Category: Tax
Preparing for Tax Season
By Mark Sipos, LFG Tax Services With the Holiday season behind us, it is time to start thinking about the 2025 tax filing season. Most documents that you will need to compile and file your 2024 tax return will be arriving in your mailbox soon. Before you begin working on your personal income tax return, it’s a good idea to collect and organize your tax documents and related records. The tax preparation checklist included below will help you keep track of the information you will need. While this is not a complete list of items that may be required for your tax return, it will cover the documents and other information needed by most people to file their federal income tax return. Personal Information: Social Security numbers for you, your spouse, and any dependents. Dates of birth for you, your spouse, and any dependents. Bank account routing and account numbers for direct deposits or tax payments. Driver's license for e-filing. Taxes you may have paid: 2024 estimated taxes for federal state, and local tax agencies. Taxes paid in 2024 for amounts due for 2023 tax returns. Real estate taxes. Sales tax paid for large items purchased. Income: W-2s, 1099s for interest and dividends, brokerage year-end tax summaries for investments. 1099Rs for pension and IRA income. Business and rental income received. Gather all related expenses for these types of income as well. K-1's from S-Corporations and Partnerships. State and local
Tax-Friendly Ways to Give
With the holidays right around the corner, it is a great time to explore tax-friendly ways to give money to loved ones or your favorite charities during the holiday season. The following are some great ways to transfer money to others before the end of the year: Qualified Charitable Distributions (QCDs) If charitable giving is already part of your financial plan, then qualified charitable distributions, or QCDs, are a great way to contribute to your favorite charities throughout the year. If you are 70 1/2, you can donate up to $105,000 to a charity directly from your IRA using a QCD in 2024. In 2025 this amount will expand to $108,000. By utilizing QCDs, the taxable portion of your RMD will be reduced dollar for dollar by the amount given to a charitable organization. This will reduce your federal and state taxes without having to itemize your deductions. Gifting and 529 Plans In 2024, individuals are allowed to gift up to $18,000 to another individual without having to report it to the IRS. By staying under the $18,000 limit, there will be no future tax implications for estate taxes. The $18,000 limitation is per gift to an individual, meaning you can make multiple gifts to different individuals before the end of the year as long as they are under the limitation. In 2025, the limitation per gift will increase to $19,000. Gifting to 529 plans is a great way to plan for future education expenses. Gifts to 529 plans are eligible for a state tax deduction. In 2024, Ohio
Tax-Saving Moves You Can Make Before Year-End
Written by Mark Sipos, LFG Tax Services Director From maximizing tax-advantaged savings accounts to donating to charity, here are strategic tax moves to consider before year-end. Tax Day may still be months away, but there are plenty of tax-planning strategies you can consider before then to help manage your 2024 tax bill. In fact, certain tasks should not—or in some cases cannot—wait until next year, lest you miss out on potentially important tax-saving opportunities. Here are the top strategies to consider before December 31—and those you can ponder until Tax Day. Tax-planning strategies to consider by year-end Be sure to take all your required minimum distributions (RMDs). Generally, taxpayers age 73 or older must take minimum distributions from your tax-deferred retirement accounts by the end of the year. Individuals who reached RMD age in 2024 have until April 1 to take their first distribution. Maximize contributions to your workplace retirement plan First and foremost, if your employer matches contributions, be sure to contribute enough to your tax-deferred workplace retirement plan to get the full amount. consider contributing the maximum allowed—$23,000 ($30,500 if age 50 or older) in 2024 for 401(k)s and similar plans if you have the means. Not only can this help reduce your taxable income for the current year and boost your overall savings, but doing so can also be a great
Tax Strategies to Consider Before Year-End
With the year coming to a close, now is the perfect time to start thinking about tax planning to maximize savings for 2024. Many opportunities for tax adjustments close at year-end, so early preparation can be key to achieving the best possible results. Here are some strategic tax planning tips to consider for the final quarter of the year. The last quarter offers a unique opportunity to review income, deductions, and potential tax-saving strategies while there's still time to act. For business owners, deferring income until next year or accelerating expenses can provide tax advantages. Charitable contributions and pre-paying taxes are also options to consider. Accelerating certain expenses, like equipment purchases, may allow for deductions in 2024, helping to reduce this year’s taxable income. Another useful strategy comes in the form of tax loss harvesting, which involves selling securities at a loss to offset capital gains. Although the final position of your portfolio won’t be set until year-end, starting a review now provides time to make adjustments and capture potential tax benefits. The last few months of the year also provide an ideal time to maximize contributions to retirement accounts like 401(k)s, 403(b)s, and 457 plans. Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) can still be funded, providing further tax advantages. If you’ve turned 73 this year, it’s essential to plan for the required minimum dis
Don’t make the mistake of leaving your grandchildren with a tax bill instead of an inheritance
For older Americans, leaving retirement savings to their grandchildren without also leaving them a big tax bill is becoming harder under new rules that took effect in 2020. Previously, heirs other than spouses had decades to draw down inherited retirement accounts. After the rules change, now they must do it within 10 years. To maximize their family’s after-tax wealth, grandparents are changing their estate plans and creating new trusts. The timing change also has grandparents making a series of Roth conversions or big generation-skipping lifetime gifts. These choices make sense with the amount of money and taxes that are at play. According to the Investment Company Institute, Americans held $12.5 trillion in IRAs as of March 31, 2023 and 52% of households headed by someone 65 or older have one. By choosing to leave a Roth IRA, you avoid some of the problems of the accelerated tax hit from an inherited traditional IRA since those can cause a big tax bill, especially if distributions fall during the heir’s highest earning years. Minor grandchildren may also need to file a tax return to report the IRA payouts, and the income could be taxed at the parents’ rate. However, because of the 10-year payout period, there is a risk that your heirs will spend the money quickly. Other options to consider when planning your legacy is to start making lifetime gifts to grandchildren as soon as they are born. That can look like pay
Maximizing the hidden tax strategy behind Net Unrealized Appreciation
The idea of saving as much as possible during your career while making wise investments to have a comfortable retirement is nothing new for workers. But if you don’t consider a tax strategy with that plan, it can derail any retirement. Many workers are able to get company stock either as part of their compensation or through the company’s 401(k) program and these are the stocks you want to pay attention to so you don’t lose money in taxes. Typically, when people retire, they roll all of their 401(k) to an IRA and everything you paid for that company stock inside the 401(k) and all the appreciation through your working years will be taxed at your personal income rate when you take money out to supplement your retirement. Instead, if you use the Net Unrealized Appreciation – or NUA – rules, you can roll the stock out of the 401(k) and pay ordinary income taxes only on the cost basis, or what you paid for the stock through the years. Then, if done correctly, you can have the appreciation of the stock taxed at the much lower capital gains rates. For most people, this could cut your tax bill almost in half. For example, let’s say that you have $300,000 of company stock in your 401(k), that you paid $100,000 for. You roll the stock out of your 401(k) to a non-IRA account. You will pay taxes on the first $100,000 at your ordinary income rate, but the additional $200,000 would be taxed at your capital gain rate, which ca
Let Us Help With Your Taxes
Tax season is upon us. Our Lineweaver Tax Team is ready to help you with all your tax needs. Lead by Tax Planning and Preparation Specialist Mark Sipos, from left, with Tax Assistant and Administrative Support Loryn Zaffle and Tax Associate Josh Wenhold. To learn more about our services or access helpful resources
Is Your Tax Plan Working for You?
It’s that time of year again - tax season is upon us, and we want to remind everyone of some strategies you may be able to take advantage of on your 2019 tax return. A strategy that many find helpful is bunching deductions, which is essentially accelerating your write offs into one year to try to get above the standard deduction. Last year was the first time for all of us filing under the Tax Cuts and Jobs Act of 2017, which doubled the standard the previous standard deduction from tax year 2016. But this year the only change is a slightly increased standard deduction over last year - $24,400 for Married Filing Jointly, and 12,200 if you’re single. By bunching charitable gifts, medical expenses, or even your state and local taxes into one year, you may be able to realize significant savings. However, just keep in mind real estate and state and local taxes are still capped at $10,000. Many people also take advantage of gifting appreciated securities. For example, even if you only paid $10,000 for a security, but it’s now valued at $20,000, you can write off the whole $20,000. This allows you to help both your favorite charity, and your bottom line. Another often overlooked strategy is what’s known as a Backdoor Roth. This is a way for people with high incomes to sidestep the Roth’s income limits. Basically, you fund a traditional IRA and then convert it. This can benefit you because it allows your money to grow tax
The Power of Coordination
At the Lineweaver Companies, we believe a team approach to coordinating all your financial, legal, tax, and insurance needs helps save you time, money and worry. For example, we had clients who were both close to retirement, and unfortunately the husband had been diagnosed with terminal cancer. The first thing we did was to work with them to make sure his pension was triggered in such a way that the wife could receive a greater lifetime benefit - almost a million more dollars than she would have otherwise received. At the same time, in this sort of situation, you have to consider powers of attorney – and other basic estate planning documents that everyone should have, like wills, and even if trusts make sense for your particular situation. There were also huge student loan balances of more than $120,000. But, because they kept the loans entirely in the father’s name, when he passed, the debt was forgiven. But what many people don’t know is that the forgiveness of debt – in this case student loan debt - is considered income by the IRS – and therefore taxable. As you can imagine, in this case it was significant: an additional $40,000. However, we were able to work with the family and the IRS to get the entire amount forgiven as well – so they ended up having the debt and the tax bill forgiven. Given the pension payouts and their savings, they had significant assets that needed to be managed eff
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Case studies are intended to illustrate the types of financial issues faced by actual clients. They should not be construed as a testimonial for or endorsement of Lineweaver Wealth Advisors. They do not represent the experience of any advisory client. Each client’s situation is different, and their goals may not always be achieved. Lineweaver Wealth Advisors, LLC, is not engaged in the practice of law or accounting. Tax information provided is general in nature and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules and regulations are subject to change at any time.
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