Tax Planning

Updated: April 9th, 2017 by Kara Downing, CFP® 

Without fail as Tax Day approaches every year, the mind whirls while you check boxes and fill in numbers about everything you could have, should have, would have done to save more money on taxes. Could you have saved more? Invested better? Been smarter at charitable giving? Probably. It’s too late for some money-saving measures in the last minute lead up to the deadline for filing your taxes, but one you can take on simple measure to maximize your tax advantages (perhaps now, and certainly later)—set up a Roth IRA account.

Updated: October 8, 2016 by Kara Downing, CFP®​

Normally, transferring qualified retirement funds into an individual, joint or trust account triggers ordinary income tax on the total amount that was transferred. But, when it comes to transferring employer stock, the IRS allows special tax treatment called Net Unrealized Appreciation, or “NUA” for short.  The amount you paid for the stock, also known as “cost basis,” is taxed at your ordinary income tax rates in the year of distribution. The difference between your cost basis and the current market value of the stock is taxed at the long-term capital gains rate in effect at the time the stock is sold. If the stock continues to appreciate before you sell, you will pay long or short-term capital gains rates depending on the holding period. The higher your income tax bracket and the more the stock has appreciated, the bigger the tax benefit you will receive.