QCD Limitation Starts Inflation-Adjusting in 2024 (Secure 2.0)
with No Comments

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

What Counts As Income For Roth IRA Funding Purposes?
with No Comments

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

What Interferes With a Backdoor Roth?
with No Comments

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

Inherited RMD Update: IRS Waives 2023 Penalties and Delays to 2024
with No Comments

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

No Tax Benefit to Gifting Capital Losses
with No Comments

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

Virginia Real Estate Tax Relief For the Elderly and Disabled By City and County
with No Comments

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

New Proposals Offer Insight into Republican’s Tax Agenda
with No Comments

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

Access $1,500 Per Child for K-12 Students in Virginia
with No Comments

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

2026 Tax Cliff on Horizon
with No Comments

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

More People Eligible for ABLE Accounts in 2026 (Secure 2.0)
with No Comments

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

New Catch-Up Limits for Ages 60-63 in 2025 (Secure 2.0)
with No Comments

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

Retirement Plans Allow Roth Employer Contributions Now (Secure 2.0)
with No Comments

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

High Wages Limit Catch-Up Options to Only Roth in 2024 (Secure 2.0)
with No Comments

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

Contribution Basis is Prorated for Roth 401(k) Withdrawals But Not Roth IRA
with No Comments

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

No More Roth 401(k) RMDs in 2024 (Secure 2.0)
with No Comments

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

Changes to RMDs for Those Born in 1951 or Later (Secure 2.0)
with No Comments

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

At 65, Does the 5-Year Roth Rule Matter?
with No Comments

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

How to Avoid an IRMAA Medicare Premium Surcharge 2023
with No Comments

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

Easily Calculate the Fair Market Value (FMV) of a Security in Excel
with No Comments

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

Q&A: Wash Sale: VFIAX and VOO?
with No Comments

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

How the Wealthy Can Take Advantage of Health Insurance Subsidies for 2023 Onward
with No Comments

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

The IRS Waives 2021 & 2022 Penalties Because Its Unclear How the New Inherited IRA 10-Year Rule Works
with No Comments

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

How to Calculate Fair Market Value if the Date of Death Is on a Weekend?
with No Comments

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

Q&A: Do I Need a Contract to Employ My Child?
with No Comments

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

Q&A: Can I Hire My Child If I Have a Solo-401(k)?
with No Comments

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

What To Do With Missing Cost Basis
with No Comments

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

How the Kiddie Tax is Calculated
with No Comments

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

States with Tax-Exempt Interest from U.S. Debt Obligations
with No Comments

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

How to Change a 529 Plan Account Owner
with No Comments

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

How to Calculate Taxable Social Security (Form 1040, Line 6b)
with No Comments

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

Do Large Roth Conversions Require Backdoor Roth Contributions? (2021)
with No Comments

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

Is a SEP-IRA or Solo-401(k) Better?
with No Comments

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

Am I Limited to Only One Roth Conversion Per Year?
with No Comments

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

How to Avoid an IRMAA Medicare Premium Surcharge 2022
with No Comments

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

Can Taxable Life Insurance Benefits Contribute to an IRA?
with No Comments

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

How the Wealthy Can Take Advantage of Health Insurance Subsidies in 2022
with No Comments

If you are currently shopping for health insurance for 2022, consider getting an on-exchange health insurance plan. You may be surprised at how much subsidies you can receive.

How Your Tax Is Calculated: Qualified Dividends and Capital Gains Worksheet
with No Comments

The 25 lines of the Qualified Dividends and Capital Gain Tax Worksheet are so simplified, they end up being difficult to follow what exactly they do. So, for those of you who are curious, here’s what they do.

Individual 401(k) Elective Deferral Limits and Deadlines
with No Comments

You as the business owner have until the tax-filing deadline to complete both your profit-sharing and elective deferral contributions.

How Your Tax Is Calculated: Tax Table and Tax Computation Worksheet
with No Comments

Whether you are on the Tax Computation Worksheet or in the Tax Table it helps to understand how your tax is calculated.

How Roth Conversions Affect Your Contribution Basis
with No Comments

In the eyes of the IRS, Roth conversions are a type of rollover and their part in your Roth IRA’s contribution basis is called a rollover contribution.

Q&A: Amount Paid in Non-Cash?
with No Comments

I would recommend that you strive to pay your children $0 in non-cash compensation. Let them purchase their own rewards.

Unpacking Publication 590B’s Justin Example
with No Comments

In Publication 590B, the IRS gives an example to demonstrate how Roth distribution ordering works.

New Child Tax Credit for 2021 Only
with No Comments

The 2021 tax credit is worth $3,600 for children under age 6 and $3,000 for those under age 18. These rules apply to tax year 2021 only.

Unpacking Publication 590B’s Ishmael Example
with No Comments

In Publication 590B, the IRS gives an example to demonstrate how Roth contribution basis works in a Roth IRA.

ABLE Accounts: Tax-Advantaged Savings for People with Disabilities
with No Comments

ABLE accounts offer people with disabilities a new opportunity to save and invest for the future.

Save the 1099-R from Your Roth Rollovers
with No Comments

It is easiest to simply save your 1099-R and its numbers with your record of all your Roth IRA contributions.

Keep Track of Your Roth Contributions
with No Comments

Going forward, keep track of all your contributions in a file alongside where you store your tax returns.

Q&A: What are the Tax Rates for an Inherited IRA?
with No Comments

The short answer is that most taxable distributions from inherited IRAs are taxed at the the child / beneficiary’s income tax rate. The longer answer is that there are multiple chances for inheritance to be taxed.

How Do You Report Withdrawals from Roth Contribution Basis?
with No Comments

To take advantage of tax-free penalty-free Roth withdrawals of contribution basis, you need to keep careful records of your Roth contributions.

1 2 3 4 6

Like what you read? Subscribe to our newsletter!