Retirement Plans and IRAs

A Cash Balance Contribution May Help you Qualify for the New Deduction for “Qualified Business Income”

Recall from the last two Newsletters that the new tax law disallows doctors and other professionals from claiming the QBI deduction unless their taxable income is at or below $315,000 for married couples and $157,500 for singles. If taxable income is over $415,000/$207,500, then the deduction is disallowed entirely. If income is within these ranges, […]

The Long-Term Impact of Underpaying Your Young Children to Work in Your Practice

The dentist’s accountant was nervous that he was paying his young children $5,500 per year to work in the practice using the children’s images for marketing purposes.  He said he’d be comfortable with the children earning only $1,500 until they reach ten years old.  Consider the long-term wealth reduction if the dentist adopts this conservative […]

After Tax Reform, It Still Makes Sense to Make Back Door Roth IRA Contributions

Aside from disallowing Roth IRA “recharacterizations” (undoing a Roth IRA conversion if the investment value falls), the tax law changes left traditional and Roth IRAs alone.  If anything, the idea of making a non-deductible contribution to a traditional IRA and promptly converting it to a Roth IRA makes more sense after tax reform than it […]

2017 May be the Last Year for Roth IRA Recharacterizations

If we make a conversion of traditional IRA funds to a Roth IRA (and in the process incur the obligatory income tax), we have enjoyed the option of undoing the conversion by moving the cash or securities back to the traditional IRA through what’s called a “recharacterization.”  We’d do this if the value of the […]

Here’s a Fast Way to Calculate How Much it Takes to Maintain Your Standard of Living

That is a number you need to know in planning your financial future.  The best way to calculate this is to take an hour or so with your checkbook and write down how you spent your money over the last couple of years.  If that’s too tough, try this short cut.  It won’t give you […]

Comprehensive Year-End Tax Planning – 2017

Tax changes are coming.  The individual and corporate tax rates are expected to fall.  The marriage penalty, which taxes working spouses more than if they remain single, should go away.  The standard deduction should grow substantially.  Certain deductions will be eliminated (e.g., state and local taxes and medical expenses).  Hopefully, the alternative minimum tax (AMT) […]

Convert to a Roth IRA in 2017 and Defer the Tax on the Conversion Until 2018 if Tax Reform Passes

If you’re inclined to convert a traditional IRA to a Roth IRA to take advantage of the tax-free distributions and the Roth’s exemption from required minimum distributions, you’d prefer to do it in a year when you’re in a lower tax bracket. If you do a 2017 conversion, you’ll pay tax on the conversion at […]

The IRS is Helping Victims of Hurricanes Harvey and Irma

If you are located in a federally declared disaster area, then:  Your 2016 income tax return deadline is extended to January 31, 2018 so long as you’ve already claimed the six month filing extension.  Estimated tax payments that are originally due Sept. 15 and Jan. 16, 2018 are also extended to that date. The rules […]

September 30 is a Key Deadline for Beneficiaries of Inherited IRA

The tax laws require that IRA beneficiaries set up and fund their new inherited IRA accounts by the September 30th following the year of the original IRA owner’s death.  This is important where there are multiple beneficiaries named on the original IRA – say three people, each inheriting one-third of the IRA.  If the Sept. […]