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14 Mar, 2024
Things You Can Do for Your Future as the Year Unfolds What financial, business, or life priorities do you need to address for the coming year? Now is an excellent time to think about the investing, saving, or budgeting methods you could employ toward specific objectives, from building your retirement fund to considering an estate strategy. You have plenty of choices. Remember that this article is for informational purposes only and not a replacement for real-life advice. The tax treatment of assets earmarked for retirement can change, and there is no guarantee that the tax landscape will remain the same in years ahead. A financial or tax professional can provide up-to-date guidance. Here are a few ideas to consider: Can you contribute more to your retirement plans this year? In 2024, the contribution limit for a Roth or traditional individual retirement account (IRA) remains at $7,000 ($8,000 for those making "catch-up" contributions). Your modified adjusted gross income (MAGI) may affect how much you can put into a Roth IRA. With a traditional IRA, you can contribute if you (or your spouse if filing jointly) have taxable compensation. Income limits are one factor in determining if a traditional IRA contribution is tax-deductible. 1 Once you reach age 73, you must take the required minimum distributions from a traditional IRA. The I.R.S. taxes withdrawals as ordinary income, and if taken before age 59½, they may be subject to a 10% federal income tax penalty. Roth 401(k)s offer their investors a tax-free and penalty-free withdrawal of earnings. Qualifying distributions must meet a five-year holding requirement and occur after age 59½. Such a withdrawal also qualifies under certain other circumstances, such as the owner's passing. Employer match is pretax and not distributed tax-free during retirement. The original Roth IRA owner is not required to take minimum annual withdrawals. Make a charitable gift. You may be able to claim the deduction on your tax return, provided you follow the Internal Review Service guidelines. The paper trail can be important here. If you give cash, you should consider documenting it. A bank record can demonstrate some contributions, payroll deduction records, credit card statements, or written communication from the charity with the date and amount. Incidentally, the IRS does not equate a pledge with a donation. If you pledge $2,000 to a charity this year but only end up gifting $500, you may be able to only deduct $500. 2 Consult your tax, legal, or accounting professional before modifying your record-keeping approach or strategy for making charitable gifts. See if you can take a home office deduction for your small business. You may want to investigate this if you are a small business owner. You might be able to write off expenses linked to the portion of your home used to conduct your business. Using your home office as a business expense involves complex tax rules and regulations. Before moving forward, consider working with a professional familiar with the tax rules related to home-based businesses. Open an HSA. A Health Savings Account (HSA) works like your workplace retirement account. There are also some HSA rules and limitations to consider. You are limited to a $4,150 contribution for 2024 if you are single; and $8,300 if you have a spouse or family. Those limits jump by a $1,000 "catch-up" limit for each person in the household over age 55. 3 If you spend your HSA funds for non-medical expenses before age 65, you may need to pay ordinary income tax and a 20% penalty. After age 65, you may need to pay ordinary income taxes on HSA funds used for non-medical expenses. HSA contributions are exempt from federal income tax; however, they are not exempt from state taxes in certain states. Pay attention to asset location. Asset location is one factor to consider when creating an investment strategy. Asset location is different from asset allocation, which is an approach to help manage investment risk. Asset allocation does not guarantee against investment loss. Review your withholding status. Should it be adjusted due to any of the following factors? ● You tend to pay the federal or state government at the end of each year. ● You tend to get a federal tax refund each year. ● You recently married or divorced. ● You have a new job with adjusted earnings. Consider consulting your tax, human resources, or accounting professional before modifying your withholding status. Did you get married in 2023? If so, it may be time to review the beneficiaries of your retirement accounts and other assets. The same goes for your insurance coverage. If you are preparing to have a new last name in 2024, you should get a new Social Security card. Additionally, retirement accounts may need to be revised or adjusted. Are you coming home from active duty? If so, go ahead and check on the status of your credit. Check on any other orders that you might have preempted, too. Consider the impact of any upcoming transactions. Are you preparing to sell any real estate this year? Are you starting a business? Might any commissions or bonuses come your way in 2024? Do you anticipate selling an investment held outside of a tax-deferred account? Vow to focus on your overall health and practice sound financial habits in 2024. And don't be afraid to ask for guidance from a professional who understands your situation. Sources: 1. TheFinanceBuff.com, August 10, 2023 2. IRS.gov, June 5, 2023 3. IRS.gov, September 5, 2023
14 Mar, 2024
What financial questions are every generation asking? Over the course of this three-part series, there will be something for everyone! Today, we’ll focus on six common financial questions Baby Boomers are asking.
By Alexandria Washington 15 Feb, 2024
Equipping Points:
03 Feb, 2024
Who among us wants to pay the IRS more taxes than we have to? While few may raise their hands, Americans regularly overpay because they fail to take tax deductions for which they are eligible. Let’s take a quick look at the five most overlooked opportunities to manage your tax bill. Reinvested Dividends : When your mutual fund pays you a dividend or capital gains distribution, that income is a taxable event (unless the fund is held in a tax-deferred account, like an IRA). If you’re like most fund owners, you reinvest these payments in additional shares of the fund. The tax trap lurks when you sell your mutual fund. If you fail to add the reinvested amounts back into the investment’s cost basis, it can result in double taxation of those dividends. 1 Mutual funds are sold only by prospectus. Please consider the charges, risks, expenses, and investment objectives carefully before investing. A prospectus containing this and other information about the investment company can be obtained from your financial professional. Read it carefully before you invest or send money. Out-of-Pocket Charity : It’s not just cash donations that are deductible. If you donate goods or use your personal car for charitable work, these are potential tax deductions. Just be sure to get a receipt for any amount over $250. 2 State Taxes : Did you owe state taxes when you filed your previous year’s tax returns? If you did, don’t forget to include this payment as a tax deduction on your current year’s tax return. There is currently a $10,000 cap on the state and local tax deduction. 3 Medicare Premiums: You may be able to deduct unreimbursed medical and dental premiums, co-payments, deductibles, and other medical expenses to the extent that the costs exceed 7.5% of your adjusted gross income. This includes most Medicare premiums. 4 Income in Respect of a Decedent: If you’ve inherited an IRA or pension, you may be able to deduct any estate tax paid by the IRA owner from the taxes due on the withdrawals you take from the inherited account. 5 1. Investopedia.com, January 11, 2024 2. IRS.gov, 2024 3. IRS.gov, 2024 4. IRS.gov, 2024 5. IRS.gov, 2024. In most circumstances, once you reach age 73, you must begin taking required minimum distributions from a Traditional Individual Retirement Account (IRA). Withdrawals from Traditional IRAs are taxed as ordinary income and, if taken before age 59½, may be subject to a 10% federal income tax penalty. You may continue to contribute to a Traditional IRA past age 70½ as long as you meet the earned-income requirement. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
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By David Dickens 25 Oct, 2021
Things you can do for your future as the year unfolds.
By KC Financial Advisors 13 Sep, 2021
POAs and other advanced directives are becoming more important. The point of the POA. A power of attorney (POA) is a legal instrument that delegates an individual’s legal authority to another person. If an individual is incapacitated, the POA assigns a trusted party to make decisions on his or her behalf. There are nondurable, springing,… The post The Need for Power of Attorney appeared first on KC Financial Advisors.
By KC Financial Advisors 19 Aug, 2021
What to know as markets look forward.  Are you having a tough time keeping track of inflation’s mixed signals? You’re not alone. Consumer prices in July climbed at their fastest rate since August 2008. Worse, producer prices, which can be an indicator of future price changes at the consumer level, rose at the highest rate… The post Mixed Signals on Inflation appeared first on KC Financial Advisors.
By KC Financial Advisors 15 Jul, 2021
The midpoint of the year is a great time to review your financial position. With June officially behind us, it’s time to face the facts: we’re headed toward the second half of 2021. While there’s still plenty of time to enjoy the rest of summer, we encourage you to slow down and check up on… The post Conducting Your Mid-Year Financial Checkup appeared first on KC Financial Advisors.
By KC Financial Advisors 30 Jun, 2021
Various factors drive used car prices.  Inflation is defined as the general upward price movement of goods and services in an economy. The key word is “general.” Inflation tends to be uneven and affects the price of some items more than others. If you’ve been in the market for a used car, you’ve learned a… The post Economic Lessons from Used-Car Inflation appeared first on KC Financial Advisors.
By KC Financial Advisors 14 Jun, 2021
Preliminary estimates call for a 4.7% cost-of-living increase.1 If there is a “silver lining” to all the inflation talk, it may be that Social Security benefits are expected to see a larger-than-normal increase in 2022. Preliminary estimates call for a 4.7% cost-of-living increase (COLA) in Social Security benefits next year, which would be the highest… The post A COLA with Your Social Security? appeared first on KC Financial Advisors.
By KC Financial Advisors 24 May, 2021
There are compelling reasons to adopt a wait-and-see approach. Inflation can be a scary word for people who are retired. It’s code for “prices are going up, but my income may stay the same.” The most recent reading on consumer prices put inflation back into the conversation. The Consumer Price Index (CPI) rose 0.8% in… The post Inflation Can Be A Scary Word appeared first on KC Financial Advisors.
By KC Financial Advisors 05 May, 2021
The proposal does not yet include any new taxes on individuals. President Joe Biden introduced the much-anticipated American Jobs Plan, which outlines an approach to spend roughly $2.2 trillion on the nation’s infrastructure and other projects. As part of the legislative process, the Biden administration also laid out a proposal for paying for the domestic… The post Paying for the Infrastructure Bill appeared first on KC Financial Advisors.
By KC Financial Advisors 26 Mar, 2021
A choice for I.R.A. owners who want to reduce taxes linked to I.R.A. distributions. Do you have an I.R.A.? As you enter your 70s, you may start to look at that I.R.A. not only as an asset, but also as a problem. By law, you must take required minimum distributions (R.M.D.s) from a Traditional I.R.A.… The post Qualified Charitable Distributions appeared first on KC Financial Advisors.
By KC Financial Advisors 15 Mar, 2021
What role should taxes play in your investment decisions? Will you pay higher taxes in retirement? Do you have a 401(k) or a traditional IRA? If so, you will receive income from both after age 72. However, if you have saved and invested much of your life, you may also end up retiring at a… The post Tax Efficiency in Retirement appeared first on KC Financial Advisors.
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