taxes

What to Know About End-of-Year Taxes

The Bird’s Eye View:

As the end of the year quickly approaches, here are some last-minute tax issues you need to get in order before Jan. 1, 2022. Find out how RMDs, charitable contributions, and more could impact your taxes.

Your Guide:

On this episode of Your Retirement Elevated podcast with Scott Dougan, we’re talking about end-of-year taxes and other things you should know about as we head into a new year.

We’re just finishing up year-end tax planning for our clients, and we did a year-end tax planning webinar. If you’re a client of ours and are reading this, we’ve got you covered. If you’re not a client yet, this is a good last-minute resource for you, and we’ve included a downloadable guide for you to reference.

There are some deadlines coming up that you’ll want to get on ASAP. Most tax planning needs to be done by Dec. 31. Things that can happen after the fact are contributing to a traditional IRA, a Roth IRA, for example. You have up to April 15 of the following year.

If there is any last-minute legislation pushed through by Congress this year, we’ll let you know about that.

It’s important to know that required minimum distributions are back in play in 2021. If you are 72 or older this year, you do need to take your RMD for your IRA or retiree employee plan. You’ve got to get that money out by Dec. 31 and pay Uncle Sam his fair share of those tax-deferred funds.

Something else to consider: Are you deferring money into a current plan? If you’re still working, you want to make sure you’re maxing out your company plan. Make sure you get all the money you want to get into that plan by Dec. 31. Contributions have to be done in the calendar year.

End of year checklist: Click Here

Listen to the full episode or use the timestamps below to find specific segments.

[3:47]Required minimum distributions

[5:01] – New legislation

[5:59] Contributions

[6:48] Tax review

[8:17] – Qualified charitable distribution

[9:47] – Estate planning, FSA, etc.

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

How Long Should You Save Important Documents?

The Bird’s Eye View:

Clients often ask us how long they need to keep important documents on file. Today, we’re sharing a checklist of what you need to save and why.

 

Your Guide:

On this episode of Your Retirement Elevated podcast with Scott Dougan, we’re sharing how long you need to keep documents on hand and why.

First, you should create different categories – such as tax documents, health care, legal, assets and debt and other documents – and make a process that works best for you.

Tax documents

You never mess with any government agency that has three letters. For the IRS, you need to keep at least three years of state and federal income tax returns and all your supporting documentation.

If you live in California, you need to keep them longer than three years. In other cases, there are some tax documents you may need to keep for six or seven years, which we detail in the podcast.

Health care

If you’re on Medicare, you’ll want to keep your summary notices for at least a year or until the bill is paid in full. If you’re in an employer drug plan, keep your annual notice of credible coverage. You’ll need that if you’re on Part D at a later time.

Legal

You definitely want a copy of your Social Security card, birth certificate and passport. If you have an estate plan, you want a digital copy in a PDF. You also want to save marriage certificates and military discharge papers.

Listen to the full episode or use the timestamps below to find specific segments.

[7:15] – Taxes

[8:54] – Health care

[9:54] – Legal

[11:13] – Assets and debts

[12:55] – Other documents

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

Download the free PDF: What Documents Should I Keep on File

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Questions Not Usually Addressed in Financial Plans

The Bird’s Eye View:

We often hear about frequently asked questions, but what are some questions that are not usually addressed in financial plans? We’ll explain what they are and why you need to know the answers.

 

Your Guide:

On this episode of Your Retirement Elevated podcast with Scott Dougan, we’ll explain what questions are not usually addressed in financial plans and what you can do about it.

“We like to call it, ‘We need to isolate and find the money falling through the cracks,’” said Scott. “We do that by following a process and a system and set of questions for our prospective clients.”

Sometimes we don’t know what we don’t know, and there can be things going on in our financial lives that we’re not even aware of.

One area money could be falling through the cracks is on your tax return. It’s important that you do tax planning. Your financial advisor can be looking forward to figure out how you can save money.

Another area is your estate plan, which can have holes or be outdated. You need to surround yourself with a team to help you prepare these important documents, and that team needs to communicate.

We’ve come up with a list of questions that aren’t often asked. That will help us streamline your plan and make sure there aren’t any missing pieces. Some of those questions include:

  • Is your current investment risk an undiagnosed problem creating a ticking time bomb in your financial future?
  • Do you use proven strategies to mitigate investment risk?
  • Are you aware of all the tax, investment, or risk issues that are not addressed or solved by a will or living trust?

You need to make factual, logic-based decisions, not emotional decisions. To help you make more sound decisions, your financial advisor can track all the pieces of your financial life, including taxes, beneficiaries, estate plans and more.

Listen to the full episode or use the timestamps below to find specific segments.

[1:22] – Money falling through the cracks

[2:56] – Tax returns

[3:44] – Estate plans

[6:00] – Lack of communication

[10:36] – Making factual, logical decisions

[14:00] – Questions you need to ask

[14:36] – Tax-loss harvesting strategies

[20:24] – Financial advisors can be your quarterback

[23:50] – Virtual educational events

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

 

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Estate Planning 101: Stealth Taxes

The Bird’s Eye View:

In part three of our estate planning series, we’re talking with attorneys Chris Gaughan and Casey Connealy about stealth taxes. They are sneaky taxes that we often don’t think about or know about but can really add up.

 

Your Guide:

Welcome to part three in our series on estate planning. On this episode of Your Retirement Elevated podcast with Scott Dougan, we’ll explain four types of stealth taxes and what you need to know about them.

Our guests today are Chris Gaughan and Casey Connealy, with Gaughan & Connealy Estate Planning Attorneys.

“Stealth taxes are mandates and rules that increase revenues without raising the ire of taxpayers,” said Casey. “These are ways that the government or administrative bodies can say ‘Hey, we are going to charge a fee for this.’”

Death taxes

“One of the biggest concerns that clients express to us is they don’t want to pay any taxes unnecessarily when they die,” said Chris. “There is this assumption out there that you’re going to pay some kind of death tax.”

Death tax isn’t as bad as it looks, but it can be if you’re not careful. The way death tax works is there’s a certain amount of money you’re allowed to leave your family before you have to pay a tax. It’s called the estate tax exemption. Right now, that threshold is really high. It’s $11.7 million.

Individual retirement accounts

We’re talking about IRAs, 401ks, 403bs or any traditional retirement accounts that are pre-tax. They end up having to be taxed either to you, or your kids if you don’t spend all the money, at ordinary income rates. This is typically a much higher tax rate than paying regular capital gains.

During this episode, Chris and Casey also talk about stealth taxes on probate and other administrative fees. Listen to the full episode or use the timestamps below to find specific segments.

[2:19] – What are stealth taxes?

[4:00] – Death taxes

[7:57] – Individual retirement accounts

[11:34] – Probate

[14:09] – Delays and administrative fees

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Check out Part 1 of our Estate Planning 101 Series 

Check out Part 2 of our Estate Planning 101 Series

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

End-of-Year Tax Planning Guide

The Bird’s Eye View:

Consider this your end-of-year tax planning guide. Find out why tax planning is often a missing piece in people’s financial plans.   

 

Your Guide:

In our 19 years of financial planning, we have talked a lot about tax planning. It’s an important topic that more people should be familiar with. On this episode of Your Retirement Elevated podcast with Scott Dougan, we explain why tax planning is so important, how the election could affect taxes and much more.

Why tax planning is often a missing piece

Tax planning should always be top of mind, but it’s usually a big missing piece in people’s plans.

“You need to be proactive in your tax planning,” said Scott. “The IRS does not send out a helpful guide.”

Our job is to help you navigate what the rules are and help you take advantage of what’s available to you. We don’t do tax preparation, but we can help with tax planning and help you make changes to your financial situation to affect taxes.

Itemization vs. standard deduction

The Tax Cuts and Jobs Act roughly doubled the standard deduction. Since 2018, only about 10% of people have itemized their taxes. Most find it’s more beneficial to take the standard deduction.

If you itemize, keep your receipts, and your tax preparer can help you.

CPAs vs. financial planners

CPAs are historians. They collect information you give them about what happened the previous year and tell you what you owe or what refund you will get.

Financial planners can help you do tax planning and figure out things you can do to positively affect your taxes going forward.

Actions to consider before year-end

A few things to consider before the end of the year:

– Estimate what your taxable income will look like for 2020

– Research the notable tax changes for 2020

– Review your capital gains and losses

– Consider a Roth IRA conversion

Listen to the full episode to hear more about notable tax changes, how the election could affect taxes and more. Use the timestamps below to find specific segments.

[2:15] – Why tax planning is often a missing piece

[5:38] – Itemization vs. standard deduction

[7:48] – CPAs vs. financial planners

[11:00] – Actions to consider before year end

[15:29] – Making contributions next year

[17:22] – Notable tax changes

[20:42] – Other important tax considerations

[26:11] – How the election could affect taxes

[30:55] – Eliminating the step up in basis

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Do You Know the Four Tax Liability Buckets?

The Bird’s Eye View:

Do you know what the four tax liability buckets are and what you have in each bucket? Scott Dougan explains why it’s important to know this information. 

 

Your Guide:

Do you know where your tax liabilities fall? You may not realize it, but your tax situation likely falls into one of four buckets, and you may have a little bit in each bucket. On this episode of Your Retirement Elevated Podcast, Scott Dougan explains what the four buckets are and why it’s important to know this information.  

We spend a lot of time talking about how to save and grow your money, but we don’t talk as much about tax efficiency.

“I think it’s one of those things that’s overlooked, is that tax planning portion of most retirement plans,” said Scott.

DOWNLOAD THE FOUR BUCKETS WHITEPAPER

Taxable bucket

This bucket contains money you earn from CDs, checking accounts, money market accounts, after-tax stocks, bonds, mutual funds, your dividends and the capital gains you earn from your stocks and bonds.

This is where you should keep your emergency fund.

“Most experts say that we should have about six months worth of essential expenses in our emergency fund,” said Scott.

Tax-deferred assets bucket

This is the largest bucket and contains things such as your 401K, IRA, 403B, 457 or TSP.

You get a tax deduction when money goes in and you are taxed when you take it out. At age 72, you will have required minimum distributions.

Tax-free bucket

This bucket includes Roth IRAs, most municipal bonds, appreciation of capital assets, properly structured life insurance policies, etc.

How much should be in this bucket? “As much as possible,” said Scott.

A lot of work is focused on getting money from the tax-deferred assets bucket to the tax-free bucket.

Estate tax-free assets

This bucket requires more advanced planning and includes things such as irrevocable life insurance trusts and charitable trusts. The goal is to do some higher-end planning so you don’t have to give a large portion of these assets to the federal government due to bad planning.

Thanks for checking out the Your Retirement Elevated Podcast. Listen to the full episode or use the time codes below to listen to a specific segment. We’ll talk to you again on the next show.

[1:30] – Tax liabilities

[3:29] – Taxable bucket

[7:10] – Tax-deferred assets bucket

[10:08] – Tax-free bucket

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Will the Pandemic Rob Your Retirement? 4 Things to Check Now

The Bird’s Eye View:

The fear for many right now is that once the pandemic finally passes, the financial impact will knock them off track for the future. If you’re worried that the coronavirus could rob you of your retirement, there are four areas of your finances that you can check right now. Find out what they are and why they’re good indicators of where you’re headed.

 

Your Guide:

With the coronavirus still creating many economic and financial issues across the country, pre-retirees along with retirees are concerned about their future. How long can they withstand the volatility before it robs them of their retirement?

Our hope is that you already had a solid plan in place when the year started and haven’t spent much time worrying about the state of your finances, but many people did not. And then there are others that just aren’t too sure about where they stand.

On this episode of Your Retirement Elevated Podcast, Scott Dougan will provide you with a list of four items that you can check on right now that will help you determine whether you’re still on track or whether you need to make adjustments.

No. 1 – Check in on your expenses.

How well are you managing you money during the pandemic? You should have a budget in place already but you should check to see if you’re sticking to it. You might even find during this time that you can cut certain expenses out of your life. Plus, look ahead to see if there are any expenses coming so you can allocate that money now.

No. 2 – Check your assets.

These assets give you the ability to generate income and that’s essential to live the way you choose. Take inventory of what you have.

No. 3 – Check your risk tolerance.

Is your portfolio built to withstand the ups and the downs? You might have thought your risk tolerance was higher than you realized you’re comfortable with, but check to see if you have more risk than you actually believe.

No. 4 – Check the income gap.

Finally, take a look at what your expenses are compared to your guaranteed income sources. If there’s a gap, you need to make changes.

We’ll run through all of these in more detail on the show but use this as an opportunity to look through your finances and find out exactly where you stand.

If you’d like to check out the PDF we’ve created, click here. 

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

[0:53] – Will a recession rob your retirement?

[2:07] – Most of the folks we work with still have the same plan now that they did before the pandemic.

[3:29] – No. 1 – Check in on your expenses.

[6:26] – No. 2 – Check your assets.

[9:26] – No. 3 – Check your risk tolerance. Here’s what that means.

[14:18] – No. 4 – Check the income gap.

[18:12] – How does Scott use this checklist with clients?

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

New Rollover Rules for 2020 RMDs

The Bird’s Eye View:

With so much news to process these last few months, financial updates might not be at the top of your list. But part of the recent relief efforts included new rollover rolls that impact people that need to take RMDs. Find out what it all means and whether this impacts you.

 

Your Guide:

When the government rolled out the CARES Act in March, the legislation aimed at providing economic relief and aid for Americans and it did so in many different forms.

The stimulus received most of the headlines along with the PPP loans that were provided to small businesses. But investors need to pay attention to the new required minimum distribution rules that were included in this because it might impact your financial plans for 2020. At the time, it waived RMDs for the remainder of the year.

What about people that made their withdrawals before that time?

In June, the IRS passed new rollover rules that gave people the opportunity to put that money back into their retirement account if they choose to. It’s a nice option to present to people, but should you take advantage of these new rules?

On this episode of Your Retirement Elevated, Scott will explain the new rules that were put into place last month and what they mean to you. We want to make sure you know what the IRS wanted to accomplish but also whether it impacts your planning process directly.

If you haven’t sat down with your trusted advisor yet to discuss the changes in 2020, make sure you prioritize that to give yourself enough time to make any necessary adjustments. Feel free to contact us if you want to learn more and have us look over your portfolio.

Let’s get the show started. Feel free to use the timestamps below by clicking on them to skip around to specific topics. 

[0:52] – How’s everyone doing around the office?

[2:01] – With change comes opportunity.

[5:18] – New rollover rolls were introduced recently.

[6:18] – Who does this apply to?

[6:43] – Provisions from the CARES Act

[9:31] – Just because you can put money back, should you?

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Best Intentions But Bad Financial Advice

The Bird’s Eye View:

Maybe even more so now than ever, we are looking for more and more financial guidance. A lot of times we turn to lots of different sources to find that information. And while these sources might have the best intentions, that doesn’t mean that the advice is always going to fit you. Let’s look at some examples and explore the reasons why we have to be very careful from whom we’re taking this important guidance.

 

Your Guide:

Whether you work with an advisor or not, you likely turn to people close to you to get their opinion on a subject or to get advice on a financial strategy.

Often times we look to these sources because we believe we trust that they’ll give us their best information. But even if these sources have the best intentions, it doesn’t always result in good advice. In fact, sometimes the guidance you receive is completely wrong for what you need.

So this episode of Your Retirement Elevated Podcast, Scott is going to take us through four common places we turn to get advice and help us understand why things might go wrong. We chose these four because they are the sources people that are both convenient and trusted.

Here’s what we’ll get into on the show:

  • Family
  • Friends
  • Your CPA
  • Financial Experts in the Media

Now that’s not to say that all of these people have bad advice, but how well do they truly know your situation and how knowledgable are they about the topics they discuss with you?

We believe there’s some great information in this episode that we hope will help you out next time you do research, but let’s leave you with a couple thoughts. First, no matter where you turn, make sure you ultimately rely on a financial advisor to help you truly determine what is going to be in your best interest. There are so many pieces to a financial plan and your advisor will know better than anyone which actions to take.

The second is make sure you’re separating information from entertainment. It’s easy to get caught up in what you hear and the confidence in which it’s delivered but is it actually providing you valuable information or just a method for ratings?

Let’s get the show started. Feel free to use the timestamps below by clicking on them to skip around to specific topics. 

[1:17] – First day back in the office as a team since the pandemic began. 

[1:52] – Here’s what we’re talking about today.

[2:45] – The first source: Family

[5:32] A great lesson Scott learned from a mentor early in his career.

[9:21] – The second source: Friends

[10:51] – The third source: CPAs

[16:16] – The fourth source: Financial experts in the media.

[19:45] – Here’s the bottomline on getting advice.

[21:30] – Separating experts from entertainers.

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact

Tax Planning Opportunities with Special Guest David McKnight

The Bird’s Eye View:

Since we aren’t able to bring David McKnight to Kansas City for an in-person appearance, we decided to do the next best thing and bring him on the podcast. Join us as the author and tax planning expert gives us his perspective of what we’re experiencing with a turbulent economy and what opportunities investors have to move closer to a zero percent tax bracket.

 

Your Guide:

We’ve been excited for a while to bring David McKnight back to Kansas City to spend some time with people who want tax-planning guidance. Unfortunately, that plan had to be delayed due to the coronavirus health crisis.

But this is such an important time financially. With taxes at historically-low levels and debt rising rapidly, we thought it would be very valuable to hear from McKnight, even in a scaled-down capacity. He was gracious enough to accept an invitation onto the podcast so we could discuss a number of different tax-planning topics.

If you haven’t had the opportunity to hear from McKnight or read any of his books, go visit his website here. We reference one of his books, The Power of Zero, all the time with clients and even have copies available if you’re interested. All you have to do is reach out to our office.

And that goal of moving into the zero percent tax bracket has never been more accessible. The current tax plan runs to 2026 but the question is what happens after that? Many people assume and expect rates to rise, especially on the heels of multiple stimulus packages being rolled out to help Americans with this financial crisis. Just take a look at the US Debt Clock. That debt total is about to cross $25 trillion when this podcast was released and continues to climb higher and higher.

McKnight believes this is a tremendous opportunity for investors to move money into tax-free accounts and move closer to that goal of zero. Keep in mind that you might no be able to get all of your money into that tax bracket, but it’s important to try because there’s a jump to the next bracket. And that might be even higher by the time your taxes are due.

So he’ll share his perspective on what we’re witnessing right now and what that means for you. What tax-planning options are available right now and why is this such a crucial time? He’ll take us through that and then share some final words of wisdom.

Make sure to keep an eye on McKnight’s website because his new book will be published in November of this year. Don’t forget to ask us about it either because we’ll likely have more copies on hand. And stay tuned for details on when we can expect the author to visit again.

Let’s get the show started. Feel free to use the timestamps below by clicking on them to skip around to specific topics. 

[1:02] – Special guest David McKnight joins us on the show today.

[1:21] – Some background on David.

[2:22] – What has the coronavirus done to the economy and how will it effect tax rates in the future?

[3:36] – As the national deficit increases, politicians have two options.

[5:15] – The state of the economy now that the health crisis has hit.

[6:55] – Our job as advisors is to navigate the current circumstances. What options or opportunities are available now?

[11:16] – How we’re working with clients right now.

[12:12] – If you can’t get to the zero tax bracket, what’s the next best thing?

[13:50] – Last words of wisdom from David.

[16:07] – If you want to get a copy of the book, here’s what we’re doing for listeners.

[17:18] – David’s new book is coming out earlier. 

Thanks for checking out the Your Retirement Elevated Podcast. We’ll talk to you again on the next show.

 

 

Your Guide:

Home Insight About Scott

Scott Dougan, RFC, Investment Advisor – Contact