Tax Rules

You have until April 15 (or October 15 with an extension) of the next year to finish up your prior year SEP IRA funding.

Biden’s state of the union address makes clear who he wants to tax.

Alas, there is only one thing we can do to help dictate which kind of tax system we face and that is vote.

Taxpayers waiting for final guidance, have seen penalties waived for 2021 or 2022 RMDs, for 2023 RMDs, and now for 2024 RMDs.

The 3.8% Net Investment Income Tax (NIIT) is a Medicare contribution tax on investment income.

Individual retirement accounts (IRAs) are one of the most important account types, and understanding the difference between Roth and traditional contributions and withdrawals is foundational to tax planning.

What procedure can you put in place to prevent employer match churning? That is still unclear.

After over a decade of broken promises and rising costs, our need for a more sustainable tax system is acutely felt.

While an excess or failed backdoor Roth can feel very stressful to solve, it is a normal and quick fix for your qualified financial custodian.

Seniors over age 65 may receive relief on their real estate taxes limited by AGI but regardless of net worth.

The IRS authors make clear that the purpose of the notice is to “provide guidance on discreet issues to assist in commencing implementation of these provisions” not to provide comprehensive guidance.

While the initial details sound promising, the downsides are many.

You can have an effectively uncapped state tax deduction if you have a high tolerance for paperwork.

While most states do not have their own estate or inheritance taxes, some states do and often their exemption is lower than the federal one.

This new rule says that the account owner can distribute funds from a 529 plan directly to the designated beneficiary’s Roth IRA and have the rollover “be treated in the same manner as the earnings and contributions of a Roth IRA” (meaning no taxation).

Congress decided to inflation-adjust both the existing and the new split-entity qualified charitable distribution limitations.

Roth IRAs can only be funded with earned income. Here is a guide to what the IRS considers to be earned income.

Here are three common Roth transactions and how they interact with MAGI for Roth IRA purposes.

This notice did not offer the final guidance we were hoping for, but rather continued to push the decision further down the road.

Gifting depreciated stock is more complex and never to anyone’s advantage.

Each governing body in Virginia has their own rules and eligibility requirements.

We’ll have to wait and see what they really mean by these lofty goals.

These grants are called “K-12 Learning Acceleration Grants” and must be used to pay for “qualifying education services.”

Why create tax rules which expire so soon after they are made? The answers are as frustrating as the uncertainty the sunsets create.

This amendment raises the ABLE account age to 46 starting in 2026.

Seniors born between 1962 and 1965 will be the first to be able to take advantage of these plus-sized limits.

For those who run a retirement plan, the next step for implementing this change is to email your plan provider.

Hopefully over all this amendment encourages employer plans to offer Roth options, which will be good for taxpayers, even if this additional wealthy discrimination is unwelcome.

In a designated Roth account like a Roth 401(k), each early distribution is treated as coming part from contribution basis and part from earnings.

This update amends the Roth-side of employer retirement plans to behave more like Roth IRAs prior to death.

Later required beginning dates are generally advantageous to seniors, although the complexity surrounding RMD rules is nothing to celebrate.

For those over age 59 1/2, you would need to withdraw all funds attributable to basis before your withdrawal would be sourced from Roth IRA earnings and the age of your Roth IRA would matter for taxation.

To avoid getting issued an IRMAA, you can proactively tell the SSA of any changes your income has seen in the past two years using a “Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event” form.

With the help of Yahoo Finance and a one-cell formula, you barely need to do any work.

The IRS has very limited case law on what constitutes a substantially different fund. However, here is what we do in our own trading.

You may be surprised by the amount of subsidies you can receive.

In 2019, the SECURE Act changed how inherited RMD rules work. After many IRS notices, we now aren’t sure how the new rules work.

Calculating the fair market value of property varies in difficulty depending on the type of property and the date of death.

Employment contracts have their origins in very old master-servant laws. With no employment contract, you can better protect your child’s freedom and childhood.

You can find out if your child or other employee qualifies by reviewing your 401(k) plan document.

If you have cost basis information missing in a taxable account, it is important to work with your custodian on correcting the missing information.

Some investable assets in the name of the child can currently keep $2,300 of unearned income from the tax rate of the parents.

As always, it is best to confer with a tax professional on matters such as these.

While you may think that the account owner needs to stay the same, you can easily change the account owner.

If you receive Social Security benefits, the portion of those benefits which will be taxable depends on your income. The taxable portion can be anywhere from 0% to a maximum of 85% of your benefits.

Luckily for Roth lovers like us, you don’t have to choose between Roth conversions or Roth contributions.

A SEP-IRA can be opened any time before you file your tax return and you can make prior-year contributions at that time. In contrast, a solo-401(k) must be opened and contributed to before the year end to count for that tax year.

Most people are able to do direct rollovers from a traditional IRA to a Roth IRA. In this way, most people can do any number of Roth conversions in one twelve-month period.

To avoid getting issued an IRMAA, you can proactively tell the SSA of any changes your income has seen in the past two years using a “Medicare Income-Related Monthly Adjustment Amount – Life-Changing Event” form.

If you have this fringe employer or former employer benefit, I hope you are able to take advantage of making small Roth IRA contributions throughout your retirement.