Advisors in Tricky Two
canada goose deals A 3.8 percent surcharge on net investment income contained in the Patient Protection and Affordable Care Act will create extra homework for advisors this year canada goose coats as they figure out which assets to sell through tax loss harvesting. canada goose deals
The tax, known as the Net Investment Income Tax (NIIT), took effect Jan. 1, 2013. It applies to net investment income above a modified adjusted gross income (MAGI) amount of $200,000 for individuals and $250,000 for married couples filing jointly.
“Investors that don’t pay close attention to their MAGI and net investment income could be subject to higher taxes,” said Jamie Hopkins, associate director of buy canada goose jacket the retirement income program at the American College of Financial Services in Bryn Mawr, Canada Goose Online Pa.
canada goose coats on sale Tax loss harvesting, or the idea that investment losses offset gains, lowers taxable income and that means forking over less to Uncle Sam. canada goose coats on sale
“Remember, you don’t want to pay more in taxes than you have to,” Hopkins said.
Canada Goose Outlet Though a popular tool for maximizing after tax returns, not everyone is enamored with tax loss harvesting. Some advisors say selling stocks and bonds that are out cheap Canada Goose of favor only to buy them back later amounts to little more than a tax deferral. Canada Goose Outlet
canada goose Subtract trading commissions and the investment opportunities lost by moving into cash and suddenly tax loss harvesting doesn’t seem so shrewd. canada goose
Canada Goose Parka “Tax loss harvesting flies in the face of the most fundamental rule of investment, which is to buy low and sell high,” said Jonathan Citrin, founder and chief compliance officer of Citrin Group, in an October interview with CNBC. Canada Goose Parka
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But tax loss harvesting can also be applied to life insurance policies and annuities via a 1035 exchange, Hopkins said.
canada goose black friday sale “This is all about Canada Goose Outlet taking advantage of the amount you have paid into canada goose clearance the policy compared to the cash cheap canada goose uk value of the policy if uk canada goose outlet you have paid a lot into the policy but your cash value canada goose uk shop or surrender value is lower, you could transfer the policy to an annuity and offset future taxable gains in the annuity,” Hopkins said in an interview with InsuranceNewsNet. canada goose black friday sale
Canada Goose online Generally, though, tax loss harvesting on longer duration life insurance contracts and annuities is less frequent than on shorter duration investments. Canada Goose online
Few joint tax filers make as much as $250,000. So for tens of millions of taxpayers, Medicaid surcharges and tax loss harvesting, which affects Canada Goose Outlet income outside of tax advantaged accounts, isn’t something they are worried about, Hopkins said.
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canada goose coats “You can get almost every uk canada goose single advisor interested in talking about a Roth IRA since people ask their financial advisor if they canada goose store should contribute to a Roth IRA or traditional IRA,” Hopkins said. canada goose coats
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canadian goose jacket Roth IRAs, which offer tax free growth, are more attractive to investors who prefer paying taxes today taxes that are presumably lower in the early part of a working career as taxes rise when employees earn more. canadian goose jacket
For most people, the traditional IRA makes more sense because it lowers a worker’s canada goose uk outlet tax bracket during the prime contribution years. In retirement, when a worker canadian goose jacket no longer earns what he or she used to, it’s better to pay taxes later than in the prime of a working life.
canada goose clearance sale The question with IRAs often revolves around whether contributions are deductible or not, and whether a Roth IRA presents a more attractive option. canada goose clearance sale
“Good Canada Goose Coats On Sale advisors should be canada goose clearance sale looking at the income implications for a client’s down year,” Hopkins said.
buy canada goose jacket Suppose you are in sales and have come up short of plan in 2015, then it’s worth converting part of a traditional IRA to a Roth IRA and take advantage of a lower tax rate. buy canada goose jacket
Canada Goose sale “Also, make sure you convert the whole account and pay taxes from Canada Goose Jackets the outside of the account because $5,500 in a Roth IRA will canada goose coats on sale be worth more than in $5,500 in traditional IRA,” he said. Canada Goose sale
Canada Goose Jackets With the country in a generally rising tax rate environment to pay for government spending, it’s worth putting funds into a Roth IRA, a traditional tax deferred vehicle and even a brokerage account, which amounts to a tax diversification strategy, Hopkins said. Canada Goose Jackets
“We went to minimize that risk of putting all your retirement assets into one type of account,” he said.
buy canada goose jacket cheap For the very wealthy, Roth canada goose factory sale IRAs are good because investors avoid required minimum distributions at 70.5 years required under a traditional IRA. buy canada goose jacket cheap
“With a Roth account, everything in it is all yours, but with the buy canada goose jacket cheap traditional IRA, the government still owns a claim on canada goose black friday sale it in the form of taxes. For some people the Roth IRA brings peace of mind,” Hopkins said.