Hello! Happy New Year! Unless you just got back from an extended stay on Pluto, you probably know that 2016 is a Presidential election year here in the US. In the coming months we will be hearing a lot about income inequality, the tax code, and whether the rich (however one defines that) are paying their "fair share". Have you ever wondered how your income stacks up against your fellow Americans? Do you have any idea what portion of the nation's tax burden you are bearing? Read on to find out how you can quickly answer these questions. And Happy Election Year. Best, Michelle Morris, CFP®, EA BRIO Financial Planning Kiplinger recently …
Taxes
Uncle Horace Died and Left You His IRA. Now What?
Hello! Does your family have an Uncle Horace? I invented him for this article but a lot of families have a similar character: a hardworking, frugal soul who lives alone and says little but thinks a lot. This is the kind of person who accumulates a tidy sum. As the saying goes 'You can't take it with you', so when Horace reaches the end of his hopefully long life, it has to go somewhere. Like almost everything in the IRS code, the rules for Inherited IRAs are tricky. A misstep can result in unnecessary taxes/penalties and missed opportunity for tax deferred growth for the beneficiary(ies). Read on to learn more! Best, Michelle Morris, CFP®, EA BRIO Financial …
What is YOUR spending number?
Hello! I recently helped a colleague do a retirement projection for one of his new clients. His client was recently widowed and uncertain about her future. We plugged numbers into the planning software, we did a tax projection, we discussed the best way to deploy her life insurance proceeds, and we discussed the pros and cons of selling her house. There were many things to consider. Finally I said, "You know, I think it all comes down to what she spends." And he looked at me and said, "Doesn't it always?" There are a slew of things that matter on the path to financial independence, but spending is without a doubt one of the biggest. What is YOUR spending …
Your W-2 form – have you ever really looked at it?
It’s tax season, and I’ve been looking at a lot of W-2 forms. If you’re an employee, you get one of these every year. Your employer sends it to you and the IRS. It shows your annual wages and the amount of taxes withheld from your paycheck. If you have someone else prepare your taxes you probably don’t give it a second glance- you throw it in the pile of things to give to your preparer. (By the way—that email from your tax preparer, the one you’ve been ignoring? Answer it. Now!) I could write a book about all the information on a W-2 form. OK, maybe not a whole book, but at least a chapter! But today I want to focus on Boxes 5 and 12. Spoiler alert: this topic has some math. If …
Why You Should Fall Out of Love With Your Tax Refund
Like many taxpayers, you probably get a refund each year when you file your taxes. Last year ≈73% of individual tax returns resulted in refunds. The average refund was $2,783. It’s no secret that taxpayers use the tax withholding system as a form of savings. Too much money is taken out of your paycheck throughout the year and is refunded back to you after you file your tax return. It seems like a windfall, but of course it isn’t. It’s really YOUR money the government has been holding for you. One argument against getting a refund is you’re giving an interest free loan to the government. However in today’s interest rate environment that’s not much of an argument. On an average refund …