This article from Financial-Planning online magazine has a great and very detailed discussion about the tax advantages of hiring your kids, definitely worth a read!
If you own a business and have kids, you need to take full advantage of the tax savings from hiring your kids, especially if you are to give them allowance anyway!
This article from Financial-Planning online magazine has a great and very detailed discussion about the tax advantages of hiring your kids, definitely worth a read!
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Q. What if I wait a year to cash a retirement plan distribution check? Do I owe tax in previous year or the year the check was cashed?
A. IRS' ruling (2019-19) was addressed primarily to the plan administrators for company retirement plans who wanted clarification on when uncashed checks should be considered distributions. The IRS ruled that a payment from a 401(a) tax-qualified retirement plan was taxable in the year distributed — even though the recipient failed to cash the check. The ruling does not indicate whether the same holding would apply if the check were actually received in a subsequent year. The IRS also did not say whether the ruling is limited to 401(a) plan distributions or whether it also applies to IRA distributions. The IRS also ruled that the plan administrator’s obligations for withholding and reporting arose in the year of distribution, and those obligations were not altered by the recipient’s failure to cash the check during that year. How do you like this service - a price-protection services combs your email inbox for order confirmations and shopping receipts from major retailers and for hotel reservations from selected booking sites, then searches for price drops and claims the refund for you?
If you like it, here are two websites would do it for you - Earny.co It works with more than 15 retailers as well as all Citibank credit cards and all Mastercards (for up to 4 claims per year). It will deduct 25% fee from each refund, or you can pay $9.99 for a monthly subscription. If you link credit card accounts that offer price protection, you can also get refunds on purchases from Amazon.com. Paribus.co It's a Capital One company, it will monitor your inbox for receipts from more than 25 major retailers, but it does not monitor your credit card accounts. Q. What is the tax-smart strategy to withdraw money from retirement accounts?
A. The conventional strategy is to withdraw money from your taxable accounts first (as they are usually taxed at long term capital gain tax rates), then tax-deferred accounts such as traditional IRAs and 401k (this will be subject to income tax rates), and finally Roth IRA (so the tax-free money has more time to grow). However, if the bulk of your assets are in 401k or traditional IRA accounts, since these accounts face RMD requirements from IRS and a large withdrawal after age 70.5 could bump you into much higher tax brackets, you need to start reducing future RMDs by withdrawing money out of those accounts while still in lower tax brackets. If you don't need such money, you can convert them into Roth IRA. Q. How should I invest in my HSA after age 65?
A. Same as how you invest in your other retirement accounts - Shift towards a less aggressive portfolio as you age, which means decreasing the stock holdings and increasing bonds and cash holdings. If you are likely in need the HSA money for health payment, keep a portion of the funds in HSA's money market funds. For archived newsletters, please visit here.
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