Could Asset Location Make Your Investments More Tax Efficient?

September 20, 2013

What happens when you get a group together that consists of financial planners, CPAs, estate planning attorneys and investment managers? Usually when that happens for me, it means that a bunch of my friends are getting together to go watch one of our friend’s bands play or we’re playing poker. And, it also means that the topic is eventually going to become a financial one and inevitably there will be people on opposite sides of an issue so debate is a certainty.  The great thing about the debate is no matter what side you’re on, you learn something you didn’t know before the debate. One of our recent debates was about asset location.  Continue reading “Could Asset Location Make Your Investments More Tax Efficient?”

Let Open Enrollment Help You Minimize Taxes

September 13, 2013

With tax rates where they are today, and potentially going higher in the future due to the ever-increasing national debt and Congressional spending habits, I get asked a lot of questions about how to minimize taxes. That’s always an interesting conversation because taxation comes in many forms (taxes on income, capital gains, and interest, not to mention all of the consumption taxes we pay) and across many timelines. Are we looking at ways to minimize this year’s tax bite or our lifetime tax bite? Sometimes there are tradeoffs.  Continue reading “Let Open Enrollment Help You Minimize Taxes”

Getting Help From an Unlikely Source

September 04, 2013

When was the last time you looked forward to dealing with the IRS? Most of us only interact with the IRS when it’s time to file our income taxes or respond to a filing inquiry (i.e. an audit). We probably all know someone who has had challenges with the IRS, and hopefully we never fall into that category, but believe it or not, there are several helpful tools and resources this often belittled agency makes available to taxpayers to help them manage their taxes better. Here is an overview of what I consider some of the more useful resources that may be just a click or phone call away: Continue reading “Getting Help From an Unlikely Source”

Do You Know the Difference Between an HSA and an FSA?

September 03, 2013

Fall has arrived, and that means open enrollment is just right around the corner. For many employees, this provides the window of opportunity to sign up for either an HSA or FSA in order to set aside pre-tax dollars for your out-of-pocket healthcare costs.  Not quite sure what the difference is between these 2 types of accounts? Well, you are not alone.  In a recent Fidelity survey, two-thirds of those surveyed said they simply do not understand how an HSA works and “a full 73 percent of respondents said an HSA is pretty much the same thing as a health FSA or were unsure, and the ‘use it or lose it’ provision of FSAs was one of the most commonly misunderstood differences between the account types.” Continue reading “Do You Know the Difference Between an HSA and an FSA?”

Which States Are Really Tax-Friendly?

August 30, 2013

One of the more interesting conversations I get to have with people who are close to retirement is about where they plan to live. Often, inertia (or a paid off mortgage) leads people to stay exactly where they are today. People are often attached to their homes and moving is rarely if ever a smooth and easy process.  Continue reading “Which States Are Really Tax-Friendly?”

How to Get Around Roth IRA Income Limits

July 25, 2013

Updated February, 2018

A while ago, I wrote about some reasons to consider contributing to a Roth IRA. But if you earn too much to contribute to one, these arguments may seem like a moot point. However, there are a few things to keep in mind before completely writing off the Roth IRA. Continue reading “How to Get Around Roth IRA Income Limits”

5 Ways to Save for Retirement With Some Surprising Benefits

June 13, 2013

When it comes to saving for retirement, most people know to contribute to their employer’s retirement plan (at least enough to max out their employer’s match) but there are also other ways of saving for retirement with some unique benefits that are not quite as well known. Here are 5 that you want to take advantage of if possible: Continue reading “5 Ways to Save for Retirement With Some Surprising Benefits”

10 Financial Lessons From the Celebrity Apprentice

May 16, 2013

While I don’t generally watch tv or even own one, I have to admit that I’m a huge fan of one particular show: The Apprentice, which is currently on the verge of the finale of its All-Star Celebrity Season. While the show has its share of mindless reality tv entertainment, there are lessons that can be derived from it, not just for the business world that the show is based on (albeit loosely) but for our own personal financial lives as well. Here are some financial lessons from this season’s celebrity firings: Continue reading “10 Financial Lessons From the Celebrity Apprentice”

How Is Your Retirement Income Taxed?

May 15, 2013

Last month I took a phone call from a gentleman who is in the process of preparing for retirement. He has done a good job saving and now that he is getting ready to take distributions from his retirement accounts, he is concerned about taxes. We are often lead to believe that taxes will be less in retirement and for many taxpayers, that will be true not because of a change in the way things are taxed but rather because many retirees will be able to enjoy retirement on less income.  Income sources are taxed no differently in retirement than they are while we are working.  Sure, we receive an additional deduction once we turn 65, but the primary difference between our working and retired years is not how our sources of income are taxed, but the “sources” of income themselves. Continue reading “How Is Your Retirement Income Taxed?”

Does the 401(k) “Suck?”

May 09, 2013

A friend of mine recently sent me an article titled “It’s a 401(k) World and It Sucks.” I realize that the 401(k) is not perfect (but what is?) and the author does make some good points. But that being said, “sucks” is a pretty strong word about the vehicle that has encouraged more retirement saving than anything else, especially considering how much we need to increase those retirement savings. Let’s take a look at each of the author’s main arguments: Continue reading “Does the 401(k) “Suck?””

Tips for Tax Day

March 27, 2013

The days are getting longer, but your fuse may be getting dangerously short if you are among the 25% of Americans who wait till the last two weeks to file your tax returns. Good old procrastination is probably responsible for many last-minute returns, but there are other reasons, too.  Some people believe that the chances of an audit go down if your 1040 rolls in with the tidal wave of returns submitted on April 15, overwhelming the IRS.  Others are still trying to get a hold of numbers and documents, not even sure what documents they need and what policies apply to them when it comes to reducing their tax burdens. So for those folks still spending their weekends indoors, despite the growing rumor that spring has arrived, here are some last-minute tips to save time and face when it comes to taxes. Continue reading “Tips for Tax Day”

Why It’s No Shocker When Athletes Go Broke

March 08, 2013

As a sports fan, I see a lot of sports–related items in the news, on Facebook, on my Twitter feed…all over the place.  Not too long ago, ESPN aired a special called “Broke” about athletes that earned tens of millions of dollars during their careers who are now completely broke.  A lot of people have expressed a bit of shock and disbelief that someone who earns $10,000,000 or more in a short career can have nothing left just a few short years after their playing days are over. Continue reading “Why It’s No Shocker When Athletes Go Broke”

What’s the Deal with the Double D?

February 26, 2013

Have you had any of your employees question you about the DD in box 12 of their W-2?  No, it’s not a battery style or bra size but a new requirement for W-2 reporting as a result of the Affordable Care Act.  Effective with 2012 W-2 forms, employers with more than 250 employees are required to report the cost of employer-sponsored health coverage, and have the option of reporting the cost of a group dental or vision plan.  Continue reading “What’s the Deal with the Double D?”

How to Avoid an IRS Audit

February 25, 2013

The IRS is a universally feared agency and for good reason. The IRS can garnish wages, seize bank accounts and lien property to those who owe them money!  That is not their first course of action of course, but they have the power to do all of those things so getting a letter in the mail from the IRS is something everyone wants to avoid. Here are some tips on how to do that: Continue reading “How to Avoid an IRS Audit”

The Mistake That Turned My Refund Into a Tax Bill

February 20, 2013

This past weekend I decided to prepare my 2012 tax return.  I typically like to do this early in the year so that I get my tax refund sooner rather than later, but something very strange happened to me this year: I ended up owing the IRS money!  This is unusual for me.  I’m usually getting money back, but call it a case of bad luck or just Murphy’s Law, after writing last week’s blog post on how to estimate the right number of allowances to claim on your W-4 so that you end up close to breaking even with the IRS, I ended up NOT breaking even with the IRS.  WHAT WENT WRONG? Continue reading “The Mistake That Turned My Refund Into a Tax Bill”

Don’t Wait For Next Year’s Tax Refund

February 13, 2013

For the next several months, U.S. taxpayers will begin filing their 2012 tax return, and that means many will be getting a tax refund.  In his article titled A Tax Refund Isn’t Always Something To Feel Guilty About, Associated Press personal finance writer Dave Carpenter states, “About 75 percent of individual taxpayers get a refund every year and the average amount is about $3,000.”  Some taxpayers like the idea of a tax refund because they see it as a simple, forced way to save, often treating it as “found” money they use to pay off debt, go on vacation, or fund some other financial goal.  Others, like me, see it as an unnecessary way of giving the IRS an interest-free loan.  Regardless of which camp you fall into, you may be able to control the size of your tax refund by adjusting the number of allowances you claim on your W-4. Continue reading “Don’t Wait For Next Year’s Tax Refund”

The Tax Implications of Non-Child Dependents Can Be Tricky

February 06, 2013

When tax season rolls around, invariably I get inundated by tax questions.  Every once in a while, a tax question comes along that offers a unique perspective on a common tax issue. Recently, I had two such questions come into my email box.  Here is a summary of the situation, along with a couple of specific questions asked by this employee. Continue reading “The Tax Implications of Non-Child Dependents Can Be Tricky”

Financial Records – What To Keep And What To Shred

February 04, 2013

How many years worth of old tax returns do you have in your garage? Before I downsized and moved to a condo less than half the size of my house, I kept them all.  I had three file cabinets in my garage so there was no urgency to throw any old documents away. Continue reading “Financial Records – What To Keep And What To Shred”