Reduction Strategies

Saving on Gift Taxes

Tax strategies are key elements of financial planning. When sharing your fortune with someone else, no matter how you accumulate it, you should understand the tax implications so that your good intentions don’t come back to bite you.

A Simple Way to Shrink Taxes

After tax season, when they realize exactly how much tax they paid at home, a number of my friends, colleagues and clients asked me what they should do to reduce their taxes next year. While I’m not a tax professional, I certainly pay attention to tax rules and rates regarding investing.

My short answer to their question was – create a portfolio of low-fee, thoughtfully constructed stock index mutual funds or exchange-traded funds. Yet not all of them do the job for you. Here’s how to find the right one.

Why Millennials Need Roth IRAs

If 20-somethings ask me what to do to get ahead financially, I have a laundry list: create a budget, start investing now, be smart about your taxes and so on. If I absolutely have to narrow it down to one thing, I’d say, open up a Roth individual retirement account.

Overpaying Income Tax?

If you start a job in the middle of the year, chances are you will be over-taxed. You get a refund, but it’s not an inefficient use of your money. To prevent this problem altogether, use something called the part-year withholding method.

When you get a job, you file the W-4 form, aka the employee’s withholding allowance certificate, with the new employer. This form instructs the employer how much tax to withhold for the Internal Revenue Service from each of your paychecks.

Capital Gains: More Complex

How you deal with the new capital gains rates hinges on your tax bracket. Strategies to deal with capital gains differ for each level – part of their new complexity starting last year.

When you sell certain assets, such as stocks and bonds, you may incur capital gains. A capital asset also includes most property you own and use for personal or investment purposes. If the original purchase price of the asset plus associated expenses (the cost basis) is less than the proceeds you receive from the sale, you incur a capital gain.

Under-Used College Savings

Some good news on the college cost front: More parents with college-bound kids are saving for education, some 51%, a recovery from the recession. Trouble is, most of those parents aren’t putting away money the best way. A terrific savings vehicle, called a 529 plan, exists for that purpose, but people don’t use it nearly enough.

Mechanics of 401(k)s (Pt. 1)

Many folks have a retirement plan, such as a 401(k), available from their employers. It is a relatively straightforward savings vehicle, but can still be very confusing if you don’t know what exactly is under the hood.

When you sign up for your company’s retirement plan, there are a few things you need to decide. Examine the mechanism carefully, because your livelihood in retirement depends on these decisions you make now.

Here are some questions you may encounter when you start a 401(k) plan:

10 Tax Tips for Farmers

There ain’t much an old country boy or girl like you can’t hack – except for a hefty tax bill. Crop problems, hired hands, pregnant livestock and busted tractors all complicate your return. Fortunately, the Internal Revenue Service offers numerous benefits if you own a plantation, ranch, range or orchard to raise livestock, poultry or fish or grow fruits or vegetables.

Here are 10 tips for farmers’ tax returns:

How to Be a Tax-Savvy Investor

A tax-savvy investor knows how to employ strategies to reduce taxes. Helpful methods are 1) asset location, 2) tax-managed mutual funds, 3) index exchange-traded funds and 4) tax loss harvesting.

Obama’s Tax Return Lessons

Recently the White House released President Barack Obama’s 2013 tax return. What financial planning lessons can we all learn from the return of the most powerful couple on the planet?

First, the president received a large tax refund this year. The Obamas’ overall tax liability last year was slightly more than $98,000. In addition to just over $100,000 withheld from his regular salary of $400,000, the president paid estimated taxes of nearly $17,000.

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