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Fair Housing Laws for Apartments: Rules All Property Managers Need to Follow
The penalties for violating these rules are stiff.
The post Fair Housing Laws for Apartments: Rules All Property Managers Need to Follow appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
Everyone Is Talking about Roth IRA Conversions â Hereâs Why
As investors emerge from a tumultuous market in the first quarter of 2022, the current volatility may pose an opportunity for IRA account holders. Those who hold IRAs (and 401(k) accounts that allow for Roth conversion) may be considering whether itâs advantageous to convert a portion of their pre-tax IRAs to a Roth.
Here I provide two reasons why current market conditions are favorable for Roth conversion planning:
1. Current Market Conditions
 Converting a pre-tax traditional IRA to a Roth IRA will result in taxable income based upon the fair market value of the assets in the IRA at the time of conversion. However, once the account is converted to a Roth IRA, current law allows any future growth to be withdrawn income tax-free, so long as the account owner is at least 59½ years old and has had at least one Roth IRA opened for five years on the date of withdrawal. Thus, it may be advantageous to utilize a Roth conversion at a time when markets are down and the tax liability will be based off a lower valuation.
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For example, if an individual in the 24% federal tax bracket converts a $100,000 traditional IRA to a Roth IRA, her taxable income for the year will increase by $100,000. Assuming she remains in the 24% bracket with this additional $100,000 of income, she would owe roughly $24,000 in federal taxes at the time of conversion. If a market correction reduces her account balance by 20% and she converts the account at an $80,000 value, her federal income tax from the conversion would fall to $19,200, yielding a $4,800 tax savings. Once the funds are held inside a Roth IRA, any future market rebound and appreciation will be free of tax.
2. Possibility of Tax Increase
Absent congressional action, reduced tax brackets initiated by the Tax Cuts and Jobs Act (TCJA) in 2018 will sunset on Jan. 1, 2026. The chart below illustrates the reduced tax rates brought on by the TCJA.
Courtesy of Michael Aloi
Unless Congress changes the 2022 tax brackets through tax reform, converting a traditional IRA to a Roth in 2022 could result in a lower marginal federal tax rate than would be applied in 2026 or later. Given that traditional IRAs are subject to required minimum distributions, it may be advantageous to consider converting a portion of the IRA to a Roth while tax rates are reduced.
Other Considerations
The decision to convert all or a portion of your pre-tax IRA accounts depends upon an individualâs own facts and circumstances. Taxpayers are advised to speak with their tax and financial advisers prior to undertaking a Roth conversion. Some of the additional considerations include:
- State and local taxes: Roth conversions will increase taxable income in the year of conversion, which will also increase state and local taxes. Taxpayers should consider their retirement goals before executing a Roth conversion. If an individual currently lives in a high-tax state but plans to retire in a state without income taxes, there is a disincentive to convert to a Roth now. Furthermore, state and local taxes paid are currently deductible only up to $10,000 for federal tax purposes. Absent congressional action, state and local taxes paid will be fully deductible in 2026 (subject to the Alternative Minimum Tax).
- Current vs. Retirement Tax Brackets: For individuals still in their earning years, consideration should be given to their projected income tax bracket in retirement. For example, a taxpayer presently in the top tax bracket may be in a lower tax bracket during retirement, even with the scheduled increase in tax brackets. That could mean waiting to make a conversion may make sense.
- Legislative Risk: While Roth IRAs are presently income tax-free upon distribution and are not subject to required minimum distributions, there have been some legislative efforts to limit Roth IRAs. For example, there is a risk that Congress may change the laws in the future, so that taxpayers in higher tax brackets must pay tax on Roth earnings or required minimum distributions must be taken from Roth IRAs.
- Cash-Flow Planning to Pay Tax Liability: Ideally, the taxes triggered by a Roth conversion should be paid out of other after-tax accounts, allowing the entire IRA being converted to continue to grow income tax-free. Individuals looking to convert their traditional IRA to a Roth IRA should understand the tax implications of a conversion and how much additional tax liability will be generated.
- Avoid Required Minimum Distributions: Under current law, holders of traditional IRAs are required to take annual distributions from their IRAs beginning the year after they turn 72. Unlike traditional IRAs, a Roth IRA currently does not have required minimum distributions. Converting an IRA to a Roth would allow the account holder to continue growing their retirement account without any need to take required minimum distributions.
Final Thoughts
There are many reasons to consider a Roth IRA conversion. However, one should consult with a qualified financial adviser equipped to understand the individualâs entire financial picture to determine whether this strategy may be appropriate.
For more information on Roth conversions please email me at [email protected]. And for a deeper dive, join our April 7 Roth Conversion Webinar with Senior Tax Specialist James Rabasca (register here).
Investment advisory and financial planning services are offered through Summit Financial LLC, an SEC Registered Investment Adviser, 4 Campus Drive, Parsippany, NJ 07054. Tel. 973-285-3600 Fax. 973-285-3666. This material is for your information and guidance and is not intended as legal or tax advice. Clients should make all decisions regarding the tax and legal implications of their investments and plans after consulting with their independent tax or legal advisers. Individual investor portfolios must be constructed based on the individualâs financial resources, investment goals, risk tolerance, investment time horizon, tax situation and other relevant factors. Past performance is not a guarantee of future results. The views and opinions expressed in this article are solely those of the author and should not be attributed to Summit Financial LLC. Links to third-party websites are provided for your convenience and informational purposes only. Summit is not responsible for the information contained on third-party websites. The Summit financial planning design team admitted attorneys and/or CPAs, who act exclusively in a non-representative capacity with respect to Summitâs clients. Neither they nor Summit provide tax or legal advice to clients. Any tax statements contained herein were not intended or written to be used, and cannot be used, for the purpose of avoiding U.S. federal, state or local taxes.
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The Cheapest Cities Near Miami
You’ll get a lot of bang for your buck in one of these cities.
The post The Cheapest Cities Near Miami appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
Kraken Review – 110+ Cryptocurrencies and Low Crypto Trading Fees
Chase Launches New World Of Hyatt Business Card: 75,000 Signup Bonus, $100 Hyatt Credits, $199 Annual Fee [Deal Ends Soon]
Update 4/1/22: Deal will end April 11 at 4 ET. Chase and Hyatt launched today a new World of Hyatt small business Visa credit card which boasts a 75,000 points signup bonus and comes with a $199 annual fee. The card comes with two $50 annual Hyatt credits, 10% points bonus with $50,000 spend, Discoverist […]
Moving to San Jose: What All Renters Need to Know
Living in San Jose you’ll experience great neighborhoods, good food and a booming job market.
The post Moving to San Jose: What All Renters Need to Know appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
Know the Good and Bad of Subscription Boxes Before Signing Up
The appeal of a subscription box is obvious: A little gift delivered to your door each month. Better yet, the specifics of the contents are a surprise. Sort of like a birthday present. But like any commercial gimmick, monthly subscription boxes have their pros and their cons. Beauty boxes like Birchbox want to keep you [â¦]
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
What is the Fair Housing Act and How Does It Impact Renters?
Housing is an equal opportunity for everyone.
The post What is the Fair Housing Act and How Does It Impact Renters? appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.
7 Best Practices for a Stress-Free Tax Season
Itâs the most wonderful time of the year: tax season! All jokes aside, a 2020 study found that the majority of taxpayers dread doing their taxes. Taxes take time, can cost money, and many people find them confusing. Theyâre basically like homework for adults.
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But taxes donât need to be so terrible. Through years of experience and repetition, I have gained efficiencies to speed up the process. While you may not be at that level, here are seven ways to be more organized for tax season â so you can stop dreading the paperwork and get back to your life. Â
1. Gather as you go
Collect all tax-related information in one place as it arrives. When you receive an envelope in the mail with a tax document enclosed, add it to that spot immediately. Youâll be able to easily find it later on, which will help make your tax filing a smoother process.Â
2. Designate a place
Keep previous yearsâ tax information in a central location. In most circumstances, your tax filing this year will be largely similar to the previous year. For this reason you may want to reference previous tax documents to confirm specific numbers or even to see which documents were relevant. You can store your tax information in a folder on a bookshelf, a file in your safe, or even a âBox of Knowledgeâ in the closet. Pick one and stick with it.Â
3. Go paperless
If you are technically inclined, get your tax statements electronically. Itâll be faster, better for document retention, and help you streamline your taxes in future years.Â
4. Know what you need
Think about where your money is stored and any companies that may have a long-term relationship with your money. Check each of these places for tax-related information. For reference, if you have any of the following, you may need a related tax statement for each:Â
- A job: You should get a W-2 form, and if you received unemployment, you should get a Form 1099-G.
- Debt: A mortgage for a home (Form 1098), student loans (Form 1098-E), a personal loan thatâs forgiven (Form 1099-C), other loans.
- Daycare: All the receipts youâve saved from day cares or after-school programs showing your expenses.
- Bank accounts: Savings accounts and interest-earning checking accounts (1099-INT form for interest youâve received).
- Investment accounts: Depending on what types of accounts you hold, there can be several forms to watch for (1099-B for capital gains, 1099-DIV for dividend income, 1099-R for retirement distributions, etc.).
- Donations:Â Charity contribution receipts and end-of-the year receipts from any monthly or recurring payments.
- Pandemic payments: Advance child tax credits (Letter 6419 from the IRS to show how much you received) and stimulus checks (you can utilize a 1444-C and/or Letter 6475 to reconcile the third stimulus payment and determine if any additional amount is owed to you).
5. File early
The sooner your taxes are filed, the surer you can be that they were submitted properly ahead of the deadline and that you wonât get any surprises from the IRS later on. Filing earlier may also lead to a quicker turn-around time on your refund.Â
6. Know where you stand with the IRS
If youâre dying to know the status of your refund, the IRS has an online tool for that: the âWhereâs My Refundâ portal. Otherwise, if you have a tax question, it can be difficult to get a hold of the IRS. They are understaffed, catching up with many rule changes, and processing a lot of tax documents â including from the 2020 tax season. For this reason, you may receive a letter from the IRS that doesnât make sense. Donât panic. Thereâs probably a good explanation for it.
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If you need to call them with a question, be patient and expect a long wait time. You can also check the IRS website to access tax records, see whether you owe the IRS any payments and whether they have processed your payments or tax returns.Â
7. Know when to get help
The IRS doesnât want to see mistakes on tax forms. If they catch a mistake on your form, it could cost you time, money and stress to get it resolved. Many tax-filing software programs are good for straightforward circumstances, but you may not receive the full refund you deserve. Being a business owner, having a higher income, and investing are among the factors that could complicate your tax-filing status.
The more complicated your taxes are, the more it makes sense to find a tax preparer (the IRS also has a preparer directory). A tax preparer or tax adviser can ensure your taxes are filed properly, that you take advantage of tax breaks when available, and can also correct mistakes with the IRS on your behalf. Itâs a win-win!
Taxes donât have to be scary ⦠they only come once a year. They are not meant for you to panic or have anxiety. Being organized and a little professional help can take that stress away. Find a strategy that works for you.Â
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