FINANCIaL
FIELd NOTES
Corrected 1099s - Why You Should Wait to File
A 1099 form reports income from sources such as dividends, interest, and capital gains. Brokerage firms provide these documents based on the information they receive from mutual funds, ETFs, and other investment vehicles.
As tax season approaches, many investors receive their 1099 forms early in the year and feel the urge to file as soon as possible. However, financial institutions often issue corrected versions. If you receive one of these corrected 1099s and have already filed, an amendment to your tax return may be needed…
How Underpaying in Taxes is Now Costing You More
When it comes to taxes, underpaying the IRS can be costly. In recent years, the cost of underpaying has gone up substantially.
One primary reason underpaying taxes is more expensive is the rising interest rates on unpaid taxes. The IRS charges interest on any tax owed, just like a loan from a bank. These rates are adjusted quarterly and are tied to current interest rates.
As with other forms of debt, this rate has also increased. As of January 2025, the rate is 7%, up from 3% a few years ago…
Understanding the Primary Home Tax Exclusion
One question I hear from many pre-retirees planning to move after retirement is what the taxes will be when they sell their home. Many have lived in the home for 10, 20, or even 30+ years and are sitting on a substantial gain. Fortunately, the answer is often that there will be little to no taxes due to the primary home tax exclusion.
This provision in the U.S. tax code allows homeowners to exclude a portion of the capital gains from the sale of their primary residence from their taxable income…
The Tax Rules for Roth IRA Withdrawals
In a recent meeting with a client, they had two big, unexpected expenses come up – they needed a new car, and their daughter was getting married! They were concerned about how these purchases would affect their taxes. Fortunately, they have had some money saved away in a Roth IRA that they withdrew from to help mitigate the tax burden of withdrawing all that money from a pre-tax IRA.
The Roth IRA is one of the most powerful tools in your retirement planning arsenal. Its tax advantages during the accumulation phase are well-known, but understanding the rules for Roth withdrawals is equally crucial…
End-of-Year Tax Prep Checklist
With the year coming to a close, below are 23 year-end planning tax items that I review for my clients.
Reviewed maxing out 401(k) or employer-sponsored plan.
Reviewed next year's 401(k) contribution limits and adjust withholdings in January.
Contributed to IRA or…
The Tax-Efficient Way to Consolidate Accounts
As pre-retirees prepare for retirement and the eventual withdrawal from retirement accounts, there may be some confusion about how to optimize their withdrawal strategy. Two of the most common questions I hear are “Which account should I take from?” and “What investment should I sell first?” One of the likely reasons for this confusion is that they have accounts in various places, making it difficult to organize.
One of the first steps in getting organized is to take inventory of all your accounts and then choose a primary custodian to consolidate accounts to. However, there can be significant challenges to doing so…