Tax Planning

How to report a backdoor Roth in Turbo Tax.

On April 25, David John Marotta discusses details of IRS form 1040 and other tax documents, how you can use your tax return to glean information about your financial habits, and ways to optimize your accounts.

A dollar saved on taxes is worth more than a dollar earned. If you earn another dollar, they will just tax you again.

With the federal tax filing deadline upon us, here are some articles on little-known tax tips, interesting facts, good advice, and general information about taxes. Some of these are applicable now, and some you might want to store away for next year.

For families with complexity to their finances, hiring a tax professional actually saves them money. Wealth managers bring benefit to such families in the same way.

Let me tell you how it will be: There’s one for you, nineteen for me. Should five per cent appear too small, Be thankful I don’t take it all.

As one of Forbes’s 25 largest fictional companies, Stark International could avoid $4 billion in U.S. corporate taxes with this one simple technique.

Maybe it is time you checked up on your favorite charities before making your next gift.

Do any of these ideas suggest any incentive for the highly productive to continue producing?

“Until the deficit is eliminated from our budget, … there is no end to inflation; there is finally no end to taxation; and the eventual result would, of course, be catastrophe.”

Claims of “fair” or even “regressive” or “progressive” depend very much on what is used as the denominator.

The worst marriage penalty is for couples earning between $26,000 and $60,000 who have three or more children.

With the enormous increase in the taxation of dividends, high net worth investors may be tempted to abandon dividend-paying stocks entirely. This is not necessary.

“I would like to give my daughter my newer car, but the tax considerations are not simple.”

Tax on capital gains is scheduled to rise and become much more complex at the end of this year. Keeping your head in the midst of these changes can help your bottom line. Government should tax either the value of an asset or its yield but not both.

The victors in the recent election have declared it open hunting season on the rich, which they evidently believe will solve our spending problems. Tax hikes everywhere are aimed at the most productive members of society.

Personally I think it is a mistake to value supporting the government (taxes) higher than supporting society (charitable giving).

Many families seek financial planning advice specifically for retirement. But if they wait too long, they miss an important tax-planning opportunity. A great strategy is to take advantage of the time between retirement and Social Security at age 70, the so-called gap years.

Do I start planting investments and then refrain from giving for ten years?

Here are some additional tax planning resources regarding choosing the appropriate investment vehicles.

It can be useful to maintain a grid where all of the available asset classes are arranged in order, by tax efficiency and potential return based on time horizon, so clients can clearly see when and where tax-deferral can offer the greatest benefits.

David John Marotta was interviewed on radio 1070 WINA’s Schilling Show discussing tax planning in 2012 and the most important things to do now to prepare for rising taxes in 2013.

Laws have always regulated who may marry, the obligations related to marriage and children and whether and how a marriage can be ended. Governments have always put their own social agenda above the pluralism of personal choice.

Precious metals will, on average, just keep up with inflation, but your after tax return would mean you fell behind inflation by the 28% tax you must pay.

Most infomercials that begin with such urgency are trying to get you to buy something, but in this case I want you to consider selling.

Starting in 2013, pending further legislation, the capital gains tax will go up to 20%.

The qualified dividend tax rate is currently at a maximum of 15%, as are capital gains. Starting January 1, 2013, dividend tax rates will go up to the investor’s ordinary income rate.

There is a distinction between existing high capital gains exposure in a mutual fund verses future capital gains you expose yourself to.

“How can you respond if these new taxes are enacted? One option is to do a Roth conversion so that you can pay taxes now for those retirement funds.”

Nearly everyone is an excellent candidate for a Roth conversion this year. You can always undo part or all of a Roth conversion with what’s called a recharacterization, so you can’t convert too much.

Who would have thought that someone earning $10,700 might want to purposefully push their taxable income up to $217,450 this year in order to pay $47,595 more in taxes at these lower 2012 tax rates?

Who would have thought that someone in the 33% tax bracket now who will be in a lower 28% tax bracket in the future might want to do a Roth conversion at his higher rates now?

Who would have thought that someone earning $400,000 might want to purposefully push their taxable income up to $1.2M this year in order to pay $280,000 more in taxes at these lower 2012 tax rates?

Who would have thought that someone earning $75,000 might want to purposefully push their taxable income up to $275,000 this year in order to pay as much as possible at these lower 2012 tax rates!

Nearly everyone is an excellent candidate for executing a Roth conversion this year. But it is helpful to have a target amount in mind before you begin.

You may be a good candidate for a Roth conversion in 2012 if you can answer “yes” to any of these statements.

A tax tsunami is coming at the end of this year. This will be your last opportunity to safeguard your assets in a lifeboat and avoid getting swamped with taxes.

An article by David John Marotta on how to glean information from your IRS 1040 tax return was featured in the latest Nov/Dec 2011 issue of NAPFA Planning Perspectives.

In the process of building wealth, saving a penny on your taxes is just as important as earning a penny in the markets.

David John Marotta was featured in a Wall Street Journal article about the upcoming Roth recharacterization deadline.

Marotta’s Roth segregation technique of conversion and recharacterization was featured in InvestmentNews magazine.

Those productive small business owners with higher earnings are a different group from the ultra-wealthy with higher net worths.

This article from Donald Jay Korn for Investor’s Business Daily describes the benefits of advance tax planning to reduce the tax bite that is inevitable as you grow older and required minimum distributions (RMDs) become a larger portion of your retirement account.

Many people believe a dollar saved on their taxes is not worth the same as a dollar of their salary or a dollar of gain in the stock market. They are correct. A dollar saved on your taxes is actually worth more.

Going forward, tax management will be as significant as investment management in a comprehensive wealth management plan.

No one approaches financial planning with the goal of paying more taxes. Tax management, like all financial planning, is based on the premise that small changes made over time can achieve big goals.

Small business owners enjoy more flexibility when it comes to tax maneuvering. That’s why tax planning is especially important for small businesses. Whether your business employs one employee or one hundred employees, last-minute tax moves can save you money, if you act before the end of the year.

Even if you didn’t make a penny more next year, how can you have more dollars for next year’s holiday
season? Reduce your taxes. Between now and the end of the year there are several last-minute tax moves that may save you significant amounts of money. After January 1st, there’s little to do but pay-up.

David Marotta discusses how to increase your after-tax net worth.

A complex technique called “Roth segregation accounts” could earn your investments an extra 30% over the next two years.