Tax Planning Tips from CPAs | Ep. 112 | Marty James & Corey Hulstein | The Guided Retirement Show
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- เผยแพร่เมื่อ 23 พ.ย. 2024
- How can you pay less taxes over your lifetime? That’s a question everyone wants to know the answer to, but there isn’t a one-size-fits-all answer. Everyone’s financial situation is different. Along with explaining the importance of having a forward-looking tax plan as a part of your personalized financial plan, Corey Hulstein, CPA and Marty James, CPS, PFS joined Dean Barber on The Guided Retirement Show to share some tax planning tips.
In this podcast interview, you’ll learn:
• The Dynamic of the CFP® Professional and CPA Working Relationship
• The Difference Between Tax Preparation and Tax Planning
• Considerations When Creating a Distribution Strategy
• The Difference Between Charitable Remainder Trusts and Charitable Lead Trusts
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Very good content. Got the full name of IRMMA incorrect, but it should have included Medicare instead of Monthly.😊
I struggle with the Roth conversion concept. I have significant tax deferred IRA. Year 1 of retirement and turning 63 so this years income will be looked at for IRMAA. I am at the top of the 12% bracket so I could convert $100k without triggering an IRMAA surcharge and can convert $150k without hitting the 3.8% investment income threshold and $200k+ to top of 24% bracket. Here is where I struggle. I have a pension so 85% of my SS will always be taxable so there is no benefit to be had there. $100k or $200k conversion won’t even make a dent in the account, in fact the account growth YTD is over $500k so I would need to put myself into the 37% bracket just to keep the account from growing (a good problem I understand). So let’s play out the $100k conversion example. I will pay $25k tax today ($22k ordinary income and $3k on dividends that are now taxed at 15% instead of zero). If I don’t convert I will likely be in the 28% bracket when RMDs kick in. Year 1 RMD on that $100k will be about $3,600 so at 28% tax that is $1000. Meanwhile the $25k that I have invested the past 13 years is now worth $50k and at 5% interest is generating $2500, more than double the $1000 extra tax. I appreciate that RMDs go up each year but so does the standard deduction and tax bracket ceilings so more income each year falls into lower brackets.
One additional point as you may say what about my heirs having to pay tax on the account vs Roth. Good point except that they will already inherit a house, brokerage account and life insurance tax free. My intent is to let those continue to grow and try to spend all my tax deferred money. If I die before that, they will pay some tax but it will be icing on the cake and not the intention
Paying less in taxes does not mean you come out ahead especially as it relates to Roth conversions. I can show an example where you and your heirs pay twice as many tax dollars (but a lower average tax rate) and come out ahead by deferring.