Posts in Tax Planning
How will I be taxed on the money from the sale of my house?
How will I be taxed on the money from the sale of my house?

There is a good chance you will pay 0% in taxes on the sale of your home. The tax code has a provision for the sale of your primary residence where you can shield profit from taxation, called the primary residence exclusion. If you have been living in the house for at least the past two years, you can qualify to avoid taxation on the profit from your home, up to a total of $250,000 if you are single or $500,000 if you are married.

  • You may not be able to avoid all taxes

  • You only pay taxes on profit

  • You may owe no taxes

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Tax PlanningJoshua Escalante Troesh, CFPTax Planning, Mortgage, Buying A Home, Capital Gains Taxes, Property Tax
Is now a good time to sell some of my investment properties?
Is now a good time to sell some of my investment properties?

This is a more complex question than it may seem at first. From a simple perspective, you want to analyze what the true expected future rate of return is on the property including all costs such as maintenance, future upgrades, vacancy, taxes and more. Then compare that true rate of return with the other options you have for the money, accounting for differences in risk.

Also Covered:

  • High Valuations = Lower Expected Future Returns

  • Impact of taxes and transaction costs

  • Your desired life trumps the money

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Investing, Tax Planning, Business AdvisingJoshua Escalante Troesh, CFPReal Estate Investing, rental properties, Small Business, Business Owners
How can I reduce the amount of my taxable income?
How can I reduce the amount of my taxable income?

You seem to be doing well overall with your financial strategy, so the focus will be on optimizing what you are already doing. The following are a few of the most common practices for reducing your income, although I'd need to understand more about your actual situation to be able to guide you in the right direction. I have also included the approximate amount you could reduce your taxable income by with each strategy.

  • CONTRIBUTE MORE TO YOUR WORKPLACE PLAN

  • SEE IF YOU HAVE A 457 PLAN

  • CONTRIBUTE TO HEALTH ACCOUNTS

  • SEEK A COMPREHENSIVE FINANCIAL PLANNER

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Tax PlanningJoshua Escalante Troesh, CFPTax Withholdings, Tax Planning
How Do I Change Tax Withholdings Without Exemptions
How Do I Change Tax Withholdings Without Exemptions

The newest IRS Form W-4 provides a new process to accomplish the same goal as exemptions did in the past. In fact, the new form more clearly connects setting your withholdings with the process you will use in April to fill out Form 1040 and file your taxes.

ALSO COVERED:

  • Filling out the form

  • Getting to an exact withholding number

  • Getting payroll estimates from HR

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Tax PlanningJoshua Escalante Troesh, CFPTax Planning, Federal Income Tax, Exemptions, Form W-4, Tax Withholdings
How is my severance package taxed?
How is my severance package taxed?

Severance packages are considered compensation by the IRS and are taxed the same as other income from a job, but this means not all of your severance is subject to taxation. Reviewing the terms of the agreement with your CPA or financial advisor can help you know exactly how it is taxed. If you are still negotiating your severance, you have an opportunity to lower your taxes by changing the terms of the package.

ALSO COVERED:

  • The Severance Agreement

  • Estimating Tax Withholdings

  • Avoiding Taxation — healthcare & fringe benefits

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Life Planning, Tax PlanningJoshua Escalante Troesh, CFPYoung Families, Starting Out, Financial Foundation, Corona Virus, Covid 19, Severance Package, Layoff, Building Wealth, Career Advice, Career Planning, Career Development
How will a 401(k) withdrawal impact my taxes at year-end?
How will a 401(k) withdrawal impact my taxes at year-end?

Assuming the withdrawal is going to be spent and not rolled over to another retirement account, a partial withdrawal from your Traditional 401(k) will be treated as taxable income when you file your taxes next year. The amount the 401(k) provider deducts and sends to the IRS will also be counted as a prepayment of your taxes for the year, similar to how withholdings worked while working. . . .

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Tax Planning, Retirement PlanningJoshua Escalante Troesh, CFPRetirement & Legacy, Retirement Planning, 401(k), ROTH 401(k), IRA Rollover, Tax Planning, Tax Deduction, Federal Income Tax
How do I file an amended return with form 1040X?
How do I file an amended return with form 1040X?

The IRS provides directions for filing a 1040X on their website, although as with all things IRS they aren't always the easiest to follow. I highly recommend engaging a qualified tax professional, such as a CPA, to assist you with your taxes. Additionally, since you have a significant underpayment of taxes for the prior year, you will want to have professional guidance to minimize penalties (the IRS doesn't generally lower interest charges).

Article Also Covers:

  • Hiring a CPA is Cheap

  • Volunteer Income Tax Assistance Program

  • Minimizing Multi-Decade Taxes

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Tax PlanningJoshua Escalante Troesh, CFPTax Planning, Federal Income Tax, Roth Conversion, Amended Tax Returns, Form 1040X
Is it worth paying points to buy down the mortgage interest rate?
Is it worth paying points to buy down the mortgage interest rate?

If you keep the mortgage for 30 years it is generally worth it, but almost no one does this for either their home or investment property. If you sell the property in 3 months it doesn’t make sense to pay $10k in points to get a $170 monthly savings. The question is: How long do you need to have the mortgage to make paying that fee (the points) worth it - considering the time-value of money?

Article Also Covers:

  • How to calcluate the net present value of the bank’s offers

  • How banks calculate their offers

  • Estimating how long will you keep the mortgage

  • The rate of return on alternative uses for the funds

  • Multi-decade tax planning and mortgage points

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Debt Management, Tax Planning, Life PlanningJoshua Escalante Troesh, CFPReal Estate Investing, 30-year mortgage, Tax Deduction, Tax Planning, Income Tax, Mortgage, 15-year mortgage
If a private individual leases a property to a non-profit, is there an exemption for property taxes for the term of the lease?
If a private individual leases a property to a non-profit, is there an exemption for property taxes for the term of the lease?

Simply leasing a property to a non-profit will not, on its own, exempt a private individual from having to pay property taxes. Since property taxes are state taxes, the exemption will depend on the laws in your individual state. Non-profits are exempt from all state property taxes because. . . .

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Tax PlanningJoshua Escalante Troesh, CFPReal Estate Investing, Property Tax, Non-Profit, 501(c)3
How is the profit from the sale of our home taxed during a divorce?
How is the profit from the sale of our home taxed during a divorce?

There are a few questions imbedded in your bigger question, so I'll be taking them one at a time. Before starting, however, you will likely benefit from talking with a financial professional, at least CPA for doing your taxes this year. To answer your main question, assuming the property was never depreciated as an investment property, your share of the capital gains will be taxed at long-term capital gains rates. This should be a tax of 15% of the capital gain above the exclusion amount.

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Tax PlanningJoshua Escalante Troesh, CFPTax Planning, Tax Deduction, Federal Income Tax, Divorce, Primary Residence Exclusion, Capital Gains Taxes
What happens to vested options when your company closes?
What happens to vested options when your company closes?

Assuming the company closed and is out of business, the options will become worthless just like the stock. In which case, you would not want to exercise the options and there would be no tax implications. If you were taxed on the options/stocks in the past, it is possible you could have a positive impact on your current taxes.

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Tax PlanningJoshua Escalante Troesh, CFPStock options, ISO, NQSO, Incentive stock options
Would Getting a Paper Divorce Help Financially?
Would Getting a Paper Divorce Help Financially?

Yes, getting a paper divorce can help you financially but it can also be a financial negative depending on your personal situation. As with most things with Personal Finance, the answer is it will depend on a large number of factors related to your family's finances. Below are a few of the consideration that immediately spring to mind, which you will want to explore.

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Life Planning, Tax PlanningJoshua Escalante Troesh, CFPStarting Out, Building Wealth, Young Families, 401(k), Financial Foundation, Divorce, Estate Planning
Is interest on a HELOC still deductible under the new tax law?
Is interest on a HELOC still deductible under the new tax law?

Based on what you have stated, your interest should still be deductible under the new tax law. Whether second mortgage interest is deductible is highly dependent on your individual circumstances, and many are confused by the new rules (as they are honestly quite confusing). You will want to . . . .

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Tax PlanningJoshua Escalante Troesh, CFPFederal Income Tax, HELOC, 15-year mortgage, Tax Planning, Tax Deduction
Can I ask the IRS to allow me to return an IRA distribution after the 60 day rollover period?
Can I ask the IRS to allow me to return an IRA distribution after the 60 day rollover period?

Yes, there is potential for relief from the IRS, but ignorance of the rules and weakness in English are most likely going to get denied. At this point you will want to contact a financial advisor and a CPA to help you with this. The CPA will help you in dealing with the IRS and a good financial advisor . . . .

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Tax Planning, Retirement PlanningJoshua Escalante Troesh, CFPIRA Rollover, IRA Penalty, Managing Wealth, Building Wealth, Starting Out, 60 Day Rollover
How are taxes calculated when Bitcoin is exchanged for physical gold and a profit is generated?
How are taxes calculated when Bitcoin is exchanged for physical gold and a profit is generated?

The IRS considers Bitcoin, and all virtual currency, to be property and will tax the gains in the property whenever you sell or exchange your Bitcoin for another asset (including gold or even other virtual currency). So you will have to pay taxes on the amount the Bitcoin has increased in value since you bought it. Below are additional key tax issues related to virtual currency . . . .

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Tax Planning, InvestingJoshua Escalante Troesh, CFPBitcoin, Virtual Currency, Capital Gains Taxes, Gold
What are the tax implications of selling a rental property and using the profits to purchase another rental property?
What are the tax implications of selling a rental property and using the profits to purchase another rental property?

Depending on your situation and your desire, there are two broad options each with their own tax implications. The option which allows you to defer taxes on the sale is a 1031 exchange and will require you not to have access to . . . .

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Investing, Tax PlanningJoshua Escalante Troesh, CFP1031 Exchange, Real Estate Investing, Capital Gains Taxes, investment property