Tax - Paying Income Taxes - Federal Form 1040

Why Employees Should Care About the Tax Code

Intro

Are you living paycheck-to-paycheck or struggling to meet your financial goals? Taxes are one of, if not your biggest expense. It is a myth that employees who don’t have millions in assets shouldn’t concern themselves with the tax code because they have little or no opportunities to manage their taxes. It is true that some of the best tax opportunities are reserved for the wealthy (e.g. accredited investors), but employees have opportunities as well.

In this episode, our goal is to convince you that you should care about the tax code. We discuss strategies employees can take advantage of to reduce their taxes. We also warn of some pitfalls you can run into if you’re not planning your taxes effectively.

Some topics in this episode include:

  1. Proper withholding
  2. Tax-favored accounts (401k, HSA, IRA)
  3. Health insurance (HSA, premium tax credit, Medicaid)
  4. Opportunities and pitfalls due to income fluctuations
  5. Retirement planning

Podcast

1
00:00:00,000 –> 00:00:14,640
Hey everybody, welcome to the Bigger Insights Finance podcast where we’ll help you build

2
00:00:14,640 –> 00:00:17,960
a life that you don’t need a vacation from.

3
00:00:17,960 –> 00:00:22,460
Are you living paycheck to paycheck or do you sit down every year and feel like you’re

4
00:00:22,460 –> 00:00:25,280
just not going anywhere financially?

5
00:00:25,280 –> 00:00:30,680
If that’s the case, which it is for a lot of Americans, let’s be honest, have you given

6
00:00:30,680 –> 00:00:36,880
any consideration to what’s probably your biggest expense, which are taxes?

7
00:00:36,880 –> 00:00:43,320
Now there’s a widespread myth out there that if you’re an employee or you’re not a wealthy

8
00:00:43,320 –> 00:00:47,960
business owner or investor or something like that, that you don’t really need to be concerned

9
00:00:47,960 –> 00:00:52,600
about your taxes because you have no control over them and you can’t minimize your tax

10
00:00:52,600 –> 00:00:59,440
burden or anything like that. Which I’ll admit even I was guilty of at one point in the past.

11
00:00:59,440 –> 00:01:04,800
However, in this episode, we’re going to try to convince you that even employees who don’t

12
00:01:04,800 –> 00:01:10,200
have millions of dollars in assets should care about the tax code because like I said

13
00:01:10,200 –> 00:01:15,040
before, it probably is your biggest expense if you really sit down and add it all up

14
00:01:15,040 –> 00:01:20,600
and there are good options for you to legally reduce your taxes.

15
00:01:20,600 –> 00:01:26,560
Just as a quick caveat, we are not CPAs or tax attorneys or enrolled agents or anything

16
00:01:26,560 –> 00:01:32,080
like that and this isn’t tax advice, so be sure to check with your tax advisor before

17
00:01:32,080 –> 00:01:35,280
making any changes to your tax situation.

18
00:01:35,280 –> 00:01:40,440
If you subscribe to our podcast, which we think you should, you’ll find that we’re going

19
00:01:40,440 –> 00:01:44,120
to spend a lot of time talking about taxes.

20
00:01:44,120 –> 00:01:50,040
It’s obviously not a very entertaining subject, but if you want to improve your financial

21
00:01:50,040 –> 00:01:55,840
situation, we think that learning a thing or two about the tax code is low hanging fruit

22
00:01:55,840 –> 00:02:00,840
because there are a lot of opportunities, even for employees, to not only make more

23
00:02:00,840 –> 00:02:05,840
money, but also keep more money after you pay your taxes.

24
00:02:05,840 –> 00:02:10,520
We’re going to produce an episode in the future where we go over the basics of the U.S. federal

25
00:02:10,520 –> 00:02:17,440
tax code, but the first thing you should know about the tax code is that all income is taxable

26
00:02:17,440 –> 00:02:20,760
unless explicitly stated otherwise.

27
00:02:20,760 –> 00:02:25,760
That’s basically rule number one of the tax code and it’s a real head-scratcher when I

28
00:02:25,760 –> 00:02:32,760
see these articles like some crypto trader made a bunch of money and then gambled it

29
00:02:32,760 –> 00:02:39,560
all again and then lost it and now he has a huge tax bill because he didn’t know that

30
00:02:39,560 –> 00:02:42,000
that income was going to be taxed.

31
00:02:42,000 –> 00:02:47,760
Now in fairness, a lot of these stories were before the IRS was really weighing in on how

32
00:02:47,760 –> 00:02:54,240
exactly different crypto transactions would be taxed. But still, I mean, anybody who knows

33
00:02:54,240 –> 00:03:00,360
anything about taxes should know that even if it doesn’t state how crypto transactions

34
00:03:00,360 –> 00:03:03,680
are taxed that they are still taxed.

35
00:03:03,680 –> 00:03:09,680
So let that be a warning to you in the future if we come up with some new way of making

36
00:03:09,680 –> 00:03:17,560
income, even if it doesn’t say that specific activity in the tax code, it’s still taxable.

37
00:03:17,560 –> 00:03:22,840
The other thing you need to keep in mind is the other tens of thousands of pages of the

38
00:03:22,840 –> 00:03:29,600
tax code mostly revolve around giving you ways to save on your taxes.

39
00:03:29,600 –> 00:03:36,320
This involves, you know, countless numbers of tax credits and deductions and rules regarding

40
00:03:36,320 –> 00:03:39,040
tax-favored accounts and things like that.

41
00:03:39,040 –> 00:03:44,880
So the point of this is the way the tax code works at a high level is, “We’re going to tax

42
00:03:44,880 –> 00:03:49,760
everything you make and if you follow all of these other rules and you do the things

43
00:03:49,760 –> 00:03:54,800
that we think you should do, then we’ll allow you to save on your taxes.”

44
00:03:54,800 –> 00:04:00,600
Now we can sit here and debate about the morality of that because basically the tax code is

45
00:04:00,600 –> 00:04:03,440
a giant social engineering experiment.

46
00:04:03,440 –> 00:04:05,680
However, it is what it is.

47
00:04:05,680 –> 00:04:09,640
If you want to improve your financial situation, this is a great place to start.

48
00:04:09,640 –> 00:04:16,160
Now in fairness, it is true that many of these incentives are beyond what many employees

49
00:04:16,160 –> 00:04:21,200
can take advantage of, especially those who aren’t an accredited investor.

50
00:04:21,200 –> 00:04:26,080
However, employees still have a fair amount of tax flexibility.

51
00:04:26,080 –> 00:04:30,040
There are many opportunities, but there are also many pitfalls, which we’re going to talk

52
00:04:30,040 –> 00:04:33,720
about in this episode and in future episodes.

53
00:04:33,720 –> 00:04:38,880
Another primary reason why employees should care about the tax code is because whether

54
00:04:38,880 –> 00:04:44,760
they realize it or not, many of the decisions they make, like where they live, where they

55
00:04:44,760 –> 00:04:51,040
work, what they invest in, what kind of insurance they get, does affect their taxes and benefits

56
00:04:51,040 –> 00:04:52,440
quite a bit.

57
00:04:52,440 –> 00:04:57,960
For example, when one of our clients are considering moving, one of the things that we’ll talk

58
00:04:57,960 –> 00:05:02,840
to them about or what the tax consequences are of the jurisdiction where they’re considering

59
00:05:02,840 –> 00:05:03,840
moving to.

60
00:05:03,840 –> 00:05:09,880
And this is important because some state and local tax policies can really surprise you

61
00:05:09,880 –> 00:05:14,400
and we don’t want our clients to get hit with a nasty tax surprise.

62
00:05:14,400 –> 00:05:21,000
So for example, some jurisdictions around here in Cincinnati give you a 100% credit

63
00:05:21,000 –> 00:05:26,160
for taxes that you pay in the city where you work, whereas some of them will only give

64
00:05:26,160 –> 00:05:29,440
you, for example, a 50% credit.

65
00:05:29,440 –> 00:05:35,840
So in the latter case, you can be spending quite a bit more on taxes than you were planning

66
00:05:35,840 –> 00:05:41,320
on and I’m convinced that a lot of people don’t realize that until they actually move

67
00:05:41,320 –> 00:05:43,960
there and see their tax bill.

68
00:05:43,960 –> 00:05:50,400
We think this episode is very important because from our observations and experiences, what

69
00:05:50,400 –> 00:05:57,920
we notice is that when employees don’t understand taxes, they suffer from a few major problems.

70
00:05:57,920 –> 00:06:03,060
The first of which is they’re generally leaving money on the table, either paying way too

71
00:06:03,060 –> 00:06:07,480
much tax or missing credits or deductions.

72
00:06:07,480 –> 00:06:14,200
Another is that we see employees focusing on their after-tax pay as opposed to building

73
00:06:14,200 –> 00:06:16,640
wealth in a tax-efficient manner.

74
00:06:16,640 –> 00:06:22,200
And when they do that, the decisions they make lead to paying higher taxes. With their

75
00:06:22,200 –> 00:06:29,640
larger paychecks and lack of investment, they tend to just blow that money on personal consumption.

76
00:06:29,640 –> 00:06:35,320
And the third is that we observe that a lot of employees aren’t even realizing how much

77
00:06:35,320 –> 00:06:37,840
money they’re losing to taxes.

78
00:06:37,840 –> 00:06:42,880
And when you do that, you have no motivation to change anything because why fix something

79
00:06:42,880 –> 00:06:47,600
that you don’t think is broke, and especially if you think there are no opportunities for

80
00:06:47,600 –> 00:06:50,000
you to improve your situation?

81
00:06:50,000 –> 00:06:53,480
So now let’s get into some more specific examples.

82
00:06:53,480 –> 00:06:56,520
First of all, are your withholdings correct?

83
00:06:56,520 –> 00:07:00,840
If you’re an employee and you get a W-2 at the end of the year, that means that you had

84
00:07:00,840 –> 00:07:05,440
to fill out a W-4 to withhold taxes from each paycheck.

85
00:07:05,440 –> 00:07:11,000
And the reason why the government does this is because they’re concerned and probably

86
00:07:11,000 –> 00:07:16,280
correctly that if they don’t withhold taxes from people’s paychecks, that they’ll take

87
00:07:16,280 –> 00:07:20,300
whatever money they get and find some way to spend it, and then when their tax bill

88
00:07:20,300 –> 00:07:25,120
comes due, they’re going to throw their hands up and say, well, I just don’t have the money.

89
00:07:25,120 –> 00:07:29,640
Another reason why they do that is because a lot of people don’t take the time to learn

90
00:07:29,640 –> 00:07:33,840
the tax code, which admittedly is pretty complicated.

91
00:07:33,840 –> 00:07:37,000
And because of that, they can’t calculate their taxes.

92
00:07:37,000 –> 00:07:42,400
So they just fill out some information on their W-4, and then someone else will calculate

93
00:07:42,400 –> 00:07:46,480
what they think your taxes are and withhold that money from your paycheck.

94
00:07:46,480 –> 00:07:51,640
So then when you sit down at tax time to fill out your return, the purpose of that is to

95
00:07:51,640 –> 00:07:57,600
reconcile how much you should have paid in taxes with what you did pay in taxes through

96
00:07:57,600 –> 00:07:59,480
your withholdings.

97
00:07:59,480 –> 00:08:03,920
And if you’re getting a refund, that just means that you overpaid your taxes and that

98
00:08:03,920 –> 00:08:06,560
the government was holding on to your money.

99
00:08:06,560 –> 00:08:11,400
So in other words, you basically just gave the federal government an interest-free loan.

100
00:08:11,400 –> 00:08:17,160
That’s why it really bothers me when I see all these commercials on TV, well I used

101
00:08:17,160 –> 00:08:21,880
to see, I don’t really watch TV anymore, but I’d see all these commercials like, “Oh, come

102
00:08:21,880 –> 00:08:25,120
down and buy our mattress.

103
00:08:25,120 –> 00:08:28,040
What else are you going to do with your tax refund?”

104
00:08:28,040 –> 00:08:32,160
And I’m sure a lot of people fall for that because they don’t understand how taxes work,

105
00:08:32,160 –> 00:08:36,280
but just keep in mind, a tax refund is not income.

106
00:08:36,280 –> 00:08:37,880
It’s not like winning the lottery or something.

107
00:08:37,880 –> 00:08:41,440
That’s your money that you just overpaid the government.

108
00:08:41,440 –> 00:08:46,160
So you shouldn’t just go out and blow it like you found it on the street or something.

109
00:08:46,160 –> 00:08:52,120
Which by the way, pro tip: If you do find money in the street, that’s also taxable income.

110
00:08:52,120 –> 00:08:57,840
Now when you fill out your withholding forms, you obviously need to do one for the feds,

111
00:08:57,840 –> 00:09:02,880
but in states that collect income tax, you’ll need to fill out a withholding form with them

112
00:09:02,880 –> 00:09:03,880
as well.

113
00:09:03,880 –> 00:09:08,760
And in some of those states like Ohio, they give you very little flexibility in how you

114
00:09:08,760 –> 00:09:10,280
fill those out.

115
00:09:10,280 –> 00:09:16,560
Ohio, for example, will make you withhold taxes, even if you know that you’re not going

116
00:09:16,560 –> 00:09:17,560
to owe them anything.

117
00:09:17,560 –> 00:09:20,560
And then you’ve got to file a return to get that money back.

118
00:09:20,560 –> 00:09:22,240
It’s pretty messed up.

119
00:09:22,240 –> 00:09:28,360
But with the federal W-4 form, at least, it does give you a decent amount of flexibility

120
00:09:28,360 –> 00:09:32,760
to adjust your withholdings up or down, depending on what you think your tax situation is going

121
00:09:32,760 –> 00:09:33,760
to be.

122
00:09:33,760 –> 00:09:39,920
So what we recommend that our clients do, at least with regard to the W-4 form, is to

123
00:09:39,920 –> 00:09:47,080
do their best to estimate their income, their deductions, their credits for the tax year,

124
00:09:47,080 –> 00:09:51,880
and then adjust their withholdings up or down to try to get their refund as close to zero

125
00:09:51,880 –> 00:09:52,880
as possible.

126
00:09:52,880 –> 00:09:58,720
Now, if you’re really good at tax planning and you understand the tax code very well,

127
00:09:58,720 –> 00:10:05,160
you can do what I do and try to owe a little bit of money without owing so much that you

128
00:10:05,160 –> 00:10:07,720
have to pay penalties and interest.

129
00:10:07,720 –> 00:10:13,680
I don’t know if you saw one of Trump’s tax returns, there was like some memes going around

130
00:10:13,680 –> 00:10:14,680
about it.

131
00:10:14,680 –> 00:10:21,560
I saw a Pawn Stars one where it said the IRS was asking Trump, Trump’s accountants for

132
00:10:21,560 –> 00:10:26,640
millions of dollars in taxes, and it was a picture of Rick Harrison saying, “The best

133
00:10:26,640 –> 00:10:35,320
I can do is $750″. And that’s not just a coincidence, $750 is a good amount to owe because you’ve

134
00:10:35,320 –> 00:10:40,320
been holding on to that money, which is really the government’s money, interest-free, and

135
00:10:40,320 –> 00:10:46,080
it’s below the $1,000 threshold for where you have to start paying penalties and interest.

136
00:10:46,080 –> 00:10:48,400
Now let’s talk about tax-favored accounts.

137
00:10:48,400 –> 00:10:55,120
We’ll probably [be] producing quite a few episodes regarding tax-favored accounts like 401Ks,

138
00:10:55,120 –> 00:11:00,200
IRAs, HSAs, etc., and you might have some of these accounts and you might know

139
00:11:00,200 –> 00:11:06,600
a thing or two about them, but still, if you don’t understand your taxes, you run into

140
00:11:06,600 –> 00:11:11,360
a lot of questions that are kind of uncomfortable because you don’t quite know how to answer

141
00:11:11,360 –> 00:11:12,360
them.

142
00:11:12,360 –> 00:11:14,680
For example, how much should you contribute?

143
00:11:14,680 –> 00:11:22,840
When I was an employee, I had a 401K, which I could do Roth and or traditional contributions.

144
00:11:22,840 –> 00:11:29,640
I had a Roth IRA and an HSA, and every year I would sit down and try to answer this question.

145
00:11:29,640 –> 00:11:31,240
How much should I contribute?

146
00:11:31,240 –> 00:11:33,600
To which accounts should I contribute?

147
00:11:33,600 –> 00:11:37,400
Should I do pre-tax contributions, Roth contributions?

148
00:11:37,400 –> 00:11:42,040
Is this even worth my while or should I just pay the taxes and then have the money in my

149
00:11:42,040 –> 00:11:44,160
taxable accounts?

150
00:11:44,160 –> 00:11:49,040
And if your income starts picking up, you need to be worried about things like what the contribution

151
00:11:49,040 –> 00:11:50,200
rules are.

152
00:11:50,200 –> 00:11:57,840
It might surprise you how low the income limit is to be able to make direct Roth IRA contributions.

153
00:11:57,840 –> 00:12:02,280
If your income is lower, then you obviously have things to worry about like your personal

154
00:12:02,280 –> 00:12:04,560
cash flow, which could be a problem.

155
00:12:04,560 –> 00:12:08,120
You don’t necessarily want to stuff tons of money into these accounts if you’re going

156
00:12:08,120 –> 00:12:10,360
to have cash flow problems.

157
00:12:10,360 –> 00:12:14,120
And there are other things like the retirement savers credit, which can be helpful depending

158
00:12:14,120 –> 00:12:16,360
on your situation.

159
00:12:16,360 –> 00:12:18,400
Let’s talk about health insurance.

160
00:12:18,400 –> 00:12:21,200
You might have multiple options at work.

161
00:12:21,200 –> 00:12:26,160
We do like HSAs, but we’ve noticed that a lot of people are kind of afraid of getting

162
00:12:26,160 –> 00:12:33,000
an HSA because HSAs require a high-deductible health plan (HDHP), and people just get so hung up

163
00:12:33,000 –> 00:12:37,400
on the sticker shock of that high deductible that they’re not seeing all of the amazing

164
00:12:37,400 –> 00:12:42,960
tax benefits that come along with an HSA. One of which is, and we’ll go into this in

165
00:12:42,960 –> 00:12:47,360
a lot more detail in a future episode, but you can invest your HSA.

166
00:12:47,360 –> 00:12:52,840
It’s not just a savings account where you collect, you know, 50 basis points of interest.

167
00:12:52,840 –> 00:12:56,600
You can invest the funds in your HSA in almost anything.

168
00:12:56,600 –> 00:13:04,120
You can invest in gold, silver stocks, bonds, CDs, apartment buildings, livestock, all kinds

169
00:13:04,120 –> 00:13:06,040
of things in your HSA.

170
00:13:06,040 –> 00:13:10,280
If your income is a little bit on the lower side, there are two other health insurance

171
00:13:10,280 –> 00:13:12,240
things to keep in mind.

172
00:13:12,240 –> 00:13:19,080
One of those is premium tax credits (PTC), the calculation for those is not super complicated, but I

173
00:13:19,080 –> 00:13:24,160
think very few people who get premium tax credits actually understand how that works.

174
00:13:24,160 –> 00:13:27,880
It’s mostly based on your modified adjusted gross income (AGI).

175
00:13:27,880 –> 00:13:33,320
So if you can pull some strings to adjust your modified adjusted gross income, then you might

176
00:13:33,320 –> 00:13:36,000
be able to get more premium tax credits.

177
00:13:36,000 –> 00:13:38,080
It’s the same deal with Medicaid.

178
00:13:38,080 –> 00:13:43,720
If you’re on Medicaid or you have dependents on Medicaid, or if your income is low enough,

179
00:13:43,720 –> 00:13:47,720
you might not understand, do you qualify for Medicaid?

180
00:13:47,720 –> 00:13:52,200
Or if you’re expecting to make a little bit more money, you might be wondering, “Am I at

181
00:13:52,200 –> 00:13:54,960
risk of losing Medicaid?”

182
00:13:54,960 –> 00:14:01,400
This is a very common theme in tax planning is not only maximizing your benefits, but

183
00:14:01,400 –> 00:14:04,400
also avoiding stepping on a landmine.

184
00:14:04,400 –> 00:14:09,280
I mean, imagine if you’ve lost some premium tax credits or your Medicaid coverage, because

185
00:14:09,280 –> 00:14:14,120
you picked up a few extra shifts at work and made some extra money, and that pushed you

186
00:14:14,120 –> 00:14:16,840
beyond an income threshold.

187
00:14:16,840 –> 00:14:20,880
And unfortunately, a lot of people don’t find out those things until they sit down to do

188
00:14:20,880 –> 00:14:21,880
their taxes.

189
00:14:21,880 –> 00:14:26,360
But of course, by that point, it might be too late for you to do something about it.

190
00:14:26,360 –> 00:14:28,040
Although that’s not always the case.

191
00:14:28,040 –> 00:14:32,600
That’s one of the reasons why we like HSAs, for example. If you were to sit down and do

192
00:14:32,600 –> 00:14:38,000
your taxes at the end of the year, you might be able to contribute to an HSA and reduce

193
00:14:38,000 –> 00:14:40,520
your adjusted gross income if you need to.

194
00:14:40,520 –> 00:14:44,960
So that’s a nice tool to have in your tax planning toolbox.

195
00:14:44,960 –> 00:14:50,240
Now let’s switch gears and talk about income fluctuations, which can have a significant

196
00:14:50,240 –> 00:14:52,320
impact on your taxes.

197
00:14:52,320 –> 00:14:58,240
This is especially important for those of you who have the ability to work overtime or

198
00:14:58,240 –> 00:15:04,120
extra shifts, or if you earn commissions on sales or something like that, you might

199
00:15:04,120 –> 00:15:09,200
be wondering, “Hey, if I work more, how might that affect my taxes?”

200
00:15:09,200 –> 00:15:14,020
If your income fluctuates to the upside, that can have some adverse consequences if you’re

201
00:15:14,020 –> 00:15:15,920
not planning properly.

202
00:15:15,920 –> 00:15:20,360
And one of those are pushing you up into higher tax brackets.

203
00:15:20,360 –> 00:15:26,120
At the federal level and in many states, there are progressive tax brackets, which can increase

204
00:15:26,120 –> 00:15:31,680
the tax rate on additional dollars earned. Which might not sound like a big deal, but

205
00:15:31,680 –> 00:15:32,680
it can really add up.

206
00:15:32,680 –> 00:15:38,480
I mean, I remember there were times when I was an employee that my boss would offer me

207
00:15:38,480 –> 00:15:44,600
the ability to work overtime, paid overtime, and I’d really have to think about it in terms

208
00:15:44,600 –> 00:15:49,880
of whether that was actually worth it for me, because I knew that the tax rate that

209
00:15:49,880 –> 00:15:54,800
I would pay on those overtime hours would be quite high.

210
00:15:54,800 –> 00:15:59,440
And then I’d have to kind of weigh that against, you know, how much I value my time.

211
00:15:59,440 –> 00:16:04,080
I could either spend that time on leisure, which has value, or I could spend that time

212
00:16:04,080 –> 00:16:08,060
doing something else, like building a side business or investing.

213
00:16:08,060 –> 00:16:12,600
So that can be an important consideration, depending on how much you’re making.

214
00:16:12,600 –> 00:16:18,400
Increases in your income can also cause you to lose out on tax credits or deductions.

215
00:16:18,400 –> 00:16:22,720
You can lose the ability to contribute to certain tax-favorite accounts, like what

216
00:16:22,720 –> 00:16:26,200
I was saying earlier about the Roth IRA.

217
00:16:26,200 –> 00:16:32,600
The upper income limit for that is somewhere in the ballpark of $150,000, which I realize

218
00:16:32,600 –> 00:16:36,480
that sounds like a lot of money, but, you know, depending on what industry you’re in

219
00:16:36,480 –> 00:16:39,540
and where you live, that might not be that much money.

220
00:16:39,540 –> 00:16:44,000
So if you are interested in a Roth IRA, you might want to think about that because I think

221
00:16:44,000 –> 00:16:48,560
a lot of young people are thinking to themselves, “I’ll just worry about saving for retirement

222
00:16:48,560 –> 00:16:49,560
later.”

223
00:16:49,560 –> 00:16:54,000
Well, if you do that and you happen to be making more than the income limit, then you’ve

224
00:16:54,000 –> 00:16:55,680
kind of got a problem.

225
00:16:55,680 –> 00:17:03,160
So let me give you an example of what taxpayers are looking at in Ohio in 2022, which, by the

226
00:17:03,160 –> 00:17:10,600
way, we help our clients mostly electronically, you know, through web meetings and text messages

227
00:17:10,600 –> 00:17:12,480
and emails and things like that.

228
00:17:12,480 –> 00:17:18,980
But we are based in Ohio, so you’ll probably be hearing a lot of examples from Ohio.

229
00:17:18,980 –> 00:17:23,840
So this is somewhat of a landmine that Ohio taxpayers might be looking at.

230
00:17:23,840 –> 00:17:34,320
But in Ohio in 2022, if you made between zero and $26,050, and that’s the federal adjusted

231
00:17:34,320 –> 00:17:41,960
gross income, by the way, then you owe no tax to Ohio, no income tax. Not a single penny.

232
00:17:41,960 –> 00:17:56,320
But if you made $1 extra, $26,051, you would have to pay Ohio $360.69 plus 2.765% on any

233
00:17:56,320 –> 00:17:58,000
dollar over that.

234
00:17:58,000 –> 00:18:04,280
So if you were sitting at $26,050 and you decided to do something like make an extra

235
00:18:04,280 –> 00:18:08,720
sale or pick up an extra shift or something like that, you might not even realize that

236
00:18:08,720 –> 00:18:13,560
that you just incurred a pretty significant tax liability because you weren’t paying attention

237
00:18:13,560 –> 00:18:15,200
to your taxes.

238
00:18:15,200 –> 00:18:26,480
So in earning that extra dollar, you’ve raised your tax rate from 0% up to 1.4% at $26,051.

239
00:18:26,480 –> 00:18:30,960
So if a client came to us with this predicament, one of the things that we might ask them to

240
00:18:30,960 –> 00:18:38,280
consider doing is contributing to an HSA or a traditional IRA to knock their adjusted gross

241
00:18:38,280 –> 00:18:44,000
income back down and in the process, they’d probably pick up some retirement savers credit

242
00:18:44,000 –> 00:18:49,360
as well, at least in the case of the IRA, not the HSA.

243
00:18:49,360 –> 00:18:54,360
Another thing to consider would be tax loss harvesting, which we also help our clients

244
00:18:54,360 –> 00:18:55,360
with.

245
00:18:55,360 –> 00:18:57,320
And there’s a lot of nuance to that.

246
00:18:57,320 –> 00:19:02,400
It’s not quite as simple as what a lot of the articles make it seem to be in the mainstream

247
00:19:02,400 –> 00:19:03,400
media.

248
00:19:03,400 –> 00:19:08,720
So basically, you can kind of trim the turds out of your portfolio and use those losses

249
00:19:08,720 –> 00:19:11,040
to offset some of your income.

250
00:19:11,040 –> 00:19:15,520
But there are a lot of strategies in there that, you know, people don’t talk about.

251
00:19:15,520 –> 00:19:19,320
So we might, we might make an episode on that in the future.

252
00:19:19,320 –> 00:19:25,720
For example, you could sell something at a loss that you actually want in your portfolio

253
00:19:25,720 –> 00:19:30,960
and then use that money to buy something that’s similar in that it’ll give you the investment

254
00:19:30,960 –> 00:19:36,520
exposure that you’re looking for, but not “substantially similar”, which is a technical

255
00:19:36,520 –> 00:19:37,680
term.

256
00:19:37,680 –> 00:19:43,040
And I realize you can’t see my air quotes, but if it’s not “substantially similar”, then

257
00:19:43,040 –> 00:19:47,000
you can still deduct that loss and not have to worry about the wash-sale rule.

258
00:19:47,000 –> 00:19:49,320
But like I said, there’s a lot of nuance to that.

259
00:19:49,320 –> 00:19:50,480
It’s kind of complicated.

260
00:19:50,480 –> 00:19:53,920
So we might talk about that in a future episode.

261
00:19:53,920 –> 00:19:59,640
Now let’s talk about income fluctuations on the downside, because that happens as well.

262
00:19:59,640 –> 00:20:04,360
You might lose your job or you might quit and start a business or something like that.

263
00:20:04,360 –> 00:20:08,560
And that might not sound like a big deal to you, but even when your income is down, there

264
00:20:08,560 –> 00:20:14,800
are opportunities and there is such a thing as your income becoming too low.

265
00:20:14,800 –> 00:20:19,440
There can be adverse consequences if your income drops below a certain point.

266
00:20:19,440 –> 00:20:23,360
For example, someone might be able to claim you as a dependent.

267
00:20:23,360 –> 00:20:27,600
You might lose premium tax credits, which is kind of weird to think about.

268
00:20:27,600 –> 00:20:33,080
You know, it doesn’t surprise anybody that if your income is too high, they’ll cut you

269
00:20:33,080 –> 00:20:35,440
off on your premium tax credits.

270
00:20:35,440 –> 00:20:41,000
But if your income goes too low, which varies from state to state, you can lose your premium

271
00:20:41,000 –> 00:20:46,800
tax credits and they’ll make you pay the full premium if you want a health insurance plan

272
00:20:46,800 –> 00:20:50,280
from the healthcare.gov Marketplace.

273
00:20:50,280 –> 00:20:54,920
And their reasoning for that is if your income is that low, they think that you should be

274
00:20:54,920 –> 00:21:00,160
on your state’s Medicaid plan rather than on the Marketplace, but that’s still something

275
00:21:00,160 –> 00:21:05,560
to keep in mind because I’m sure if you’re looking for a job or starting a business or

276
00:21:05,560 –> 00:21:09,080
something like that, you probably don’t want to deal with the headaches that come along

277
00:21:09,080 –> 00:21:13,400
with being on Medicaid, unless of course you really need it.

278
00:21:13,400 –> 00:21:18,480
So like I said, if your income does fluctuate to the downside, there are tax opportunities

279
00:21:18,480 –> 00:21:25,720
as well and not just being subject to lower tax brackets. If you have investments like

280
00:21:25,720 –> 00:21:30,920
a taxable brokerage account, for example, you can take advantage of what we call tax

281
00:21:30,920 –> 00:21:32,880
gain harvesting.

282
00:21:32,880 –> 00:21:39,560
Now we’ve never heard anyone talk about this because people are so hung up on taking losses.

283
00:21:39,560 –> 00:21:43,880
But if your income is low, you can consider tax gain harvesting.

284
00:21:43,880 –> 00:21:50,840
And basically what that is, is selling appreciated assets prematurely to take that gain on now

285
00:21:50,840 –> 00:21:55,640
and pay your taxes now when you’re at a lower rate. And you might be thinking to yourself,

286
00:21:55,640 –> 00:21:57,800
“Well, why the heck would you want to do that?

287
00:21:57,800 –> 00:21:59,960
I mean, who wants to pay taxes?”

288
00:21:59,960 –> 00:22:04,520
And the advantage of that is, like I said, your tax rate is lower now. But if you still

289
00:22:04,520 –> 00:22:11,160
like the asset, you can just re-buy it, which raises your tax basis for future years.

290
00:22:11,160 –> 00:22:16,080
So in future years, when your income goes back up, and then you sell that asset at a

291
00:22:16,080 –> 00:22:21,440
gain, it’ll be at a much smaller gain, which reduces your taxable income.

292
00:22:21,440 –> 00:22:26,080
But like I alluded to earlier, there are some complications there, it’s not quite as simple

293
00:22:26,080 –> 00:22:27,080
as that.

294
00:22:27,080 –> 00:22:33,560
You have to look at how increasing your investment income might affect other parts of your return.

295
00:22:33,560 –> 00:22:41,440
So the earned income credit (EIC), for example, has an investment income cap, which is rather low.

296
00:22:41,440 –> 00:22:44,000
So that’s something to keep in mind.

297
00:22:44,000 –> 00:22:49,000
Also when your income is low, keep in mind that your long-term capital gains rate might

298
00:22:49,000 –> 00:22:50,900
be 0%.

299
00:22:50,900 –> 00:22:59,040
So if your income is less than about $44,625, your long-term capital gain rate is zero.

300
00:22:59,040 –> 00:23:03,080
I think this doesn’t receive enough attention, but you know, there are quite a few people

301
00:23:03,080 –> 00:23:08,640
out there making that much money, and little do they know, they could be earning passive

302
00:23:08,640 –> 00:23:11,640
investment income tax-free.

303
00:23:11,640 –> 00:23:16,240
If your income is temporarily lower than it normally is, another thing you should consider

304
00:23:16,240 –> 00:23:18,720
is doing a Roth Conversion.

305
00:23:18,720 –> 00:23:25,080
So basically, this is where you convert pre-tax contributions to your retirement plan, like

306
00:23:25,080 –> 00:23:31,200
an IRA or 401k, and you convert them over to Roth contributions.

307
00:23:31,200 –> 00:23:36,360
And when you do that, if the contributions to your traditional account were deducted

308
00:23:36,360 –> 00:23:42,160
previously, that Conversion amount is now considered taxable income, which is unfortunate

309
00:23:42,160 –> 00:23:43,160
now.

310
00:23:43,160 –> 00:23:48,760
But if your income is lower now, and your tax rates are lower, then that can save you quite

311
00:23:48,760 –> 00:23:50,640
a bit of money in the future.

312
00:23:50,640 –> 00:23:54,960
Because with a Roth account, when you pull that money out in retirement, that’s all tax

313
00:23:54,960 –> 00:23:55,960
free.

314
00:23:55,960 –> 00:24:02,320
So I’ll share a personal story about that. When I was working at a job previously, the

315
00:24:02,320 –> 00:24:09,040
first 401k plan that they offered didn’t have a designated Roth account, so I could only

316
00:24:09,040 –> 00:24:11,680
make pre-tax contributions.

317
00:24:11,680 –> 00:24:16,800
And this irritated me because I wanted to do a Roth because they can be very powerful

318
00:24:16,800 –> 00:24:21,520
and my tax rate was lower than I expected it to be in the future.

319
00:24:21,520 –> 00:24:28,560
So basically what I did was I made those pre-tax contributions, which deducted my taxable income.

320
00:24:28,560 –> 00:24:32,920
So that saved me, you know, thousands of dollars while I was contributing.

321
00:24:32,920 –> 00:24:36,360
That money obviously grew tax-free.

322
00:24:36,360 –> 00:24:41,440
And then when I left my job and started Bigger Insights, my income dropped.

323
00:24:41,440 –> 00:24:48,080
So I used that as an opportunity to go back and convert some of those pre-tax contributions

324
00:24:48,080 –> 00:24:50,400
over to my Roth account.

325
00:24:50,400 –> 00:24:55,760
So basically I saved thousands of dollars when I made those contributions initially.

326
00:24:55,760 –> 00:25:00,680
I saved probably thousands of dollars with tax-free growth.

327
00:25:00,680 –> 00:25:05,200
And then I’m going to end up saving thousands of dollars in the future when I pull that

328
00:25:05,200 –> 00:25:07,280
money out in retirement.

329
00:25:07,280 –> 00:25:12,360
Now we’re not a huge fan of retirement accounts, but that’s not a bad deal.

330
00:25:12,360 –> 00:25:15,680
And another thing that doesn’t get talked about enough, which we’ll talk about in future

331
00:25:15,680 –> 00:25:22,760
episodes, is that a Roth IRA is more powerful than a traditional IRA, because one of the

332
00:25:22,760 –> 00:25:30,920
unique features about it is you can pull your basis out at any time, tax-free, penalty-free.

333
00:25:30,920 –> 00:25:33,280
And there are some five year rules around that.

334
00:25:33,280 –> 00:25:39,480
Like, you know, once I did my Roth Conversion, then I have to wait for five years for those

335
00:25:39,480 –> 00:25:44,720
to basically mature before I can take that money back out.

336
00:25:44,720 –> 00:25:49,480
But in general, it’s more tax-efficient to take money out of a Roth IRA than it is a

337
00:25:49,480 –> 00:25:52,200
traditional IRA before retirement.

338
00:25:52,200 –> 00:25:57,240
So if you want to take advantage of the tax code, but without locking that money up for

339
00:25:57,240 –> 00:26:03,480
you know, 10, 20, 30, 40 years until you retire, a Roth is a great option.

340
00:26:03,480 –> 00:26:09,720
Because let’s face it, you know, things change, plans change, bad things can happen, or you

341
00:26:09,720 –> 00:26:14,520
might come across a very good investment opportunity, and you might want to pull that money out

342
00:26:14,520 –> 00:26:18,280
of your retirement accounts without getting hit with a big penalty.

343
00:26:18,280 –> 00:26:21,600
But like I said, this stuff does get complicated.

344
00:26:21,600 –> 00:26:26,600
So we think it’s important that you learn the tax code, because you can sit down and

345
00:26:26,600 –> 00:26:32,760
do some tax planning, and do things like, “Okay, well, if I, you know, contribute $1,000

346
00:26:32,760 –> 00:26:35,520
to this, what happens to my taxes?”

347
00:26:35,520 –> 00:26:39,400
Or “If I earn a little bit of extra money, or I don’t, you know, how does that affect

348
00:26:39,400 –> 00:26:44,920
my earned income tax credit, or my retirement savers tax credit, or how much of that can

349
00:26:44,920 –> 00:26:46,980
I get refunded?”

350
00:26:46,980 –> 00:26:53,040
You can also play games like contributing to a Roth IRA, getting the retirement savers

351
00:26:53,040 –> 00:26:59,040
credit, and then withdrawing your Roth contributions if you want to.

352
00:26:59,040 –> 00:27:03,000
So that gets a little bit complicated, but you can do it.

353
00:27:03,000 –> 00:27:05,360
And there are good opportunities here.

354
00:27:05,360 –> 00:27:11,360
So for example, we sat down with the client once, and we showed him that if he could reduce

355
00:27:11,360 –> 00:27:17,240
his adjusted gross income a little bit, by contributing a very specific amount to his

356
00:27:17,240 –> 00:27:24,240
HSA, and then contribute a very specific amount to his Roth IRA, then he could maximize not

357
00:27:24,240 –> 00:27:29,720
only his earned income credit, but also his retirement savers credit.

358
00:27:29,720 –> 00:27:34,080
But again, if you don’t know how to calculate your taxes, there’s no way you can do that.

359
00:27:34,080 –> 00:27:39,400
You’re just praying for the best, and you know, probably 999 times out of 1000, that’s

360
00:27:39,400 –> 00:27:42,920
going to result in you paying extra taxes.

361
00:27:42,920 –> 00:27:46,000
Let’s talk about retirement planning for a little bit.

362
00:27:46,000 –> 00:27:50,680
Knowing a thing or two about taxes can really help with that, because otherwise, you know,

363
00:27:50,680 –> 00:27:52,680
how do you know when you can retire?

364
00:27:52,680 –> 00:27:55,960
How do you know how much money you need saved up for retirement?

365
00:27:55,960 –> 00:28:01,280
Which by the way, we’re not a huge fan of the whole, you know, hand over your savings

366
00:28:01,280 –> 00:28:08,400
to Wall Street for 40 years, and save up a big nest egg, and then quit and spend, you

367
00:28:08,400 –> 00:28:11,920
know, the rest of your life blowing leaves out of your front lawn or something, because

368
00:28:11,920 –> 00:28:13,520
you don’t know what to do with yourself.

369
00:28:13,520 –> 00:28:18,640
So we’ll probably be talking about retirement planning quite a bit in future episodes.

370
00:28:18,640 –> 00:28:21,920
But if that’s what you’re doing, then these questions are very pertinent.

371
00:28:21,920 –> 00:28:24,440
You might want to be thinking about inflation.

372
00:28:24,440 –> 00:28:26,960
Will cost of living adjustments keep up? [No]

373
00:28:26,960 –> 00:28:31,800
You know, how does your state tax retirement income, because that can get kind of complicated?

374
00:28:31,800 –> 00:28:34,160
I mean, just think about this.

375
00:28:34,160 –> 00:28:41,480
An average couple in the United States will need about $300,000 in retirement just for

376
00:28:41,480 –> 00:28:43,040
medical care.

377
00:28:43,040 –> 00:28:46,880
And the first time I heard that, I was thinking to myself like, “Well, how could that be?

378
00:28:46,880 –> 00:28:47,880
That’s insane.”

379
00:28:47,880 –> 00:28:53,360
And what I wasn’t thinking about was about two thirds of that are Medicare premiums

380
00:28:53,360 –> 00:28:54,360
alone.

381
00:28:54,360 –> 00:28:56,560
You know, that stuff ain’t free.

382
00:28:56,560 –> 00:28:59,680
Social Security payments are also kind of complicated.

383
00:28:59,680 –> 00:29:04,080
You need to be thinking about things like the Social Security Administration gives you

384
00:29:04,080 –> 00:29:09,040
some flexibility in terms of when you start collecting Social Security, and that can have

385
00:29:09,040 –> 00:29:12,280
very serious implications on your finances.

386
00:29:12,280 –> 00:29:16,920
Because if you start collecting earlier, like at age 62, for example, then you’re going

387
00:29:16,920 –> 00:29:19,440
to get a much smaller payout.

388
00:29:19,440 –> 00:29:21,680
And that’s a permanent decision.

389
00:29:21,680 –> 00:29:25,600
You also need to be thinking about whether you’re going to collect while you’re still

390
00:29:25,600 –> 00:29:29,920
working, because there can be some adverse consequences there as well.

391
00:29:29,920 –> 00:29:34,960
And you need to be thinking about how that income is taxed at the federal, state, and

392
00:29:34,960 –> 00:29:36,720
local level.

393
00:29:36,720 –> 00:29:42,040
You should also be aware that Social Security and Medicare benefits are based on your earned

394
00:29:42,040 –> 00:29:45,600
income and the taxes paid into those systems.

395
00:29:45,600 –> 00:29:48,880
When I was younger, I used to see all of these little warnings.

396
00:29:48,880 –> 00:29:50,400
You might have seen them.

397
00:29:50,400 –> 00:29:55,560
But if you read some documentation on HSAs or something like that, you might have seen

398
00:29:55,560 –> 00:30:01,280
these little warnings in fine print that say something like, “Oh, contributing to an HSA

399
00:30:01,280 –> 00:30:04,160
might reduce your Social Security benefits.”

400
00:30:04,160 –> 00:30:09,920
And the reason for that is because your HSA contributions are excluded from Social Security

401
00:30:09,920 –> 00:30:11,320
taxes.

402
00:30:11,320 –> 00:30:17,040
So when they’re calculating how big your Social Security payments are, they look at your

403
00:30:17,040 –> 00:30:22,480
income history, which excludes your contributions to your HSA and other plans.

404
00:30:22,480 –> 00:30:24,280
That doesn’t mean that you shouldn’t do it.

405
00:30:24,280 –> 00:30:27,360
It just means that this stuff is complicated.

406
00:30:27,360 –> 00:30:30,560
And if you don’t understand how it works, you’re probably not going to make very good

407
00:30:30,560 –> 00:30:32,720
financial decisions.

408
00:30:32,720 –> 00:30:37,440
You should also be cognizant of how you structure your retirement accounts, because some of

409
00:30:37,440 –> 00:30:42,480
them are subject to required minimum distributions (RMD), and some of them are not.

410
00:30:42,480 –> 00:30:46,040
And that might be a big deal to you, because you might not want to be forced to make a

411
00:30:46,040 –> 00:30:51,360
distribution, whether that be for tax reasons, you know, maybe that year you had a lot of

412
00:30:51,360 –> 00:30:58,280
other income, or maybe you want to save that account for, you know, one of your heirs.

413
00:30:58,280 –> 00:31:02,920
And required minimum distributions can also be a headache, depending on what kind of assets

414
00:31:02,920 –> 00:31:04,600
you have in that account.

415
00:31:04,600 –> 00:31:10,360
If you have something like a Roth 401k that owns nothing but an apartment building, for

416
00:31:10,360 –> 00:31:14,880
example, well, how are you going to divide that up so that you can take your required

417
00:31:14,880 –> 00:31:16,880
minimum distribution?

418
00:31:16,880 –> 00:31:22,400
So one of the things that you can do, for example, is roll that Roth 401k over to a

419
00:31:22,400 –> 00:31:27,800
Roth IRA, because Roth IRAs are not subject to required minimum distributions.

420
00:31:27,800 –> 00:31:32,120
All right, so that pretty much wraps up this episode.

421
00:31:32,120 –> 00:31:36,000
Make sure you subscribe and stay tuned, because we’re going to produce a lot of episodes in

422
00:31:36,000 –> 00:31:41,960
the future, talking about the tax code, tax-favored accounts, retirement planning, getting

423
00:31:41,960 –> 00:31:48,120
out of debt, investing in stocks, bonds, real estate, precious metals, commodities, and

424
00:31:48,120 –> 00:31:50,520
other personal finance topics.

425
00:31:50,520 –> 00:31:54,360
In the meantime, we’ve got some action items for you.

426
00:31:54,360 –> 00:31:57,960
There’s a few things that you might want to start doing so that you can help manage your

427
00:31:57,960 –> 00:31:58,960
taxes.

428
00:31:58,960 –> 00:32:01,040
One is learn how to invest.

429
00:32:01,040 –> 00:32:04,120
There are a lot of tax incentives for investors.

430
00:32:04,120 –> 00:32:10,480
And along those lines, start educating yourself on 401ks, IRAs, HSAs, and other tax-favored

431
00:32:10,480 –> 00:32:14,520
accounts, because there are a lot of opportunities there as well.

432
00:32:14,520 –> 00:32:20,080
We also recommend that all of our clients start doing some very basic tax planning, which

433
00:32:20,080 –> 00:32:24,120
you should really be doing at the beginning of the year, the end of the year, and throughout

434
00:32:24,120 –> 00:32:29,600
the year as things change, but a great place to start there is to start estimating your

435
00:32:29,600 –> 00:32:30,600
future income.

436
00:32:30,600 –> 00:32:35,800
I mean, obviously, no one has a crystal ball, but if you can estimate whether your income

437
00:32:35,800 –> 00:32:41,560
is going to be higher or lower, for example, then you might be able to make better decisions.

438
00:32:41,560 –> 00:32:47,040
And you should also get into the habit of actually reading your tax return after it’s

439
00:32:47,040 –> 00:32:50,400
prepared by whoever does it for you.

440
00:32:50,400 –> 00:32:55,160
And you should be able to look at it, at least all the numbers that apply to your situation

441
00:32:55,160 –> 00:32:58,000
and see where they come from.

442
00:32:58,000 –> 00:33:01,160
That’s actually how I started learning about the tax code.

443
00:33:01,160 –> 00:33:06,960
Every year before I filed my return, I would check it for errors and see if I could understand

444
00:33:06,960 –> 00:33:10,720
and calculate every number that was on the return.

445
00:33:10,720 –> 00:33:15,440
And once I could do that, then I could make a workbook that would essentially serve to

446
00:33:15,440 –> 00:33:22,880
be like a simplified version of TurboTax to where I could type in my numbers in the future

447
00:33:22,880 –> 00:33:27,680
and have a very good idea as to what my tax return will look like the next year.

448
00:33:27,680 –> 00:33:32,880
Now, that doesn’t sound very impressive, but the advantage there is that I could do things

449
00:33:32,880 –> 00:33:36,680
like, “Okay, well, what if I earn some extra money?

450
00:33:36,680 –> 00:33:38,920
How does that affect my bottom line?

451
00:33:38,920 –> 00:33:43,360
What if I contribute X amount to this account or Y amount to that account?”

452
00:33:43,360 –> 00:33:49,240
And then I can see in real-time, not just how much tax I expect to pay, but other things

453
00:33:49,240 –> 00:33:54,160
like, “Oh, well, now I miss out on this credit or I miss out on that deduction.”

454
00:33:54,160 –> 00:34:00,440
And another advantage is, since I already know roughly what my 1040 should look like

455
00:34:00,440 –> 00:34:06,320
when I get my draft returns from my accountant, I can compare my numbers to his numbers.

456
00:34:06,320 –> 00:34:10,720
And I don’t know, maybe my accountant isn’t very good, but sometimes my numbers are actually

457
00:34:10,720 –> 00:34:13,240
more accurate than his are.

458
00:34:13,240 –> 00:34:18,080
Another thing you might want to consider doing is thinking about how you can make money without

459
00:34:18,080 –> 00:34:19,840
a JOB.

460
00:34:19,840 –> 00:34:25,320
And one of the best ways to do that from a tax standpoint is starting a business.

461
00:34:25,320 –> 00:34:30,040
You know, I understand that not everybody is Elon Musk, but you don’t have to start

462
00:34:30,040 –> 00:34:35,560
a SpaceX to start a good business and take advantage of some of the tax incentives that

463
00:34:35,560 –> 00:34:37,880
the tax code provides.

464
00:34:37,880 –> 00:34:43,480
And the best thing you can do is obviously consider becoming a Bigger Insights client.

465
00:34:43,480 –> 00:34:50,160
Re-help our clients get out of debt, make more money, save more money, save on their taxes,

466
00:34:50,160 –> 00:34:52,440
plan for retirement, etc.

467
00:34:52,440 –> 00:34:57,120
So they don’t have to live paycheck-to-paycheck for the rest of their lives, which unfortunately

468
00:34:57,120 –> 00:35:01,100
it’s looking like a lot of Americans are going to end up doing.

469
00:35:01,100 –> 00:35:06,240
So if that sounds interesting to you, head over to our website, BiggerInsights.com, and

470
00:35:06,240 –> 00:35:10,120
fill out the very short form at the bottom of the page, and we’ll reach out to you to

471
00:35:10,120 –> 00:35:12,960
schedule your initial consultation.

472
00:35:12,960 –> 00:35:18,000
And finally, make sure you share this podcast with your friends and family, especially people

473
00:35:18,000 –> 00:35:23,720
who are early on in their career or are graduating from college soon because the sooner they

474
00:35:23,720 –> 00:35:28,120
get this information, the sooner they can get set on the right track.

475
00:35:28,120 –> 00:35:32,120
Because unfortunately, I think a lot of people don’t start thinking about these things until

476
00:35:32,120 –> 00:35:37,280
they wake up one day and they’re in their 40s or 50s and think to themselves, “Crap. I’m

477
00:35:37,280 –> 00:35:43,880
supposed to be retiring soon, I’ve got virtually no retirement savings, and I have no idea what

478
00:35:43,880 –> 00:35:45,760
I’m going to do.”

479
00:35:45,760 –> 00:35:47,040
We don’t like seeing that.

480
00:35:47,040 –> 00:35:52,000
So if we can help people avoid that situation and make a little bit of money in the process,

481
00:35:52,000 –> 00:35:53,800
we think that’s a win-win for everyone.

482
00:35:53,800 –> 00:35:55,480
All right, that’s everything.

483
00:35:55,480 –> 00:35:57,520
So thanks for staying until the end.

484
00:35:57,520 –> 00:36:15,080
Make sure you subscribe and go reduce your tax burden!

Disclaimer

We are not CPAs, tax attorneys, or other tax professionals and nothing in this episode should be construed as tax, financial, or other advice. See our full Disclaimer for more details.

Support Us

We’re an ethical company that puts our community first. You won’t find us injecting targeted ads or trackers into our website, peddling sketchy products/services, or selling our visitors’ data to 3rd-parties. As a result, our visibility and resources are rather limited.

Please consider supporting us to help keep our mission going. There are several ways to make a difference – from cryptocurrency contributions to simply sharing our content. Every bit of support is greatly appreciated and helps us make the world a more private, secure, and prosperous place.

More Great Content

  • All
  • Finance
  • Privacy & Security
  • Technology
Finance - Budgeting - Financial Planning - Accounting - Asset Allocation - Taxable and Tax-favored Accounts - Cash Finance

Asset Location: Taxable vs. Tax-favored Accounts (401k, IRA, HSA)

Asset Location (AKA Asset Placement) is a strategy for organizing your assets in an optimal way that helps you meet your financial goals. In the previous episode, we focused on asset location strategies for reducing taxes and simplifying your tax return. In this episode, we focus on asset location considerations ...
Continue →
Security - Software - Email - Computer Screen Privacy & Security

Email is Insecure – Here’s How to Improve Email Security

Email was never designed to be private or secure, so not surprisingly, it is neither private, nor secure. In the previous episode, we explained the reasons why as well as the risks inherent to email. However, email is so prevalent that it is unfortunately a necessary evil. In this episode, ...
Continue →
Planning - Concepting - Whiteboard - Tax Planning Tips - Asset Location - Asset Placement Finance

Asset Location: Reducing Taxes & Simplifying Your Tax Return

Asset Location (AKA Asset Placement) is a strategy for organizing your assets in such a way as to reduce tax burden, simplify your tax return, and manage risk. We discuss our Asset Location strategies, which includes specifics about tax treatment for growth stocks, dividend stocks, taxable bonds, real estate investment ...
Continue →
Drake - Bad Choice-Good Choice - Linux vs Windows macOS ChromeOS Technology

Linux Doesn’t Suck – Here’s Why Even Normies Should Use It

Linux has long been viewed as a science fair project for nerds. We explain why Linux doesn’t suck and why it's now usable even for normies. Some of the items discussed: Issues with Windows, ease of use, performance (efficient use of resources), hardware support, application support, OS licensing, concerns about ...
Continue →
Email - Mobile Phone - Privacy and Security - Technology - Hands Privacy & Security

Email is Insecure – Stop Using it for Sensitive Communications

Email is the primary means of sending messages and documents for many people. Unfortunately, email was never designed to be private or secure. Over time, we’ve developed several tools and techniques to help make it more secure. But at the end of the day, no matter how uncomfortable it makes ...
Continue →
Woman Shopping - Holding Shopping Bags - Retail - Spending Money Finance

What Does it Mean to be Able to Afford Something?

Most everyone will agree that you shouldn’t buy things that you can’t afford, yet so many do. Why is that? It seems to us that one of the reasons for this is because many don’t know what it means to be able to afford something. Spoiler alert – it doesn’t ...
Continue →
Scroll to Top