|
TAX INFORMATION - Archived
Below, you will find information on the following topics:
For more information on any of these topics, call Ta-Check Tax Service 440-887-3333 TAXABLE SOCIAL SECURITY Show 158 Air date: 2/24/02 The Government gives us Social Security with one hand, but then may take it away with the other. Is your Social Security taxable? And if it is, how can we avoid that tax? Here, some answers from our resident tax expert, Dave Ptacek, from Ta-Check Tax Service.
Answer: For singles, an
income of $24,000 yearly means your Social Security is taxable. If
you're married, the number is $32,000.
Question: Do tax-free
municipals affect my taxable Social Security?
Answer: Look at tax deferral
(use annuities, depends on situation). If you have money and you’re
not using interests/dividends but paying taxes, defer growth so it’s not
income and then Social Security won’t be taxed.
---Dave Ptacek
TAX LAW CHANGES Show #159 Air date: 3/3/02 Whatever happened to tax simplification? The new tax law makes things more confusing than ever. On early returns, the IRS says its finding tons of mistakes. Our tax expert Dave Ptacek, of Ta-Check Tax Service, will help explain the new tax law, and he’ll help us save our hard-earned money.
Question: Last year congress made the most sweeping tax changes in 20 years. Now we're doing our tax returns. They sure didn't simplify the tax code, did they?
Answer: No. In fact, it's
more complex than ever. Some changes start now and disappear in a few years.
Others don’t go into effect until years from now.
Answer: Absolutely. You can
defer income to future years with lower rates. For example, if you have a
choice where to take spending money, use regular accounts and delay taking
from IRAs and 401(k)s. Take these in later years when the income tax will be
lower. Question: Speaking of estates, is the estate tax repealed? Answer: Just for 1 year, 2010. So you still need to do some planning to reduce or avoid the death tax - - unless you’re sure you’ll die in 2010.
Don’t feel bad if you’re confused. The tax laws are about as clear as mud. And they’ve gotten worse this year. Be sure you have the most up-to-date information on the tax laws, and then get expert help. ---Dave Ptacek
ITEMS THAT ARE OFTEN OVERLOOKED ON YOUR TAXES Show #161 Air date: 3/17/02 Figuring your taxes can be overwhelming. The IRS itself says that millions of taxpayers miss deductions and credits they’re entitled to take.
Question: What are some basic deductions missed
or overlooked?
Answer: Child tax credit, Education
credit
Answer: IRAs—remember people can contribute up
until April 15.
You don’t have to tie a string around your finger to remember all the things you have to know about your taxes. If you’re like most people, you’re missing some of the tax breaks that Uncle Sam allows. Don’t overpay your taxes! ---Dave Ptacek
TAX PLANNING TIPS Show 172 Air date: 6/30/02 You just got
through paying taxes a couple of months ago. Thank heavens. You don’t have
to think about taxes for awhile, right? Not really. It’s only right if you
don’t mind giving extra money to the taxman. Dave Ptacek, from Ta-Check Tax
Service, gives us helpful, money-saving tips we’ll need today to cut next
April’s tax bill.
Answer: Plan now for the year. Don’t wait
until next March or April - - you can’t cut 2002 taxes in 2003
Answer: Yes, all the time
Answer: Start to plan. Review your last
tax return, and look for planning ideas
Answer:
After
Adjustments - we could turn some interest income into tax deferred (Annuity,
IRA)
Question: What if, in the same example, we used
tax-free municipal bonds? Answer:
In this
example - - we cut taxes by more than ½ just by taking some CDs or regular
mutual funds, & cutting income tax by changing into something like annuities
or tax managed mutual funds.
Answer: No. Some of
your money should be invested in tax now accounts – CDs, etc. so that you
have some liquid money. ---Dave Ptacek
TAX NOW, TAX LATER OR TAX NEVER Show 174 Air date: 7/14/02
The taxman comes knocking every year, that never changes.
But did you know that with some accounts taxes can be deferred, and there
are actually investments that are never taxed? And most surprising,
sometimes you’re actually better off paying taxes. Our tax expert, Tony
Mercuri, from Ta-Check Tax Service, will help us figure out how to minimize
our taxes while still meeting our financial needs.
Answer: Accounts can be
taxed in three ways: taxed now, taxed later, and taxed never. Usually you
want a mixture.
Question: So everyone
shouldn’t put everything into tax never or even tax deferred accounts?
Question: How hard is it to
change current investments to a better mix? For example, if you have a lot
in taxed later, and you may need more liquidity, won’t you pay taxes by
changing investments?
Living the life you want, while paying less in
taxes...that sounds good! Your personal financial needs shape what
kinds of accounts you should use.
TAX LAW CHANGES
Air date: 2/23/03 A great stand-up comedian once said: A fine is a tax for doing something bad. A Tax is a fine for doing well. We want to make sure that you’ll do fine without paying too much in taxes. So we brought back our tax expert, Tony Mercuri, to help us keep more of our hard earned money for ourselves. Tony’s with Ta-check Tax Service.
Answer:
No. In fact, the sweeping changes made a year ago have made taxes more
complicated than ever. Answer: Yes they have, Armond. The lower rate for the 10% tax bracket took effect this past year, along with the lowering of other rates.
The 39.1% tax bracket has been eliminated, meaning lower tax rates. Answer: There have actually been quite a few tax changes in the area of retirement planning. As most people know, the contribution limits have been changed.
Question: You’ve mentioned changes in rules regarding distributions. What are those changes and how can they help?
Answer: You can now write off health club
memberships if a doctor prescribed the exercise therapy.
TAXES ON SOCIAL SECURITY
Air date: 3/9/03 When it comes to our Social Security checks, Uncle Sam giveth and he taketh away. Is it possible to avoid tax on our Social Security benefits? Here with the answers is Tony Mercuri, from TA-Check Tax Service, our tax expert who never taxes our patience.
Answer:
It’s not a yes and no answer—it’s complicated, and people make a lot of
costly mistakes. Answer:
No. Part of the benefits will be taxed, depending on the amounts. Answer:
No. Tax exempt income is included in the calculation. Answer:
Defer income. Buying EE bonds, for example, lets you avoid income until you
cash in the funds. Answer: It really makes no sense. But as long as they do, we have to make sure we don’t pay more than necessary. The rules are complicated. But knowing the ins and outs can save you money. When it comes to taxes, get help from an expert. And to help save you more money, Ta-Check Tax Service is offering Golden Opportunities viewers a $25 discount coupon off your tax preparation service. And they guarantee their prices are lower than H & R Block. Here’s the number to call.
RETIREMENT TAX STRATEGIES
Air date: 3/16/03 Perhaps you’ve retired from your job. But unfortunately, you can’t retire from paying taxes. Your income typically is cut in retirement, but the taxes keep going, and going, and going. Tony Mercuri from TA-Check Tax Service is here to give us some money-saving retirement tax strategies.
Answer: Yes. One unique strategy is called
10-year averaging. Unfortunately, this is not available to everyone.
Question: What is this strategy? Who does
it work for? Answer: Ten-year averaging is a way for someone to take money out of a qualified plan with substantial tax savings.
This strategy
only applies to people born in 1936 or prior. Also, the money must come from
a qualified plan, like a 401(k), and the person must have participated in
the plan for a minimum of five years. Question: Can you explain this just a little more? Why is this called 10-year averaging?
Answer: When tax is figured, instead of all
$100,000 taxable at rate for $100,000, instead figure as if it had been
taken $10,000/year over 10 years. Lower rate on $10,000. Add the 10 years of
taxes up, lower than if $100,000 all at the higher rate.
Answer: We typically look at tax-free accounts,
like Roth IRA’s. Seniors often overlook these.
Question: What do you feel is the most common
mistake retirees make at tax time?
Answer: Cashing in bonds without a plan.
Answer: Far too often I see people cash
in bonds, making their social security taxable. That’s a big, unpleasant tax
surprise. When you cash in, you create lots of taxable income. This pushes
you into a higher bracket, and makes Social Security taxable.
When you’re retired, every dollar counts. Don’t pay your Uncle Sam more than you have to. For help wading through the complicated tax laws, give Ta-Check a call. You’ll get a coupon for $25 dollars off the cost of your tax return.
AFTER-SEASON TAX PLANNING
Air date: 6/15/03 Taxes were due two months ago. You don’t have to worry about taxes again for quite a while, right? Not if you want to save money next year. Here to tell us what to do now to save money next April 15th is Tony Mercuri from Ta-Check Tax Service.
Answer: Yes it is possible. Some investments
are “triple tax exempt,” meaning they are not taxable at the federal, state,
or local levels. Some investments are only free from federal tax while
others are only free from state tax. Question: What are some types of tax-free investments?
Answer: Most folks associate “tax free” with
government bonds; however, many bonds, such as EE and E, are only tax
deferred with federal taxes but are tax free with the state. You still pay
federal income tax when you cash those bonds in.
Question: If you want to lower your taxes,
should you automatically buy one of these tax-free investments?
Answer: Not necessarily. It truly depends on
your tax situation, your tax bracket, and how you are deriving your income.
Question: Can you give an example?
Answer: Sure. Take a retiree who is living
primarily off his social security check and a pension. Cutting your taxes is no simple task. Even tax free income could add to your taxes! Want to learn more? During this tax post-season, Ta-Check is offering our viewers a free tax analysis. The number’s coming up next. My thanks to Tony Mercuri.
ESTATE PLANNING AND TAXES
Air date: 7/27/03 Each person is
allowed to give away $1million over his or her lifetime. He can do it all at
once or slowly, at death or while alive. Having to file a tax return does
not mean you will owe taxes. If this is done properly, no taxes will be
paid. Question: By counting it against your lifetime exemption, you file a tax return but pay no taxes?
Answer: That is correct.
Question: Are the $11,000 gifts counted against our $1 million exemption?
Answer: No. Only count amounts over $11,000. Question: If you give away money to your kids, you don't pay gift tax. But do your kids pay tax?
Answer: No. It’s a gift, not income.
Question: Now we know how to gift—but what are the possible benefits of gifting assets away?
Answer: Gifting lowers the estate, and that can
save thousands of dollars in Federal Estate Tax and/or the Ohio Death Tax.
It helps with Medicaid planning and protecting assets from a nursing home.
Shifting income out of your estate will save you income taxes as well. Question: Is there a downside to this strategy?
Answer: Yes. When you gift an asset, you give
up all rights to it. So you really need to be careful on what and how much
you give away. A wise saying goes: “It’s better to give than to receive.” That may be especially true when it comes to Medicaid and estate planning. But to maximize your gifting benefits, and to reduce the risks, it’s even wiser to “give” after you’ve “received” expert advice. Give Ta-Check Tax Services a call.
CAPITAL GAINS TAX CHANGES
Air date: 8/24/03 Changes in our tax laws often mean less change in our pocketbooks. But there just might be a silver lining when it comes to the new laws for capital gains taxes. Here to explain why it’s a change for the better is Tony Mercuri from Ta-Check Tax services.
Question: First, what are capital gains?
Answer: A Stock/house appreciates, then you sell for a profit. That’s capital gains. Buy stock for $10, goes to $50. That’s a $40 gain.
Question: Just a few years ago, Uncle Sam made many changes to the tax laws. Is it possible that they’ve just cut taxes again?
Answer: Yes. As hard as it is to believe, the
federal government has actually made other changes that can benefit us. Question: What types of changes have been made?
Answer: They have expanded the 10% and 15% tax
bracket for those filing both singly and jointly. There was an
increase in the child tax credit. They accelerated the reduction of
the individual income tax brackets. Question: What changes were made regarding capital gains?
Answer: Previously, the tax was 10% to
20% on capital gains, depending on the income tax bracket you are in. They
also had special treatment for long-term (five years or longer) capital
gains. Those were taxed at 8% and 18%, respectively. Question: Is this a permanent change?
Answer: This change “sunsets” after 2008. In 2009, the rates revert back to current rates unless they pass another tax act.
Question: So, this means that people with a highly appreciated asset are able to sell it with a smaller tax bill.
Answer: Correct. In fact, there is a little used tax strategy that allows people to pull highly appreciated stock from a retirement plan without having to pay much income tax. Rather, you pay mainly capital gain tax, which is typically much lower than the income tax rate.
Question: How does this work?
Answer; It is called Net Unrealized
Appreciation. Typically when you take money out of a retirement
plan, you pay income tax on the amount you take out. So if you are in the
33% tax bracket, you pay 33% tax. However, if you have company stock
in your retirement plan, we can take that money out and only pay income tax
on a small portion of it, paying capital gains tax on the rest. So if you
are in the 33% income tax bracket, we can get the money out for usually
15-20% in taxes. This is an excellent opportunity.
Question: do these new tax rates apply to
stocks in our IRAs and 401(K)S?
Answer: No. When you pull money out, it’s taxed
as regular income.
Question: Is there any way to get the lower
rate for our IRAs and 401(K)S?
Answer: There’s a little known strategy that
allows you to pull company stock out of a retirement plan without much
income tax. Then you pay mainly capital gain tax when you sell.
Answer: You worked for GE and have $10,000 of GE company stock in your 401(k). If just sell and pull out cash, pay $3,300 income tax (at 33% bracket). But if you originally paid only $1,000, you can pull the stock out of the 401(k), and pay the 33% tax ($330) on the $1,000 cost basis only. Then sell the stock and pay capital gain tax on the $9,000—$1,350. Your total tax would be $1,680, which is a savings of more than $1,600. Question: How do the new tax rules work with annuities?
Answer: Annuities are less attractive.
The tax laws let you better appreciate your appreciated assets. To find out how the changes in capital gains laws affect your taxes, call Ta-Check Tax Service. My thanks to Tony Mercuri.
GETTING FAVORABLE TAX TREATMENT ON EARLY WITHDRAWALS
Air date: 10/12/03 Being early is usually considered a virtue. But if you’re early in withdrawing money from your retirement accounts, the penalties will simply bedevil you. Unless you have the right advice. Here to make sure you don’t pay extra is the virtuous Tony Mercuri from Ta-Check Tax Service. Question: When are you able to take distributions from a retirement account? Answer: Once you reach the age of 59 ½ you are able to take money from qualified accounts. Question: What if you need the money prior to age 59 ½? Answer: The government penalizes you with a 10% penalty, in addition to the tax you owe on the distribution. Question: Can you ever avoid the 10% penalty? Answer: There are several ways to avoid the penalty:
Question: Well what if none of those apply and you just want to retire early? Answer: For IRAs you need to set up a 72(t) distribution. Question: Can you explain that? Answer: A 72(t) is a schedule of substantially equal periodic payments made over the life expectancy of the individual. These payments must continue until you reach 59 ½ or for 5 years, which ever is longer. There are basically 3 different calculations and once you pick one it can never be changed. Question: So you’re stuck with the same amount whether you need it or not? Answer: Correct. In fact, if you do switch it, you will be hit with a penalty tax on all distributions taken prior to you reaching 59 ½, as if the exception never took place. Question: What if you start, and you have to take a certain amount based on the value, and then the value drops? Answer: The government allows one time recalculation. Question: Is this for all qualified plans or just IRAs? Answer: There are a couple of different concepts that can be used for 401(k)s. Such as: if you are over the age 55 and leave the company, you can take money from your 401(k) without any penalty. You would only pay tax. There is also a way to take company stock from a retirement plan and pay mostly capital gains tax as opposed to income tax. This saves most people quite a bit of money. Question: Even if you avoid the penalty, you still pay tax? Answer: Right
|
|
This Week | Kitchen Conversation Line | Most Requested Numbers Upcoming Topics | Meet the GO Team | Meet the Flo Team Page designed by Ryan Budish, Stephanie Keough and Elder Productions | January 2002 For comments, questions or concerns about this page please contact the webmaster at info@goldenopportunities.tv
Any questions about the show? Contact our Kitchen Conversation Line!
|