A Late Save

Richard Connor  |  May 26, 2023

MANY RETIREMENT savers fund tax-deferred accounts—with good reason: The money we contribute pre-tax to an IRA or 401(k) reduces our taxable income, plus that money grows tax-deferred until withdrawn.
But there are two lesser-known benefits that are worth keeping in mind. First, with IRAs and solo 401(k)s, you can contribute for last year right up until the tax-filing deadline in April of the following year. That means you can calculate your tax bill, make an IRA contribution that’s credited to last year—and voila—cut the tab you owe Uncle Sam.

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Exposing Themselves

Richard Connor  |  May 19, 2023

RICHARD NIXON IS best known for the infamous Watergate scandal. But how many of us remember that, prior to Watergate, he got caught up in another scandal over a suspect tax deduction?
In 1969, Nixon donated more than 1,000 boxes of his official papers to his presidential library and attempted to claim a $576,000 charitable deduction. This caused an uproar, and served to start turning much of the nation against the president.
Congress got involved,

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That 28,000,000% Tax

John Yeigh  |  Apr 17, 2023

IF YOU’RE IN YOUR 60s or older and making sizable Roth conversions, it isn’t just income taxes that you need to worry about. You may also trigger much higher Medicare Part B and Part D premiums.
We’re talking here about those Medicare surcharges known as IRMAA, short for income-related monthly adjustment amount. These surcharges are over and above 2023’s standard $1,979 per person Medicare premium, and they’re based on income from two years earlier.

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Taxing Pastimes

Richard Connor  |  Apr 10, 2023

THIS IS MY FIFTH year providing income-tax preparation as part of the IRS’s Volunteer Income Tax Assistance program. This year, my colleagues and I have seen something new. We’ve had numerous retired taxpayers who have received IRS Form 1099-K for the sale of personal property. They’d never received one before and found it confusing.
What triggered these 1099-Ks? Many retirees find ways to supplement their income—including selling items on the internet. This is the modern version of yard sales and flea markets.

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When Free Isn’t Free

Richard Quinn  |  Feb 24, 2023

DO A QUICK REVIEW of Twitter and other social media sites, and you’ll find extensive use of the word “free.” The dictionary defines free as “without cost or payment.”

College, health care, child care, preschool, even housing are often mentioned in connection with “free.” The actual cost of “free” may not be what it seems. Free in this context typically means shifting the cost from one person to another, or redirecting money to some favored purpose.

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What’s in It for Me?

Adam M. Grossman  |  Feb 12, 2023

IN THE WANING DAYS of 2019, Congress passed the SECURE Act, a law that delivered a mixed bag of changes for retirement savers. Well, Congress has been busy again. At the tail end of 2022, a follow-up law—known as SECURE 2.0—was signed into law.
The good news: There’s a whole lot included in this new law. The bad news? There’s a whole lot included in this new law. SECURE 2.0 presents a number of new planning opportunities but,

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Profiting From Losses

Michael Perry  |  Feb 10, 2023

WE TRIMMED THE TAXES we owed on investment gains in 2021 by using losses we’d realized during 2020’s stock market swoon. Now, 2022’s market decline has allowed us to repeat this process, once again offsetting capital gains with tax losses that we’d earlier harvested.
My wife and I haven’t just saved on taxes, however. The sales have also allowed us to reposition our taxable portfolio away from active management and toward more of an indexing bent.

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Revisiting My Results

Richard Connor  |  Feb 3, 2023

I ENJOY WRITING for HumbleDollar—but I often feel I get more from the thoughtful reader comments than whatever insights I provided. For instance, in a recent article, I discussed some year-end financial decisions I was considering. Two readers made comments that caused me to review my decisions, while also delivering a few dollars’ worth of humility.
The first comment identified an error in my spreadsheet analysis. I noted that my marginal New Jersey state income-tax rate was 8.97%.

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What Gets Taxed

Richard Connor  |  Jan 23, 2023

INCOME SHOULD BE ONE of the simplest concepts in financial planning—and yet it turns out to be one of the most confusing, thanks to the multiple ways it’s calculated depending upon whether it applies to income taxes, Social Security and so on. My goal today: Help you sort out income’s shifting definition across the U.S. tax code.
Gross income. This is the granddaddy—income from all sources, before almost any taxes or deductions.

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We’re Overruled

Richard Quinn  |  Jan 22, 2023

I BEGAN TRYING TO figure out the laws related to retirement and employee benefits after the enactment of ERISA in 1974. I spent endless hours over many years in lawyers’ offices in Washington, D.C., as each new law or regulation came along.

TEFRA, DEFRA and COBRA are but a few of the many laws that now confound Americans. I bet most people think COBRA was only about health insurance. In fact, it’s the Consolidated Omnibus Budget Reconciliation Act.

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Juggling for Retirees

Jonathan Clements  |  Jan 21, 2023

WHEN I FIRST LOOKED at the issue of portfolio withdrawals more than two decades ago, many financial experts suggested retirees follow a simple strategy: spend taxable account money first, traditional retirement accounts next and Roth accounts last. That way, you’d squeeze more years of tax-deferred growth out of your traditional retirement accounts, and even more out of your tax-free Roth.
If only things were so simple today.
Why have portfolio withdrawals become more complicated?

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Securing Lower Taxes

John Yeigh  |  Jan 5, 2023

THE TWO SECURE ACTS—2019’s and 2022’s—may inadvertently increase the federal and state tax rates on tax-deferred retirement accounts, such as 401(k)s, 403(b)s and IRAs. While well-intentioned, the laws result in required withdrawals being bunched into fewer years—which could push people into higher tax brackets. But there are ways this tax toll might be lightened or avoided, as you’ll see.
With tax-deferred accounts, the normal advice is to delay taxable distributions for as long as possible to give more time for investment growth.

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Tax-Free Abundance

Jonathan Clements  |  Dec 30, 2022

I HAVE A CONUNDRUM: In 2023, I’ll have ample opportunities for tax-free growth—but probably not enough cash to take advantage.
It doesn’t get much better than tax-free, right? I remember the excitement when Roth IRAs came into being, thanks to 1997’s Taxpayer Relief Act. But today, the Roth is just the tip of the tax-free iceberg. Indeed, for 2023, I’m eyeing four tax-free accounts.
I want to fund a health savings account and my solo Roth 401(k),

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For the Record

Kenyon Sayler  |  Dec 28, 2022

IT’S EASY TO GET overwhelmed by the number of documents we receive over our lifetime. Paper copies take up space, and even electronic records necessitate computer storage. Either type requires a certain amount of time spent organizing.
The sheer volume makes the question of how long to retain records a perennial topic for newspapers, social media and podcasts. For instance, many folks have heard the advice that they should retain all documentation for seven years after they file their taxes.

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Yellen About Taxes

Greg Spears  |  Dec 19, 2022

WHEN JANET YELLEN was nominated to be Secretary of the Treasury, the Senate Finance Committee staff went over her tax returns with a magnifying glass. Yellen, an economics PhD who taught at Harvard, always prepared the returns for herself and her husband, economics Nobel laureate George A. Akerlof.
“She discovered to her surprise that she had been doing the family taxes wrong for years,” reports Owen Ullmann in his excellent new biography of Yellen,

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