Lost Abroad

Michael Flack  |  Jan 15, 2021

ONE OF THE GREATEST business books I’ve ever read is Antifragile by Nassim Nicholas Taleb. In it, he postulates the idea that, while things that become damaged by stress are considered fragile and things that resist stress are considered resilient, “there is no word for the exact opposite of fragile,” things that become stronger due to stress. So, he coined the word “antifragile” and then wrote an entire book about the subject.

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Retirement Gambit

James McGlynn  |  Jan 13, 2021

INSPIRED BY THE TV series The Queen’s Gambit, many people suddenly want to master the game of chess. But I’m more interested in mastering the practical world of retirement gambits—and that means matching wits with Congress and the IRS.
During my working career, I saved money in taxable brokerage accounts, IRAs and 401(k)s, but never focused on Roth accounts. At age 55, having left my last employer, I had two things that compelled me to begin—time and reduced income.

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Taxing Endeavor

Andrew Forsythe  |  Jan 5, 2021

I’M A DINOSAUR. Not only do I prepare my own tax return with no help from an accountant or tax preparer, but also I do it by hand. Yep, that’s right—no TurboTax or other computer program.
I really can’t use the computer programs because I often attach an oddball form or two that they don’t offer. On top of that, I always add “annotations” to parts of my return. These additional explanatory notes may be helpful to the IRS.

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The Taxman Cometh

James McGlynn  |  Oct 23, 2020

LATE LAST YEAR, Congress voted to kill off the so-called stretch IRA, which had allowed those who inherited retirement accounts to draw them down slowly over their lifetime. Many folks were surprised by the stretch IRA’s demise, but they shouldn’t have been.
When a tax break or some other government provision benefits only a few folks, Congress often changes the law. Think back to 2015. That year, Congress eliminated the ability to “file and suspend” Social Security—another strategy that tended to be exploited only by a privileged few.

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State of Taxation

Richard Connor  |  Oct 21, 2020

ONE OF MY FAVORITE things to do is sit on our local beach with a cold beverage on a beautiful day, and talk finance with interested friends and family members. This past Labor Day weekend, I did just that with a soon-to-be retiree.
One of the big issues facing him and his wife: where to live. He had been relocated to New York by his employer. But he and his wife are natives of the Philadelphia region,

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Much Appreciated

Richard Connor  |  Aug 31, 2020

WHAT’S YOUR CAPITAL gains tax rate? It’s a crucial number to know—and it could open the door to some big tax savings.
Most investors are aware that there’s a significant difference between the tax rate on short-term capital gains—investments held for a year or less—and that on long-term gains, those held more than a year. Realized short-term gains are dunned as ordinary income, just like your salary or any interest income you earn, while long-term appreciation gets taxed at a lower rate.

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Working the Numbers

Richard Connor  |  Aug 4, 2020

THIS YEAR’S TAX DAY was the strangest I can remember. Amid the pandemic, the filing deadline had been pushed back to July 15, three months later than usual. And for me, it was our most complicated tax year ever. I had both retirement income and income from various in-state and out-of-state consulting gigs.
But the biggest complication stemmed from last year’s sale of our second home. This was a vacation home that we rented part-time and also used ourselves.

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Give Me Five

Rick Moberg  |  May 21, 2020

ARE YOU PLANNING to withdraw funds from your Roth IRA? If you aren’t careful, you could owe both taxes and penalties, even though you’ve already paid taxes on the money that went into the Roth. At issue: the IRS’s five-year rule. How do you sidestep its unpleasant consequences? Bear with me while I explain.
First, a word of caution: You don’t have to take distributions from your Roth IRA during your lifetime. Withdrawals are strictly up to you.

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To Roth or Not?

Rick Moberg  |  May 13, 2020

SHOULD YOU CONVERT your traditional IRA to a Roth IRA? Below, you’ll find five questions to help you decide. If you answer “yes” to the first three questions, you’re a good candidate for a Roth conversion. If you answer “yes” to all five questions, you’re an outstanding candidate.
Question No. 1: Are you taxed at lower rates today than you will be in future?
Roth conversions make sense if your federal and state tax rates today are below what they’ll likely be when you have to take required minimum distributions (RMDs) from your traditional IRA.

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Taking the Hit

Richard Connor  |  Apr 29, 2020

ONE OF MY GOALS for 2020: develop a plan for doing Roth IRA conversions over the next 10 years. Once the money is out of traditional IRAs and in a Roth, it’ll grow tax-free. Problem is, the conversion means taking a tax hit today.
So why am I interested? There are several reasons: lowering lifetime taxes for my wife and me, creating the flexibility to manage future tax bills and leaving a tax-free inheritance to our children.

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Numbers Game

Richard Connor  |  Apr 10, 2020

IT’S TAX SEASON—NOT something many of us look forward to. Although HumbleDollar’s readers may be ready and willing to tackle their own taxes, many others approach Form 1040 with dread. I’ve seen that firsthand.
This has been my second year as a certified volunteer tax counselor for the AARP Foundation’s Tax-Aide program, which offers free tax preparation for low-to-moderate income taxpayers, especially those age 50 and older. Earlier this year, Tax-Aide was providing this service at nearly 5,000 locations nationwide,

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Not Too Late

Richard Connor  |  Mar 23, 2020

WE OFTEN PREPARE our taxes, only to learn we owe a substantial sum to Uncle Sam. Most of us believe we can’t do much about this—and yet there’s one simple fix available to many taxpayers: Make a tax-deductible retirement account contribution this year for 2019.
Indeed, thanks to the stock market’s decline, this is a great time to shovel more money into your retirement accounts—and you may discover you can add to more than one account.

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Where’s My Refund?

Mike Zaccardi  |  Mar 19, 2020

WE LOVE TO procrastinate. Have you done your taxes yet? IRS data show that nearly a quarter of Americans wait until the last two weeks of tax season to file. It often feels like that nagging task that grows more arduous each year, though the result for many is a juicy refund.
The average federal tax refund is more than $2,800, so it can pay to get your taxes done sooner rather than later.

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Bankrolling Roth

John Yeigh  |  Feb 21, 2020

IN EIGHT YEARS, my wife and I will be age 72—and we’ll be locked into required minimum distributions from our retirement accounts for the rest of our lives. Nearly all of our savings are in tax-deferred accounts.
At that juncture, we’ll also have begun Social Security payments. The upshot: Our tax rate will jump significantly and, thanks to the combination of required minimum distributions (RMDs) and Social Security, our income will easily exceed our expenses.

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Go Ahead and Pay

Dan Danford  |  Jan 30, 2020

EXPERTS OFTEN SUGGEST putting bonds or bond funds in retirement accounts. I think this is kind of dumb—or, at the very least, it places the focus on the wrong thing.
It’s always a good idea to consider taxes. But my experience is that many people place too much emphasis on taxes, often to their own detriment. Municipal bonds are a great example of this: Many people who purchase them are in lower tax brackets,

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