Blog Series: How to Take Money Out of Your IRA Tax-Free!

Posted on by in Income Tax, IRAs.

Did you know there are several ways to take money out of your IRA tax-free? Remember, just because you CAN, doesn’t mean you SHOULD.

The first thing you should do is consult your tax/legal/financial advisor(s) and determine if taking money out of your IRA is the right step for you!

Option 5: Losses relating to the sale of rental properties.

Many people forget that the loss on a rental property usually will generate an ordinary loss and not a capital loss. A net capital loss, as described above, is usually limited to only $3,000. An ordinary loss, on the other hand, may have no limitations (depending on your tax situation).

This particular opportunity has a lot of complications, exceptions, and holes to jump through, so have your trusted advisor review your situation carefully!

Remember, these are just ideas!  Everyone’s situation is different. Make sure to consult your trusted advisors to determine what is appropriate for you!

 

Information gathered from MD Producer article for professionals

Blog Series: How to Take Money Out of Your IRA Tax-Free!

Posted on by in Income Tax, IRAs.

Did you know there are several ways to take money out of your IRA tax-free? Remember, just because you CAN, doesn’t mean you SHOULD.

The first thing you should do is consult your tax/legal/financial advisor(s) and determine if taking money out of your IRA is the right step for you!

Option 4: Net operating losses.

If you have deductions or losses in a prior year that generated a negative taxable income, you may be able to carry that forward! Many of these deductions from the prior year are able to be carry forwarded into the next year and can be taken against the IRA distribution.

Everyone’s situation is different! Make sure to consult your trusted advisors to determine what is appropriate for your situation!

 

Information gathered from MD Producer article for professionals

Blog Series: How to Take Money Out of Your IRA Tax-Free!

Posted on by in Income Tax, IRAs.

Did you know there are several ways to take money out of your IRA tax-free? Remember, just because you CAN, doesn’t mean you SHOULD.

The first thing you should do is consult your tax/legal/financial advisor(s) and determine if taking money out of your IRA is the right step for you!

Option 3: Charitable contributions.

If you are very charity-minded, it may be best make an additional contribution to a non-profit organization, which is usually tax-deductible, or even ask your lawyer about establishing a charitable remainder trust. These charitable contributions can sometimes be used to offset an IRA distribution. Please understand that your itemized deductions are reduced depending on your adjusted gross income, so you should definitly consult a tax advisor before moving forward with any tax reduction strategy!

Everyone’s situation is different!  Make sure to consult your trusted advisors to determine what is appropriate for your situation!

 

Information gathered from MD Producer article for professionals

Blog Series: Take Money Out of Your IRA Tax-Free!

Posted on by in Income Tax, IRAs.

Did you know there are several ways to take money out of your IRA tax-free? Remember, just because you CAN, doesn’t mean you SHOULD.

The first thing you should do is consult your tax/legal/financial advisor(s) and determine if taking money out of your IRA is the right step for you!

Option 2: Capital losses.

Many investors have unrealized capital losses. Ask your advisor to determine the basis of each of your  investments and find out whether or not they have any unrealized capital losses. Please remember that only $3,000 of net capital losses can be usually taken on an income tax return. However, the additional capital losses can sometimes be carried forward to future years. This $3,000 loss can offset a $3,000 distribution from an IRA, making the distribution from the IRA income tax-free!

Everyone’s situation is different!  Make sure to consult your trusted advisors to determine what is appropriate for your situation!

 

Information gathered from MD Producer article for professionals

Have you done your year-end tax planning?

Posted on by in Estate Tax, Income Tax.

“Year-end tax planning is always complicated by the uncertainty that the following year may bring and 2012 is no exception. Indeed, year-end tax planning in 2012 is one of the most challenging in recent memory.

A combination of events – including possible expiration of some or all of the Bush-era tax cuts after 2012, the imposition of new so-called Medicare taxes on investments and wages, doubts about renewal of many tax extenders, and the threat of massive across-the-board federal spending cuts – have many taxpayers asking how can they prepare for 2013 and beyond … and what to do before then.

The short answer is to quickly become familiar with the expiring tax incentives and what may replace them after 2012 … and to plan accordingly. Year-end planning for 2012 requires a combination of multi-layered strategies, taking into account a variety of possible scenarios and outcomes(CCH tax briefing 2013).”

If you have questions or concerns about your tax situation in 2013 and beyond, speak to your advisor and start your planning now.

If we can help, call our office at 412.521.2732.

Take the 10-second test!

Posted on by in Estate Tax, Income Tax, IRAs, Roth IRA, Roth IRA Conversions.

Please take the next 10 seconds to complete this survey about your financial future. . . you might rediscover some opportunities for financial growth.

Are you concerned about outliving your income?

Would you like to reduce (possibly eliminate) your quarterly estimated tax payments?

Would you like to see your grandchildren go to college?

Are you concerned about going into a nursing home?

Would you like to earn more competitive interest and preserve the safety of your nest egg?

Are you concerned about the stock market going down?

Would you like to find out how to take money out of your IRA tax free?

Is your house still titled as joint tenancy? (If yes, you are probably making a serious mistake!)

Are you concerned about which option to make regarding your minimum distribution requirements from your IRA at age 70 1/2?

Do you want to get more information on the Inherited IRA that can possibly continue your IRA for 30, 40, 50 years or longer even after you pass away?

Are you concerned about the likelihood that the government will get over 50% of your retirement accounts after you pass away?

If you have answered, Yes, to 3 or more of these questions, you should come in for a complimentary review!  Call 412.521.2732 and ask for Alice.

Remember, what you don’t know can hurt you!

 

Never a Better Time for a Roth IRA Conversion

Posted on by in Income Tax, Roth IRA, Roth IRA Conversions.

According to the September/October edition of Private Wealth Magazine there has never been a better time to make a Roth IRA conversion.

“”Roth IRA conversions never looked so good as they do now,” says Jones. Not only will 2012 conversions be taxed at rates no higher than 35%, today’s slow economy may lead to a legitimately low valuation of illiquid IRA assets – and a relatively low tax bill. “IRAs must be valued each year, “says Slott. “If a client is reporting a low value because of the week economy, less tax will be due on a Roth IRA conversion. ”

Paying the tax from non- IRA investment assets can trim a client’s taxable holdings, reduce future taxable investment income, and therefore reduce exposure to schedule tax hikes as well as to the coming 3.8% Medicare surtax. after five years and after age 59 1/2,all Roth IRA withdrawals will be tax-free. in essence, a Roth IRA conversion this year can move mega – IRA money from surtax straits into tax-free territory.”

Taken from : (Korn, Donald. Private Wealth Magazine, Sept./Oct. 2012. p. 54)

(The quotes in this selection are from Ed Slott, “America’s IRA Expert” and Michael J. Jones of Thomson Jones LLP, a tax consulting firm in Monterey,California)

Are you self-employed?

Posted on by in Income Tax.

IRS lawyers confirm that self-employeds can deduct Medicare premiums. Premiums paid for all parts of Medicare are included in the deduction for health insurance on the front page of the 1040 form. This easing also applies to partners, provided the partnership paid the premiums or reimbursed the partner, and the amounts are reported as guaranteed payments that are taxed as income. The premiums must be included as taxable wages on the shareholders W-2 form.

Medicare premiums paid by a spouse qualifies well, the Service says filers who didn’t take the deduction in prior years can file for refund.

(Kiplinger’s Tax Letter, September 2012)

(Kiplinger’s (Kiplinger’s (Kiplinger’s Fantasy Kiplinger’s Parentheses Lingers

2011 Changes in Tax Law

Posted on by in Estate Tax, Income Tax, Lange’s Cascading Beneficiary Plan.

The recently enacted “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” (the “2010 Tax Act”), signed by President Barack Obama on December 17, 2010, makes important changes to the taxation of estates and gifts, which will affect many grandparents. This Act significantly increases the prior exemptions for estates and gifts. It will affect many existing wills and estate plans, so it would be wise for grandparents to review their estate-planning documents with their attorneys to determine if changes are appropriate.

The 2010 Tax Act reinstates the federal estate tax at rates of 35 percent (as opposed to 45 percent under prior law) and provides for a federal exemption of $5 million for individuals and $10 million for a husband and wife for 2011 and 2012. It also keeps the tax rate at 35 percent for gifts made in 2010 through 2012. The lifetime gift-tax exemption amount is reunified with the $5 million estate-tax exemption, providing for a unified gift and estate tax exemption of $5 million for decedents in 2011 and 2012. This makes lifetime gifts much more attractive as an estate-planning vehicle.

Keep in mind that even though federal estate taxes have been eliminated on estates of less than $5 million (or $10 million, in the case of a surviving spouse), there may still be significant state estate taxes on estates of less than $5 million. New York State, for example, has not changed its $1 million exemption to conform to increases in the federal estate-tax exemption, and thus, a decedent with a $5 million estate who dies in New York will be subject to state estate tax of approximately $400,000, even though there is no federal estate tax.

Last Minute Tax Strategies for IRAs & Other Retirement Accounts

Posted on by in Estate Tax, Income Tax, IRAs, Roth IRA, Roth IRA Conversions.

Make your 2010 IRA contribution as late as April 18, 2011: 

You can contribute up to $5,000 (or $6,000 if you are 50 or older) until the time you file your income tax return, but no later than April 18, 2011.  If you participate in a retirement plan at work, the IRA deduction phases out if you are married and your joint AGI is $89,000 or more, or if you are single and your adjusted gross income is $56,000 or more.  Filing an extension will not buy you additional time.  Non-deductible pay-ins to IRAs and Roth IRAs are also due by April 18, 2011.

Make a deductible contribution to a spousal IRA:

If you do not participate in a workplace-based retirement plan but your spouse does, you can deduct some or all of your IRA contributions on your 2010 income tax return as long as your adjusted gross income does not exceed $177,000.

Make a contribution to a Roth IRA: 

Contributions to Roth IRAs are not tax deductible, but the earnings on them may be withdrawn totally income tax-free in the future as long as the distributions are qualified.  A Roth IRA distribution is qualified if you’ve had the account for at least five years, the distribution is made after you’ve reached age 59½, you become totally and permanently disabled, in the event of your death, or for first-time homebuyer expenses.  Contribution limits are the same as traditional IRAs, except the maximum contribution for both Roth and traditional IRAs is still limited to $5,000 or $6,000 for persons age 50 or older.

To make a full Roth IRA contribution for 2010, your AGI cannot  exceed $177,000 if you are married or $120,000 if you are single.  You are subject to the same limitations for a non-working spouse.  Subject to some exceptions, I usually prefer Roth IRAs to traditional IRAs or even traditional 401(k)s.

Look into Roth IRA conversions:

The rules for contributions to Roth IRAs are different from the rules for Roth IRA conversions.  Prior to January 1, 2010, you could only convert a traditional IRA to a Roth IRA if your AGI was $100,000 or less (before the conversion).  However, this dollar cap is now removed starting January 1, 2010 and there is no limit to your earnings in order to qualify for a Roth IRA conversion.  Please remember that a conversion to a Roth IRA may place you in a higher tax bracket than you are in now and have other adverse consequences, such as subjecting more of your Social Security to be taxable due to the increase in your AGI.  Please also note that a Roth IRA conversion does not have to be all or nothing. You can elect to do a partial Roth IRA conversion and you can convert any dollar amount you decide is best for your situation.  Our most common set of recommendations after “running the numbers” is usually a series of Roth IRA conversions over a number of years.  Please remember that a Roth IRA conversion may not be appropriate for all investors.