tax-saving strategy - best benefit solutions...tax strategy – deferred & adv. access 529...
Post on 02-Jun-2020
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Tax-saving Strategy
Process of Money
in Life Journey
Asset
Accumulation
Asset Protection Asset
Transfers
Risk/Return Keep $ Growing Safely
Passing $ Safely Based on your
Wishes/Needs/Preference
Outlines
Tax challenges
Tax-saving strategy
◦ Tax return matters
Individual Taxpayers
Business Owners
◦ Tax planning for future
Tax-deductible
Tax-deferred
Tax-advantage Access
Tax Challenges
Tax Return
Gross Income
-Deductions for AGI (Above the Line)
AGI
-Itemized deduction/Standard
-Personal & Dependency Exemptions
Taxable Income
Tax
-Tax credit
Tax refund/Tax owe
Tax return -- individual
Tax Deductions Capital losses (max. $3000)
Moving expenses
Qualified plan contributions
HSA contribution
Itemized deductions/standard deductions
Personal exemptions
Tax Credits American opportunity credit
Child credit
Foreign tax credit
Tax return - Business Owner
Owning a Business can Maximize your tax
money saving
Tax law favors Business owners
Employee (W2)
Earn – Pay tax – Spend (non-deductible)
Business owner (1099)
Earn – Spend (tax – deductible) – Pay tax
Tax return -- Business Owner
Business related expenses
◦ Mileage deductions
◦ Section 179 deduction
◦ Home-office expenses
◦ Business Travels
◦ Meals and Entertainment
◦ Salary/wages
Special qualified plan
◦ Sep IRA/Simple IRA/Profit Sharing
◦ Solo 401(k)
◦ Defined Benefit Plan
2015 Tax Updates certain phase-out for higher income
2015 Tax Updates Capital gains and qualified dividends
2015 Tax Updates Additional tax on earnings
20
2015 Tax Updates 3.8% Medicare surtax on net investment income
21
2015 Tax Updates 3.8% Medicare surtax on net investment income
22
2015 Tax Updates 3.8% Medicare surtax on net investment income
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Top U.S. Federal Income Tax Bracket
Long Term Tax Impact
Tax-benefit plans
Tax-deductible
Tax-deferred
Tax Advantage access
Tax strategy – deductible & deferred
Qualified plan (401K/IRA/SEP/DB)
◦ Advantages:
Pre-tax contribution
Tax-deferred earnings
Flexible investment options
◦ Disadvantage:
Contribution limit/income limit
Age limit (59 ½ and 70 ½)
Tax strategy -- deferred
Non-deductible IRA/401(k)
Non-Qualified Annuity
◦ Advantages:
Tax-deferred earnings
Life time income stream
Offer some guarantees/more options
No contribution limit
◦ Disadvantages:
Age limit (59 ½)
Tax strategy – deferred & adv. access
Roth IRA/401K
◦ Advantages:
Tax-deferred earnings
Tax-advantage withdrawal
No 70 ½ limitation
◦ Disadvantage:
After-tax contributions
Age limit (5-year & 59 ½)
Contribution limit/income limit
Tax strategy – deferred & adv. access
529 college saving plan ◦ Advantages:
Tax-deferred earnings
Federal tax-free withdrawal for qualified usage
No income limits/age limits
Reduce the contributor’s federal taxable estate
◦ Disadvantage:
Used for qualified higher education expenses
Maybe subject to 10% penalty
Affect your beneficiary’s eligibility for Financial Aid
Tax strategy – deferred & adv. access
Cash Value Life Insurance
◦ Advantages:
Life insurance protection
Tax-deferred earnings
Tax-advantaged access: withdrawals/loans
Income tax-free death benefit
Efficient tool for assets transfer
Flexibility/Liquidity
◦ Disadvantage
Long-term/discipline
Financial/physical qualification
2015 Gift/Estate Tax
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