnant” was the story my health teacher gave us to remember. As it turns out, there are many other absolutes in life that are similar. However, in a totally characteristic move, the IRS gives us a way that takes something that you think would be absolute, and twists it so that you can, in fact, be a little bit pregnant (or rather, a little bit taxable, a little bit tax free, in this case). Confused yet? Sorry, that wasn’t my intent… some people refer to this as the “cream in the coffee” rule. With this analogy, it is explained that once you put cream in your coffee, you can’t […]

Roth Conversions for Inherited Retirement Plans

If you have an IRA or a 401(k) that you’ve inherited, you may wonder if it is possible to convert that account over into a Roth IRA. After all, you’ve got to take RMD (Required Minimum Distributions) from the account since it’s inherited, why couldn’t you just pay all the tax upfront and roll it over? Well, there are two answers to this question, one for inherited IRAs, and one for inherited qualified retirement plans (QRPs, such as 401(k) or 403(b) plans). And like many other things in this wonderful tax code of ours, the two kinds of plans are treated differently today, but may be subject to change in the future. It should be noted that we’re talking about non-spouse beneficiaries here. A spouse has pretty much the same rights as the decedent (original owner, now deceased) had, so if the decedent was eligible for a Roth conversion, the […]

Integrating Roth IRA With Social Security Benefits

It can pay off if you plan on integrating Roth IRA with your Social Security benefits. Conversion to Roth IRA can be very beneficial in surprising ways.

4 Ways You Can Make IRA Contributions – Without a Job!

Did you know that you don’t have to have a job to make ira contributions? There are at least 4 exceptions that allow you to contribute without a job.

401k Loans Double-Taxed? Not so fast, conspiracy theory-breath

Is your 401k loan taxed twice? Even though it seems like it is, the fact is that it’s not. It’s actually the same as if you took out any other loan.

To Gift or Inherit? Deciding When to Bequeath Assets

After beneficiaries are named and you understand how assets are distributed at death, we need to discuss the tax implications of gifted and inherited assets. The following is a description of the tax implications of non-qualified assets (those not in 401(k)s or IRAs) received by beneficiaries if gifted during lifetime or inherited after death. Our example will use stocks in a brokerage account as the assets demonstrating the tax implications of assets gifted during lifetime or inherited at death. Let’s assume that an individual has a brokerage account and they initially purchased $250,000 worth of stock in the account. Several years have gone by and the account as grown to $500,000. For tax purposes the basis in the account is $250,000. The individual is contemplating gifting the account to their beneficiary. If the individual decides to gift the account during their lifetime to their beneficiary, the beneficiary receives the assets […]

Taxation of Social Security Benefits

Do you know how taxation of Social Security benefits works? It’s complicated, but understanding this may help you plan income to reduce taxes.

Credits and Deductions

Let’s talk a little bit about tax credits and tax deductions. Both can be used to help reduce or avoid taxation but behave differently when it comes to doing so. Tax deductions are beneficial because help lower the amount of your income subject to taxation. Deductions may be either “above the line” or for AGI, or “below the line” or from AGI. The line in the sand in this scenario is of course, AGI (adjusted gross income). Above the line deductions are beneficial because they reduce gross income to arrive at AGI. A lower AGI may result in being able to take advantages of other benefits in the Internal Revenue Code (IRC) such as being able to contribute to a Roth IRA and qualifying for additional tax credits (discussed below). Common above the line deductions include pre-tax 401(k) contributions, student loan interest, deductible contributions to a traditional IRA, HSA contributions, […]

IRD from an IRA

IRD from an IRA can be pretty confusing – but it can also make a huge difference in the taxaxtion of distributions from an inherited IRA.

How to Check the Status of Your Tax Refund

You’ve filed your tax return and you should have a refund coming. How can you check the status of your tax refund? This article explains how.

Missing a W2? Here’s What to Do…

So – you’re all set to do your taxes.  And then… you realize you’re missing something.  One of your W2’s hasn’t shown up in the mail.  Maybe it was a short-term or a part-time gig, or maybe the business changed hands – or maybe it just got lost in the mail. Whatever the reason, you’re missing one of the documents that you need in order to prepare your tax return.  So what do you do? What Do You Do? Your employer is required to send your W2 earnings statement to you by February 1 for the prior year’s earnings. But sometimes things go awry, and you don’t receive the form. There are four steps to follow to retrieve the required information… Contact your employer – inquire if and when the W2 forms were mailed out.  It’s possible that the postal service returned it to your employer due to an incorrect […]

IRA Inheritance – Not Taking Timely Distributions

What happens when you forget to take the required distributions from an IRA inheritance?

TWO 5-year Rules for Roth IRAs

There are two 5-year rules that apply to Roth IRAs. Depending on the circumstances, one or the other may apply to your account and distributions from it.

IRS Private Letter Rulings, Revenue Rulings and Revenue Procedures

For specific guidance on how the IRS will handle a particular situation, they issue Private Letter Rulings, Revenue Rulings and Revenue Procedures.

Roth IRA Conversion Strategy – Fill Out the Bracket

One strategy for Roth IRA conversions is known as “fill out the bracket”. This article gives an explanation along with examples.

How to Resolve an Over-Contribution to Your IRA

What happens when you have an over-contribution to your IRA? Are there consequences? How can you resolve this situation without excess penalty?

Don’t Invent Income!

It may be tempting to invent income for a child, such as paying them to do the dishes, in order to qualify for a Roth IRA contribution. Don’t do it!