Financial Planning Opportunities
How much tax are you paying? How efficient are your short- and long-term capital gains? Do you need to plan for a Medicare surcharge during retirement? Let us know if you’d like help deciphering your tax return.
*Ryan is not a tax professional, and all information or ideas presented is for educational purposes only and should not be taken as tax advice. Your specific situation should be discussed in detail with an accountant or tax advisor prior to implementation.
-
WEBVTT
1
00:00:02.720 --> 00:00:03.525
Good morning everyone.
2
00:00:03.525 --> 00:00:04.645
Welcome to the Money Matters
3
00:00:04.705 --> 00:00:08.165
for the week ending March 29th, 2024.
4
00:00:08.505 --> 00:00:11.445
So we are one quarter of the way done with the year already.
5
00:00:12.105 --> 00:00:14.685
Uh, been a great start to the year in terms of the market.
6
00:00:15.225 --> 00:00:17.805
And for most of you, hopefully you have already filed
7
00:00:17.865 --> 00:00:20.565
or are just getting ready to file your income tax returns.
8
00:00:21.145 --> 00:00:22.845
Uh, individual returns are due
9
00:00:22.865 --> 00:00:24.965
by April 15th, so don't be late.
10
00:00:25.585 --> 00:00:28.485
So speaking of income tax returns, how many
11
00:00:28.485 --> 00:00:29.805
of you actually look at 'em
12
00:00:30.415 --> 00:00:32.195
and how many of you have someone
13
00:00:32.325 --> 00:00:33.595
who's looking at 'em with you?
14
00:00:33.935 --> 00:00:35.875
You know, we work with a lot of great CPAs
15
00:00:35.875 --> 00:00:37.995
and tax preparers, and one of the things
16
00:00:37.995 --> 00:00:41.555
that they always tell me is they are very, very busy and,
17
00:00:41.575 --> 00:00:44.755
and a big part of their job is getting the numbers in there,
18
00:00:44.825 --> 00:00:47.195
getting it ran through and getting you filed.
19
00:00:47.695 --> 00:00:49.395
And so most of the time the
20
00:00:49.395 --> 00:00:50.875
conversation goes something like this.
21
00:00:51.015 --> 00:00:52.115
If there is a conversation,
22
00:00:52.175 --> 00:00:54.075
but you know the process if you will,
23
00:00:54.255 --> 00:00:56.875
you drop off all your stuff, they crunch all the numbers,
24
00:00:57.465 --> 00:00:58.835
they call you, email you
25
00:00:58.835 --> 00:01:00.955
and say, Hey, this is what you owe, this is
26
00:01:00.955 --> 00:01:02.715
what you're getting back, sign here
27
00:01:03.095 --> 00:01:04.235
and you're all on your way.
28
00:01:04.655 --> 00:01:06.875
And, and you know, and that's a, that's a big value add.
29
00:01:06.875 --> 00:01:09.955
However, that skips a lot of the in-between.
30
00:01:10.655 --> 00:01:13.115
And if you don't have an advisor looking over your tax
31
00:01:13.115 --> 00:01:14.755
return, and we always use this question, say,
32
00:01:14.755 --> 00:01:16.915
when's the last time your advisor looked at your tax return?
33
00:01:17.415 --> 00:01:19.355
And most of the time when we're working with somebody,
34
00:01:19.355 --> 00:01:21.315
they go, well, my advisor's never looked at my tax return.
35
00:01:21.775 --> 00:01:24.235
Now, full disclosure, this is a, a, a service for,
36
00:01:24.375 --> 00:01:26.035
for uh, planning clients.
37
00:01:26.695 --> 00:01:29.155
Um, but I wanna show you just a wealth of some
38
00:01:29.155 --> 00:01:31.155
of the resources that are inside a tax return
39
00:01:31.615 --> 00:01:33.195
and we'd be happy to help walk you through
40
00:01:33.195 --> 00:01:34.395
that at any point in time.
41
00:01:34.615 --> 00:01:36.955
And especially those of you who watched this video that,
42
00:01:37.065 --> 00:01:38.675
that, you know, maybe have been looking at us
43
00:01:38.675 --> 00:01:41.275
or just following videos, uh, this is a big differentiator.
44
00:01:41.815 --> 00:01:45.855
So, uh, with a copy of the tax return, we can feed it
45
00:01:45.855 --> 00:01:47.695
through a system and just get a wealth
46
00:01:47.695 --> 00:01:49.255
of information of reports like this.
47
00:01:49.525 --> 00:01:51.815
Okay? Now I blocked out obviously the name, um,
48
00:01:51.815 --> 00:01:53.175
but this is a real tax return note.
49
00:01:53.175 --> 00:01:54.255
This is 2022.
50
00:01:55.035 --> 00:01:57.175
So, uh, it's from a couple years ago,
51
00:01:57.755 --> 00:01:59.975
but here's just some of the information and,
52
00:01:59.975 --> 00:02:01.735
and opportunities we can claim off of this.
53
00:02:02.155 --> 00:02:04.575
For one, most people really don't ever even know
54
00:02:04.575 --> 00:02:05.975
what they're actually paying in taxes.
55
00:02:06.395 --> 00:02:07.735
So right at the top, Hey, this is
56
00:02:07.735 --> 00:02:08.775
what you paid in federal tax.
57
00:02:08.965 --> 00:02:10.255
Well, is that good, bad or other?
58
00:02:10.325 --> 00:02:12.695
Well, the highest marginal rate is 37,
59
00:02:13.765 --> 00:02:16.255
this person was in 24, so they're in the middle,
60
00:02:16.755 --> 00:02:18.415
but actually that's their marginal rate.
61
00:02:18.415 --> 00:02:20.015
Their average rate was 13.8.
62
00:02:20.315 --> 00:02:22.455
So I'd say, yeah, this is, this is pretty efficient.
63
00:02:22.455 --> 00:02:24.615
This person, you know, on 141,000
64
00:02:24.615 --> 00:02:27.335
of income only paid about 13.8%.
65
00:02:27.875 --> 00:02:29.615
Um, pretty good. It's good to know that.
66
00:02:29.755 --> 00:02:32.815
Now, one of the reasons they did pay little income just
67
00:02:32.815 --> 00:02:36.575
because they had a lot of tax exempt interest, 98% of
68
00:02:36.575 --> 00:02:37.695
that interest was tax exempt.
69
00:02:38.035 --> 00:02:39.175
And this is one of our clients.
70
00:02:39.375 --> 00:02:41.575
I know that we set 'em up with a lot of tax exempt interest.
71
00:02:42.195 --> 00:02:44.575
Um, what about, you know, capital gains?
72
00:02:44.805 --> 00:02:47.855
Well, you can see here there was some work to be done
73
00:02:48.065 --> 00:02:50.895
where the capital gains short-term
74
00:02:50.935 --> 00:02:53.575
and long term almost perfectly offset each other
75
00:02:53.955 --> 00:02:56.015
to create very, very little taxation
76
00:02:56.195 --> 00:02:58.755
for them. Uh, so security,
77
00:02:58.945 --> 00:03:01.765
Anyone with, with a higher income in retirement is gonna
78
00:03:01.765 --> 00:03:03.805
have 85% of their social security taxable.
79
00:03:03.965 --> 00:03:05.125
A lot of people don't realize that.
80
00:03:05.865 --> 00:03:07.605
Uh, what about other planning opportunities?
81
00:03:07.825 --> 00:03:10.165
You know, uh, here's a list of all sorts
82
00:03:10.165 --> 00:03:11.205
of funding opportunities
83
00:03:11.305 --> 00:03:13.005
and it's gonna tell us, Hey, are you over
84
00:03:13.145 --> 00:03:14.605
or under the income threshold?
85
00:03:15.025 --> 00:03:18.505
Or you could contribute, uh, uh,
86
00:03:18.855 --> 00:03:20.145
IRAs, Roth IRAs, et cetera.
87
00:03:20.145 --> 00:03:21.305
This person is, is retired,
88
00:03:21.305 --> 00:03:22.545
so they're no longer contributing.
89
00:03:22.545 --> 00:03:25.745
But it's a great thing to know, uh,
90
00:03:25.745 --> 00:03:28.665
what is your marginal rate for long-term gains,
91
00:03:28.935 --> 00:03:30.265
long-term capital gains?
92
00:03:31.555 --> 00:03:34.215
And for those of you approaching age 65 or 65
93
00:03:34.235 --> 00:03:35.895
or over, here's a fun one.
94
00:03:36.655 --> 00:03:39.415
Medicare surcharges. What do you mean they're surcharges?
95
00:03:39.415 --> 00:03:41.175
Yeah. If you make above a certain threshold,
96
00:03:41.175 --> 00:03:42.375
this is the single number.
97
00:03:42.835 --> 00:03:44.575
Um, married number is larger,
98
00:03:44.915 --> 00:03:48.095
but this particular person, um, one of the, one
99
00:03:48.095 --> 00:03:49.495
of the challenges of having a high income,
100
00:03:49.495 --> 00:03:51.735
they're they're gonna get slapped with about an extra $200 a
101
00:03:51.735 --> 00:03:53.255
month of Medicare surcharges
102
00:03:53.255 --> 00:03:55.495
because they have a very healthy income.
103
00:03:56.315 --> 00:03:58.175
Uh, now that's a planning opportunity
104
00:03:58.755 --> 00:03:59.895
for, for going forward.
105
00:04:00.365 --> 00:04:03.135
What about Roth IRA conversions we can model, Hey,
106
00:04:03.135 --> 00:04:05.175
if we convert this much to a Roth, how much does
107
00:04:05.175 --> 00:04:06.415
that actually cost you in taxes?
108
00:04:06.795 --> 00:04:09.375
And how much additional tax does that drive up?
109
00:04:09.645 --> 00:04:11.215
Does it make sense? Doesn't it make sense?
110
00:04:11.645 --> 00:04:13.295
What about putting more money in tax
111
00:04:13.295 --> 00:04:14.775
deferred versus tax free?
112
00:04:15.355 --> 00:04:17.495
Now, there's all sorts of strategy and planning.
113
00:04:17.635 --> 00:04:21.415
We can, we can go for when we get access to this information
114
00:04:21.795 --> 00:04:23.135
and it's a simple conversation.
115
00:04:23.835 --> 00:04:26.135
Um, but it's an important conversation.
116
00:04:26.235 --> 00:04:28.095
You know, a lot of people, they file their tax returns,
117
00:04:28.365 --> 00:04:30.175
they, they pay their check or they get their money
118
00:04:30.195 --> 00:04:31.415
and they go onward to next year.
119
00:04:31.635 --> 00:04:33.455
So now that you're getting returns back,
120
00:04:33.535 --> 00:04:35.255
I just wanna encourage you to, to take a minute,
121
00:04:35.695 --> 00:04:37.815
actually look through that return if you're not gonna
122
00:04:37.815 --> 00:04:39.575
discuss it with us, at least discuss it
123
00:04:39.575 --> 00:04:40.615
with your tax preparer
124
00:04:40.755 --> 00:04:41.895
or make yourself aware
125
00:04:41.895 --> 00:04:43.415
of the opportunities that are out there.
126
00:04:43.995 --> 00:04:46.975
And as always, we are available as a resource for you,
127
00:04:47.085 --> 00:04:48.095
your friends, your family.
128
00:04:48.595 --> 00:04:51.455
Please keep us in mind. Thanks for watching.
129
00:04:51.535 --> 00:04:53.935
Have a great day. Uh, I am out next week
130
00:04:53.935 --> 00:04:55.055
for spring break with the family.
131
00:04:55.295 --> 00:04:56.415
I know many of you are as well.
132
00:04:56.485 --> 00:04:59.095
Hope you have safe travels and we'll see you in a few weeks.