If your income hits a certain level, you may face an additional wrinkle in calculating your taxes: the net investment income tax (also referred to as the unearned income Medicare contribution tax). This 3.8% Medicare tax applies to some or all of your net investment income if your modified adjusted gross income (MAGI) exceeds certain thresholds. The tax is in addition to any other income tax applicable to such income…. Read More
It’s nice to own stocks, bonds, and other investments. Nice, that is, until it’s time to fill out your federal income tax return. At that point, you may be left scratching your head. Just how do you report your investments and how are they taxed? Is it ordinary income or a capital gain? To determine how an investment vehicle is taxed in a given year, first ask yourself what went… Read More
Annuities are popular retirement savings vehicles. Chances are you’ve heard many – possibly conflicting – opinions about them. To give you a better understanding of annuities, here is a brief overview of what they are, why you should consider them, how they work, and if they are right for you. The Definition As defined by the Securities and Exchange Commission (SEC), an annuity is: “A contract between you and an… Read More
The income tax benefits offered by 529 plans make these plans attractive to parents (and others) who are saving for college or K-12 tuition. Qualified withdrawals from a 529 plan are tax free at the federal level, and some states also offer tax breaks to their residents. It’s important to evaluate the federal and state tax consequences of plan withdrawals and contributions before you invest in a 529 plan. Federal… Read More
Taxes can take a big bite out of your total investment returns, so it’s helpful to look for tax-advantaged strategies when building a portfolio. But keep in mind that investment decisions shouldn’t be driven solely by tax considerations; other factors to consider include the potential risk, the expected rate of return, and the quality of the investment. Tax-deferred and tax-free investments Tax deferral is the process of delaying (but not… Read More
The window of opportunity for many tax-saving moves closes on December 31, so it’s important to evaluate your tax situation now, while there’s still time to affect your bottom line for the 2019 tax year. Timing is everything Consider any opportunities you have to defer income to 2020. For example, you may be able to defer a year-end bonus, or delay the collection of business debts, rents, and payments for… Read More
Understanding the importance of life insurance is one thing. Understanding the tax rules is quite another. As insurance products have evolved and become more sophisticated, the line separating insurance vehicles from investment vehicles has grown blurry. To differentiate between the two, a mix of complex rules and exceptions now governs the taxation of insurance products. If you have neither the time nor the inclination to decipher the IRS regulations, here… Read More
Self-employment is the opportunity to be your own boss, to come and go as you please, and oh yes, to establish a lifelong bond with your accountant. If you’re self-employed, you’ll need to pay your own FICA taxes and take charge of your own retirement plan, among other things. Here are some planning tips. Understand self-employment tax and how it’s calculated As a starting point, make sure that you understand… Read More
Money discussions can affect your relationship, especially if you put those talks off too long. You and your partner need to get on the same page and talk honestly and regularly about finances. Researchers find that arguments about money often foretell divorce and are more intense than couples’ fights over other subjects. When arguing about money, couples use harsher language with each other, and the arguments usually last longer. Understand… Read More
If you have a life insurance policy, you should make sure that the life insurance benefits your family will receive after your death won’t be included in your estate. That way, the benefits won’t be subject to the federal estate tax. Under the estate tax rules, life insurance will be included in your taxable estate if either: Your estate is the beneficiary of the insurance proceeds, or You possessed certain… Read More
