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Tax

How to Increase Your Returns with Tax-Savvy Investing

Published October 28, 2016

After market-risk and inflation-risk, which investors take great strides to mitigate through sound investment practices, taxation-risk presents the biggest obstacle to building wealth. A sound investment strategy not only seeks to generate returns on your capital, it also seeks to preserve as much of your capital as possible to keep it working for you. One of the surest ways to preserve your capital is to reduce the amount of taxes you pay on investment income and gains. By incorporating tax-saving strategies into your investment plan, you can minimize the impact that taxes have on your capital-at-work.

With your asset allocation it’s all about location

One of the first rules of wealth accumulation is to sock away as much of your income as possible into a tax-qualified retirement plan, such as a 401k, 403b, or an IRA. This gives you an immediate and long-term tax advantage. However, in terms of an overall asset allocation strategy, the placement of various types of investments among your tax-qualified plans and your non-qualified investment accounts is nearly as important as the selection of investments for meeting your particular investment objectives. At its simplest, you should place your tax efficient investment in your non-qualified investment accounts, and your non-tax efficient investments in your qualified accounts.

Are My Social Security Benefits Taxable?

Published July 7, 2016

The quick answer is “it depends.”  But, for the 33 percent of retirees who now rely more heavily on their Social Security benefits to sustain their lifestyle, the answer takes on even more significance.  Generally, your income from Social Security is not taxable on its own; but when it’s combined with other sources of income for tax reporting purposes, a portion of your Social Security benefits, up to 85 percent, could be includable as taxable income. Unfortunately, over 40 percent of retirees aren’t aware that their benefits could possibly be taxed, and it is always a rude awakening when it happens.

Having an understanding of how Social Security benefits could be taxed might enable you to consider ways to reduce the impact. So the real question becomes, “under what circumstances are my Social Security benefits taxable?

Generally, any income from employment, a pension, IRA withdrawals, interest on savings, even interest on tax exempt bonds is combined along with half of your Social Security income to determine the taxable portion. The only sources of income that are not included are monthly payments from an annuity or withdrawals from a Roth IRA.

Getting the Most from Your 401(k) Plan

Published December 16, 2014

As employer sponsored pension plans have become far less common in the private sector, Congress established 401(k) plans to encourage individuals to save for their retirement. Offered through employers, the plans are generally available to eligible employees who are allowed to contribute a percent of their salary to the plan. In most plans, employees are given a menu of investment options that enable them to create a portfolio that is most suited for their investment preferences and risk tolerance.

Are Advisory Fees Tax Deductible?

It’s tax season again, and a question we often get when talking with a new client is, “Are my investment advisory fees tax deductible?” And the answer is an equivocal, “It depends.”

Congress did grant a tax deduction for certain investment expenses, but with anything to do with the tax code, the devil is in the details.

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