by Boris Benic | Aug 4, 2014 | Blog
If you have a traditional IRA, you might benefit from converting some or all of it to a Roth IRA. A conversion can allow you to turn tax-deferred future growth into tax-free growth. It also can provide estate planning advantages: Roth IRAs don’t require you to take distributions during your life, so you can let the entire balance grow tax-free over your lifetime for the benefit of your heirs.
There’s no income-based limit on who can convert to a Roth IRA. But the converted amount is taxable in the year of the conversion. Whether a conversion makes sense for you depends on factors such as:
- Your age,
- Whether the conversion would push you into a higher income tax bracket or trigger the 3.8% net investment income tax,
- Whether you can afford to pay the tax on the conversion,
- Your tax bracket now and expected tax bracket in retirement, and
- Whether you’ll need the IRA funds in retirement.
Please click here to contact us if you would like us to help you to decide if a conversion is right for you this year. We can run the numbers for you so you make an informed decision.
© 2014 Thomson Reuters/Tax & Accounting
by Boris Benic | Jul 28, 2014 | Blog
Would you like to benefit charity while reducing the size of your taxable estate yet maintain an income stream for yourself? Would you also like to divest yourself of highly appreciated assets and diversify your portfolio with minimal tax consequences? Then consider a Charitable Remainder Trust (CRT). Here’s how it works:
- When you fund the CRT, you receive a partial income tax deduction and the property is removed from your estate.
- For a given term, the CRT pays an amount to you annually.
- At the term’s end, the CRT’s remaining assets pass to charity.
If you fund the CRT with appreciated assets, it can sell them without paying tax on the gain and then invest the proceeds in a variety of stocks and bonds. You’ll owe capital gains tax when you receive CRT payments, but much of the liability will be deferred. Plus, only a portion of each payment will be attributable to capital gains. This also may help you reduce or avoid exposure to the 3.8% net investment income tax and the 20% top long-term capital gains rate.
For more ideas on tax-smart gifts to charity, minimizing estate taxes, maintaining an income stream or diversifying your portfolio tax efficiently, contact us.
© 2014 Thomson Reuters/Tax & Accounting
by Boris Benic | Jul 1, 2014 | Blog
Summer is a common time to put a home on the market. If you’re among those who are following this trend, it’s important to be aware of the tax consequences. If you’re selling your principal residence, you can exclude up to $250,000 ($500,000 for joint filers) of gain — as long as you meet certain tests. Gain that qualifies for exclusion also is excluded from the Affordable Care Act’s 3.8% net investment income tax.
A loss on the sale of your principal residence generally isn’t deductible. But if part of your home is rented out or used exclusively for your business, the loss attributable to that portion may be deductible.
If you’re selling a second home, be aware that it won’t be eligible for the gain exclusion. But if it qualifies as a rental property, it can be considered a business asset, and you may be able to defer tax on any gains through an installment sale or a Section 1031 exchange. Or you may be able to deduct a loss.
If you have a home on the market, please contact us to learn more about the potential tax consequences of a sale.
© 2014 Thomson Reuters/Tax & Accounting
by Boris Benic | Jan 27, 2020 | Blog
There are few things Americans dread more than April 15th. The weeks and days leading up to the date are filled with stress and anxiety. Then we breathe a collective sigh of relief when the deed is done. That is, of course, unless you become the focus of an audit.
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by Boris Benic | May 15, 2018 | Blog
May 15, 2018
If you received a large refund after filing your 2017 income tax return, you’re probably enjoying the influx of cash. But a large refund isn’t all positive. It also means you were essentially giving the government an interest-free loan. (more…)
