Core Insights - The average federal tax refund for 2025 is $2,476, reflecting a 14.2% increase compared to the previous year [1] Group 1: Financial Management - Tax refunds should be prioritized for addressing short-term debt payments, such as credit cards and mortgages, or to enhance emergency funds [2] - Part of the tax refund can be allocated to fund near-term goals like travel or education, helping to prevent impulsive spending [3] - Tax refunds are considered "windfall" payments, and contributing them to retirement plans like IRAs or 401(k)s can enhance long-term wealth [4] Group 2: Personal Development - Investing tax refunds in education or credential programs can lead to significantly higher lifelong earnings, as supported by U.S. Bureau of Labor Statistics data [5] Group 3: Tax Planning - To avoid overpaying taxes and receiving a refund in 2026, individuals should use the IRS Tax Withholding Estimator to balance their withholding [6] - A higher tax refund indicates overpayment, which means the government had access to the taxpayer's money throughout the year, highlighting the importance of tax planning [7] - Early tax refunds tend to be higher due to simpler returns being processed first, while more complex returns may lower the average refund as the tax deadline approaches [7]

Move over Altruist, there’s a new AI-powered tax tool in town. Wealthtech firm April is expanding its tax planning platform into the wealth management space, giving financial advisors real-time tax insights and enabling an efficient filing process that can be outsourced or led by a firm’s own CPAs. The capabilities, April execs say, help turn once-tedious tax work into a source of growth for RIAs. April President Raj Doshi and CEO Ben Borodach, who previewed the tools for Advisor Upside, said most wealt ...

For many people, tax regrets don’t come from doing something wrong. It comes from waiting too long to take action. Financial and tax experts said some of the most common year-end regrets stem from treating taxes as a once-a-year chore rather than an ongoing part of everyday financial decisions. 1. Waiting Too Long To Treat Taxes as a Year-Round Strategy Many people still think of taxes as something to deal with only when it’s time to file. However, “Without real-time projections, they don’t see how earl ...

Core Insights - The importance of having the right conversations with financial advisors is emphasized as market conditions and personal financial situations evolve over time [1] Group 1: Tax Handling - Different firms have varying approaches to handling clients' taxes, with some employing in-house tax experts while others collaborate with external tax advisors [2] Group 2: Communication Preferences - The frequency and method of communication between clients and advisors can differ based on individual preferences, highlighting the need for a suitable fit [3] - Digital communication options, such as texting or online portals, should be available, with a focus on privacy and information security [4] Group 3: Reporting and Performance Tracking - Clients should inquire about the nature of reporting, including the frequency and comprehensiveness of investment updates, and whether they can access real-time data [5] Group 4: Financial Tools and Personal Situation - It is crucial to assess whether specific financial tools or services align with an individual's financial situation, considering alternatives for better expense management [6]

Core Insights - The upcoming 2026 midterm elections on November 3 could significantly impact personal finances and taxes, prompting MassMutual to suggest proactive tax strategies for preparation [1] Tax Awareness - Understanding one's tax bracket is crucial as it helps evaluate how proposed policies from different political parties may affect financial outcomes [2] - Reviewing income, deductions, and overall tax situation enables informed decisions regarding saving, investing, and managing income and expenses ahead of potential policy changes [2] Financial Health Assessment - Calculating net worth provides a comprehensive view of financial health by assessing assets and liabilities, highlighting vulnerabilities and strengths [3] - This assessment is particularly valuable during uncertain financial times, allowing adjustments to long-term goals in response to potential tax policy changes [4] Professional Guidance - Engaging with a financial professional is recommended during election cycles due to the volatility and unpredictability of political events, ensuring focus on long-term financial goals [5] - A tax professional can provide a solid plan and expert guidance, helping to navigate the chaotic political landscape without making impulsive decisions [5] Strategic Tax Moves - Implementing three smart tax strategies before the midterm elections can facilitate informed tax choices, keeping finances on track during and after the election season [6]

Core Insights - The article discusses various strategies for taxpayers to save on their taxes, particularly in light of recent changes under the One Big Beautiful Bill Act (OBBBA) that will affect tax returns filed in 2025 and beyond Group 1: Tax Filing Strategies - Taxpayers need to decide whether to itemize deductions or take the standard deduction, with the standard deduction amount increasing for tax year 2025 due to the OBBBA [2][3] - The OBBBA made the increased standard deduction permanent, which has led to a significant decrease in the number of taxpayers itemizing deductions, dropping from about one-third to less than 10% [4] - An estimated 5 million additional taxpayers are expected to itemize in 2025 as a result of the new law [4] Group 2: Deductions for Seniors - A new deduction for seniors aged 65 and older allows for an additional $6,000 deduction on top of itemized or standard deductions, applicable per person [5][6] - The deduction phases out for individuals earning over $75,000 or married couples filing jointly earning over $150,000 [6] Group 3: State and Local Taxes (SALT) - The OBBBA increased the SALT deduction limit from $10,000 to $40,000, potentially making itemizing more beneficial for many taxpayers [7][9] Group 4: Tips Deduction - Starting in 2025, certain workers can deduct up to $25,000 in tips, with the deduction phasing out for those earning more than $150,000 [10][11] Group 5: Charitable Contributions - Beginning in the 2026 tax year, taxpayers can deduct $1,000 in charitable donations even if they take the standard deduction, a change that may benefit those who donate to charities [13][14] Group 6: Investment Losses - Taxpayers can offset capital gains with investment losses, with a limit of $3,000 for single filers, and losses can be carried forward to future tax years [14][15] Group 7: Health Savings Accounts (HSA) - Contributions to HSAs can reduce taxable income and are made with pre-tax dollars, with specific contribution limits based on individual and family plans [16][17][18] Group 8: Retirement Accounts - Contribution limits for 401(k) plans are set at $23,500 for 2025, increasing to $24,500 for 2026, with additional catch-up contributions available for those aged 50 and older [19][20] - Taxpayers can contribute to traditional IRAs until April 15, 2026, for the 2025 tax year, with limits of $7,000 for 2025 and $7,500 for 2026 [20][21]

Tax planning and wealth management stocks sank Tuesday after financial software provider Altruist launched an AI tool for creating tax strategies, sparking concerns that traditional players could be at risk https://t.co/7kmicKS1Pg ...

Core Insights - Altruist has launched an AI-powered tax planning feature within its Hazel platform, allowing advisors to create personalized tax strategies by analyzing various financial documents [1][3] - The new feature is available to all advisory firms, regardless of custody arrangements, and is part of a series of expanded planning solutions for the platform [2] - Hazel's tax planning capability automates the conversion of completed client tax returns into client-ready strategies, utilizing Altruist's proprietary tax logic [3] Feature Details - The tax planning tool enables interactive scenario modeling, allowing advisors to explore various "what-if" scenarios with real-time projected tax outcomes [5] - Advisors can export reports generated by Hazel or present findings live to clients, enhancing client engagement [6] - The platform operates under strict zero-data-retention agreements, ensuring customer data is not retained or used for AI model training [6] Market Context - Tax planning is identified as a critical area for advisors to enhance client outcomes, though it is often time-consuming and mentally taxing, especially during tax season [7] - Altruist previously introduced real-time account data access to advisors, further enhancing the platform's capabilities [7]

Core Insights - The article discusses the financial challenges faced by newly widowed individuals, particularly focusing on the need to reassess retirement planning and investment strategies after the loss of a spouse [2][4]. Financial Situation Overview - Widows at age 66 often receive 100% of their deceased spouse's Social Security benefit, but household expenses typically remain at 75-80% of the previous income level [5][7]. - The transition from joint to individual financial planning is highlighted as a primary challenge for those in this demographic [8]. Income and Growth Balance - The core financial tension involves balancing immediate income stability with the need for long-term growth, especially given the potential for life expectancy to extend 20 to 25 years [4]. - Inflation poses a significant risk to purchasing power, necessitating a portfolio that can sustain withdrawals while also maintaining growth [4]. Portfolio Allocation Strategies - A conservative portfolio allocation of 60% bonds and 40% stocks prioritizes stability but may not keep pace with inflation over the long term [6]. - The current yield on long-term Treasury bonds is around 4.6%, while stocks have returned 14.5% over the past year, illustrating the trade-off between safety and purchasing power [6]. Strategic Financial Planning - A bucket strategy is recommended, allocating cash for 2 years, intermediate bonds for 3-7 years, and stocks for long-term growth needs [7]. - Roth conversions of $20,000 to $30,000 annually before age 73 can help reduce future tax burdens when Required Minimum Distributions begin [7].

Core Insights - Roth retirement accounts, such as Roth IRAs and 401(k)s, provide tax-free investment gains and greater flexibility in retirement, as they do not require minimum distributions and allow tax-free withdrawals [1] Group 1: Roth Conversion - Individuals who missed direct contributions to a Roth account or have high income may consider a Roth conversion to benefit from tax-free growth [2] - A Roth conversion can lead to a significant tax bill in the year of conversion and potentially higher Medicare premiums in the future [3][4] Group 2: Medicare Implications - A Roth conversion can increase income above certain thresholds, resulting in income-related monthly adjustment amounts (IRMAAs) for Medicare premiums, affecting single filers with a modified adjusted gross income (MAGI) above $109,000 and married filers above $218,000 [5] - The thresholds for IRMAAs are relatively low, making it easy for a Roth conversion to trigger additional costs for Medicare premiums [5] Group 3: Caution and Strategy - Caution is advised when considering a Roth conversion due to potential tax implications and increased Medicare costs [6][8] - It may be beneficial to perform smaller Roth conversions over several years rather than a large conversion in one year, and consulting a tax professional is recommended to optimize timing and minimize tax impact [8]