Warning: count(): Parameter must be an array or an object that implements Countable in /home/crowleyh/public_html/blog/wp-includes/post-template.php on line 284

Warning: count(): Parameter must be an array or an object that implements Countable in /home/crowleyh/public_html/blog/wp-includes/post-template.php on line 284

Warning: count(): Parameter must be an array or an object that implements Countable in /home/crowleyh/public_html/blog/wp-includes/post-template.php on line 284

Warning: count(): Parameter must be an array or an object that implements Countable in /home/crowleyh/public_html/blog/wp-includes/post-template.php on line 284

How Not to Ruin Your Taxes

The simplest advice that can be given to start with is: Don’t overdo. Sometimes trying to find more ways to save money will cost more in the end. Tax laws are hard for CPAs to understand and the interpretation can vary from situation to situation. The biggest problems are once you start to understand tax law, then it is changed and you begin all over again. The following is advice on how to avoid ruining your tax return and making the most out of what you have from millionaires to middle class.

  1. Rethink Bypass Trusts: in the 1990s, some people designed bypass trusts to minimize estate taxes when the lifetime exclusion was around $600,000, but with the new ‘portability’ rule making the lifetime exclusion around $5 million, it makes it much easier to pass money to heirs and shielding them from taxes. For the most part, bypass trusts can cause more harm than good, but they can be useful for specific situations.
  2. Keep Tax Planning Simple: The common practice when investing is rebalancing. This practice is having dividends automatically reinvested in taxable accounts. This can have more harm than good. Instead of reinvesting into taxable accounts, in high earning years, maximize tax-deductible retirement, and in low earning years maximize Roth contributions. Prepare for tax planning in November and December to be prepared for the coming year.
  3. Optimize Social Security Timing: By delaying social security benefits, people can take advantage of the increases in income the delay causes. You can add on average $10,000 to your net worth by just delaying taking social security by a few years.
Share