Stu talks about the Income Tax implications of drawing from an IRA

 

Do you have questions about withdrawing from your IRA? We like to describe the potential growth in an IRA as a bell curve, hopefully growing up over the years, and then slowly being drained over the rest of your life expectancy, starting at age 70 ½ years old.

There are three types of withdrawals, also known as distributions:

 

  • Owner withdrawal before age 59 ½, after age 59 ½, and after age 70 ½;
  • Owner passes away and the spouse inherits account;
  • Owner passes away and a non-spouse inherits the account.

Distributions before age 59 1/2. In addition to all applicable federal and state taxes, if you take distributions before age 50 1/2, you’ll also have to pay a 10-percent penalty. However, under certain extenuating circumstances, you may avoid the penalty—though you’ll still owe the taxes. Exempt situations may include:

  • Buying your first home;
  • Paying for a child, grandchild, or spouse’s school;
  • Unreimbursed medical costs that are more than 7.5 percent of your adjusted gross income;
  • Health insurance premium costs, if you’re unemployed for 12 weeks or more;
  • In the case of disability or death.

Distributions after age 59 1/2. There are no penalties or restrictions if you take disbursements between the ages of 59 1/2 and 70 1/2. Remember, your interest, dividends, and capital gains will be taxed as ordinary income, so you may owe state and federal taxes.

Distributions after age 70 1/2. Once you turn 70 1/2, you must take distributions. Also known as minimum required distributions or MRDs, if you don’t make these withdrawals, you’ll pay a penalty of up to 50 percent of the amount you should have taken.

If you pass away and your spouse inherits your account. Good news: if your spouse doesn’t need the funds right away, they can roll them over into their own IRA then take distributions after 59 1/2. If they need the funds early and are under age 59 1/2, they can roll the funds into a so-called “Inherited IRA” account and avoid the 10-percent penalty.

If you pass away and a non-spouse inherits your account. If your IRA passes to a non-spouse beneficiary, they may transfer the assets into an inherited IRA beneficiary account. Distributions will depend on your beneficiary’s age and life expectancy, and will be taxed as part of their income.

The rules that govern IRA distribution and inheritance are complex. Meet with a trusted financial advisor to work through the details.

Considering tapping into your IRA? Know the rules first to avoid fees, taxes or penalties.

Listen below to hear Stu and Win Damon review this topic on Joppa Radio 106.1 Newburyport

 

Like what you have read? Please share with friends.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Stu chats TAX Reform with Win Damon on FM 96.3 Joppa radio

Tax reform is front and center these days as potential plans for reform are being pushed and are in ASAP mode.  As usual there are so many stories and claims to this extremely huge issue.  After reviewing dozens of articles I am hard pressed to find any that say that reform as it is currently being debated is going to be good for America.

The one argument the GOP continues to use is the “trickle down” theory which says cut tax on the richest and the fruits of the tax cut will trickle down to the masses.  This I find to be unequivocally untrue and in fact it did not work under Reagan or Bush and will fail again if enacted.  The rich and big corporations will get richer, the poor will get poorer, and the middle class will continue to shrink.  The cut will stimulate little job creation, will not repair our crumbling infrastructure, and will most certainly lead to vital cuts for programs such as medicare and social security as well as ballooning the already massive deficit.

In fact, I have not found one article advocating for these cuts that uses any “theory” besides trickle down.  See the articles below among many others that show how amazing these cuts are for the top 1/2 of 1%.  In fact the “pass through” tax break will provide massive tax cuts to the super wealthy.  Please read for yourself below.

http://www.businessinsider.com/trump-gop-tax-plan-middle-class-effects-tpc-analysis-2017-11

https://www.cbpp.org/research/federal-tax/republican-leadership-tax-plans-pass-through-tax-break-would-provide-massive  (From the Center on Budget and Policy Priorities)

I hope I am wrong but all the intellectual studies back up my claims.  Trickle down will fail and cause far higher inequality in America.  Again, I hope i am incorrect.

 

;

 

Like what you have read? Please share with friends.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

10 Tips for Stronger Identity Theft Protection

iStock_000043931448_FullIdentity theft is the number one consumer complaint in the country, making it a serious and growing problem. From fraudulent credit card use to misuse of bank accounts to big data breaches, identity thieves use increasingly sophisticated methods to hack and steal personal, sensitive financial data.

More than 34 million Americans experienced identity theft in 2013 alone — that’s about 14 percent of the population — and the financial losses from this crime total more than $24.7 billion each year… almost twice as much as losses from reported burglaries, car theft, and other cases of property theft combined.

Fortunately, there are ways to protect yourself. Don’t become one of the millions of victims of identity theft: These 10 tips will help you achieve stronger identity theft protection.

  • Monitor your credit report. You’re legally entitled to one free credit report per year from each of the bureaus: TransUnion, Experian, and Equifax. Request your report directly from a different bureau once every four months.
  • Keep an eye on your bank and credit card statements. Look for purchases you didn’t make and call your financial institution immediately if you notice anything strange.
  • Shred all documents that contain your personal info. Don’t just throw bills, statements, or even junk mail into the trash or recycle bin; thieves can use anything with your personal details on it to create a false identity.
  • Don’t share personal information on social media or networking sites. Keep your security and privacy settings on “high” and don’t post information that could help thieves assume your identity, like your exact date of birth or your mother’s maiden name.
  • Change your online passwords each month. This makes it harder for would-be hackers to steal your personal data.
  • Use smart passwords. Avoid obvious passwords, like your child’s name, your birthday, or (need we say it) “password.” Instead, use a combination of capital and lowercase letters, numbers, and symbols that would be difficult for hackers to guess; random combinations are better than words from the dictionary. Clear your history, cookies, and saved passwords—especially if you work on a public or shared computer—and never save your passwords on financial sites.
  • Don’t make online financial transactions on an unsecured WiFi connection. Wait to complete any financial transactions, including simply logging in to online accounts, until you’re on a secure network.
  • Use your credit card to shop online. Credit cards tend to offer more protection against fraudulent purchases than do debit cards or online payment systems.
  • Watch out for phishing scams. Be aware of emails or popups that look like they’re coming from your bank; before you enter any personal data, be sure to verify that a website is legit.
  • Secure your mail. Invest in a P.O. box or a locking mailbox to keep thieves from stealing personal data in your incoming or outgoing mail.

Finally, if you suspect your data has been compromised, you can request that a fraud alert or a credit freeze be placed on your accounts. Though these aren’t always convenient, as you have to verify your identity before being issued credit, they may protect you from criminal activity.

Sources

http://www.bjs.gov/content/pub/press/vit12pr.cfm, http://www.dailyfinance.com/2013/12/31/scariest -identity-theft-
statistics/, https://www.ncjrs.gov/spotlight/identity_theft/facts.html, http://washington.cbslocal.com/2 014/07/01/report-10-million-identity-theft-cases-most-common-consumer-complaint-in-

us/, http://www.consumer.ftc.gov/articles/0271-signs-identity-
theft, http://www.bankrate.com/finance/personal-finance/7-ways-protect-yourself-id- theft.aspx#slide=1, http://guides.wsj.com/personal-finance/credit/how-to-protect-yourself-from- identity-theft/

Like what you have read? Please share with friends.

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Income Tax planning for Olympic Medal Winners

I came across an interesting article that happens to get published around Olympics Time every couple of years.  Did you know that the Olympic medals that Olympians win are taxable?  There is also prize money awarded for winning and that is taxable too.

Here is how it works.  Say Michael Phelps wins a gold medal prize of $25,000.  (Silver = $15,000 and Bronze $10,000).  This could be taxable as high as 39.6% for the federal and ~6% for his state.  This is a huge percentage of his earnings, close to 50%!  Now take into account multiple victories and there is potential for a huge tax bill!

There are a few of important factors here.  An athlete in a sport rich with endorsements will obviously be in a higher tax bracket.  So Phelps’s tax issues will be entirely different from many other athletes.  Also, some of the athletes participate as a hobby, and for some it is their business.  So expenses can be used to offset income for many of the athletes who operate their passion as a self employed business.

The value of the medal is also taxed, and this depends on the commodities market. Current values of gold = ~$600, Silver = $300, and bronze is practically worthless. On the open market however a gold medal will be worth far more than its actual value on the open market and at the point it is sold will have capital gains tax implication for the seller.

Tune in below and listen too our chat.  We really do have fun talking about money each week and hope you enjoy our weekly chats.  Please reach out if you ever have any questions!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Source:  http://www.usatoday.com/story/money/personalfinance/2016/08/15/olympics-victory-tax-gold-medal/88587636/

A Review of GOP Presidential Candidate Donald Trump’s Income Tax Plan

Close - up US Tax income form

I spoke with Win Damon last week about Mr. Trump’s income tax plan.  His plan would cut taxes and lead to higher incomes for taxpayers at all levels of income, including the wealthy and the super wealthy.  In many ways it is a classic GOP tax plan where the money flows from the rich in the form of huge tax cuts and trickles down to the middle and lower incomes though jobs and further economic gain.

Single filers making less than $25,000 and married filers making less than $50,000 will pay no taxes on the plan.  Currently around 45% Americans do not pay any tax and the number would increase under Trump’s proposal.

One point of interest is that Mr. trump wants to go after one particular group of super wealthy folks and make them pay their fair share:  The Hedge Fund Guys.  He’s talking about them everywhere.  They pay income tax at the long term capital gains rate of 23.8% instead of the ordinary income tax rate of 43.4% on monies that they earn.  The key here is that they are not risking their own money, and should be taxed at the ordinary income tax rate like all other workers who are not risking there own money!

In the end, Trump’s plan cuts rates at the top and the very top even more than Jeb Bush, and this will surely lead to more arguments about trickle down and inequality in America.

With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He also uses his CPA expertise in many areas of personal finance.  Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Click below to hear the chat with Win Damon on WNBP.com and FM radio 106.1 WNBP in Newburyport, MA.

Tax Fraud – You WILL Get Caught!

handcuffs on an American 1040 income tax form indicating tax fraud or evasionAre you a U.S. Citizen? Are you sure? I ask as news headlines are all abuzz with the astounding fact that, this “guy”  one of the husbands of the New Jersey Housewives show, apparently did not realize he was not a legal citizen? Hmmm.

I have got to tell you, I am not a viewer of this series but what a position they put themselves in.  Joe and Teresa Giudice from Real Housewives of New Jersey are going to jail for Mail, Wire, and Bankruptcy Fraud?  Just crazy.

People…..LISTEN, YOU – WILL – GET – CAUGHT. Honesty continues to be the best policy; especially when it comes to important issues such as taxes. One minor omittance turns into another and another and, it just snowballs. Hiding assets, lying on loan applications, claim withholding, they are all Federal offences. This Giudice couple was initially indicted in 2013, when they were accused of hiding their fortune in a bankruptcy filing. Joe was also accused of failing to file tax returns between 2004 and 2008. Clearly, they thought they were untouchable.

Here is a case where their tax advisors failed. The advice he gave this couple was not heeded.

Make sure all documents and deductions you provide are accurate and can be provided if asked by the IRS. If you can’t prove it, don’t list it! If you have it, claim it!

The government does not care who you are; celeb or a regular “Joe” from the burbs; everyone has to pay their taxes.

It’s All About Balance.

April 15th! Tax Paying deadline, NOT the filing deadline!

Erock photo - Tax dayAs April 15th rapidly approaches, I see more and more tax folders and faxes and client documents come through my office.  With all of us leading more “complicated” lives, our tax returns have become more complicated as well.  But here is the main catch:  Do you know when your tax return is due?  If you said April 15th, you are wrong!

See, our world is filled with media over indulgence.  When one thing happens we see it all over the place in every news source over and over again.   It’s no different for the tax deadline so to speak.  April 15th is not the deadline to file your taxes. It never has been and never will be.  But, this is all you will hear from every newscaster and internet reporter from sea to shining sea. Not from me!

So what is this mystery day anyway?  April 15th is the day we need to settle up with Uncle Sam (and the state) for the previous year.  What does that mean usually?  Well it often means completing 80+ % of your tax return to see approximately what you owe.  Just the money is due, and often with one form that does not even have to be signed!  I put a form or 2 on my clients’ secure portal, they print the form(s) and mail to government with the amount due.  That is our only requirement for April 15th

So, why do people run to the post office on the 14th or 15th by midnight to file returns?  Because they are getting incorrect advice.  They are putting unnecessary stress on themselves to get something filed that they really don’t have to!  I am sure the lousy, hastily filled out forms that get filed that day have more mistakes and get questioned more than any other returns filed at different times of the year

“But I am going to get audited if I extend my return.”  FALSE. This is never been true.  The word extension makes people feel nervous and it has negative connotation in an area that already causes so much anxiety for many people.  So, let’s not use the word extension or extend.  Let’s use a new word, continue. You as a taxpayer can “continue” your return until October 15th, as long as you settle up with payment due on April 15th. Yes, continue is a much better word!

Listen below to Win Damon and I review this very topic on WNBP, FM 106.1 and WNBP.com every Tuesday at 8:20 AM

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

Erock CPA Tax Tips – IRS Form 2106 Unreimbursed Business Expenses

erock - photos - expenses

Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

IRS Form 2016 is used if you have expenses that you incur while working as an employee of a firm and you do not get reimbursed by your employer for these expenses.  These unreimbursed expenses can include auto and truck expense, unreimbursed business or office supplies, education, if needed to maintain your career, and business use of your telephone or computer.  There are complicated rules for employees who work out of their homes as well, so please seek competent advice when filing.  Once all expenses have been totaled, you still need to exceed a floor of 2% of your adjusted income before you can take any of these expenses as deductions.  Also, you may have these expenses limited by the alternative minimum tax (AMT) but that’s a story for a different blog!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – Have you ever heard of a Positive Audit?

Audit Red stamp

Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

 Have you ever heard of a positive audit?

Don’t laugh. I’d like to ask you a question: Do you have the nagging feeling that you could be doing more to save on income taxes, but you don’t have the time or the knowledge to act? If you are thinking, yes…I do. I promise you, you are not alone. With a tax code as thick as several copies of “War and Peace,” finding tax answers is nearly impossible unless you have years of training, and more years to read the dense language. Bottom line… there may be many ways you could keep more of what you’re earning – tax credits, deductions, exemptions, etc. – but without the right guidance, you might never find them.  CPA’s, like myself, will give you the kind of audit that may actually save you money.

It is possible to learn those tax savings before or after April 15 and use them to save money on your taxes. Give me a call to set up a free “Anti-Audit.” Unlike other CPA’s that frequently charge as much as $300 per hour, I offer this service to you complimentary. You will receive an intensive one-hour analysis of your tax situation, complete with suggestions for reducing your tax burden and taking advantage of the ever-changing tax codes. I’ll crunch your tax numbers in advance, and present you with a written report. I then go over my recommendations step-by-step, in person. As I said, it is general practice for tax planners to charge as much as $300 per hour for this kind of information, and honestly, they don’t take kindly to me giving it out for free. So why do it? Because I want to build a relationship of trust with you and believe it is an investment in working with you on your financial-advising business. It’s a great opportunity for me to show you the kind of valuable service I provide. Your “Anti-Audit” can reveal ways to potentially keep more of what you earn through tax-wise investing.

25+ years of financial and tax experience.

Since 1988, I’ve been working with tax preparers, CPAs and other financial professionals. As a student of tax law, I know taxation, and I may know how to help you reduce your tax burden legally, sensibly and above board. There’s no magic to it, just knowledge, planning and common sense. Make an appointment anytime for your free “Anti-Audit. “ I’ll request copies of your financial, investment and income information, which will be secured and completely confidential. In a week or so, I’ll have an action plan that could potentially allow you to save big on taxes. How often can you expect that from an audit?

I look forward to speaking with you.

Stu Steinberg, CPA, MBA

Click below to hear Win Damon of WNBP FM 106.1 and I review this topic.  We have insightful tax and financial chats every Tuesday morning at 8:20.

P. S. April 15 isn’t too far away, so call (781) 247-5569 or email anytime lynne@erocktax.com soon and set up your free “Anti-Audit!”

With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Erock CPA Tax Tips – IRS Form 2441 – Child Care Credit

erock - photos - childcare

Tax Tips from Stu Steinberg – CPA, National Speaker & Financial Advisor

“Celebrating 25 Years in the Business”

 Anyone who has ever had to pay for child care realizes the overwhelming cost.  The IRS shares a little break to us with this cost by allowing us a credit on IRS Form 2441.  This item is a credit and is a direct reduction in total tax.  The care must be provided by a qualified caregiver and the total credit is limited to $1200 for two or more kids.  Most states take the deduction as well so there is usually a little savings on the state end, in addition.  While this is not a huge credit, it still helps families struggling with the rising cost of child care.  With more and more families with two working spouses or single parents, it is not a surprise the cost has skyrocketed!

About Stu: With more than 25 years of experience as a credentialed tax professional, Stu Steinberg brings a broad depth of knowledge to his work. Stu founded Erock Tax to help provide tax strategies to individuals, families and small businesses. He uses his CPA expertise to help each client navigate their long-term debt and mortgage, gaining them the best deals and rates possible. Stu is passionate about empowering his clients through education about their tax health. He is highly energetic and brings a sense of optimism, creative problem-solving and a deep level of commitment to every Erock client.

 

Recent Posts

Recent Comments

    Archives

    Categories