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Hillary wants to take from the rich and give to the poor | My Money Track

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Hillary wants to take from the rich and give to the poor

 

Robin Hood has traded green tights for a royal-blue pantsuit. Hillary Rodham-hood’s recent speech takes aim at those hard-working and successful Americans who have generally sacrificed to earn their wealth. It plays right in line with the comments made by President Obama years ago that “you, didn’t earn your wealth through you own hard work, but because of him and the American system,” or something along those lines.  Are you and your success a fraud? Poor Ben CarsonEven the quite and “low-energy,” Ben Carson apparently may have exaggerated a tad in his autobiography, Gifted Hands a fraud?. Could Carson also be a fraud???

Hillary also commented that with “corporations making record profits, with CEOs making record pay, but your paychecks have barely budged,” she said. And while that appears to be 100% accurate, The wealthy aren’t the issue. Baby Boomers and Generation X members are tied of getting screwed.

The need for much higher incomeHillary tax rates is not a democrat or republican issue; it is a math issue. There simply is not enough tax revenue to pay off or down our debt in the foreseeable future. This could spell pain and doom for our children and grandchildren if something isn’t done immediately.

The National debt and out of control government spending (including looting the social security piggy bank) has created what is nearly an insurmountable obstacle for the future of America and it’s younger millennial generations. It’s time to get smart about your income taxes and how to both reduce your income tax bracket and learn how to legally avoid paying the highest rate of taxes on your earnings.

Even your social security benefits are taxable up to 85%, which is laughable since social security is in fact a tax.

Social Security is nothing more than a lifetime annuity; similar to a pension. Secret Strategy copyIf you want to avoid paying taxes on social security income or on annuities you may own, then you need to call us.

If your income level fluctuates from year to year, you may find yourself paying more than you expect at tax time. That’s because when you have higher income, your income may be bumped into another tax bracket, causing you to pay higher tax rates at upper levels of income. The tax rate jumps as much as 5% from one level to the next – a significant amount when you’re planning your tax year.

What can you do to avoid paying higher tax rates when you have a year with more income?

James Michael Ham of My Money Track comments; “first, it is better to make more money, even if one does end up in a higher income tax bracket; but why not play the system just as the wealthy do each year?”

My Money Track offers the best 5 tricks and tips to avoid being bumped into a higher tax bracket: 

1. Contribute to retirement plans.

When one retires (yes, some baby boomers are still able to imagine retiring some day), theoretically one will be in a lower overall income tax bracket. Of course you pay tax on the money when you take it out in retirement. If you’re in a lower tax bracket after you retire, however, you’ll pay far less income tax that way. Say you are in the 28% tax bracket now, while you are working. You may contribute to a traditional retirement plan (IRA, 401k, SEP IRA, 403b, profit-sharing plan, etc.), reducing your taxable income this year by the deductible amount. When you withdraw the money after retirement, you may be in a 15% or 25% tax bracket – a significant improvement tax-wise.

2. Don’t sell too many assets in a single year.

Say you have a stock that’s gone up in a short period of time or your real estate has increased significantly in value. Maybe you’d like to sell them and cash in on those gains. Consider selling some of the shares in one year, and some the next, if selling the stock would put you in a higher tax bracket. If you’ve held your stocks or real estate for more than one year, you may qualify for long-term capital gains rates, which are even lower.

 

3. Plan the timing of income and business expenses.

One of the best things about self-employed is your ability to control when you pay yourself or collect revenues and when you make expenditures. Using the “cash” accounting method (which the majority of us use), you claim the income as revenue in the year you “receive” it and not ion the year when you “earned” it. So if you’ve had a banner year in revenue, you’d likely be better off by buying needed equipment or updating your web site or making SEO expenditures in the same banner income year.

 

 

4. Pay deductible expenses and make contributions in high income years. 

If you make contributions to charitable organizations or to your church or synagogue, make larger donations in years with higher revenues. So for example, A $100 contribution will save you $33 in federal income taxes when you are in the 33% tax bracket and already itemizing deductions. If you make the same $100 contribution in a year when you’re in the 25% tax bracket, it only saves you $25 in federal income taxes. You can also make sure you make your January mortgage payment by December 31 if your income is higher this year. Your January mortgage payment covers December interest expense, so you may as well pay it in December and take the mortgage interest deduction. You may also pay next year’s real estate property taxes in the year with higher income too. IMPORTANT: Make sure you write that check or put it on your credit card in the year you’re in the highest tax bracket.

5. Farming or Fishing for a living?

Some taxpayers are allowed to smooth their income out over a three-year period, using a process called “income averaging.” This can help keep income spikes from pushing them into higher tax brackets. Prior to 1987, all taxpayers could use income averaging but apparently there was quite a bit of tax fraud. So now, you must be in a farming business or working as a fisherman to benefit from it.  Still a great deal if you can qualify for it.

What if you can’t avoid bumping into the next tax bracket when your income and income tax bill rises?

All else being equal, you’re still better off making more money and paying a slightly higher tax on it that you would be making less.  You need to set up a budget and monitor your progress regularly to ensure you are sticking to it!

Don’t forget – the higher tax bracket only applies to your income that exceeds the last tax bracket limit. So if you find yourself in the highest marginal tax bracket, that top bracket only applies to the amount of income earned OVER the lower tax bracket, not on ALL of the income for the entire year.

The best way to capture all of these benefits is to seek the help, advice and guidance of a local financial professional planner or CPA. There are hundreds of qualified experts in this field in Dallas and Ft. Worth that specialize in income tax saving plans.

One of the worst mistakes made by millions of baby boomers is not getting help from a local expert when rolling over their 401k or IRA account(s). Using a do-it-yourself outfit such as Vanguard or Fidelity generally doesn’t offer any income tax advice when rolling over your IRA or other retirement plan. Done incorrectly could cost you up to 25% of your entire retirement account in income taxes. You need our help if you rollover your 401k or 403b into an IRA. The advice is free and worth its weight in gold.

My Money Track is one of many firms that do specialize in helping boomers and generation X members correctly rollover their retirement accounts while completely avoiding income taxes. It really isn’t rocket science and quite a simple process but never do it alone unless you are totally confident of what you are doing.  James Michael Ham says; “the biggest misconception I see is that employees do not understand that they may rollover the vested amounts in their company 401k into an IRA without paying a penny of income tax.”

Once you make your rollover election, it is pretty much “written in stone,” and cannot be “undone.” And while you’re at it, be certain to review your designated beneficiaries of your retirement accounts and IRA and 401k plan. Your spouse and children will be eternally thankful that you did. Contact Michael Ham at My Money Track for more totally free information. You’ll be glad you did!

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