Skip to content

Taxes

Jump to bottom
Nolan Hergert edited this page May 16, 2023 · 80 revisions

Long-Term Notes

Qualified Charitable Distribution

Great donations from Traditional IRA

Do you plan to give to charity while in retirement? Are you familiar with QCDs?
A Qualified Charitable Distribution (QCD) allows an IRA withdrawal (ex. RMD) made after age 70.5 to be tax-free as long as that withdrawal is transferred directly to a qualified charity (DAFs are NOT eligible). QCDs reduce your AGI without having to itemize deductions, and they can satisfy RMD requirements.
Prior to learning about QCDs, I was a little unsettled about how much money I had in pre-tax accounts and was wishing more was in Roth. Given that I do plan to donate generously to charity in retirement, I am now less concerned about my pre-tax balance and the effect RMDs might have on my income in retirement.
QCD Benefits
· Reduce overall amount of income subject to taxation
· Potentially reduce amount of Social Security benefit that will be taxed and potentially reduce Medicare premium (by removing some/all of your RMD from taxable income)
· Enable tax benefit by making charitable contribution even when not itemizing deductions on tax return
· Satisfy RMD requirements

General Notes

  • Start with most niche deductions first, to ensure your tax software supports it. Cash App Taxes didn't support nearly any of the Oregon ASC deductions/credits/etc. https://www.oregon.gov/dor/forms/FormsPubs/schedule-or-asc_101-063_2021.pdf

  • Enter in final taxes into estimated tax spreadsheet for next year. Probably want to avoid anomalous year of 2021 OR giving.

  • DEDUCT ESTIMATED TAX PAYMENT FEES.

2023

Oregon and Federal car rebate thing.

  • DEDUCT ESTIMATED TAX PAYMENT FEES.
  • Amex biz checking
  • $150 in swagbucks in early Feb from Axos bank
  • 1099s from Streetbeat?, Public?, TD Ameritrade, Fidelity Bloom Save. Roth IRA from Chase, ... unsure if I need to do anything.

2022

Metro and max tax. hey Dzung - in my W2, I see in box # 19 (local income tax) has a $ number and box# 20 (locality name) says 'METRO' (i'm in WA county, so only the SHS applies

Bonuses

  • Schwab, $500
  • USBank (biz checking 300)
  • Citi, $1K
  • American express egg green checking thing..
  • No 1099-MISC. DIYing it in 1099 schedule C as a business: Streetbeat, $1020? Might not get a proper mailing though. $175 in swagbucks

2021

Is refund from previous tax year taxable? Something about only if it's itemized...weird. https://www.hrblock.com/tax-center/filing/adjustments-and-deductions/is-a-state-refund-taxable/

Write off biz expenses as sole prop? Stuff? It's more like a hobby at this point though.

Do I need to pay new metro housing tax? No, didn't make over $125000 taxable income this year.

Do standard or itemized deduction?

Ensure that 3600 from HSA contributions is deducted, as well as $19500 Deducted already on W2 explained page

Make SoFi as direct deposit payee

Put final tax into estimated tax spreadsheet. Make extra April payment to Oregon and Fed if necessary for 2022 taxes to meet 100% of 2021 taxes.

~~Need to make federal payment of ~$1544 when have funds and note on document somewhere?~~

Write off margin interest (some at IBKR, some at Schwab), total of $150? Itemized deductions, if applicable.

Only counting 10% of IDA contribution as deductible because of Federal Charitable Allowance. 90% is getting returned to me for Oregon as tax credit.

Bonuses needing 1099s

  • Bank of America biz checking (500). Normal checking?
  • Merrill Edge (500)
  • Interactive Brokers (a little under a 1000)
  • USBank normal checking $400
  • SoFi loan and referral income. $1K?
  • Wells Fargo (checking 400)
  • Fidelity, several signup bonuses.

Small

  • Discover

2020

1040 5a, pensions and annuities of $37K. It's from the RIPC, but I only contributed 28K, and rolled over 8K of it...hmm.. = $37K. Maybe it doesn't matter? Taxable amount is $0, so I think I'm fine here, even though the value is wrong.

$25, Qualified Business Income? Try to get that removed, not sure what from... From REIT income :-(

W2 Breakdown shows $3300 of HSA deductions, whereas actual W2 shows $3475 (which is Intel's $175 contribution). Weird. The $75 from Fidelity is supposed to be on line 2 of Form 8889.

Did my short term capital gains harvesting get kiboshed by withdrawing 10K for a car? Hmm...lame.

Bonuses needing 1099s

  • Discover (2019)
  • First Tech
  • Bank of the West
  • Columbia Bank
  • HSBC
  • SoFi Bank and Brokerage
  • PNC?
  • Alliant Credit Union?
  • BBVA

Brokerage Forms

  • SoFi (particularly tax loss harvest action, or was that in M1?)
  • Ally
  • M1 Finance (two of em)
  • TastyTrade
  • Chase
  • ETrade
  • Robinhood

529

Oregon 529 plan administration (sumday) is invisibly .25%, but the internal Vanguard fund is .02% ER.

Merrill Edge, not sure what their fees are overall, but their cheapest fund is %.17 total.

Investigate transferring the 529 somewhere else? Can you still get the tax deduction?

Dying / Estate

I'm mostly interested in avoiding probate and making it easy for heirs. Minimizing taxes is nice I guess, but not a huge priority.

Summarized pretty well here: https://www.fiphysician.com/planning-the-next-life-how-to-leave-money-to-your-heirs/

  • Roth accounts, no taxes although subject to estate tax
  • Taxable accounts, heirs receive a stepped up basis
  • Traditional accounts, heirs need to pay income tax. But you can do tricks to spread it out.

Zook and Zook Law

https://hunter-zook-law-llc.mycase.com/

By operation of law

  • Beneficiaries should know who they are.

  • Will is useful for any other assets.

    • Do I really need it though? If I do have it, do I have to go through probate or mini probate for it? Just sell the car!

  • Power of Attorney is useful

  • Advanced Directive, living will.

Trust becomes really valuable with property, since for whatever reason it doesn't really have TOD beneficiaries. Beneficiaries in 401k are good enough

Transfer On Death

Should be the primary use case for most investment accounts. Don't need to go through probate, but requires a separate form (not necessarily just specifying the beneficiaries online I think).

Trusts and stuff

Living trust is the default. Should be used for anything that doesn't fit into the above, like a house?

Standalone retirement trust is a thing. Recently popular because 2019 SECURE Act limits inherited traditional IRAs to be disbursed in 10 years. But this standalone thing stretches it out

Folks are saying Plan Your Estate is useful, but not a replacement for talking with a good attorney.

Rent or Sell

Really good article on depreciation of rental properties: https://www.fool.com/millionacres/taxes/depreciation/.

  • The IRS depreciates the house over time, even if you don't deduct it on your taxes over time! You have to pay the difference!
  • You can't deduct the purchase of the house all at once as a business expense.
  • The difference between the adjusted basis and the original sale price ("depreciation recapture") is taxed at 25%. Capital gains (difference between purchase price and sale price) is still taxed at normal capital gains rate.
  • 1031 exchange allows you to roll the basis from one property into the next property. Something like that.
Clone this wiki locally