Seeking the help of a professional to assist in one’s wealth planning leaves more time for them to focus on their primary specialty area, thus driving efficiency in managing results. Often, these individuals are focused on their careers, are business owners, or are high achievers with many goals. Here are ten ways a financial professional can assist high-performing individuals work toward improving their financial health.

1. Planning for Goals

A financial professional can develop a customized plan considering income, expenses, financial goals, risk tolerance, and investment strategies. This holistic plan considers all aspects of a high-performing individual’s financial life and aligns them with their goals.

2. Planning for Retirement

It’s vital to start planning early to maintain your desired lifestyle while working and after retirement. Financial professionals will work to understand your retirement lifestyle goals and devise a comprehensive plan based on your goals, risk aversion, and timeline.

3. Investment Advice Based on Your Situation

Investing can be a complex process. A financial professional can help with investment diversification and recommend suitable investment strategies to help manage financial goals.

4. Tax Planning

Efficient tax planning can result in significant financial savings. Financial professionals are equipped to recognize your tax liabilities and objectively propose strategies to mitigate taxes.

5. Risk Management and Insurance

From health insurance to life and property insurance, financial professionals can help you understand the importance of appropriate insurance coverage. Your assets may avoid early depletion with suitable insurance, making insurance essential to asset preservation.

6. Debt Management

Too much debt can hinder financial independence. Financial professionals work with you to determine appropriate strategies for prioritizing and paying off debts, maintaining a healthy credit score, and working toward financial confidence.

7. Estate Planning

Comprehensive estate planning ensures efficient wealth transfer to beneficiaries. Financial and legal professionals together will help guide you through complex processes such as drafting a will, setting up trusts, and tax implications based on your situation.

8. Education Funding

Whether you’re funding your child’s education or returning to school yourself, a financial professional can guide you on appropriate strategies for paying for education without jeopardizing your financial goals.

9. Emergency Funding

Unexpected situations that require immediate financial resources may arise. A financial professional will help develop a strategy for creating an emergency fund and determine the appropriate amount to set aside as you work toward a fully funded emergency fund.

10. Behavioral Coaching

Money decisions often involve a lot of emotions; market ups and downs and other significant life events can derail your long-term financial goals. If your emotions dictate your investment decisions, a financial professional can help you manage them to keep you on track toward pursuing your goals.

Remember, financial wellness is not just about acquiring wealth; it’s also about managing and preserving it for the future. High-performing individuals must seek guidance in this endeavor, as managing finances requires the help of a financial professional, time, and continuous effort.

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as tax, legal, insurance or investment advice. If you are seeking advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

 All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.This article was prepared by Fresh Finance.

LPL Tracking # 538128

Sources

https://www.forbes.com/advisor/investing/financial-advisor/what-is-a-financial-advisor/

The post Asking for Help Is a Strength, Not a Weakness. 10 Ways a Financial Professional Can Assist You. appeared first on Choice Bank.

Knowing about these taxes, who pays them, and how the process works may make a challenging moment less stressful. Here’s an explanation about how estate and inheritance taxes work.

Estate and Inheritance Taxes: What Are They?

Estate and inheritance taxes are both posthumous taxes on assets, but they’re two very different types of taxes.

Estate Tax
The estate tax is the amount of the deceased’s estate paid to the state or federal government before the remainder of the estate passes to the heirs. The estate’s executor (also called the administrator) pays this tax before anything goes to the heirs. The executor must submit the estate tax return and pay any taxes.

• Who needs to pay estate taxes?
  Estate taxes are due at the federal level if the deceased’s estate is worth more than a certain amount.

Inheritance Tax
An inheritance tax is a tax on the assets after their distribution to the beneficiaries. Beneficiaries may have to pay taxes on their share of the estate.

• Who must pay inheritance taxes?
  In contrast to estate taxes, inheritance taxes are paid by the heirs who inherit from the estate. Only a handful of states levy inheritance taxes, and the amount owed varies from one to the next. The states currently taxing inheritance are Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

Estate Taxes in Your State

Many states collect estate taxes, and exemption levels vary. Some states have far lower exemption thresholds than the federal government. State estate taxes might be due if the deceased lived in one of these states or had property in one of these states, even though the estate is exempt from federal estate taxes.

Exemption
The federal estate tax exemption in 2024 is $12.92 million. This exemption means there are no federal estate taxes to pay on an estate worth less than this amount. However, if the estate is worth over $12.92 million, the amount above the threshold is taxable.

How to Lower or Avoid Estate and Inheritance Taxes

You might be a little wary of estate or inheritance taxes, but there are ways to avoid or manage them. With proper planning, you may leave more of your fortune to your loved ones rather than paying taxes to the government.

• Use the Annual Gift Tax Exclusion
  You may give a portion of your estate to someone every year without having it count toward your lifetime estate tax exemption. The gift tax exclusion in 2024 is $17,000 per recipient annually. This exclusion means you may gift as much as $17,000 per person to as many people as you want without the risk of paying any gift tax.
• Use Trusts
  Trusts are the most common means of guarding wealth. Some trusts, such as an irrevocable life insurance trust (ILIT), remove life insurance proceeds from your taxable estate. Others, such as a Charitable Remainder Trust (CRT), help you to leave things to charity while managing your taxable estate.
• Use the Marital Deduction
  If married, under the unlimited marital deduction, you may give your spouse assets without any tax penalty. This strategy delays any estate tax until the surviving spouse dies.
• Spend Down Your Estate
  Another way to make your estate go down is to pay down your estate while you’re still alive. You may give things to your heirs, pay school fees or medical bills, or just invest in your lifestyle to enjoy your fortune and save on your estate tax bill.

Seek Professional Help

Estate and inheritance taxes may be complex – especially for estates with significant assets. State tax regulations differ, and there are several options to choose from. You may want to work with a tax professional or estate planner to help you understand what to do and devise a plan that works for your family.

Meet with a Choice Wealth Team Member

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by WriterAccess.

LPL Tracking #665085

The post Death and Taxes: What to Know About Estate and Inheritance Taxes appeared first on Choice Bank.

What are Capital Gains Taxes?

Capital gains come from the sale of an asset, such as stocks or real estate. Assets will not incur taxes until they are sold or realized. There are two types of capital gains: short-term and long-term.

• Short-Term Gains
  Short-term capital gains taxes are levied on the profits from the sale of an asset held for one year or less. These gains are taxed at the same rate as your ordinary income depending on the marginal tax bracket you fall under. Capital gains could also push you into a higher tax bracket as it increases your income.
• Long-Term Gains
  Investments held for more than a year are considered long-term and are generally taxed less than ordinary income. High earners may also be subject to net investment income tax (NIIT), an additional 3.8% tax that people at a certain income level must consider.

Proposed Capital Gains Tax Rate Increases

Over the past year or so, the financial world has been abuzz with different proposals put forth regarding increasing the capital gains tax. For those who invest their hard-earned money, this news is likely unsettling. Early on, there was talk that the proposed capital gains tax rate increase would double from 20% to nearly 40%. Though not completely eliminated, that talk has cooled some. However, there is still a proposal on the table of a possible increase of around 28% for individuals who earn over $1 million or more.

For ultra-high-net-worth individuals, there is a proposed change to the capital gains tax in the fiscal year 2025 budget that may be of some concern to certain investors. The proposed change suggests a modification requiring individuals with a net worth above a specified amount to pay a minimum tax on their unrealized capital gains from assets such as stocks, bonds, or privately held companies. This differs from current capital gains tax laws where taxpayers pay taxes on realized gains. If passed, some may worry this could create a precedent for the future that could impact investors at any income level.

Potential Impact of Capital Gains Tax Increase Proposals

Pros

• According to the Joint Economic Committee, there are no real benefits to investors, across the income spectrum, regarding the increase of capital gains taxes.

Cons

• Capital gains tax increases raise the cost of capital, decreasing investments and hindering economic growth, including:
  • Decreasing real gross domestic product (GDP)
  • Potentially hurting the jobs market
  • Decreasing real business spending
• Taxpayers would pay capital gains on illusory, inflation-generated gains.
• Early economist, Adam Smith wrote in 1776, “A tax which tended to drive away stock from any particular country would so far tend to dry up every source of revenue both to the sovereign and to the society.” He was trying to make the point that too much tax on capital gains has a greater effect on society than just who (the wealthy) is being taxed.
  • According to the Joint Economic Committee, increasing capital gains tends to drive down wages as well as the general standard of living.

Capital Gains Tax Strategies to Consider

• Hold onto your investment for over a year to prevent the profit from being taxed as regular income.
• Don’t forget about tax-advantaged accounts such as Roth IRAs.
• Your investment losses can be deducted from your investment profits to lower your income by up to $3,000 annually.
• Look into exclusions that may allow you to exclude a portion of gains from the house sale.
• Talk with a financial professional regarding your concerns.

Discuss Capital Gains Taxes With Your Financial Professional

If you are an investor concerned about capital gains, consider reaching out to your financial professional to discuss the potential changes to capital gains tax rates and to help you develop or modify strategies to prepare for whatever legislation gets passed. It may be helpful to create a list of the pros and cons of a capital gains tax increase and going over it with your financial professional.

Sometimes people view trading to make a quick buck by buying low and selling when the price is higher than when you bought it. However, if you fail to consider the capital gains implications, a large chunk of your profits could be lost. This is one of the many risks involved when it comes to investing. Remember, there is no guarantee you will make money and some loss is to be expected. Working with a financial professional can be a beneficial approach to help mitigate some of the risks. Don’t wait, schedule that consultation today!

Sources:

FINL-PDF.DOC (senate.gov)

Harris Unrealized Capital Gains Tax Proposal: Details & Analysis (taxfoundation.org)

DeepDive: The capital gains tax hike will hurt the middle class too – The Hub

Kamala Harris Golf Tax and Unrealized Gains? What You Really Need to Know | Kiplinger

Important Disclosures

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional.

This article was prepared by LPL Marketing Solutions.

LPL Tracking #629416

The post The Economic Impact of a Capital Gains Tax Increase appeared first on Choice Bank.

How Does it Work?

Contributions must be claimed as itemized deductions on Schedule A of IRS Form 1040. The limit for cash donations is generally up to 60% of the taxpayer’s adjusted gross income; however, in some cases 20%, 30%, or 50% limits may apply. Deductions are permitted by the IRS for cash and non-cash contributions depending on that year’s rules and guidelines which may change, so individuals should stay up to date.

Is It Counted as a Charitable Deduction?

Deductions can only be made for contributions that plan to serve a charitable purpose. The IRS also requires the organization to qualify for tax-exempt status.

What Determines a Qualified Organization?

According to the IRS, qualifying organizations include those that operate for charitable, scientific, literary, religious, or educational pursuits, or to combat child or animal abuse. There is a long list of qualified organization examples that can be found on the official IRS website.

What if I Have Non-cash Gifts?

Charitable contributions of goods such as household items and clothes, are acceptable just like artwork and real estate, and must be in good condition so the recipient can use the donation. The deduction amount is based on the item’s fair market value. If the deduction for the non-cash gifts is over $500, individuals, corporations, and partnerships must include Form 8283 when they file their tax returns.

Vehicles
Vehicle donations are a bit different. If the fair market value of the vehicle is over $500, taxpayers can deduct the lesser of:

• The vehicle’s fair market value on the date the gift is given, or
• The gross proceeds from the sale of the vehicle by the organization.

However, if the individual sells the vehicle for $500 or less, a taxpayer can deduct the lesser of:

• $500, or
• The vehicle’s fair market value on the date the gift is given.

Capital Gains
Appreciated capital gains are generally limited to 30% of the taxpayer’s AGI if they are made to qualifying organizations and 20% of the adjusted gross income for non-qualifying organizations.

What if There is an Economic Benefit Attached to a Donation?

If a donor is given an economic benefit in return for their gift, for example, a calendar, this is called a “quid pro quo” donation. If this is the case, their contribution is limited to the amount of the donation in excess of the fair market value of the calendar. If the fair market value of the calendar is $10 and the contribution is $50, the deductible amount is $40.

Non-Financial Benefits of Purposeful Giving

Not everything is about money. Some of the non-financial aspects of giving include:

1. Making a Difference in People’s Lives
   When you give to charity you are providing less fortunate people with a way to make their lives more manageable and less stressful.
2. Improving Your Own Health
   It may make you feel good, and that can make you happy. According to Northwestern Medicine, happiness is great for your health. It may lower your risk for cardiovascular disease, lower your blood pressure, improve sleep, and numerous other health-related benefits.
3. Helping to Foster a Sense of Purpose Within Yourself
   Giving provides some people with a sense of purpose in life. Studies indicate that individuals can fair much better in their lives when they have a purpose.
4. Helping to Build Stronger, Safer Communities
   People can benefit in several ways from charitable giving, such as improving life skills, learning a trade, or some other activity that can give back to the community. This, in turn, can help grow, develop, and inspire a culture of giving within the community.

Consider Discussing Giving Ideas with a Financial Professional

Charitable giving can be complex and impact you in a variety of ways. To get the most out of your charitable donations, consider consulting a financial professional to ensure you are taking the steps necessary to align with your financial strategies and goals while working to mitigate the risk of financial implications due to uninformed decision-making.

Sources:

Charitable Contribution Deduction: Tax Years 2023 and 2024 (investopedia.com)

Publication 526 (2023), Charitable Contributions | Internal Revenue Service (irs.gov)

What is Form 8283? (thomsonreuters.com)

Charitable contribution deductions | Internal Revenue Service (irs.gov)

How Happiness Impacts Health | Northwestern Medicine

The Health Benefits of Giving | RUSH

Important Disclosures:

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax advisor.

This article was prepared by LPL Marketing Solutions

LPL Tracking # 630183

The post The Power of Purposeful Giving: Tax Planning Insights for Charitable Deductions appeared first on Choice Bank.

The Tax Benefits of Life Insurance

First and foremost, life insurance can provide significant tax benefits upon death. The death benefit the policy’s beneficiaries receive is tax-free and not subject to federal or state income taxes. Additionally, life insurance proceeds are not subject to probate, which can save both time and money and quickly pass to heirs.

However, life insurance’s tax benefits continue. Life insurance can be used to transfer assets to future generations without incurring gift or estate taxes. By setting up an irrevocable life insurance trust (ILIT) strategy, individuals can remove the value of their life insurance policies from their taxable estates. The death benefit paid to the trust’s beneficiaries may not be subject to either gift or estate taxes.

Life Insurance as Part of Business Planning

Life insurance can also help business owners lower their tax burden since premiums are deductible. Critical person insurance, also known as key man insurance, is a type of life insurance policy taken out by a business on the life of a key employee or owner. In the event of their death, the company receives the death benefit to help cover any financial losses or expenses incurred due to the loss of that individual. The death benefit is not taxable, making it an asset for the business.

Another way that business owners can use life insurance for tax planning is through buy-sell agreements. Buy-sell agreements outline what can happen to a business in the event of an owner’s death or disability. In these situations, the remaining business owners can use the life insurance proceeds to buy the deceased or disabled owner’s share of the business, providing independence for both parties. Again, the death benefit received is not taxable, saving the company from significant tax liabilities.

In conclusion, HNW individuals have many options for using life insurance as a tax planning tool. From minimizing income and estate taxes to transferring wealth to future generations and preserving their businesses, life insurance offers numerous benefits that may significantly lower their tax burden. Working with financial and tax professionals is essential when considering life insurance as part of your overall tax strategy to thoroughly understand the pros and cons outlined in this article.

Sources:

https://www.investopedia.com/articles/personal-finance/092315/7-reasons-own-life-insurance-irrevocable-trust.asp

https://www.forbes.com/advisor/life-insurance/life-insurance-for-business-owners/

https://www.investopedia.com/articles/pf/07/permanent_life_insurance_taxes.asp

Important Disclosures:

This material contains only general descriptions and is not a solicitation to sell any insurance product, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice, you should consult an insurance professional. You may also visit your state’s insurance department for more information.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

LPL Tracking #552474

The post Tackle Your Tax Burden with a Well-Designed Life Insurance Policy appeared first on Choice Bank.

1. Gather up and organize your tax documents

Compile your tax documents and organize them. Print off digital documents so they are all together (unless you are e-filing) for a more manageable filing year.

2. Determine your filing status

Your filing status is the rate at which income is taxed. There are five filing statuses: single, married filing separately, married filing jointly, head of household, and qualifying widow(er) with dependent child filing status.

3. Check if you qualify for tax exemptions, deductions, or credits

• Tax deductions – Tax deductions reduce your taxable income, potentially lowering the tax you owe. A few examples include medical expenses, property taxes, and charitable contributions.
• Tax exemption – Tax exemptions include income or transactions that are free from tax at the federal, state, or local level. These include some non-profits, specific veterans (for example, disabled veterans), and income from some types of investments like municipal bonds or 401(k)s.
• Tax credit – Tax credits directly reduce the amount of your tax bill. There are either refundable or nonrefundable credits. Examples include the earned income tax credit (refundable) and saver’s credit (nonrefundable).

4. Consider filing electronically (e-File)

The IRS has partnered with several companies to provide electronic filing to the public. Some of these options include TurboTax, H&R Block, and TaxSlayer.

5. Consult a financial professional

A financial professional can work with you to get the most benefit from your tax filing.

Meet with a team member

6. Tax Rates

For the 2024 tax year, according to the IRS, the tax rates are as follows:

More tax rate information for 2024:

The Alternative Minimum Tax exemption, which impacts approximately 0.8% of the U.S. population, goes into effect if income is above the annual AMT exemption amount. This generally applies to taxpayers with high incomes, ensuring these taxpayers pay at least the minimum tax amount owed. Their tax is calculated under regular tax rules and AMT rules, and they pay the higher amount of the two. For 2024, the AMT exemption amount is $85,700 and starts to phase out at $609,350 ($133,300 for married couples filing jointly whose phase out begins at $1,218,700).

The Earned Income Tax Credit amount is $7,830 for qualifying taxpayers in 2024. To qualify, you must meet the basic rules:

• Must be a U.S. citizen or resident alien for the entire year.
• Have a valid social security number by the due date of your 2023 tax return.
• Have an earned income through working under $63,398.
• Have investment income below $11,000 in the 2023 tax year.
• Will not file form 2555 for foreign earned income.
• Qualify for the rules of separation from your spouse and not filing a joint tax return.

Qualifying rules for members of the military, clergy, and taxpayers and their relatives with disabilities.

• The monthly limitation for the qualified transportation fringe benefit and qualified parking is $315.
• The dollar limitation for employee salary reductions for contributions to health flexible spending arrangements is $3,200.
• For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount is $640.
• For participants with self-only coverage in a Medical Savings Account, the plan must have an annual deductible that is not less than $2,800 and not more than $4,150. The maximum out-of-pocket expense amount for self-only coverage is $5,550.
• For family coverage in a Medical Savings Account, the annual deductible is not less than $5,550 and cannot be more than $8,350. The out-of-pocket expense limit for family coverage is $10,200.
• The foreign-earned income exclusion is $126,500.
• The lifetime gift and estate tax exemption amount is now $13,610,000 (this amount may significantly decrease after Dec. 31, 2025, when the Tax Cuts and Jobs Act sunsets unless policymakers extend these provisions).
• The annual gift exclusion is now $18,000.
• The maximum credit allowed for adoptions is the qualified adoption expenses up to $16,810.
• The Lifetime Learning credit applies to individuals who are enrolled in an eligible educational institution (colleges, universities, or technical schools offering education beyond high school) and taking eligible courses (those that improve or acquire job skills). They must also have a modified adjusted gross income of less than $80,000 for single filers and $160,000 for joint filers (beyond this limit, the credit phases out). The tax credit is worth up to 20% of the first $10,000 of qualified tuition and related expenses paid during the taxable year for a maximum credit of $2,000.

Items that are unaltered by indexing due to the Tax Cuts and Jobs Act of 2017.

• The personal exemption remains at 0 (line 5 of your 1040, which states that you want the most amount of tax taken out of your pay each pay period). If you put 1, for example, less taxes are withheld from your paychecks, so you get more money now with a smaller refund.
• There is no limitation on itemized deductions.

This may change upon sunsetting of the Tax Cuts and Jobs Act at the close of 2025.

7. Protecting Yourself from Tax Identity Theft

Identity theft is a severe problem in today’s technological world. To help mitigate the risk of identity theft, consider taking these steps:

• Secure your devices
  Always keep your devices on your person or in a secure location, and ensure your passwords are strong.
• Keep your social security number private
  Criminals steal your social security number in an attempt to obtain credit or even a job in your name.
• Regularly monitor your accounts
  Monitoring your accounts on a regular basis can help you recognize if someone is using your identity to file a fake tax return to claim a fraudulent refund. They may also use this information to get a job or claim your child as a dependent on a phony return.
• Beware of phishing
  Phishing involves people sending emails or other messages posing as a family member, friend, or legitimate company to attempt to steal information. Never click on links or open emails from anyone you don’t know.
• Only go to a tax preparer you trust
  Be sure only to get tax help from a legitimate tax preparer.
• Regularly change your passwords
  Changing your passwords often and ensuring you aren’t repeating them for multiple accounts helps to prevent identity thieves from gaining access to your personal information.
• Respond to IRS notices
  The IRS may send letters 4883C or 6330C asking you to verify your identity. Call the toll-free number provided in the letter to help keep your identity secure. Until the IRS hears from you, they won’t be able to process your tax return, issue refunds, or credit any overpayments to your account.
• Consult a financial professional
  A financial professional can help you take the necessary steps to keep your information out of the hands of identity thieves and provide guidance for a more manageable and efficient tax filing.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by LPL Marketing Solutions

LPL Tracking # 525074

Sources:

IRS provides tax inflation adjustments for tax year 2024 | Internal Revenue Service

What Does It Mean to Be Tax-Exempt or Have Tax-Exempt Income? (investopedia.com)[/disclosure]

Electronic Filing (e-file) | Internal Revenue Service (irs.gov)

Credits & Deductions for Individuals | Internal Revenue Service (irs.gov)

Taxpayer guide to identity theft | Internal Revenue Service (irs.gov)

3 Ways Identity Thieves Steal Your Tax Refund and How to Prevent It – SC Office of the State Treasurer

A Comprehensive Guide to 2024 Tax Credits | SmartAsset

Who Qualifies for the Earned Income Tax Credit (EITC) | Internal Revenue Service (irs.gov)

The post The Ultimate Guide to Navigating Tax Filing Season appeared first on Choice Bank.

1. Defer Income to Next Year

Consider opportunities to defer income to 2024, particularly if you think you may be in a lower tax bracket then. For example, you may be able to defer a year-end bonus or delay the collection of business debts, rents, and payments for services. Doing so may enable you to postpone payment of tax on the income until next year.

2. Accelerate Deductions

You might also look for opportunities to accelerate deductions into the current tax year. If you itemize deductions, making payments for deductible expenses such as qualifying interest, state taxes, and medical expenses before the end of the year, instead of paying them in early 2024, could make a difference on your 2023 return.

3. Make Deductible Charitable Contributions

If you itemize deductions on your federal income tax return, you can generally deduct charitable contributions, but the deduction is limited to 50%, with an increase to 60% for cash contributions to public charities, 30%, or 20% of your adjusted gross income, depending on the type of property you give and the type of organization to which you contribute. Keep in mind that excess amounts can be carried over for up to five years.

4. Bump up Withholding to Cover a Tax Shortfall

If it looks as though you will owe federal income tax for the year, consider increasing your withholding on Form W-4 for the remainder of the year to cover the shortfall. Time may be limited for employees to request a Form W-4 change and for their employers to implement it in time for 2023. The biggest advantage in doing so is that withholding is considered as having been paid evenly throughout the year instead of when the dollars are actually taken from your paycheck. This strategy can be used to make up for low or missing quarterly estimated tax payments.

5. Save More for Retirement

Deductible contributions to a traditional IRA and pre-tax contributions to an employer-sponsored retirement plan such as a 401(k) can reduce your 2023 taxable income. If you haven’t already contributed up to the maximum amount allowed, consider doing so. For 2023, you can contribute up to $22,500 to a 401(k) plan, $30,000 if you’re age 50 or older, and up to $6,500 to traditional and Roth IRAs combined, $7,500 if you’re age 50 or older. Reminder that Roth contributions are not deductible, but Roth qualified distributions are not taxable. The window to make 2023 contributions to an employer plan generally closes at the end of the year, while you have until April 15, 2024, to make 2023 IRA contributions.

6. Take Required Minimum Distributions

If you are age 73 or older, you generally must take required minimum distributions from traditional IRAs and employer-sponsored retirement plans, special rules apply if you’re still working and participating in your employer’s retirement plan. You have to make the withdrawals by the date required — the end of the year for most individuals. The penalty for failing to do so is substantial: 25% of any amount that you failed to distribute as required, 10% if corrected in a timely manner.

7.  Weigh Year-end Investment Moves

You shouldn’t let tax considerations drive your investment decisions. However, it’s worth considering the tax implications of any year-end investment moves that you make. For example, if you have realized net capital gains from selling securities at a profit, you might avoid being taxed on some or all of those gains by selling losing positions. Any losses over and above the amount of your gains can be used to offset up to $3,000 of ordinary income, $1,500 if your filing status is married filing separately, or carried forward to reduce your taxes in future years.

No matter your year end situation, there are many tax moves to consider before celebrating the new year. We would love to meet with you to discuss yours!

Talk to a Financial Advisor

Important Disclosures:

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Broadridge.

LPL Tracking #499280

The post 2023 Year-End Tax Tips appeared first on Choice Bank.

DAFs date from the 1930s but did not become popular until the 1990s. DAFs act as vehicles for receiving gifts, often of appreciated stock, and then distributing cash grants to charities selected by the one making the donation. DAFs make the process of transferring appreciated stock and designating checks as simple as a bank’s bill-paying system.

All DAF donors receive a tax deduction on the date of transfer. You can also transfer stock during one calendar year and receive a deduction even if the DAF completes distribution of grant money to a charity in a subsequent year. According to Internal Revenue Service rules, you calculate the value of your donation and the resulting fixed deduction based on the average of the high and the low market price on the day of transfer. (You are responsible for computing this value.)

After receipt, the stock you gifted is sold and the DAF, itself a charity, pays no tax on any capital gain realized. The proceeds may remain in cash or you may direct the DAF to invest those assets for potential further appreciation (usually in a professionally managed separate account). Any subsequent change in the value of the account does not change the amount you can deduct on your taxes.

As the donor, you direct to which charities the DAF distributes assets. Officially, the DAF owns the assets and is not legally bound to use them as you direct, but it is exceedingly rare for a DAF to not follow the donor’s advice.

Most DAFs also maintain a database of 501(c)(3) tax-exempt charities, based on those organizations’ IRS 990 filing, from which you chose. After you suggest an amount to gift and a charity to receive the gift, the DAF vets and processes your suggestion to ensure the organization qualifies as a public charity under the IRS code. DAFs also handle all record keeping and due diligence and can protect your identity if you want to give anonymously.

Donor-advised funds are the fastest growing charitable giving vehicle in the United States, with more than 1,005,099 donor-advised accounts holding around $159.83 billion in assets. To put that in perspective, the Bill and Melinda Gates Foundation has about $49.8 billion in assets.

Besides considering a DAF, here are other ways to make your charitable giving more significant:

1. Focus your effort. Passionate giving is more sustainable than spreading donations to every good cause or everyone who asks. Consider focusing your donations to just a few charities. Think through why you are giving and what you feel passionate about.
2. Find bang for the buck. Fund programs that produce the greatest effect for the least money and focus on long-term positive outcomes.
3. Include the next generation. You can include your children in the giving process or even help them gift some of their own money.
4. Talk to Your Financial Professional. If you’re considering a DAF or want to learn more, we would love to meet with you.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by RSW Publishing.

LPL Tracking #1-05306261

The post Examining Donor-Advised Funds appeared first on Choice Bank.

What is a Financial Review?

Just as you’d check your navigation system occasionally when traveling on a long trip, it’s important to periodically review your finances to ensure you’re on the correct path and focusing on the objective. This is what a financial review entails—it assesses where you are now, where you’d like to be, and what steps you may need to take to get there.

During a financial review, answer the following questions:

• What are your financial goals?
• What progress have you made on these goals in the last year?
• What progress would you like to make on these goals in the upcoming year?
• Have your goals shifted?
• Has your personal situation changed?
• Do you anticipate any major personal changes (such as marriage, divorce, a new job, a new child, or a home purchase or sale) in the near future
• The answers to these questions may influence everything from what types of insurance you should have to how much you may wish to save for retirement.

Benefits of an Annual Financial Review

Keeping a sharp eye on your finances with this periodic checkup may help you remain financially nimble, quickly adapting to any potential complications that come your way.

Monitor your investment performance and make any changes needed.

By calculating the annual return on your invested funds and comparing them to your target asset allocation, you may be able to determine whether your investments are on track or underperforming. Tax time may be a good time to reconsider any funds that just aren’t keeping up with your targets for some people.

You can adapt to changes in your personal situation.

If you’ve had any major personal changes, reviewing your finances may help you ensure that you’re carrying adequate insurance coverage, appropriately budgeting for major expenses, and taking any other necessary steps to preserve your financial future.

Investigate ways to manage your monthly expenses.

In some situations, a financial review may reveal that you have one or more loans or lines of credit you could refinance to potentially save money. You may also review your subscription services, cutting out any that you no longer use and reducing your monthly outflow.

You may be able to manage your taxes.

By conducting your financial review around the same time you’re preparing and filing your taxes, you may be able to spot any changes you may wish to make now to manage your taxable income for the current tax year. For example, you may be able to contribute more to your 401(k) or traditional IRA to manage your taxable income and overall tax rate.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any insurance product or individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

We suggest that you discuss your specific tax issues with a qualified tax advisor.

Investing involves risks including possible loss of principal.

Asset allocation does not ensure a profit or protect against a loss.

Past performance is no guarantee of future results.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess

LPL Tracking # 1-05233581

The post How to Spring Clean Your Finances with a Financial Review appeared first on Choice Bank.

There are a number of different tax planning moves you can make before December 31 to reduce your owed taxes. But how can you know which ones are available to you? Here are five year-end tax planning questions you may want to ask your financial professional soon.

#1: Is there room left in my retirement accounts?

For the 2022 tax year, most taxpayers who have earned income can contribute up to $20,500 to a 401(k) and $6,000 to a traditional or Roth IRA. Depending on your tax bracket and taxable income, contributing money to a pre-tax account like a 401(k) or traditional IRA could save you a significant amount in taxes. If you haven’t already maxed out your contributions to one or both of these accounts, doing so could pay off at tax time.

For example, if you’re in the 22% bracket, contributing an extra $3,000 to your IRA could reduce your federal income taxes by $660. And if you live in a state that taxes income, this IRA contribution can save you even more in state taxes.

#2: Should I sell investments?

If you have some stagnant or “loser” investments, you may be able to sell them at a loss in order to offset investment gains. This strategy, known as “tax loss harvesting,” can allow you to free up funds for more lucrative investments while minimizing your capital gains taxes.

But because the rules around buying and selling taxable securities can be complicated, this is a strategy you’ll definitely want to discuss with your financial professional before finalizing any transactions.

#3: Are any other tax deductions available?

Some last-minute tax deductions may work to lower your bill. Talk to your tax professional about whether these deductions may be available:

• Charitable contributions
• Medical expenses
• Student loan interest
• Gambling losses
• Home office expenses

#4: Can I defer any income?

Another way to reduce your taxes is to defer some income into 2023. Though you may not be able to do this with a traditional W2 paycheck, deferring contract or freelance income, a bonus, or capital gains into next January instead of December will mean that this income is taxed in 2023, not 2022.

However, deferring income may only make sense if you expect yourself to be in the same tax bracket (or a lower one) next year. You don’t want to defer income that will launch you into a higher bracket. Talk to your financial professional to see whether it makes sense to defer any income and, if so, how to make it happen.

#5: Do I need to spend FSA funds?

Unlike a health savings account (HSA), which allows you to carry over funds from year to year, a flexible spending account (FSA) is generally “use it or lose it.” If you’ve contributed to an FSA for 2022, it’s a good time to take stock of how much is left and what you can spend it on. Also, be on the lookout for any grace periods—you might find that you have until March 2023 instead of December 2022 to spend certain FSA funds.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.

The Roth IRA offers tax deferral on any earnings in the account. Withdrawals from the account may be tax free, as long as they are considered qualified. Limitations and restrictions may apply. Withdrawals prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Future tax laws can change at any time and may impact the benefits of Roth IRAs. Their tax treatment may change.

All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05325555.

The post 5 Year-End Tax Planning Questions to Ask Your Financial Professional appeared first on Choice Bank.