Podcasts about Adjusted gross income

In this episode of the 9innings Podcast, Kevin Thompson delves into the topic of "above the line deductions" to help listeners lower their adjusted gross income (AGI). Using relatable analogies like baseball, Kevin breaks down complex tax concepts into understandable and actionable steps. He covers common deductions such as educator expenses, retirement contributions, student loan interest, and Health Savings Account (HSA) contributions. Kevin also highlights additional deductions for self-employed individuals. Throughout the episode, he emphasizes the importance of understanding these deductions to maximize tax savings and keep more money in one's pocket.Understanding Above the Line Deductions (00:01:05) Importance of Adjusted Gross Income (00:02:30)Common Above the Line Deductions (00:03:43) Health Savings Account Contributions (00:06:17) Self-Employment Tax Deductions (00:07:31) Unique Deductions and Wild Cards (00:08:58) Action Steps for Tax Savings (00:10:14) Conclusion and Wrap Up (00:11:17) NEWSLETTER (WHAT NOW): https://substack.com/@9icapital?r=2eig6s&utm_campaign=profile&utm_medium=profile-page Follow Us: youtube: / @9icap Linkedin: / kevin-thompson-ricp%c2%ae-cfp%c2%ae-74964428 facebook: / mlb2cfp Buy MLB2CFP Here: https://www.amazon.com/MLB-CFP%C2%AE-90-Feet-Counting-ebook/dp/B0BLJPYNS4 Website: http://www.9icapitalgroup.com Hit the subscribe button to get new content notifications. Corrections: Editing by http://SwoleNerdProductions.com Disclosure: https://sites.google.com/view/9idisclosure/disclosure

Tax Advantaged Investment Accounts, Ep #59It's April and taxes are on the forefront of everyone's mind. An essential part of building wealth is to not pay more taxes than you have to. In this episode, I will be getting back to the basics and provide and overview of tax-advantaged investment accounts. In this episode...Pre-tax account strategies [4:03]After-tax account strategies [6:11]How young adults can benefit from HSA accounts [12:26]Taxes can be incredibly confusing regarding how they work and the terminology does not help. Terms such as Gross Income, Adjusted Gross Income, Modified Adjusted Gross Income, above-the-line deductions, below-the-line deductions, tax credits, tax deductions, and Marginal tax rate vs effective tax rate are all important to understand how taxes work and how to implement tax saving strategies. If you want to learn more about these terms consider listening to Episode 8 and Episode 9 of this podcast. In this episode, I'll provide a more basic understanding of tax-advantaged investment accounts and how these accounts can help you save on taxes. More specifically, how different investment accounts are taxed because knowing the differences can help a person decide when it is to their advantage to pay taxes. This is an important topic because I often see individuals and families paying way more taxes than they need to because they don't understand the differences between tax-advantaged investment accounts and how they allow tax optimization.There are 3 different types of tax-advantaged accounts we will discuss each one below.Pre-tax Accounts - Also known as traditional retirement accounts. Most know these as their 401(k) or IRA. In these accounts, you contribute a portion of your salary before you pay taxes. You will still have to pay taxes on this money but you will pay it later, when you take the money out of the account. These types of accounts make the most sense when you are in your highest earning income years. Deciding to pay taxes on the money put into these accounts during retirement when your income is lower can save you a significant amount of money in taxes. After-tax Accounts -After-tax accounts are when you pay taxes on the money before you make contributions to the account. These are commonly recognized as Roth 401k or Roth IRA retirement accounts. 529 accounts are also after-tax accounts. The advantage to these accounts is you never have to pay taxes again on the money contributed if you follow the distribution rules. This type of tax-advantaged account makes a lot of sense in your lowest and lower earning income years. By deciding to pay taxes when your income is lower you can save a significant amount in taxes. HSA Accounts -HSA accounts are the only accounts that are considered triple tax-free. With these types of accounts, you don't pay taxes on the contributions or distributions or anytime in between. The contributions are tax-deductible, and both the growth, and distributions (if used for a qualifying medical expense) are tax-free. As long as you follow the rules with HSAs you will pay ZERO taxes on them. Only people with a qualifying high-deductible medical plan are eligible to invest in HSAs. Contributions to HSAs are limited to an annual amount. For 2024 the limits are as follows: Individual $4,150, and Family $8,300. For those 55 and older you can contribute an additional $1,000. You may use funds in an HSA at any time for medical expenses. If you do not use all of...

This week's Open Mic guest is Sen. Cindy Hyde-Smith. The Mississippi Republican stands firm on protecting farmers in her Delta state. She recognizes the financial challenges of writing a new farm bill and believes funding in the Inflation Reduction Act would be better served by bolstering the overall safety net for farmers than existing conservation programs. Hyde-Smith discounts the idea of an Adjusted Gross Income means test for farmers in the crop insurance program andjoins a long list of agriculture groups and other legislators who disagree with the USDA's administration of ERP funds. Hyde-Smith says livestock farmers need relief from losses caused by predatory animals.

10-2-23 AJ DailyDeciding to Keep or Sell HeifersAdapted from an article by Lisa Moser, K-State Research and Extension news service Decoding the Definitions of Adjusted Gross Income and Actively Engaged in Farming for Payment Eligibility Requirements Adapted from a Market Intel article by Betty Resnick, American Farm Bureau Federation Ranch Management University Set for Oct. 23-27 in College Station Adapted from a release by Kay Ledbetter, Texas A&M AgriLife Communications A Special Female for a Special Function Adapted from a release by Missouri Angus Association Compiled by Paige Nelson, field editor, Angus Journal.  For more Angus news, visit angusjournal.net. 

How does one decide to start an agency? According to Drew McLellan, Founder of Agency Management Institute, most people who start an agency are accidental business owners. They know the ins and outs of their craft but not necessarily the ropes of running a business. And that's where Drew's company comes in. AMI helps agencies run their business better through workshops, peer-to-peer groups, and educational content like their podcast. In this episode of the Vertical Go-To Market Podcast our host Corey Quinn sits down with Drew to break down what it takes to build a thriving agency business regardless of your niche. Drew shares how he acquired AMI 15 years ago, who they work with, and what their approach to consulting small to mid-size agencies is all about. Hint: it's all about getting personal, vulnerable, and really sharing the ins and outs of what's going on with your business with your peers. Why? Because the best advice comes from people who've been there, done that, and emerged successful. Join Corey and Drew on Vertical Go-To-Market as They Discuss: Identifying the turning point when you need external support to continue on a growth path. Four major agency challenges and how to approach them. Niching down as a subject matter expert to meet client expectations. The ideal split of agency operating costs against Adjusted Gross Income. Actionable Key Takeaways for Agency Founders: Agency owners should aim to build wealth while operating the business by optimizing sales, staffing, and profitability. Processes are a must-have; tribal knowledge won't sustain success at a growing agency. Sharing and learning from peer challenges and successes calls for full transparency and vulnerability. A niche can be an industry, an audience, or even a deliverable. It isn't always a specific type of business. Hire people who have a passion for the niche you serve to avoid the boredom pit. Adjusted Gross Income is the one metric all agency owners should be obsessed with. The resources mentioned in this episode are: - Subscribe to Drew's Newsletter Here - Check out Drew's Profile on Linkedin Here - Learn More About AMI Here - Explore Drew's Books on Amazon Here Join us as we explore how agencies can reach their goals by banding together for knowledge-sharing and insights.

Adjusted Gross Income - banks care about it and what changes it Thank you for listening to another episode of Wealth Game podcast. The goal is to get informal yet actionable advice directly to business owners and investors. The episodes are intended to be short and simple to allow busy professionals to get right to the point of growing their wealth and reducing their taxes. For topic suggestions, questions to cover, or collaboration requests please email questions@wealthgamepodcast.com. For additional information and links to all available platforms please visit our website at www.wealthgamepodcast.com

Welcome to Round 2 of the “Know Better, Do Better” series born from the countless conversations two CERTIFIED FINANCIAL PLANNER™ professionals, Lauryn Williams and Chloé Moore, have about the trendy narratives and clickbaity articles that make it hard for them to help their clients. They will take you behind the numbers with real-life examples of financial situations to help you gain confidence and clarity to control your financial destiny. It's time to think about paying taxes for the money you made in 2022. In this episode, Lauryn and Chloé are diving into all things taxes. They find people are constantly looking for complex ideas and strategies on how to pay less taxes when there are several simple ways you can save.  In this episode, Lauryn and Chloé talk about: The standard deduction, including what it is and how it applies to you How you can save on taxes with your employee benefits Difference between an HSA and FSA How parents can save on taxes with a dependent care FSA How your Adjusted Gross Income can lower your student loan payment Tax loss harvesting and how you can write off investment losses Who can take advantage of tax gain harvesting The total cost of home ownership vs. mortgage interest deductions What entrepreneurs and business owners need to know about taxes Importance of working with a financial planner or tax professional Why you need to think ahead with tax planning   If you want to further connect with Lauryn Williams at Worth Winning, follow us on social media: Instagram: @worthwinning Twitter: @worth_winning Facebook: @worthwinningfp LinkedIn: @lauryn-williams If you want to further connect with Chloé Moore: Instagram: @financialstaples Twitter: @finstaples Facebook: @finstaples LinkedIn: @chloemoore  Shared quote:  “A person doesn't know how much he has to be thankful for until he has to pay taxes on it.” - Anonymous RESOURCES MENTIONED: The IRS Is Supersizing Standard Deductions For 2023. Is That Good For Your Taxes? States That Offer the Best 529 Tax Advantages Tax Withholding Estimator Talk to Lauryn about your Student Loan Plan Behind the Numbers: Homeownership vs Renting, With Lauryn Williams and Chloé Moore Explore attending a Welcome to Wealth financial retreat with Lauryn Williams in 2023. Medellin, Colombia July 2023 Bali, Indonesia August 2023

Do you know the difference between Adjusted Gross Income and Modified Adjusted Gross Income? Are you aware of how they affect your tax bracket and Medicare charges?Understanding the difference between AGI and MAGI and having conversations about them with your financial advisor will help you manage your taxes and IRMAA efficiently. The “looking forward tax planning” strategy is about helping you save money. In this episode of the Secure Your Retirement podcast, we discuss the difference between AGI (Adjusted Gross Income) and (Modified Adjusted Gross Income) and why you need to know it. Listen in to learn about examples of numbers, how they change, and how you can prepare prior.In this episode, find out:How the Modified Adjusted Gross Income can affect your IRMAA surcharges. Understanding how we look and arrive at Adjusted Gross Income (AGI).The things added to arrive at the Modified Adjusted Gross Income (MAGI).Understanding the tax code will make you efficient in the different tax things you can do.How smart tax planning can save you Medicare premium surcharges.Think and prepare for AGI & MAGI to avoid the negative effects if you're at Medicare age.Tweetable Quotes:“Your Adjusted Gross Income (AGI) ultimately is what is going to determine where you fall as far as the tax bracket goes.”- Murs Tariq“You might be able to have some forward thinking and start to think about this and have that conversation with your financial advisor or CPA.”- Radon Resources:If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!To access the course, simply visit POMWealth.net/podcast.

Bill McAfee is joining us again today, the President of Empire Title and Founder of Peak Producers which represents the Top 10% of agents in the Pikes Peak region.We recap August Stats and discuss if the sky is falling and how in every kind of market there are deals. Overall, Colorado Springs is still one of the best locations to be in and competition for buyers is nothing like it was. Bill offers the advice to keep your payment about 25% of your Adjusted Gross Income. Forecasting for 2022, rates will most likely continue to increase, including the recent increase to 6.8%, which is the biggest increase seen since around 2008. Every year we see people going to the sidelines in October as they wait to see what happens in the Election, so Bill predicts the year to not end strong. But as a buyer, he says prices will continue to ease, so it is one of the best times to purchase a home. Sellers that chase the market get hurt. From a Title Company's perspective, Bill mentions you must read the Title work for boundary line and easement discrepancies, HOAs bylaws and other things you may not realize. Bill tells a cautionary tale about illegally divided subdivisions and permits.Cherise Selley and the Group talk about what it takes for buyers and sellers to succeed in a complicated real estate market both in Colorado Springs, and in other locations across the country. Subscribe and hit the notification bell for updates on weekly episodes where we discuss what it really takes to succeed in real estate!Although we're based in Colorado, our experience can benefit buyers and sellers, and real estate professionals nationwide.The Real Estate Show is available on Spotify, iTunes, and here on Youtube! Looking to learn more about us? Follow along with Selley Group Real Estate online!✅ https://www.instagram.com/selleygrouprealestate/✅ https://www.facebook.com/SelleyGroupRealEstate

Did you know that the Farm Service Agency offers financial assistance to remove and replant vines infected with Red Blotch? Jeff Sledd, County Executive Director at the San Luis Obispo County Farm Service Agency explains how the Tree Assistance Program (TAP) offers commercial farmers aid with multiple qualifying disasters including natural occurrences like freezing or floods, and diseases including Pierces Disease and Red Blotch. The Farm Service Agency is a national program with county-level agencies for assistance. It is important for farmers to connect with their local agency to remain aware of current relief programs and to request funding for new issues. Make sure to listen to the end. If you received an insurance payment in 2020, 2021, or 2022 for COVID or drought, you may be eligible for the Emergency Relief Program. References: 122: Preserving Agriculture Land to Combat Climate Change California State Office of the FSA Farmers.gov Jeffrey Sledd Tree Assistance Program SIP Certified Sustainable Ag Expo November 14-16, 2022 Get More Subscribe wherever you listen so you never miss an episode on the latest science and research with the Sustainable Winegrowing Podcast. Since 1994, Vineyard Team has been your resource for workshops and field demonstrations, research, and events dedicated to the stewardship of our natural resources. Learn more at www.vineyardteam.org. Transcript Craig Macmillan  0:00  And with me today is Jeff Sledd, who is the county executive director of the San Luis Obispo County Farm Service Agency, which is part of the United States Department of Agriculture. And today we're going to talk about the tree Assistance Program plus couple of other things. Hey, thanks for  being on the podcast, Jeff.   Jeff Sledd  0:14  Hey, I'm glad to be here. I'm glad to join you, Craig. Thank you.   Craig Macmillan  0:18  For those who may not be familiar with the organization, what exactly is the Farm Service Agency?   Jeff Sledd  0:23  Sure, good question. So the Farm Service Agency is a division of the United States Department of Agriculture. We are tasked specifically to administer the Farm Bill, which is a package of legislation that Congress puts out around every five or so years, that has to do with everything ag related in the US. And the Farm Service Agency specifically administers the subsidy and disaster programs that are designed to aid farmers with financial assistance to help them feed America.   Craig Macmillan  0:59  And speaking of disasters, there is a program called the Tree Assistance Program that is to help growers of tree things specifically, in the face of various kinds of losses. Can you tell us a little bit about the program just in general and who's eligible?   Jeff Sledd  1:15  So yes, it's called the Tree Assistance Program. Because we're a federal agency. We abbreviate everything, so if you call in and ask about it, you'll probably hear us call it TAP  tree Assistance Program. It's a bit of a misnomer because it is for trees, bushes and vines, anything that is grown, that is part of a commercial farming operation, this program would cover those. Again, like I said, as long as it's for commercial consumption or use. The Tree Assistance Program specifically, is a cost share program that helps farmers and ranchers and orchardists remove and replant dead or diseased trees, bushes, and vines that are dead or diseased because of a qualifying condition for the program. Most of those conditions are natural occurrences weather related disasters but for grape growers, specifically in San Luis Obispo County, the plant disease Red Blotch is sort of how this program is used most. So for orchardists, who have Red Blotch in their vineyards to a point where you know, it's beginning to curtail their production. This program helps cost share the price of removing those vines, prepping the ground, and then replanting new vines.   Craig Macmillan  2:40  Are there other diseases or issues that like maybe statewide that also would be covered for winegrapes by TAP.   Jeff Sledd  2:46  Most other probably parts of the state and the nation really use the tree assistance program more for natural disasters like floods and freezes and things like that. Well, we don't have unfortunately, we don't have very many floods, don't have a lot of rain. But probably it could be used for things like fire if a fire came through and burn up an orchard. But it's typically used more for like freezes and things like that.   Craig Macmillan  3:16  I had a memory that maybe Pierce's Disease was also covered by the program and Leaf Roll virus had been added a couple of years ago is that true?   Jeff Sledd  3:23  Leaf roll virus has been added, a Pierce's Disease, although I don't know how prevalent that is in San Luis Obispo County, I can tell you, we haven't helped any vineyards that have Pierce's Disease, but yes, it would, it could qualify and there are other diseases that may not be approved at this point. But if you one of your listeners is being affected by a disease that we haven't mentioned, they can certainly contact us and we can go through the process of potentially having that specific disease added as a qualifying condition.   Craig Macmillan  4:00  I think this is an important point is that, you know, our listenership is national now. And there may be things that are either happening, like Pierce's Disease, for instance, or something like that, where they're dealing with it, but they're not getting the information that oh, this qualifies. Or, you know, we got to face facts that like we live in a ever changing environment. And there may be things that come down the pike in the future that may be devastating and may may be potentially could qualify, but of course, don't know that they can bring that. Please bring your issues and we'll look into it and we'll see if it qualifies or not. Maybe it doesn't maybe it does, but it's part of the grower community has to say hey, these are things that are that are impacting us. And to come to say, hey, we need, we'd like some help. What do you think?   Jeff Sledd  4:45  Yeah, that's a good point. Craig. So I'm talking specifically about San Luis Obispo County here in California. However, this program is available nationwide, any county in the nation has a Farm Service Agency Office. That county may specifically, have other diseases that are already approved qualifying losses, or conditions that are prevalent in that area. Red Blotch just happens to be very prevalent in our area. So it's kind of our main concern, but other counties across the nation, if your listeners are listening to this, and they're experiencing something that may be more localized to them, they should definitely contact their Farm Service Agency office to see what help is available because it certainly could be out there.   Craig Macmillan  5:34  What is the application process like to to get some assistance to TAP? What kind of documentation is required, and specifically, Red Blotch is what you've been working with, so let's talk about how that would work.   Jeff Sledd  5:46  Well, so we're a federal agency. So as you can imagine, there's a significant amount of paperwork involved, none of it is... None of it's too difficult. And all of it, we are more than willing to help you work, work with you to get to get all that paperwork done. So the first part would be an app, a TAP application, a tree Assistance Program application, which is basically just some general information of what disaster are you experiencing. When did that disaster start? When was it apparent to you, because those two aren't necessarily the same, right?   Craig Macmillan  6:26  That's true.   Jeff Sledd  6:27  When it started when it was apparent to you and you know, how many acres and how many trees, bushes or vines are affected in that acreage. So that's the TAP application or the tree Assistance Program application. Then we also have a number of other eligibility documents, that would be required for anybody applying for any kind of benefit through our agency. And, you know, again, any FSA office in the nation will help you process and complete those documents. Yeah, so you're gonna fill out the tree Assistance Program application, as part of that, if you have never participated with any Farm Service Agency programs, we are going to need to identify your ground. So to do that, we're going to need either the recorded grant deed for the acreage that your grapes are on or if it is, if it does happen to be a rented vineyard, vineyard that you're leasing, then you'd have to provide the signed executed current lease that shows the legal description of the land, so we can find that land in our mapping system. So we're going to need your APN numbers or, you know, section township range, something like that, or an address that shows, kind of gives us legal description of that land, so we can identify your land and attach you to it in our system. Then, as a part of that, where you know, we're gonna have to add you into our system. So there's some just some general forms that get your contact information, who you are, your address, contact, all that kind of stuff. And then any producers that apply for benefits with the USDA or with the Farm Service Agency, there is an eligibility requirement that has to do with income under the current Farm Bill to receive benefits, you have to be able to certify that for the the current year that we are in. So if you're applying for a 2022 program that for the year 2022, you will make equal to or less than $900,000 in your adjusted gross income. No one's filed their 2022 taxes yet, the way we determine that is we send a form to the IRS where you give them permission to take a look back, they're going to skip the immediate last year, and then look at the three years before that. So for 2022, we're going to skip 2021 and look back at 2020, 2019 and 2018. And if you as an individual or an entity, if it's a general partnership, or a corporation that is applying for the benefits, if that partnership or entity or individual can qualify that they made the equal to or less than $900,000 for those three review years, then you would be considered eligible or compliant with that average Adjusted Gross Income certification for the program here that you're applying for. It sounds like a complex form, but it's really a check in a box. It's pretty simple. And most producers if if you're, you know at the cusp, that you're not quite sure if you would exceed or you know, be above that threshold, your CPA or tax attorney certainly would be able to help you with that. But it's a pretty simple form. So there's that. Then there's some other forms that are environmental compliance, you have to promise that you're going to take care arable land in such a way that causes it not to erode away and that sort of thing, a lot of paperwork, but it's all basic, pretty simple paperwork and nothing that we're not going to help you walk through.   Craig Macmillan  10:11  So if we go through this, we have a successful application, how much assistance can a grower receive?   Jeff Sledd  10:16  the program does have a payment limitation, right for the 2018 Farm Bill, the payment does cap at $125,000 as the most benefit you could receive through the Tree Assistance Program.   Craig Macmillan  10:34  And you had indicated earlier when we're talking about Red Blotch assistance, and things that can include the removal of the vines, treatment of the land, or management of the land, in some fashion, the purchase of the new plant stock and the planting of the new plants, is that right?   Jeff Sledd  10:48  It does. And so we call those different practices that can be approved, right, so the first one would be the removal of the dead and dying vines. The program specifically says that the vine has to be dead to receive assistance. However, with plant diseases, that's a little bit different, it might still technically be alive. But for financial purposes because of the disease, it financially isn't worth continuing growing this volume, because it's not producing, it won't pay for itself. And so if that's the case, we consider that vine dead, even though it technically is still alive. We do pay for removal of the dead vines, or pay a portion of the cost of removal of the dead vines, and then what we call site prep, re leveling the land, that kind of thing, anything that would need to be done to prep the ground to receive the new trees. And then the new trees themselves, we pay for vines here in California, specifically for vines we pay it's $4 a vine or 65% of your actual cost of those vines. You turn in the receipts for what you actually paid, but we take a look and compare that to our $4 per vine, maximum limit. And then we're gonna pay you the lesser of the two, right either 65% of your actual costs or the $4 per vine. In some cases, we could also pay if the vines, really doesn't work for Red Blotch, for but for other diseases or other disasters, there might be vines that don't necessarily need to be ripped out and removed, but do need significant intervention or rehabilitation. In those cases we would pay for the rehabilitation or a portion of the rehabilitation of those vines, rather than the removal.   Craig Macmillan  12:49  And are there growers in San Luis Obispo County that are taken up the program and being part of it?   Jeff Sledd  12:54  This program is like I said a national program that any producer of tree, bush or vine producer across the nation can use but statistically San Luis Obispo County has used the program more than any other county in the nation.   Craig Macmillan  13:11  Really?   Jeff Sledd  13:12  Yeah,   Craig Macmillan  13:12  That's interesting.   Jeff Sledd  13:14  Specifically because of the prevalence of of Red Blotch in our area. So that's why we felt like it was important to contact you guys and get the word out for any grape growers that may not be aware this programs out there to help them if they're struggling with the costs and what to do about Red Blotch in their vineyard.   Craig Macmillan  13:36  You know, that's fantastic and really happy to hear that. I'm really happy to hear that people are coming for help. We've been talking specifically about the tree assistance program, but are there other FSA programs that are available or might be benefit to wine grape growers that you'd recommend?   Jeff Sledd  13:48  There are well, and very specifically, if you're a wine grape grower in the nation, it's possible if you have crop insurance, federally subsidized crop insurance and you got a an indemnity payment in program year 2020 or 2021. We right now have a program called ERP which stands for Emergency Relief Program. And it has to do with the COVID-19 disaster and the drought disaster that California has in in other parts of the nation. So if you are a grape grower and you received crop insurance indemnities in either 20 or 21, you should have received in the mail already from the Farm Service Agency, an application for the ERP or Emergency Relief Program. And what we're finding is because a lot of grape growers aren't used to dealing with the Farm Service Agency that are kind of throwing those aside because they don't know what it is. And you're essentially throwing away your free money if you do that. So if you did get one of those applications, you need to contact your farm service agents immediately and we'll help you complete the process for that. Because that program will pay you 75% right now, of the indemnity that you already received, we'll pay you that, again, if the indemnities that you received were for qualifying losses under the ERP program. So if you got one of those applications from the Farm Service Agency and don't know what it is, definitely have your your listeners should contact their FSA office in their county. If you did get an indemnity, you got an insurance payment in program year 2020, or 2021, or 2022, as well and didn't get an application, then you should contact your FSA office because we can print it out for you and get it to you. In case it you know, it went to the wrong address or something along those lines. Definitely, that's one we have, like the Tree Assistance Program. We also have, we have other disaster related programs that kind of come and go depending on what the disasters in a certain county or certain parts of the country are. And so definitely, if you are a grape grower, and you have had some kind of natural disaster, or a fire or a flood or freeze or something along those lines, you should definitely reach out to your Farm Service Agency.   Craig Macmillan  16:25  And when I was reading a little bit about the FSA, and if I understood correctly, the way FSA was was designed is meant to be really an interface between the farmer community and the USDA, a spot where people can connect directly to their government, basically, there's grower direction in this, there's a committee of farmers that are involved.   Jeff Sledd  16:46  Yeah, you've done your you've done your homework Craig, good job. So one of the things about the Farm Service Agency that we really pride ourselves in is we are really the last federal agency at a county level that is still directed or run by an elected Board of farmers in our case. So we do have a we call it the county committee, or again, we abbreviate everything, so we call them the COC. But they're a board of elected farmers that they are tasked with reviewing all of these applications that come in and approving or denying them based on procedures. So as the county executive director, I actually report directly to that board, the county committee, and it's kind of my job to help the committee know what the rules and regulations are to know what they what authority they have and don't have, and that sort of thing. And actually, this year, in our county, we have one of our board positions coming available. And we would love actually to have a grape grower on our board. Right now, we don't have a grape grower. We have other producers, you know, other types of farmers, but we would certainly love to have a grape grower. So if you are interested, you have to live in a certain part of the county because the county is cut into different we call them local administrative areas. And so you have to live in the right area of the county and farm in the right area of the county to run. If any of your listeners in San Luis Obispo County are interested, they certainly should reach out to me and because we definitely for 2023 will be holding an election at the end of this year for a seat on that board that is a three year term. That's certainly a way that a farmer or a vineyardist could get involved in the local government of their community that has a direct impact on ag in our community and has influence you know, statewide and even all the way up to the national level and what kind of programs are implemented for farmers here at the local level.   Craig Macmillan  19:05  Yeah, and that may be true at the time of this recording of this particular podcast. But that's in San Luis Obispo County, but it's also going to be true all the way into the future across the nation,   Jeff Sledd  19:15  Across the nation absolutely.   Craig Macmillan  19:16  If you, you know, feel like you can have an influence and like to help your fellow growers, which is what this is about. Getting involved is always a great idea if you're really passionate about trying to make things better for yourself and for your neighbors. And I think this is a great example of how growers can have an impact beyond the fence line, right and can have a positive influence on their community. So I think it's fantastic, great way of organizing the organization. It sounds like a really great way of getting involved with these various things.   Jeff Sledd  19:45  It's a great way to get involved that doesn't require too much time. You know, we're going to ask a couple hours a month from you, usually one day a month for a couple of hours. So it's a great way to get involved ad to assist, and serve the ag community that doesn't require just, you know, tons and tons of time and input.   Craig Macmillan  20:08  So related to TAP or anything else related to the FSA, what is one thing you would recommend to our listeners?   Jeff Sledd  20:15  Sure. So assuming that I'm talking really mostly to grape growers, right, in California, and really across the state, I would recommend, get to know your Farm Service Agency, at least know where that agency is located, how to contact that agency, because if you're not in need of the Tree Assistance Program, right now, we, all the time have ad hoc programs that just kind of come down from Congress to address specific problems that you may or may not have heard in the news about. We have assistance to give away to farmers to producers, ag producers in the nation. And if you don't know about it, you don't get your piece of the pie. So I would say my one one piece of advice is even if you don't have Red Blotch like like what we're talking about today, find out where your Farm Service Agency is, and get involved or get connected to them so that we're aware of you and you're aware of us. So when you do have some need for us, or we have some program that fits what you do, you're in our data bank so we can reach out to you and you know, have that beneficial relationship with one another.   Craig Macmillan  21:25  And so in this particular case, since Obispo County, how do people find you? Where are you located? How do they reach out to you, Jeff?   Jeff Sledd  21:32  In San Luis Obispo County, our office is in Templeton the heart of wine country right here, right next door to Paso Robles. So you can certainly come to our office, but specifically I would tell your producers to go to farmers.gov, FARMERS, farmers.gov. That's the USDA's public facing page. And in that you can get to know really every program we have but there's also on there very easy to find a find your local FSA office and it'll drill down and it'll get you right to the office in your county. Whichever county that is farmers here in San Luis Obispo County can contact me either through farmers.gov or I can give you my email address. Absolutely, welcome to reach out to us that way as well.   Craig Macmillan  22:25  I want to thank our guest, Jeff Sledd County Executive Director of the San Luis Obispo County Farm Service Agency, part of the United States Department of Agriculture. Jeff, it has really been a pleasure. Thank you for taking the time to talk to us today.   Jeff Sledd  22:37  Craig, I appreciate the opportunity.   Transcribed by https://otter.ai

Explanation of the five different versions of Modified Adjusted Gross Income, or MAGI, you're likely to come across in retirement planningDownloadable MAGI summary handout - hereWhat is MAGI YouTube video - hereUnderstanding Medicare Premium Surcharges YouTube video - hereAffordable Care Act ("ACA") Premium Tax Credits YouTube video - hereWhat is Net Investment Income Tax YouTube video - hereFacebook group - Taxes in RetirementYouTube channel - Retirement Planning DemystifiedNewsletter - Retirement Planning Insights

Nate discusses some myths surrounding the narrative that the rich don't pay their fair share of taxes. Source: Tax Foundation Key Takeaways: Income Tax Shares Income Percentiles Tax Brackets Do the rich pay their fair share in taxes? Adjusted Gross Income

Today we're looking at things you should consider before the end of this year. If you single and have less than $40,400 taxable income in 2021 or $80,800 if married filing jointly you're in the 0% capital gains tax bracket. You have a capital gain when you sell an asset, like property, stocks, bonds or mutual funds, for more than you paid for it. So this may be an opportunity to sell assets that have grown in value,  pay 0% taxes on that profit and reinvest into something else. For more info on the capital gains tax check out Episode 44.If you saving for college in a 529 account, you may be eligible for State Income tax deductions or credits. Some sates will even add or match contributions for taxpayers with modest incomes. Check out your states 529 account website for rules and details. If you haven't maxed out your 401k or TSP contributions this year there's still time to increase your savings. For 2021 the max is $19,500 a year or $26,000 if you are 50 or over. At least save enough to get your  full match. For BRS military and FERS federal employees, that's at least 5% of you annual income.If you are single with an Adjusted Gross Income less than $125,000 or Married Filing Jointly with under $198,000 of income, you can contribute earned income to a Roth IRA. And a non-working spouse can also contribute to a ROTH IRA as long as your working spouse has enough earned income. You contribute money to Roth IRA after you've paid tax on it. Then it grows tax-free. It's a great way to take advantage of being a low tax bracket now to save something, grow overtime, and be tax-free to you in retirement. You can contribute up to $6,000 a year to an IRA or $7000 a year if you're 50 or older for this year through April 15, 2022. If you  will be in a higher income tax bracket when you retire, consider doing a Roth conversion. You take money from a traditional IRA, 401k, or TSP, pay income tax now on the  withdrawal, and deposit it in a ROTH 401k or ROTH IRA. You cannot covert a traditional TSP into a ROTH TSP. You can convert a Traditional TSP into a ROTH IRA. Conversions must be completed within 60 days of making your withdrawal to avoid penalty. And It is best to use cash to pay the income tax on the conversion, instead of using retirement savings to keep your savings growing and avoid possible early withdrawal penalties. ROTH conversions can take a while, so if you want to do one for 2021, don't delay. To learn more about ROTH accounts listen to Episode 28 Meet Roth, Episode 29 Roth IRA, and Episode 30 To Roth or Not to RotH.Did you get a raise or a bonus or your spouse start working this year? Did you owe federal income tax  or get a big refund last tax season? Then take another look at your federal income tax withholding to make sure you don't end up with a large tax bill or a refund at the end of next year. The IRS has a great online tool to help you determine how much withholding you should have and print out a new W-4 to your employer. https://apps.irs.gov/app/tax-withholding-estimatorIf you do not itemize your taxes you are eligible for a tax deduction for cash charitable contributions you make this year of up to $300 if your single or $600 if MFJ. Save your receiptsand make the gift before the end of the year.If you have a Flexible Savings Account you may be able to carry over unused benefits from this year into 2022. Check with your particular plan. Federal employee with a FSAFEDS account, can carry over all remaining funds into 2022. But you must re-enroll in the same account(s) during Open Season,  Nov 8th to December 13th this year. If you fail to re-enroll, you forfeit all your unused funds. Note though, this benefit carryover only applies to Health Care FSAs. You cannot carry over any balance left in a 2021 Dependent Care FSA.

Adjusted Gross Income, or AGI, is the all-important line item on your tax return. According to the IRS, AGI represents your total income minus certain adjustments given by Uncle Sam. But we don't have to get too technical at this point; basically what you need to know is you can find your AGI on your most recent tax return. plays a huge role in the calculation of your monthly payment for federal student loans if you are in an income-driven repayment plan (PAYE, REPAYE, IBR, ICR). AGI isn't the only factor in the calculation of your monthly payment, but it certainly is a big one.

Adjusted gross income (AGI) is your total income minus certain above-the-line deductions. Learn how to calculate your AGI and why it matters.

Adjusted gross income (AGI) is your total income minus certain above-the-line deductions. Learn how to calculate your AGI and why it matters. The post How To Calculate Your Adjusted Gross Income (AGI) appeared first on The College Investor.

Today, we're going digging into the year-end appeal and I'm sharing the three things you need to include in your letter. This is very specific for 2020. As you know, this year has been very unusual so that means that your year-end appeal needs a new and fresh update. Did you know that a quarter of all nonprofits will bring in nearly half of their income off of this one letter? For some organizations, this letter is huge, it is a really, really big deal that this is done well because it brings in and it generates a lot of income for the organization. For others, roughly 40%, bring in less than 10% of their money off of this year on appeal. This just means you have to know your cause. One of the first things that I want to share with you is that you have got to customize your 2020 letter, this year's letter has got to look different. The majority of nonprofits are going to put together this letter in October because they want to get it in the mail in November or December.  I want to make sure that you are really clear about what your communication strategy is with people over the course of these next three months. Don't just send out the letter cold where these people haven't heard from you in years. That's a really bad idea. And it's going to fall flat. No matter how great your letter is, if somebody hasn't heard from you in a long, long time, they're not really engaged. So, you may be wondering if you should send your letter by email or snail mail. Either one is fine. Hear me out; either one is fine but direct mail is better. Direct mail costs more so I understand why you'd say it's just not cost-effective to do that right now. The number two option is to do an email campaign that includes your year-end appeal at the end. Regardless of whether you drop this in the mail or you actually send it out by email, note that you want to make sure that you have those touches at least 1-3 times before they receive your appeal at the end of the year. 31% of all donations come in, in the month of December, and 12% of those donations will come in in the last three days. So with your year-end appeal, just make sure that you create that urgency, and you also are paying attention to the calendar, because that is going to make a huge difference. Because we're in 2020 and in a global pandemic, nobody knew that, right? You have to make sure that you address the elephant in the room. You need to include that in our year-end appeal; what have you been doing during the pandemic? What has happened to your organization? Just share some details about how your organization has changed. Maybe some things that you have modified, maybe you were doing that fundraiser, and you had to change it or you did those camps or, these outreach activities and instead of doing them face to face, you moved them virtually. Number two, how has your work actually made a difference? In normal times, we would have just said, “Well, here's how we make a difference.” But in 2020, you have to be very specific about how your mission is still very relevant. Your mission and the way you executed your mission, very well may have changed. Finally, the third thing is that I want you to share what benefits your donors may have in 2020. For those of you who have followed the Cares Act, you know that there are benefits for your donors that allow them to deduct more from their taxes with their donation to your cause. They actually will make money back meaning that they will be able to give more money to your organization without it costing them. The new incentive for the Cares Act is actually two separate incentives, one for individuals and one for corporations. For individuals, they can elect to deduct their donations, up to 100% of their 2020 Adjusted Gross Income. For corporations, they also have the ability to increase those deductions, from 10% to 25%, of their taxable income in 2020. That's a huge difference and a huge incentive for your donors to give in 2020. I hope this is helpful for you as you start to just make plans for this year-end appeal. As you're continuing to move forward, just remember that it's important that we do communicate and that you clearly articulate what it is that your cause is doing and how your donors can make a difference to the work. It's not about you being so awesome and you doing such great things. It's about the fact that you guys all get to do this together. And the fact that you get to do it in the first place is pretty fantastic.   Connect with Mary: Mary Valloni Fundraising Freedom Academy Fully Funded Academy Facebook LinkedIn

Today, we're going digging into the year-end appeal and I'm sharing the three things you need to include in your letter. This is very specific for 2020. As you know, this year has been very unusual so that means that your year-end appeal needs a new and fresh update. Did you know that a quarter of all nonprofits will bring in nearly half of their income off of this one letter? For some organizations, this letter is huge, it is a really, really big deal that this is done well because it brings in and it generates a lot of income for the organization. For others, roughly 40%, bring in less than 10% of their money off of this year on appeal. This just means you have to know your cause. One of the first things that I want to share with you is that you have got to customize your 2020 letter, this year’s letter has got to look different. The majority of nonprofits are going to put together this letter in October because they want to get it in the mail in November or December.  I want to make sure that you are really clear about what your communication strategy is with people over the course of these next three months. Don't just send out the letter cold where these people haven't heard from you in years. That's a really bad idea. And it's going to fall flat. No matter how great your letter is, if somebody hasn't heard from you in a long, long time, they're not really engaged. So, you may be wondering if you should send your letter by email or snail mail. Either one is fine. Hear me out; either one is fine but direct mail is better. Direct mail costs more so I understand why you'd say it's just not cost-effective to do that right now. The number two option is to do an email campaign that includes your year-end appeal at the end. Regardless of whether you drop this in the mail or you actually send it out by email, note that you want to make sure that you have those touches at least 1-3 times before they receive your appeal at the end of the year. 31% of all donations come in, in the month of December, and 12% of those donations will come in in the last three days. So with your year-end appeal, just make sure that you create that urgency, and you also are paying attention to the calendar, because that is going to make a huge difference. Because we're in 2020 and in a global pandemic, nobody knew that, right? You have to make sure that you address the elephant in the room. You need to include that in our year-end appeal; what have you been doing during the pandemic? What has happened to your organization? Just share some details about how your organization has changed. Maybe some things that you have modified, maybe you were doing that fundraiser, and you had to change it or you did those camps or, these outreach activities and instead of doing them face to face, you moved them virtually. Number two, how has your work actually made a difference? In normal times, we would have just said, “Well, here's how we make a difference.” But in 2020, you have to be very specific about how your mission is still very relevant. Your mission and the way you executed your mission, very well may have changed. Finally, the third thing is that I want you to share what benefits your donors may have in 2020. For those of you who have followed the Cares Act, you know that there are benefits for your donors that allow them to deduct more from their taxes with their donation to your cause. They actually will make money back meaning that they will be able to give more money to your organization without it costing them. The new incentive for the Cares Act is actually two separate incentives, one for individuals and one for corporations. For individuals, they can elect to deduct their donations, up to 100% of their 2020 Adjusted Gross Income. For corporations, they also have the ability to increase those deductions, from 10% to 25%, of their taxable income in 2020. That's a huge difference and a huge incentive for your donors to give in 2020. I hope this is helpful for you as you start to just make plans for this year-end appeal. As you're continuing to move forward, just remember that it's important that we do communicate and that you clearly articulate what it is that your cause is doing and how your donors can make a difference to the work. It's not about you being so awesome and you doing such great things. It's about the fact that you guys all get to do this together. And the fact that you get to do it in the first place is pretty fantastic.   Connect with Mary: Mary Valloni Fundraising Freedom Academy Fully Funded Academy Facebook LinkedIn

To support this ministry financially, visit: https://www.oneplace.com/donate/1085/29 The federal government spent trillions of dollars to help individuals and businesses suffering from coronavirus shutdowns. The government gaveth, and now in some cases the government, will taketh away. Many whove received those benefits now wonder if theyll have to pay taxes on them. Financial planner and teacher Rob West has the answers. Its good news and bad, then we take your calls and questions at 800-525-7000. 800-525-7000. Millions of Americans received stimulus payments of $1200 for eligible adults and $500 for dependent children. Those $1200 and $500 stimulus payments are definitely not taxable on the return youll file for 20-20. They were actually classified as tax credits so they not only arent counted toward your Adjusted Gross Income theyre not counted as income for federal programs like Medicaid. Weve been talking about stimulus payments to individuals under the CARES Act. These are called Economic Impact Payments, or EIP. The other major form of benefits is the Paycheck Protection Program, or PPP. With the Paycheck Protection Program, payments have gone out to small businesses and self-employed individuals in the form of loans. Some portion, or all, of those loans will be forgiven, if the money is used for payroll, rent or mortgage, group health benefits, and utilities. Under federal law, loan forgiveness is usually counted as taxable income. But the CARES Act specifically excludes the forgiveness of small business PPP loans. In most cases, states follow the federal governments guidelines on taxing loan forgiveness, but not always. Its unclear now which states, if any, will tax PPP loan forgiveness. So businesses that have their loans forgiven need to set some money aside in case their state doesnt follow the lead of the IRS. Under the latest PPP rules, first, your business must retain or re-hire full-time employees during the reporting period which ends on December 31, 2020. Second, it must not reduce compensation paid to any employee by more than 25%. And last, 60-percent or more of the money must be used for employee compensation and benefits. If a business doesnt meet those criteria, then it will have to pay back some portion of the money. Those businesses will have two years to repay at only 1-percent interest, and theres an option to delay the first payment for up to 6 months. Millions of people have received unemployment benefits and depending on your income level, you could owe federal taxes on that money. The majority of states also tax unemployment benefits, but not all. California, Montana, New Jersey, Oregon, Pennsylvania and Virginia do not. On todays program we also answer your questions: My husband and I have a primary residence and three rental properties. Should we roll everything together and be able to use some of the money to make updates on our home? What is the Biblical/best stewardship for churches to expand their buildings? I made a deal with my adult granddaughter to help boost her savings. She has not been spending wisely. How do I handle this? Ask your questions at (800) 525-7000 or email them atquestions@moneywise.org. Visit our website atmoneywise.orgwhere you can connect with a MoneyWise Coach, purchase books, and even download free, helpful resources. Like and Follow us on Facebook at MoneyWise Media for videos and the very latest discussion!Remember that its your prayerful and financial support that keeps MoneyWise on the air. Help us continue this outreach by clicking the Donate tab at the top of the page.

Today we are talking all things income: gross income vs. net income vs. AGI. What are the differences and which one should YOU be paying attention to.

Here's how Free File works: Go to IRS.gov/freefile to see all Free File options. Military personnel who meet the income requirement can select from any of the nine providers that have "Free for Active Military for Adjusted Gross Income of $69,000 or less" in their offer. Nine of the 10 partners are making the offer. One product is in Spanish. Select a provider and follow the links to their web page to begin your tax return. Complete and e-file your tax return only if you have all the income and deduction records you need. The fastest way to get a refund is by filing electronically and selecting direct deposit. If you owe, use direct pay or electronic options. www.fender-tax.com

The number of taxpayers who itemized last year has been in steep decline, according to the latest Internal Revenue Service (IRS) data. Why? And why is that important? Well, most charitable giving in the U.S. comes from itemizers. The Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction. Fewer than 1 in […]

The Tax Benefits of Real Estate are numerous.  Ted Lanzaro, author of the Tax Smart Landlord, is a real estate investor and CPA whose practice is focused on helping real estate investors. Ted began working as a CPA for a firm where his clients were real estate investors.  After he recognized the benefits of real estate investing, he started investing himself. Like most investors, he started investing in single family properties, purchased, rehabbed and rented these properties.  As his experience grew, so too did his portfolio. Together with friends, they purchased and grew a portfolio of smaller multifamily properties in SE Florida.    Since then, he has relocated to Connecticut where he currently invest passively in other syndicators projects.. Benefits of a Real Estate Focused CPA  The benefits of a real estate focused CPA are not always recognized by investors.  It’s usually only after hearing Ted speak at an investor meeting that audience members will seek him out to discuss how they can improve their tax situation.  Ted’s experience as an investor helps him connect with investors as an investor rather than just a tax theory CPA.    The difference between a generalist and a specialist is proportionate to your tax consequence.  There are a lot of great CPA’s that know a little about a lot of different business types, but this is of limited use to someone whose business is primarily real estate.  A real estate specialist makes it his job to stay up to date on the laws and opportunities to take advantage of the laws to better their clients tax situation.    The Benefits of Real Estate The benefits of real estate are numerous.  With a real estate focused CPA, you are more likely to take advantage of the legal opportunities to lower your tax bill.  Benefits include:  The ability to depreciate the asset, and expense the depreciation against income; lower income equals lower tax owed. Leverage the asset and expense the interest payments. Receive loan proceeds without tax consequence. 1031 Exchange into a larger property rather than pay capital gains from a sale. Biggest Mistake Investors Make with Taxes The biggest mistake investors make with taxes is hands down, failing to take advantage of the tax filing rules as they apply to deprecation.  This failure combined not doing cost segregation studies nor writing off abandoned capital assets when they are replaced, add up to significant missed opportunities.  He attributes this to the fact that the client’s prior CPA was not a real estate investor, and therefore did not fully understand the benefit of depreciation. There are additional deductions available to you as a real estate investor that are often missed.  One additional expense often missed is the miles driven to your properties while you manage them. Even if you cannot take advantage of the losses in the current year, it helps you to accumulate these losses for the future when you have a significant gain from a sale.  These accumulated losses can then be used against your gain to lower your tax expense.   What Class of Investor are You? Depending on class of investor you are, will dictate the opportunities available for you when filing your taxes.  The taxpayer classifications available to you are:  Passive: For the investor who invests as a limited partner in a syndication.  You are not allowed to take any passive losses against your Ordinary Income.  Active - For the investor who actively manages his property, they can expense up to 25,000 if their Adjusted Gross Income is less than $100,000.  The ability to write off losses lessens as your income approaches $125,000.   Real Estate Professional: If you work in Real Estate and spend more than 750 hours in Real Estate per year, you can expense 100% of your real estate expenses against your Adjusted Gross Income. Any depreciation that you are not able to use in the current tax year, is carried forward to be used later.  If not used prior to sale, you can use to offset the gain from the sale of the property.  Cash Flow The goal of investing in real estate is cash flow.  The benefit of real estate is is amplified with the benefit of depreciation, in that the paper loss of depreciation against income can reduce your taxable income to zero.  Keep in mind that if you keep the property long enough, you will eventually run out of depreciation, unless you exchange or recapitalize the building with new investment. The reason most investors are not concerned with this is because the present value of cash is worth more than cash received at a future date.   Selling a Property Selling your property can cause a significant taxable event.  Prior to selling, you want to engage your CPA to determine what your tax consequences will be, and if you can do anything to minimize the tax consequences.   If you elect to do a 1031 Exchange, you have guidelines you have to abide by to avoid the tax consequences.  These include time lines and the use of an exchange intermediary.   BIGGEST RISK  Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”   BIGGEST RISK: The Biggest Risk Real Estate Investors currently face are the local laws being passed in favor of tenants.  These include environmental consequences, caps on rent increase, landlord fees charged by local jurisdictions, etc.      For more go to: http://lanzarocpa.com/ Phone: (203)922-1742 Email: ted@lanzarocpa.com

226 Earned Income Credit (EIC) Adjusted Gross Income (AGI) Limits --- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app

In this episode, podcast host and author of “Control Your Retirement Destiny”, Dana Anspach, covers Chapter 10 of the 2nd edition of the book titled, “Health Care.” If you want to learn even more than what there is time to cover in the podcast series, you can find the book “Control Your Retirement Destiny” on Amazon. Or, if you are looking for a customized plan for your retirement, visit us at sensiblemoney.com to see how we can help.   Chapter 10 – Podcast Script Hi, this is Dana Anspach. I’m the founder and CEO of Sensible Money, a fee-only financial planning firm. I’m also the author of Control Your Retirement Destiny, a book that provides a step by step plan on what to do as you transition into retirement. This podcast covers the material in Chapter 10, on managing health care costs in retirement. If you like what you hear today, go to Amazon and search for Control Your Retirement Destiny. And, if you are looking for a customized plan, visit sensiblemoney.com to see how we can help. ————— When it comes to health care costs in retirement, the media scares us with big numbers. One common statistic you see is the lump sum cost for health care for a couple age 65 and older. For example, the Fidelity Retiree Health Care Cost Estimate is frequently quoted by the media. It says an average retired couple, age 65 in 2018, will need approximately $280,000 saved (after taxes) to cover health care expenses in retirement. This sounds scary, but it is almost the same price tag that is quoted as the average cost to raise a child. Most parents don’t have $280,000 sitting in an account when they have a baby, yet they still manage. Health care costs are similar. Let’s look at these expenses annually instead of as a lump sum. $280,000 over 25 years is $11,200 per year, or $5,600 each. When you think of it this way, it becomes a manageable expense that you can plan for. However, this expense does not occur evenly, like a car payment. Instead, the expenses vary depending on what phase you are in. The more you understand what to expect, and how the expenses vary, the better of you’ll be. There are four key areas of planning for health care costs that I’ll cover in this podcast. First, Medicare, which begins at age 65 for most people.Second, the gap years, which occur if you retire prior to age 65 and don’t have any employer provided coverage to bridge the gap until age 65.Third, I’ll talk about one of my favorite savings vehicles, the Health Savings Account.And the last thing I’ll cover will be long term care costs. Let’s start with Medicare. If you’ve worked in the U.S. long enough to qualify (which is 10 years or 40 calendar quarters of covered work), then you become eligible for Medicare at age 65. Medicare has four parts; Parts A, B, C and D. Medicare Part A begins at age 65 and is free. Part A is the foundation of the Medicare program and is often referred to as hospital insurance. Medicare Part B is next, and it is not free. It covers additional services, some medical supplies and some preventative services. You pay a monthly premium for Part B. The amount is announced annually. In 2019, the basic Medicare Part B premium is $135 per month. However, this premium is means tested -so if you have a higher income, you may pay more. Those with the highest incomes pay $460 a month instead of the $135. I’ll cover this means testing in more detail in just a few minutes. Medicare Part D refers to prescription drug coverage that you can add to your basic Medicare Part A and B benefits. As with Medicare Part B, high-income folks pay more. In 2019, the base premium is $33 a month, and the highest income households pay $77 a month. If you add up what is covered in Parts A, B and D, you’ll find there are gaps in coverage. On average, Medicare covers about 50% of your total health care costs. Most people purchase what is called a Medigap or Medicare Supplement plan, which wraps around Original Medicare and helps cover these gaps. A few years ago, a second option became available. This is what is sometimes called Medicare Part C or a Medicare Advantage Plan. It is private insurance that provides coverage in a single plan that includes Parts A and B, and may also include Part D. Some Medicare Advantage plans also include extra services like vision, dental, and hearing. Currently, you must choose between either a Medicare Advantage plan or Original Medicare augmented with a Medicare Supplement policy. You will start receiving information about Medicare six months before your 65th birthday. Most people enroll as soon as they are eligible. But what do you do if you are still working at age 65 and have insurance through your employer? Then, it depends on the size of your employer. In general, if your employer has less than 20 employees, Medicare will become your primary insurance, even if you are still working. You will typically enroll in Parts A & B. If you employer has over 20 employees, Medicare is often the secondary insurance. Usually you enroll in Part A, but may be able to delay Part B. And possibly delay Part D depending on the drug coverage provided. It’s important go get this right, because if you were supposed to enroll in Medicare, but don’t do it in time, a penalty can apply. The penalty for not enrolling in Part A on time is temporary, but the penalty for not enrolling in Part B can mean you pay a higher Part B premium for the rest of your life. We encourage people to talk to their current health insurance provider and consult with an independent agent to discuss options as they near age 65. For those of you who with higher incomes, I am going to spend a few more minutes on the Medicare Part B and D means testing. This premium adjustment for higher income tax filers is called IRMAA or the Income Related Monthly Adjustment Amount. Medicare estimates that IRMAA results in increased premiums for about 5% of the population. Means testing begins when your modified adjusted gross income exceeds $85,000 for single filers, or $170,000 for married filers. These limits are fixed and do not adjust up with inflation. The final premium amount is determined based on your income; the more income, the higher the premium. Those with the highest incomes, over $500k for singles or $750k for marrieds, pay $460 a month instead of the $135 base amount. These IRMAA premiums are determined by looking at your tax return two years prior. If you’re age 65 in 2019, they’ll be looking at your 2017 tax return. But what if your income was much higher two years ago than it is now? We come across these situations on a regular basis. I’ll share two of them. The first is a married retired doctor and the second a single veterinarian. In both cases, they are over age 65, and their income is much lower now than it was two years ago. We suggested each person file for a reconsideration of IRMAA. There are seven reasons you can request a lower IRMAA premium and retirement, or working less hours, is one of those seven reasons. For our retired married doctor this may save them over $5,000 this year. For the veterinary, perhaps $1,000 - $2,000 in savings. How do you go about paying your Part B premiums? If you are not yet receiving Social Security, then you receive a quarterly invoice for your Part B & D premiums. Once you begin Social Security, Part B & D premiums are deducted from your monthly Social Security check. I’ve now covered the basics on Medicare. Overall, when you go right from employer provided coverage to Medicare, the transition is not too difficult. But what about those of you who plan to retire before age 65? You need to plan for the gap years. The gap years occur when you retire before age 65 and have no employer sponsored health coverage. Coverage during this time period can be expensive. Take the case of Doug and Beth as an example. Doug worked for a construction firm and had planned on working until age 65. He was forced into retirement a few years early, at 62, when the economy took a dive. His wife, Beth, was about eight years younger, and had no plans to retire in the near future. With a little rearranging, and through Doug’s use of extended unemployment benefits, their plan absorbed the change. To my surprise, a year later they came in to see if they might find a way for Beth to retire as soon as possible. Beth explained that her take-home pay was only about $1,400 a month and that if she started her pension at age 55, the pension would be $1,300 per month. “What is the point of continuing to work?” she asked. On the surface, her logic made sense, until I explained to them the cost of health insurance. Beth was paying only $54 a month for health coverage; her employer was paying the rest of the premium. Once retired, as neither she nor Doug was yet Medicare age, equivalent health insurance for the two of them would run $1,400 a month. When we factored in benefits, Beth’s job was paying her twice what she had thought. If your employer provides health insurance, it is likely subsidizing the cost, and you may have no idea how expensive it can be if you leave the workforce. When you leave your employer, you have COBRA coverage available for up to 18 months, so if you retire at 63 and a half, that will get you to Medicare-age. Premiums in the $700 - $1,000 per person per month range are common on COBRA, so plan for this in your budget. If you are younger, and you’ll need to cover health care without COBRA, you’ll need to buy insurance from the marketplace exchange. Premiums depend on where you are located and what type of plan you choose. There are four plan types; Bronze, Silver, Gold and Platinum. If you are healthy, the Bronze plan may be your best bet. It offers the lowest monthly premium, but the insurance company pays only 60% of your health care costs. If a health issue shows up, this plan can get expensive quickly. If you have known health issues you can opt for a Platinum plan. You’ll pay a larger monthly premium, but the insurance company then covers 90% of your costs. In Arizona, where the insurance options for marketplace plans have been limited, I have frequently seen premiums in the $1,000 to $1,400 per month per person range. That means a couple could be spending $30,000 a year on health insurance. To me, this sounds astronomically expensive. There is a health care tax credit that is designed to help offset these premiums. Eligibility depends on your Modified Adjusted Gross Income (or MAGI). In 2018 singles with MAGI of less than about $48,000, or marrieds with just under $65,000 of MAGI qualified. Although you may instantly think you wouldn’t qualify for this credit, don’t be quick to jump to conclusions. Health care tax credits are not just for lower net worth households – in many cases qualifying for a tax credit is about planning. Take the case of Jason and Mary. They have over $2 million in financial assets, and a paid off home. They retired in their early 60’s and have a comfortable amount of cash flow coming in, which for them is about $7,000 a month. That is $84,000 a year - but not all of it counts as Modified Adjusted Gross Income. Cash flow does not always equal what shows up on a tax return. With careful planning, we’ve kept them eligible for the health care tax credit for the last three years, saving them almost $20,000 a year in premiums. We were able keep their Adjusted Gross Income low by making the portfolio tax-efficient and being careful about how much in capital gains we realized each year. In addition, each year, we were able to decide if needed funds should come from a Roth IRA or brokerage accounts to minimize what would show up on their tax return. In these gap years, this kind of planning can really pay off. We’ve talked about a few cases where covering the gap years was expensive. On the flip side, I have one client who worked for a Fortune 500 company and retired in his late 50s. His employer provided retiree coverage for the gap years, and he pays less than $5,000 a year for he and his wife. Then at 65, they’ll transition on to Medicare. Unfortunately, these plans on rare. If you have one, count yourself lucky. The important thing about planning for the gap years is making sure you have estimated the cost, and have a plan in place to cover it. Next, let’s talk about one of my favorite savings vehicles, the Health Savings Account or HSA. An HSA can be a great tool to use to help you prepare for the gap years. I love HSAs because when used correctly, you get a deduction when you put the money in, and the funds are tax-free when they come out. This is unheard of! From a tax standpoint, it is one of the best deals out there. To establish an HSA, you must have a high deductible plan that is labeled as eligible to use with an HSA. The basic premise is that you lower your insurance premiums by choosing a high deductible plan. Since you are paying a lower premium you contribute your monthly savings on a tax-deductible basis to the health savings account. You can use the funds in the HSA any time for eligible medical expenses on a tax-free basis. An eligible or qualified medical expense includes things like: Co-pays and expenses that apply to your deductible Dental careVision carePrescriptionsAnd even over-the-counter medications if prescribed by your doctorCertain types of medical equipment can also countAccessing your HSA funds for medical expenses is easy. I have an HSA account that comes with a debit card. When I incur medical expenses, I could use that debit card to pay for these expenses directly from my HSA account with tax-free dollars. Instead, I choose to pay for expenses out-of-pocket so my HSA can accumulate for use in my retirement years. This works well because the funds grow tax free - by letting it grow you get more tax-free growth to use later. And, as you probably know, health care expense can occur suddenly and in lumpy amounts. Having a larger HSA balance to draw out of tax free for these lumpy expenses makes a lot of sense. And, HSA funds can be used to pay premiums under COBRA, premiums for a tax-qualified long-term care insurance policy, and to pay your Medicare Part B & D premiums in retirement. The only downside to an HSA is that you can’t put more in them. As with an IRA, there is a maximum allowable contribution. In 2019, the maximum contribution a single tax filer can make is $3,500 (plus an additional $1,000 catch-up if you’re age 55 or older). And for a family plan the maximum contribution is $7,000 – or up to $9,000 if you and your spouse are both over age 55. One key difference between HSAs and IRAs is the early-withdrawal penalty. With an HSA, a 20% penalty tax applies for early withdrawals if they are not used for medical reasons. For HSAs, an early withdrawal is defined as one that occurs before age 65. For IRAs it is a 10% penalty tax for early withdrawals, and an early withdrawal is one that occurs before age 59½. In conclusion, I call HSAs one of the two superhero retirement accounts. The other is the Roth IRA, which is beyond the scope of what I can cover today. The last topic for today is long term care.Long-Term Care Let me tell you a story about John and Kathy that helps illustrate how long-term care needs work. John and Cathy were in their 70s when they were referred to me by their accountant. They had been married over 50 years, and they brought a smile to my face every time they came in, often still holding hands. As they reached their early 80s, I will never forget them sitting in my conference room one day, sharing with me their heartfelt thoughts on living and on dying. John was fighting a round of skin cancer, and Cathy had Parkinson’s. John said, “We’ve had a wonderful life. Our children are grown and doing well. Now, we’re ready to go. Trips to the doctor and medications. Who wants all that? We’re ready to go.” John had a stroke a year later and passed away quickly. I went to visit Cathy numerous times and eventually met all their children. She was weak and frail and I honestly didn’t think she’d make it more than a year past John’s passing. But slowly a sparkle returned to her eye, and her strength returned. We would talk over a glass of wine, and I would gain the most marvelous insights from this amazing 84-year-old woman. Although Cathy’s strength grew and she was healthy and alert, she needed assistance around the home. Her long-term care policy covered in-home care, so she had a helper who came each day from about 10 to 2 to prepare meals, clean, do, laundry, run errands, help Cathy with bathing and so on. Although we think of long-term care needs as being confined to a nursing home, Cathy’s situation is quite common, and in-home care is an important feature offered by most long-term care insurance policies today. Contrast Cathy’s situation with that of my grandpa. In 2012, I flew to Des Moines, Iowa, for a family reunion put together in honor of my grandpa’s 90th birthday. Grandpa’s short-term memory loss had started to result in things like the stove being left on and forgotten medications. This was my first time to visit him in the care facility the family had located for him. It was a nice place with spacious, living room–like gathering areas, and Grandpa expressed that he was happy there. There were security codes with a double door system to get in and out, and although I realize they are needed for his protection, it was still odd, almost as if we start in a playpen and one day we end up back in one again. Grandpa knew who I was, but other parts of his memory were jumbled up a bit. Other than memory loss, though, he was quite healthy. He spent many years in this care facility before passing away. Grandma had passed away many years prior, so all of Grandpa’s income and assets were able to be used to support his care. If Grandpa still had a spouse at home, though, the financial strain of the situation would have been substantial. You do not know what the future may bring. Will you, like John, go quickly of a stroke, never needing any form of long-term care? Or maybe, like Cathy, you’ll need in-home care? Or will you, like my grandpa, need many years in a full-care facility? And how will such care needs be financed? If you have no insurance, you spend your own funds and assets and eventually if you run out of assets you go on Medicaid. Each state has its own limits on how much income or assets you or your spouse are allowed to retain before becoming eligible for Medicaid. It’s not much that you’re allowed to keep. Or you can shift some of the financial risk by buying a long-term care insurance policy. From my own observations in working with retirees, it seems most people who can afford long-term care insurance find that having it brings them great peace of mind. In our planning process, we use the median length of stay of five years in a full care facility and test to see if you have enough assets to cover this expense. For example, at $200 a day, in today’s dollars, a five year stay in a care facility runs bout $365,000. If your plan could sustain this expense, you may not need insurance coverage. However, the insurance offers other benefits. Those with insurance will often opt for better quality care. It can also make the decision easier on a spouse if they know there are insurance funds to help cover the cost. We recommend people get quotes, evaluate the risk and make an informed choice on how they want to handle the potential risk of a long-term care expense. We’ve now covered Medicare, including Parts A, B, C and D, and you’ve learned that higher income families may pay more for their Part B & D premiums. You’ve also learned the Medicare will not cover all your expenses and so you’ll need a Supplement policy or Medicare Advantage plan. If you’re planning on retiring early, you know you’ll need to budget for the gap years. You’ve also learned about HSA accounts and how they can be used to save for the gap years. And, you have some insight into the various ways long term care expenses can occur, and how you can pay for them. ————— Thank you for taking the time to listen today. Chapter 10 of Control Your Retirement Destiny provides additional examples, and links to many online references that are useful as you are planning for health care costs. Visit amazon.com to get a copy in either electronic or hard copy format. You can also visit sensiblemoney.com, to see how a staff of experienced retirement planners can help.    

When President Obama signed the “Affordable Care Act”, aka Obamacare, it came with a pretty significant tax bite called the Net Investment Income Tax (NIIT). From the IRS: “The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.” Now, you may be thinking, “I don't have anywhere near that $250,000 in MAGI to worry about this tax. So, what's the big deal?” See where it says: “Taxpayers should be aware that these threshold amounts are not indexed for inflation”? (Emphasis mine). Not indexed for inflation... Hmmmm..where have we heard that before? Oh yeah, the provisional income rules for the taxation of Social Security benefits as well as the Alternative Minimum Tax. When the legislation to tax Social Security and then the Alternative Minimum Tax were first enacted very few people were affected, thus no outrage, as only “the rich” paid. Now almost everyone pays some tax on their Social Security benefits. (As of the 2017 tax bill fewer taxpayers are caught in the AMT web, thankfully.) Pretty sneaky, eh? Oh, but it gets worse. How is Net Investment Income derived? Again, straight from the IRS website: What are some common types of income that are not Net Investment Income? Wages, unemployment compensation; operating income from a nonpassive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends (see Rev. Rul. 90-56, 1990-2 CB 102) and distributions from certain Qualified Plans (those described in sections 401(a), 403(a), 403(b), 408, 408A or 457(b)). (emphasis mine) Here the IRS is telling us that distributions from retirement accounts are NOT subject to the NIIT, which is factually correct. What they don't say is that distributions from retirement accounts are counted as income to determine if you need to pay the NIIT on your dividends, interest and capital gains. Some might even call this an error of omission. I certainly do. Let me give you an example of how this works. You are single. You have $180k income. You take a $50k IRA distribution. Your total income now is $230k. That $50k IRA distribution is not subject to NIIT. But if you have capital gains, interest and dividend income, those will be subject to the NIIT because that $50k IRA distribution put you above the $200k threshold! Large distributions from your qualified accounts could add 3.8% to your tax rate on dividends, interest and capital gains. That is nearly a 25% tax increase! Yeah, I get it. This tax won't affect many people so it's not a huge deal. Well, it's not a big deal now but I assure you it will be because of inflation, just like taxes on Social Security. So, what do you do to avoid this??? Take a guess… Distributions from the Roth are not counted in your Adjusted Gross Income and thus will not ensnare you in NIIT trap. Once again, YAY for the ROTH! Is there anything it can't do? --- Support this podcast: https://anchor.fm/josh-scandlen-podcast/support

Today, we’ll tell you how to use a trust to wipe out up to 30 percent of your adjusted gross income for this year. Learn what a charitable lead trust is and how it functions, as well as how you can keep the control over your asset even after moving it into the charitable trust.

In this episode, podcast host and author of “Control Your Retirement Destiny” covers Chapter 4 of the 2nd edition of the book titled, “Taxes.” If you want to learn even more than what there is time to cover in the podcast series, you can find the book “Control Your Retirement Destiny” on Amazon. Or, if you are looking for a customized plan for your retirement, visit us at sensiblemoney.com to see how we can help.   Chapter 4 – Podcast Script Hi, this is Dana Anspach. I’m the founder and CEO of Sensible Money, a fee-only financial planning firm. I’m also the author of Control Your Retirement Destiny which was initially published in 2013. A 2nd edition was published in 2016, and now, I am working on the 3rd edition. Why a 3rd edition? Well, the tax laws changed - and we want to update Chapter 4, which covers taxes. This podcast covers the material in Chapter 4, and I’ll be discussing both the old tax rules and the new tax rules. We’ll continue to follow the case study of Wally and Sally based on the 2nd edition of the book. The book has incredible 5-stars reviews on Amazon. If you like what you hear today, go to Amazon and search for Control Your Retirement Destiny. You won’t be disappointed. And if you are looking for a customized plan, visit sensiblemoney.com to see how we can help. Ok, let’s get started. In this podcast, I’ll be covering the highlights from Chapter 4 on the topic of “Taxes.” ----- There are very few people I know who enjoy doing their taxes. That includes me. I have actually never done my own tax return. To me, it is worth it to pay someone else to handle this task. Yet, I know a tremendous amount about personal tax rules. So why wouldn’t I do my own tax return? Well, a tax return is a historical account of what happened. Once it is time to file your return, there is nothing you can do to change the outcome. I prefer to use my tax knowledge to figure out how to pay less in taxes. And, to help other people pay less. To me, that is one of the most rewarding parts of my work. To pay less in taxes, you have to plan ahead. How far ahead? The more you want to save, the farther ahead you’ll plan. Think of tax planning in three levels. Level 1 is pretty basic. For example, assume you turn your tax documents in to your tax preparer, and he or she let’s you know you could fund an IRA for the previous year, and thus reduce your tax bill.  That wasn’t really planning ahead, but you did learn a step you could take to reduce current year taxes. But is this really the right step to take to lower your taxes in the long run? Not for everyone. Some people are better off funding a Roth IRA instead of a Traditional Deductible IRA. With a Roth, you make after-tax contributions and from that point on, the money grows tax-free. The Roth IRA has several unique advantages for retirees when they enter the phase where they are regularly withdrawing money. For example, Roth withdrawals do not count in the formula that determines how much of your Social Security is taxable. And Roth IRAs do not have what are called Required Minimum Distributions, which begin at age 70 ½ and require you to take out specified amount each year. These unique advantages of Roth IRAs are often missed by traditional tax preparers. The reality of Level 1 planning is that many tax preparers are so focused on what you can do to reduce this year’s tax bill, that the advice they are giving, with the best of intentions, may not be advice that is ideal for you. Next, we have Level 2 tax planning. You must tackle Level 2 planning in the fall, and run a tax projection. The bummer part of doing this is that you have to gather estimates for every item that will be on your upcoming tax return. We do this for most of our clients each year – and I’ll admit, it’s a lot of work. What do we learn from all this work? We can determine what actions need to be taken before the year is over so that people can save money. There are three items we routinely look for. 1) The opportunity to convert a portion of an IRA to a Roth IRA, 2) the ability to realize capital gains if they will fall into the zero percent tax rate, and 3) the ability to realize capital losses that can be used to offset ordinary income. If you aren’t sure what these things mean, keep listening. I promise, I’ll explain most of them in more detail. With Level 2 tax planning you mock up your tax return, and then see what it would look like if you were to take action before the year is over. One of the most memorable results I have from a tax projection was when we told a client that could sell a significant amount of Apple stock and realize $60,000 of capital gains and pay no tax. They were shocked. How were they able to do this? They had just retired, and their taxable income was going to be quite low for the year. When your taxable income is low, any capital gains you realize are likely to fall into what is called the “zero percent tax rate” – which means you can realize those gains and pay no tax. If they had waited even one more year – their taxable income would not have been as low – and they would have paid taxes on the gain at a 15% tax rate, or $9,000 in tax. Planning ahead saved them $9,000. Pretty cool. Then, we have Level 3 tax planning. With level 3 planning, you plan many years ahead. This type of planning can have a big impact on people who are near retirement. Why? Between the age of 55 and 70 there are a lot of moving parts. Retirement usually happens in this age range, which results in a change in taxable income. And various other types of income start– such as Social Security, pensions, deferred compensation payouts and IRA withdrawals – and they often all start at different times. If married, spouses may have different retirement dates and different years where each of their Social Security begins. With all these moving parts, your tax return can look entirely different from year to year – and lots of opportunities exist – if you’re on the lookout for them. In Chapter 4, we follow the case of Wally and Sally. I show you what Level 3 Tax Planning looks like by going through three potential retirement income plans for Wally and Sally. All three plans are designed so that their lifestyle spending is identical. The difference in the three plans is when they begin Social Security, and how they withdraw from various accounts. These changes impact how much in taxes they pay in each scenario. Let’s see how their three scenarios look using the old tax rates. Then we’ll summarize how it might change under the new 2018 rules. In the 2nd Edition of the book, I describe Wally and Sally’s three retirement income plans as Option A, B, and C. With Option A, Wally and Sally take their Social Security early, and at the same time withdraw from their non-retirement accounts. They know at age 70 ½ that by law they are required to begin taking distributions from retirement accounts and they plan to wait and tap IRAs only when these mandatory distributions begin. Their cumulative taxes over a 29-year projected lifetime add up to $452,000. With Option B, they use their suggested Social Security claiming plan, which has them filing a few years later, and they use the same withdrawal order as Option A. Which means they spend non-retirement savings first, while waiting until required distributions begin. Their cumulative taxes total to $487,000. With Option C, they use their suggested Social Security claiming plan while converting IRA assets to a Roth IRA during low tax years, and they withdraw from IRAs before their required distributions begin. Their cumulative taxes add up to only  $424,000. That’s a $63,000 difference in taxes paid – depending on how they structure their income plan. There is also a big difference in how much money they have left after 29 years. When looking at the estimated after-tax value of accounts, with Option A they have  $816,000 left. With Option B, in 29 years, they have $930,000. And with Option C - $1,153,000. That’s $337,000 more.   Now, if I have any economists listening, they will realize that $337,000 sounds like a lot – but that is $337,000 twenty-nine years in the future. You must discount that back to today’s dollars to do a fair comparison. Assuming a 3% inflation rate, in today’s dollars that is worth $143,000. That’s still a decent chunk of money you get to keep by planning ahead. How does this type of planning work? In the early years in retirement, Wally and Sally will be in a lower tax rate. Later in retirement, a higher tax rate will kick in because of their IRA withdrawals. With Option C, they use this to work to their benefit. They withdraw money from their IRA on purpose when their tax rates are low. They are able to put some of it in a Roth IRA where it grows tax-free. This is called a Roth conversion. The result is that later in retirement their Required IRA distributions are lower, and they have less income taxed at the higher rates. What does a similar case study look like under the new 2018 tax laws? I’m working on that right now for the third edition of the book. Starting in 2018, tax rates are lower than they were in 2017 – but they are set to go back to higher rates in the year 2026. This makes planning a bit of a challenge. I ran similar Wally and Sally scenarios using 2018 tax laws, and assuming those rules stay in place and do not revert back to old rates. Under this scenario, Wally and Sally can still save up to $48,000 in federal taxes by building a tax smart withdrawal plan that delays Social Security while withdrawing from IRAs and using Roth conversions. There is up to a $350,000 difference in after-tax assets at the end of their plan. Which is equivalent to $148,000 in today’s dollars. And, if in fact tax laws do revert, the tax planning will save Wally and Sally even more. Under old tax rules, or new ones, there is plenty of money to be found with good planning. Hopefully, I’ve convinced you that tax planning can save you money. Although I can’t cover all the rules in this podcast, with our remaining  time I will discuss tax planning triggers that you want to be on the look out for. Then, we’ll talk about a few specific parts of the tax code and how to use these parts to make better planning decisions. First, tax planning triggers. If you have the same salary, the same mortgage, and the same number of dependents this year as you did last year, most likely your tax return this year will look much like it did last year. Where big opportunities show up is when things start to change. I call these items “Triggers.” When a Trigger occurs, it might be a great year to focus extra effort on your tax planning. For example, you change jobs, or you have a year where you are only employed half the year, or you retire. During those years, you are likely to be in a lower tax bracket than you were the year before. Changing jobs, a period of unemployment, and retirement are three major Trigger events. A few others are a change in your number of dependents, a move to a different state, paying off a mortgage, or taking on a new mortgage. Selling a property or investments should also trigger a fresh look at your taxes, as you may have larger capital gains to report in years where these sales occur. Changes in income are likely to have a bigger impact than changes in deductions. To understand why, let’s quickly review how tax rates work. Income is reported on the first page of a 1040 tax return. Although income is reported here, not all of it is taxable. Many line items on your tax form have a column for the full amount of the income, and then a separate entry where you put the taxable portion. You use this income to determine what is called your Total Income on line 22 of the first page of a 1040. Then you get to adjust this income down by what are called “above the line” deductions. Some common ones are contributions to a Health Savings Account or to an IRA. The result is called your AGI, or Adjusted Gross Income, and it is shown on line 37 of a standard 1040 tax form. Next, in 2017 you get to reduce your AGI by taking either the Standard Deduction, or Itemized Deductions. This is one area where things changed between 2017 and 2018. Let’ start with 2017 rules. In 2017, each person got to reduce their AGI by a personal exemption amount of $4,050 and a standard deduction of $6,350. If you were age 65 or older you also got a slightly larger standard deduction. Let’s say you’re married and not yet 65. In 2017, your total standard deduction was $12,700. You would compare this to your itemized deductions, which included things like mortgage interest, state taxes paid, health care expenses up to a limit, and charitable contributions. If your total itemized deductions were more than the standard deduction then you got to use the larger number. In this example I’m using, as long as your itemized deductions were more than $12,700, you would use the itemized. Then you also got to reduce your income by your personal exemptions. In 2017, for a single person, age 65, when you added up your standard deductions and exemptions, without any itemizing, your AGI would be reduced by about almost $12,000 to get to what is called your Taxable Income. For a married couple both age 65, your AGI would be reduced by just over $23,000 to determine your taxable income. In 2018 – it’s different. Now, there is not a personal exemption. Instead, the standard deduction is much larger – at $12,000 each, or a total of $24,000 if married. And, you still get a little more if you’re age 65 or older. In 2018, as a single not yet age 65, you must have more than $12,000 of deductions before you cross the threshold to be able to itemize. For married couples is must be more than $24,000 (If over 65, those numbers change to $13,600 for singles and $26,600 for marrieds.) What all of this means is that many more people will use the standard deduction now instead of itemizing. In addition, what is eligible to be itemized has changed! In 2017, you could deduct state and local taxes, like property taxes and state income taxes paid, with no cap on how much could be deducted. In 2018, you can use a maximum of $10,000 of these types of deductions. This has the biggest impact on folks who live in areas with high property taxes and high state income taxes. There are a few other changes to itemized deductions too, but I can’t go into all of them. The bottom line is that you start with Total Income, then take Above the Line deductions to get to your AGI, then you reduce that by your Standard or Itemized Deductions to get to Taxable Income. Great, you have taxable income. Now what? Now, that income flows into the tax tables. And naturally, that isn’t simple either. Tax rates are tiered. This is something that I find many people do not understand – because under a Tiered system, not all income is taxed at the same rate. In 2018, the rates are 10%, 12%, 22%, 24%, 32% and 35% - these are all slightly less than they were in 2017. To understand how it works, let’s talk through an example of a single person who has Taxable Income of $80,000 (remember, that’s what is left after all their deductions). In 2018, the first $9,525 of that income is taxed at the 10% rate, the next $29,174 is taxed at 12%, and the next $31,775 is taxed at 22%. What if this person were trying to decide if they should contribute more to their 401(k) - and they could either make a deductible contribution to the plan, or an after-tax Roth contribution? Which is better? If they contribute $10,000 it will reduce the taxes they are paying at the 22% rate – which means a $10,000 deduction equals $2,200 saved in taxes. That sounds great! But tax laws are set to revert to the old rates in 2026. What if their retirement projection shows that their income later in retirement will be taxed at the 28% rate. Does it make sense to take a deduction now at 22% - then pay taxes on that same money later when you withdraw it at a 28% rate?  Probably not. This is just one example of how Level 3 Tax Planning can help you make better decisions. In addition to looking at the cut off levels between tax rates, you must also consider that all income is not treated the same under the tax code. I think of retirement income in three buckets. There is your: Ordinary income bucket Your Qualified Dividends and LT Cap Gains bucket And then you have Social Security. Ordinary income includes income you earn, interest income, IRA or 401(k) withdrawals, most types of pension income and many other things. This type of income is subject to the ordinary income tax rates that we just went over. Next you have Qualified Dividends and LT Cap gains. Long term capital gains means a gain from the sale of an investment which you owned for at least one year. These two types of income have their own special tax rates which are lower than ordinary income tax rates. The three tiers are 0%, 15% and 20%. Did I say “zero percent”? Yes, I did. There is actually a tax bracket where if your taxable income is less than $38,600 for singles, or $77,200 for married, then your qualified dividends and capital gains are not taxed. There are ways to strategize and intentionally create a tax year where your income will be low so that you can realize capital gains at a lower tax rate. How does all this work together? Well, we have a client that has a $4.5 million taxable portfolio. By taxable, I mean the investments are not inside IRAs or other retirement accounts. In 2017, their Taxable Income was $210,000. How much do you think they paid in taxes? At least 12% right? After all, in 2017 that was the lowest tax rate. At 12% they would pay just over $25,000 in federal taxes. And that would be a pretty good deal. They only paid about $14,000 in federal taxes in 2017. How can this be? A large portion of their income fell into the 0% and 15% capital gain and qualified dividend tax rates. When you structure a portfolio correctly, with taxes in mind, you can create a really great tax efficient outcome. The third type of income we’ll talk about is Social Security. The good news is 15% of the Social Security income you receive is always tax-free. Whoohoo! The bad news, is some people will pay taxes, at the ordinary income tax rate, on up to 85% of their benefits. It is all determined by a formula. If you have no income other than Social Security, you’ll pay no taxes on your benefits. As other types of income begin to flow into the formula, it changes the portion of your benefits subject to taxation. With the right type of planning, many retirees can receive more in benefits, and pay less taxes on what they get. You must engage in Level 3 Tax Planning to spot these opportunities. We’ve now discussed the old and new tax rates, and how the standard deduction has changed. We talked about the special tax rates that apply to qualified dividends and long-term capital gains. We also briefly reviewed how your Social Security benefits are taxed. And, looked at Wally and Sally, and saw a first-hand example of how planning resulted in a better outcome. There are many more items I cover in the tax chapter. There is simply not enough time to cover them all in a single podcast. You can find additional tax-related content on the SensibleMoney.com website in the Learn section. Or to develop a customized tax plan visit us at Sensible Money.com to see how we can help.

Make the New Tax Law Work For You In this episode, I break down most of the new provisions in the Tax Cuts and Jobs Act of 2017.  Recording from 1981 Lee Atwater explaining the context of “The Southern Strategy” that Reagan used to beat Jimmy Carter. Specifically, how you get the racist vote in a time when you can’t say overtly racist things. Gives the coded language example of “Cutting Taxes” as the dog whistle for racists, knowing that these and similar policies will hurt black people more than white people. This allows the Republican to court the racist voter without overtly claiming to be racist   Breaking Down the Tax Law for Individuals # of tax brackets didn’t change Rates temporarily drop for all but the lowest bracket Standard deduction doubled Families are less likely to benefit from itemizing No more Personal Exemption $4150 exemption for you and each dependent is gone Family with three or more kids will lose more than they gain in rate cut Child tax credit raised from $1000 to $2000 Only $1400 refundable Other $600 only applies to reduce your liability if you owe taxes Credit applies to incomes up to $400,000 Formerly only $110,000…benefit to upper-middle class Added $500 credit for non-child dependents College students, elderly parents, etc. Cap on State and Local Tax Deduction ($10,000) Will affect people in high-tax states most Mortgage Interest Deduction on new debt capped at $750,000 (was $1,000,000) No effect on existing mortgages Student Loan interest still deductible $2500 Medical Expenses over 7.5% of your Adjusted Gross Income is deductible Formerly had to surpass 10% Teachers can still deduct up to $250 in supplies expenses Electric Car tax credit still $7500 Only offered on first 200,000 cars sold by each manufacturer Running out of time for buying from GM, Nissan, Tesla No change in tax break for selling your home 529 Savings can be used for private school tuition Up to $10,000 Alimony tax deduction goes away Applies to separation and divorce paperwork filed after 31 December 2018 Disaster deduction now only applies if loss occurred in official National Disaster No moving expense, tax prep, bicycle commuter deductions Individual Mandate penalty reduced to $0 Effectively repealed Changes how inflation is gauged for tax purposes From CPI-U to Chain Weighted CPI-U Considered more accurate because it accounts for spending adjustments make in the face of higher prices Potential for Bracket Creep Key Provisions for Businesses Top marginal rate for C-Corporations permanently dropped from 35% to 21% Pass through companies taxes go by owners’ personal tax rates Law adds 20% deduction for pass through income Applies to all business owners with personal income below $157,500 ($315,000 Married Filing Jointly) Affects income tax but not self-employment tax Certain professional services with incomes over the threshold are excluded from receiving the 20% deduction Legal, Accounting, Health, and others These firms may consider tax structure changes to C-Corp depending on their financial realities Note: Check out BuyBlack Podcast Episode 004-C, to review the advantages & disadvantages of different legal & tax business structures https://buyblackpodcast.com/podcast/solo/choosing-legal-business-structure/ More Businesses qualify for cash-based accounting versus the GAAP standard of accrual-based accounting (up from $5M in gross receipts to $25M) This is less accurate for judging a business’ solvency, but simpler and more accurate at seeing how much cash a business has on hand today. The catch to all of this is that most of the personal tax cuts and provisions expire in 2025 while the corporate cuts are permanent.  This tax law gives us a small peek into how the game is played…if we’re paying close enough attention. GOP anticipating being able to ride the “low taxes” wave into a 2020 re-election for #45 This law keeps the low taxes through the presumed second term, then ends them in January 2025, just as the new president (who we can tell they are expecting to be a Democrat) takes office Then, as taxes skyrocket and the economy crashes they can blame it on the “failing” Democrat president. They will leverage that to try to pickup up some of the Congressional seats that they will inevitably lose over the coming seven years, and hope the story sticks long enough to win back the White House in 2028. We should always be looking at the long game and how moves made today setup the chess board for the future.  I guarantee you, that’s how the people in Washington put things together, so it’s in our best interest to look at their moves through their eyes.   How can you, I, we work this new law to our advantage Take advantage of the 529 Savings Plan for private school Start a small business as a side hustle Sole Proprietorship, Partnership, LLC, or S-Corp See BuyBlack Podcast Episode 004-D for tips to help you get started https://buyblackpodcast.com/podcast/solo/set-up-your-llc/ The BuyBlack Resource List has over 200 links to sites that can help you build and grow your business as well. https://buyblackpodcast.com/buy-black-business-resources/ Convert your profitable professional services company from a pass through to a C-Corp Check with your lawyer and accountant to see if this is best for your specific business and circumstances. Do not take my word…I am not a professional…this is not legal, financial, or tax advice   How “We” Beat this System Designed to “Hurt Blacks more than Whites” Recognize that this is all a game You can’t win a game that you don’t know is being played This is a huge part of “consciousness” Being aware of the levers, pulleys, and systems in motion all around you and learning how the gears work Once you recognize the game, you learn the rules and how it is intended to be played Figure out how to make those rules work in your favor, then dominate the board This is basically The Matrix That whole movie was essentially a lesson on unleashing the intense power that we each have when we wake up and become conscious of the power systems moving the world forward Right now, the rules are being rewritten to heavily favor the producer, the creator, the owner To benefit, you must define yourself as a producer. You must create value for the market. You must build and own things with appreciating value. It just so happens, that is exactly what this podcast exists to promote in our community We are currently America’s biggest consumers; its most loyal employees; its least successful entrepreneurs This is why using coded phrases like “tax cuts”, “tough on crime” and “reducing entitlements” can actually speak to racists AND accomplish what they want…to implement policies that disproportionately harm our community When we learn the rules to this game, then use the existing structure to move our community from net consumption to net production, none of those things will hurt us. In fact, they will help us more than the majority because of our smaller population This is how Davis slays Goliath. He is smaller, more agile, quicker to react, adjust, switch tactics, and use weapons of opportunity We must become a community of economic Davids Disclaimer: I am not a Tax Attorney (or any kind of Attorney) and I am not an Accountant.  This is not Tax Advice or Financial Advice.  It’s just information.  Please speak to one of the aforementioned experts before making ANY decisions based on the information you get from this episode. Resources: If you have a website of any kind, you want to hire Ratel SEO to help you get found.  https://ratelseo.com/ Don’t waste another day living on the fifth or sixth page of Google, Bing, or Yahoo.  Darrin is a real life SEO wizard and he will get you set and teach you so much along the way. If you’re ready to get your business started, listen to BuyBlack Podcast Episodes 004A-004D.  https://buyblackpodcast.com/podcast/004-three-things-need-start-business/ They’re relatively short and packed full of information to start you on the right track.  If you have questions, I’m always available to help. Email me at gerald@buyblackpodcast.com or you can call 501-703-0363 to connect with me by phone. Thanks for listening!

028 | In today's podcast we discuss the four different "buckets" available to savers plus an in-depth look at the Roth IRA and the 'Backdoor Roth.' In Today’s Podcast we cover: The order of operations for how you should approach the different “buckets” available to you both for retirement accounts and for your taxable savings Four basic ways for your retirement and investment funds to be taxed Best case is an account similar to the HSA which is not taxed when you put the money in nor when you pull it out Option 2 is the Roth IRA which is taxed upfront but not when you pull the money out Option 3 is a traditional IRA, 401k, etc. where it is not taxed when you contribute but is taxed when you withdraw Option 4 is your regular savings/investment accounts We focus mostly on tax-deferred retirement accounts because that is the best way to lower your taxable income in the current year and reduce your tax liability. Because of advanced FI concepts such as the ‘Roth IRA conversion ladder’ there is a chance you can pull this money out nearly tax free once you reach financial independence You want to max out your tax-deferred options The FI community looks at this problem differently than traditional financial planners and doesn’t focus on the Roth IRA generally Roth IRA makes sense if you are nearly certain that your tax rate will be higher in retirement than it currently is now (think children under 18) The issue is this is unknowable at the time of contribution (unless you are at a 0% rate) You can pull out your Roth IRA contributions at any time tax and penalty free Flexibility of your bucket #4 (taxable savings) is a big positive of that investing option over a Roth IRA The concept of a marginal tax bracket and an understanding of how your income is taxed Financial planners focus on the ‘tax diversity’ play of the Roth versus traditional retirement accounts Income limitations do exist for the Roth IRA There are also contribution limitations yearly for these accounts How to reduce your Adjusted Gross Income on your tax return to qualify for a Roth IRA The Backdoor Roth IRA option for high income individuals Discussion of the White Coat Investor article on the Backdoor Roth IRA and how you can convert your money from a nondeductible traditional IRA to a Roth IRA (the ‘backdoor’ Roth) Avoiding the pro-rata calculation How to contribute to the traditional IRA account as a nondeductible contribution and then convert it to a Roth 

TurboTax Tax Software Adjusted Gross Income (AGI) Explained - The IRS uses your AGI to determine whether you can claim certain deductions and credits and the amounts you're eligible for. For more information to help you better understand Adjusted Gross Income, also known as AGI, watch this TurboTax tax tip video. TurboTax Home TurboTax Support TurboTax Blog TurboTax Twitter TurboTax Facebook TurboTax Pinterest TurboTax Tumblr

Need to find your adjusted gross income (AGI) from last year? Learn how to find last year's AGI using TurboTax Online by watching this helpful TurboTax Support video.

It's time to think about taxes!  And that includes  finding a way not to pay so much on April 15.  Tax planner & strategist Steven Floyd www.focus1advisors.com  has advice on how business owners and individuals can reduce the bottom line of their Adjusted Gross Income.  https://www.facebook.com/MoneyMakingSense/  See omnystudio.com/listener for privacy information.

I’m not sure about you, but we haven’t met many people that wouldn’t love to lower their tax payments. As we move in to the heart of tax season, do you find yourself wondering every year around this time, what other opportunities you may be missing? Millions of people who file their tax return themselves overlook tax opportunities each year that could save them extra money in April but they hesitate to pay to have a professional prepare them.  The hidden secret is that tax planning should be done year round.  So we put together a list of a few things we see most often missed on tax returns.   Maxing Tax-Deferred Savings One of the easier ways of avoiding tax now, is to save the maximum amount in all your tax-deferred accounts (401k/403b).  Many have a tough time reaching the maximum savings limit ($18k per person in 2016).  This often brings the focus back to your cash flow as overspending keeps many from hitting the maximum amount.  Those over age 50 have an extra benefit where they can save $6,000 more each year until they stop working.   Not Funding HSA accounts This is an excellent retirement account that offers a triple tax saving opportunity.  Problem is many aren’t taking advantage of it. If you have a high-deductible health insurance plan, you have an opportunity to sock away savings tax-free, that can grow tax-free and then be withdrawn tax-free.   Non-deductible IRA contributions & Roth conversions High income earners still have a way to make Roth contributions. It just takes a few extra steps and involves some monitoring to do it successfully.  If you already have nondeductible IRA contributions, this is a great opportunity to get these contributions in to a Roth IRA, assuming you don’t have a larger deductible portion already built up (consider the pro rata rule in this case).  Don’t forget to fill out form 8606 to keep an accurate record of your nondeductible IRA contributions.   Charitable Deduction Opportunities If you have large capital gains from appreciated stock, it may benefit you to donate these shares instead of making cash charitable contributions. Another opportunity for those who are over age 70 ½, is to make a Qualified IRA Charitable Distribution which also qualifies as Required Minimum Distribution.  This benefits you by not increasing Adjusted Gross Income on your tax return which in turn helps with medical expense deductions, social security taxation and Medicare rates to name a few.   Missing Any Deductions? Some of the more common we see left off of Schedule A are car taxes, investment fees, and charitable donations. Go through your potential itemized deductions.  Look at the prior year return for some guidance.  Also, if you made a 2014 estimated payment to the state in January of this year and/or owed when you filed your 2014 state tax return then you can add those payments as a federal tax deduction on this year’s return. If in a low bracket, you may want to delay deductions and accelerate income instead.  When your AGI ends up in the 15% tax bracket, capital gains are taxed at 0%.  So realizing gains could be beneficial here. High tax bracket earners have an opposite focus as they are looking to reduce income. Word of warning: watch the Medicare Surcharge (3.8%) on income over $200k for individuals and $250k for joint filers. If you find yourself in this area, you may want to look for ways to delay income depending on the control you have in your income.   AGI thresholds You Don’t Want to Miss Child tax credit (begins phasing out at $110k).  Can you make a deductible traditional IRA contribution? This could actually reduce your tax bracket from a boosted higher rate as you are not only reducing the ordinary income tax but getting an extra benefit due to the credit. Itemized deduction limitations over $309k (single $258,250) – especially if restricted stock or stock options are vesting and you are selling in that tax year. American Opportunity Tax Credit phases out at $160k AGI ($80k single).  If you pay for the first $4k of college expenses, you can use this credit (mentioned below).   ACA subsidy tax bubble Many retirees who no longer have an employer continued health plan and haven’t yet reached 65 now have a new option – buying medical insurance through the health insurance marketplace.  Depending on the tax diversification in your investment accounts, some early retirees are receiving premium tax credits.  But be careful, if receiving the credit and your income rises above 400% of the Federal Poverty Level for the number of people in your household, you could lose all the credit. In this situation, managing tax brackets become vital.  But to do so, you need to have saved in accounts with tax flexibility.  Tara Signal Benard summarized a breakdown of this strategy in a New York Times article titled, “Devising a Tax Strategy After the Paycheck Is No More.”   Don’t Forget About Other Credits Pay for first $4k of tuition first to get AOTC – 3 million people missed this credit in 2014. Residential energy credit for any HVAC replacement or energy efficient upgrade to house Foreign Tax Credit – you lose this credit with foreign stock in IRA accounts. This is why asset location is important. Vanguard found this can add up to 0.75% per year in performance.  $7,500 for a $1 million portfolio. Dependent care credit – If both spouses are working, don’t forget to include summer camp costs as this is very likely a deduction.   Feeling Like you Missed Something? If you feel a bit lost after reading these examples then look to hire a professional.  Tax return for families can range from $300 to $500 depending on your situation.  Could be money well spent if they find tax savings you overlooked. When digging in to the numbers CNBC found the more you make the more interesting IRS auditors find you.  The IRS begins to get more interested in those earning more than $200k.  According to turbotax – only 1 percent earning less than that are audited.  If you are over the $200k threshold, then 4% of your group will be audited.  It’s not until you begin earning more than a million, to where 12.5% get an audit notification letter. If you feel like you would like a second look, we’d encourage you to find a fee-only financial planner who has knowledge in the tax planning area.  It’s very likely it could be worth it. Other Links Mentioned During the Show Mike’s NerdWallet Article: Are Advisors Worth the Fee? Article: The Best Ways to Pay for College NY Times Article: Devising a Tax Strategy After the Paycheck Is No More

The Supreme Court’s decision upholding the Affordable Care Act confirmed that taxpayers whose income exceeds a threshold amount will be subject to a 3.8% Medicare surtax on net investment income, effectively raising their marginal income tax rate. However, whether the Bush era tax cuts will be extended and, if so, for whom, remains an open question. In light of this uncertainty, CPAs may want to start planning for possible 2013 tax increases now, particularly for clients who will benefit from transferring assets to family members, decisions that can take time to make.