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Category: Tax Planning

Tax Tips for Filing in 2021

Tax Tips for Filing in 2021

Posted By Lineweaver Financial Group
March 13, 2021 Category: General, Economy, Tax Planning

  As we get into tax season, filing for 2020 is fundamentally different from most tax years, especially in light of Covid and the stimulus packages passed last year. We thought it would be helpful to share a few general tax tips to keep in mind as you’re working with your tax advisor. The first thing to consider is the tax stimulus credits. The EIP (Economic Impact Payment, aka stimulus check) is actually a 2020 tax credit that was advanced to taxpayers as part of the Cares Act. Certain qualifications, such as income levels and dependency status, impact the amount the taxpayer may receive. The first round allowed for a maximum of $1200 per qualifying adult and $500 per qualifying dependent child (age 16 and under). The second round allowed for $600 per adult and $600 for dependents 16 and under. Another consideration during 2020 tax preparation is the group of taxpayers caught in in-between – taxpayers age 17 and over, usually high school and college children still claimed as dependents by their parent. When filing 2020 tax returns, parents and their dependents need to consider whether it makes sense to still claim the dependent child. Parents may phase out of education tax credits, the child may have graduated during the tax year but still eligible to be claimed, or perhaps 529 plan money was used to pay college expenses. In those cases it may be better for the child to claim themselves to take advantage of the education credits and quali

Is Your Tax Plan Working for You?

Is Your Tax Plan Working for You

Posted By Lineweaver Financial Group
February 12, 2020 Category: General, Tax, Tax Planning, Tax Strategies

It’s that time of year again - tax season is upon us, and we want to remind everyone of some strategies you may be able to take advantage of on your 2019 tax return.  A strategy that many find helpful is bunching deductions, which is essentially accelerating your write offs into one year to try to get above the standard deduction. Last year was the first time for all of us filing under the Tax Cuts and Jobs Act of 2017, which doubled the standard the previous standard deduction from tax year 2016. But this year the only change is a slightly increased standard deduction over last year - $24,400 for Married Filing Jointly, and 12,200 if you’re single.  By bunching charitable gifts, medical expenses, or even your state and local taxes into one year, you may be able to realize significant savings. However, just keep in mind real estate and state and local taxes are still capped at $10,000.  Many people also take advantage of gifting appreciated securities. For example, even if you only paid $10,000 for a security, but it’s now valued at $20,000, you can write off the whole $20,000. This allows you to help both your favorite charity, and your bottom line.  Another often overlooked strategy is what’s known as a Backdoor Roth. This is a way for people with high incomes to sidestep the Roth’s income limits. Basically, you fund a traditional IRA and then convert it. This can benefit you because it allows your money to grow tax

Foresight is 2020: Year-End Tax Planning and Beyond

Foresight is 2020: Year End Tax Planning and Beyond

Posted By Lineweaver Financial Group
December 27, 2019 Category: Tax Planning, End Of Year Taxes, Taxes

It can be challenging to think through all the tax planning you need to do by the end of the year. There’s a lot to consider, and although it may seem early to think about taxes, now is the perfect time to make changes for tax filing after the new year. I always tell my clients, call me well before the new year, so we have time to plan ahead. After the new year, there’s nothing you can do about last year’s taxes.   One of the strategies our clients find most helpful are bunching deductions. Essentially, that means accelerating your write-offs into one year to try to get above the standard deduction. That was a challenge for many people last year since it was the first time for all of us filing under the Tax Cuts and Jobs Act of 2017, but this year the only change is a slightly increased standard deduction over last year - $24,400 for Married Filing Jointly, and $12,200 if you’re single. And, by bunching charitable gifts, medical expenses, or even your state and local taxes into one year, you may be able to realize significant savings. Just keep in mind real estate and state and local taxes are still capped at $10,000.   Another useful strategy is what’s call the Backdoor Roth. Essentially, this is a way for people with high incomes to sidestep the Roth’s income limits. Basically, you fund a traditional IRA and then convert it. That’s good news because it then allows your money to grow tax-free. But, it can be complicat

Four Ways to Take Care of a Charity - And Yourself

Four Ways to Take Care of a Charity   And Yourself

Posted By Linweaver Financial Group
June 22, 2017 Category: Charity, Donor Advised Fund, Private Foundation Charitable Lead Trust, Charitable Remainder Trust, Tax Planning

There’s nothing that says you can’t do good in the world and do well for yourself. You may even be able to reduce your taxes, secure and income for yourself or your beneficiaries, and help a charity or -  several charities -  of your choosing. Although there are many ways to accomplish your philanthropic and financial goals, today we will focus on four smart strategies. The first strategy is that of a Donor Advised Fund or DAF. A DAF has several advantages, including: There is generally a low initial minimum to open an account (usually $5,000-$10,000) There are generally low ongoing maintenance and administrative expenses There are no annual distribution requirements There are no annual tax filing requirements Gifts can be made publicly or anonymously There are higher charitable deduction limits relative to private foundations – which we will cover in just a moment! But, there are also some disadvantages. Specifically: Some donor advised funds do not allow the donor to name successors These funds do not allow compensation for board members or staff Donor advised funds don’t allow for establishing scholarship programs The second strategy is a private foundation. The advantages of a private foundation are: The donor retains complete control of the foundation The donor can engage family members to emphasize core family values and/or legacy The donor can pay reasonable compensation to board members and/or staff The fo

New Year’s Resolutions for High Income Earners

New Year’s Resolutions for High Income Earners

Posted By Lineweaver Financial Group
January 17, 2017 Category: High Income, Tax Planning, Financial Strategies

Happy New Year! It’s time to make your 2017 resolutions, and we believe that one of the smartest things that you can do in the new year is to resolve to learn more about all the ways you can be handling your finances. That’s an especially important task for high income-earners, and so, to help you keep those financial new year’s resolutions, we at Lineweaver Financial Group have some tips to help you this year. 1.  Pay taxes now rather than later on retirement accounts: Many high-income earners, or those on their way, will likely be in the top tax bracket even after retirement when they consider any pensions, investment income or other income accumulated over time. That means any deferred income put into a traditional 401k may be taxed at the highest rates in the future. Consider using a Roth 401k if your company offers it. The Roth 401k has a few distinct advantages over a traditional 401k for those with high incomes: 1.  There is no income limit to making Roth 401k contributions, unlike Roth IRAs which are phased out at higher income levels. 2.  While the deferred income is taxed before going into the Roth 401k, the growth on that money is tax-free. 3.  Roth 401ks can be rolled into Roth IRAs upon retirement or leaving a company. Best of all, since there are no required distributions from Roth IRAs upon reaching age 70 1/2, there are more opportunities for planning. This is a great way to diversify your retirement income, and

Five Year End Strategies for the High Income Earner

Five Year End Strategies for the High Income Earner

Posted By Lineweaver Financial Group
December 21, 2016 Category: High Income, Tax Planning, Financial Strategies

  If your annual household income is $200,000 or more, you have some unique financial challenges. While in many ways, you have the same needs as other people – saving for retirement, children’s college funds, and making sure that your family is insured for the various challenges that life can throw at you - you also have needs and strategies to consider that many people do not. Here are a few tips that we at the Lineweaver Financial Group suggest, and a few things to consider in your planning. 1.       Concentrated Stock Positions – It’s relatively common for higher income earners to receive a significant part of their income concentrated in employer stock or options as a way to encourage employees to grow the company. While this is great as long as the stock keeps going up, there are often strict rules about selling, which can tie up your money and can over-expose your financial portfolio to the risks inherent to your industry. We usually recommend that you keep no more than 25% of your portfolio in a single stock, or, if you have to, talk to your financial advisor about how to best hedge against your position so that if something unexpected happens, you are protected. 2.       Net Unrealized Appreciation (NUA) Tax Savings Opportunity - Another strategy for dealing with concentrated stock positions is to make use of Net Unrealized Appreciation, which is the difference in value between the av

2016 Tax Planning and Updates

Posted By Lineweaver Financial Group
October 11, 2016 Category: Tax Planning, Newsletter, Q3, Lineweaver

There are some proven tax planning tips that can be applied each and every year. They are highly effective and proven to minimize your tax bill. Here is a brief highlight of the tax planning maneuvers you should be considering for 2016:   1) Defer Income: Income is taxed in the year it is received. Consider deferring year-end bonuses from employers to 2017 if that income will place you in a higher tax bracket in 2016. If you are self-employed, you may consider delaying billings until late December so that the payments are not received until 2017. Also consider accelerating income into 2016 if you will be in a lower tax bracket in the current tax year. 2) Charitable Deductions: You may wish to consider donating appreciated property (stocks or property) in lieu of cash. You achieve the double tax benefit of deducting the contributed asset at Fair Market Value and avoiding paying the capital gains tax on the built-up appreciation. 3) HSA: Consider setting up and contributing to a Health Savings Account. You may make a tax deductible contribution to a Self-Only HSA of $3,350 or a family HSA of $6,750 (plus an additional $1,000 if age 55+). You must have a minimum annual deductible of $1,300 in an individual plan or $2,600 as a family plan. 4) Loss Harvesting: Offset capital gains on sales of stocks or mutual funds by selling investments that you are holding at an unrealized loss. Gains are offset dollar-for-dollar against losses and you may deduct

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