Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. If you earn more than $150,000 a year, you're firmly in the upper tier of U.S. income earners, but that doesn't automatically mean you're being crushed by taxes. What does change at this level is complexity. Phase-outs begin, surtaxes come into play, and certain compensation structures can quietly raise your tax bill if they aren't planned for ahead of time. The problem isn't that six-figure earners are ...

Investment Management Concerns - There is a growing need for financial advice related to tax planning, especially for individuals with significant pretax retirement savings [1] - Concerns about the high annual management fees (1%) charged by financial advisers, which may not guarantee higher returns, are prevalent among investors [3][4] - The risk of financial fraud by advisers is a significant concern, with many stories highlighting instances of advisers misappropriating client funds [3][8] Financial Advisory Services - Credit unions may offer financial advice, but it is important to understand that this advice is not entirely free, as advisers are typically salaried employees [2][11] - Independent advisers may not always act as fiduciaries, which raises concerns about their obligation to act in the client's best interest [11][12] - Fee-only fiduciary advisers are primarily regulated by the Securities and Exchange Commission or state securities regulators, ensuring a higher standard of care [12] Roth Conversions and Tax Strategies - Roth conversions can be beneficial, even if taxes are paid using retirement funds, particularly if future tax rates are expected to rise [16][19] - Timing for Roth conversions is crucial, as it is advisable to convert when in a lower tax bracket to minimize tax liabilities [18][19] - Strategies such as Qualified Charitable Distributions (QCDs) can help manage tax implications related to Required Minimum Distributions (RMDs) [14][15] Fraud Prevention Measures - To prevent financial fraud, it is recommended to use a third-party custodian for asset management and to avoid giving advisers withdrawal authority [10][11] - Advisers promising guaranteed returns should be viewed with skepticism, as this is often a red flag indicating potential fraud [8][9] - Regular reviews of investment accounts by a CPA and direct receipt of investment statements can help ensure transparency and security [10]

LaylaBird / iStock.com High earners face a ticking clock: Major provisions of the Tax Cuts and Jobs Act will expire after 2025, potentially raising income tax rates, lowering estate and gift exemptions, and changing deductions. Acting now could save thousands and protect long-term wealth. “Many households could face higher marginal income tax rates, a meaningfully lower estate and gift tax exemption, and changes to itemizing and deductions,” said Bill Harris, founder and CEO at Evergreen Wealth. Here a ...

Group 1 - Achieving a savings milestone of $1 million is commendable and marks the individual as a millionaire, emphasizing the importance of maintaining a disciplined financial strategy to avoid lifestyle inflation [1][2] - Consulting a financial planner is recommended to optimize investment strategies, asset allocation, and tax planning, which are crucial for growing wealth beyond the first million [2][5] - A couple with over $1 million in savings but only $12,000 in taxable accounts faces liquidity challenges, particularly with rising family expenses, highlighting the need for a balanced asset allocation strategy [3][6] Group 2 - Contributing excessively to a 401k can limit liquidity, especially for families with increasing expenses, suggesting that there can be a threshold for "too much" allocation in retirement accounts [4][5] - For individuals with lower salaries and no employer match, there may be a risk of having insufficient funds in non-401k accounts, indicating the importance of diversifying investment strategies [5][6] - The financial situation becomes more complex as net worth increases, underscoring the necessity for professional financial advice to navigate unique financial circumstances effectively [5]

Core Insights - Portfolio rebalancing is essential as 2025 ends, especially for those with capital gains and taxable losses, and consulting with financial advisors is highly recommended [1][6] - Investors heavily exposed to AI and growth stocks should consider diversifying their portfolios with fixed income ETFs, cash, gold, or alternative assets for better risk-adjusted returns [2][5] - The market dynamics in 2026 will significantly influence potential returns, emphasizing the importance of focusing on controllable factors [3] Investment Strategies - Investors should reassess their sector exposures and consider how their portfolios should be structured for the next five to ten years [9][8] - Reviewing insurance policies and fixed costs can lead to significant savings, making it a valuable year-end task [11] - Creating a budget for 2026 is crucial for managing income and expenses effectively, which is vital for long-term wealth growth [13] Long-Term Planning - The end of the year is an opportune time for updating estate planning documents, especially for those with dependents or health concerns [15] - Exploring additional income streams, such as side hustles, can have a substantial impact on financial goals [17] - Staying informed about macroeconomic developments can enhance long-term investment strategies [20] Goal Setting - Setting realistic and measurable goals for the new year can help investors achieve their financial objectives without overwhelming themselves [21]

Converting your 401(k) to a Roth portfolio will allow you to entirely avoid RMDs. This is a legitimate form of tax planning. However, often there’s a difference between whether you can do something and whether you should; whether it’s allowed, and whether it’s in your long-term best interest. For example, say that you’re 62 years old. You have $1.6 million in a 401(k). If you convert this portfolio to a Roth IRA 10% at a time, you can avoid required minimum distributions on your $1.6 million. However, par ...

Core Insights - The article emphasizes the importance of setting achievable financial resolutions rather than attempting to overhaul one's entire financial life at once [1][2][3] Financial Resolutions - Experts recommend focusing on one or two measurable financial goals to avoid burnout and increase the likelihood of success [2][3] - Consistency is highlighted as more important than perfection in achieving financial goals [3] Savings Strategies - Automating savings is advised, with a suggestion to establish a routine for transferring funds into a high-yield savings account to build an emergency fund of at least $1,000 [5] - Utilizing high-tech tools and apps can help individuals save money automatically through everyday purchases, which can lead to significant financial benefits over time [6] Tax Preparation - Both employees and independent contractors should prepare for the upcoming tax season by organizing their financial documentation, including contracts and receipts [8] - Self-employed individuals are encouraged to set aside a fixed percentage of their income for taxes to avoid financial strain during tax time [7]

Nevertheless, “there’s nothing in the law that restricts how that deduction interacts with other planning strategies like Roth conversions,” Levy noted. So while it wasn’t specifically crafted to accelerate Roth conversions, Levy said using the tax break for that goal “is very much in line with normal tax planning, where we look at all deductions and credits to manage marginal tax brackets over time.”Lawmakers crafted the deduction to lighten the tax burden of seniors with fixed incomes and higher medical c ...

Core Insights - The article discusses the implications of the higher SALT (State and Local Tax) deduction, which allows taxpayers to deduct up to $40,000 from their taxable income, benefiting high-income households, particularly in areas with high property taxes [2][6][10]. Group 1: SALT Deduction Overview - The SALT deduction is now $40,000 for individuals and married couples with modified adjusted gross incomes below $500,000, phasing down to $10,000 for those earning $600,000 or more [2][6]. - Projections suggest that 5 million to 7 million additional households may itemize deductions this year and next due to the increased SALT deduction [3]. - Approximately 40% of households earning between $200,000 and $500,000 could save nearly $1,200 in taxes, while 70% of those making between $500,000 and $1 million could save nearly $4,000 on average [10]. Group 2: Tax Planning Strategies - Taxpayers are encouraged to compare the benefits of itemizing versus taking the standard deduction, as the higher SALT deduction complicates this decision [4][5]. - A strategy known as "bunching" is recommended, where taxpayers cluster itemized deductions in one year to maximize tax benefits [11][12]. - Charitable donations can be effectively used in the bunching strategy to enhance the SALT deduction benefits [13][16]. Group 3: Financial Considerations - The ability to accelerate or delay tax payments can significantly impact tax savings, but not all taxpayers have the flexibility to do so [17][19]. - Homeowners with mortgages may face challenges in prepaying property taxes, while those who own their homes outright may have more options [18]. - Emotional factors can influence tax decisions, and careful planning is necessary to balance immediate cash flow with potential future tax savings [21].

Tax Bracket Adjustments - The IRS adjusts tax brackets annually to account for inflation, preventing "bracket creep" [1][2] - Due to inflation adjustments and an increased standard deduction, taxpayers may pay slightly less in 2025 compared to 2024, even with the same income [3] Tax Benefits for Seniors - Seniors aged 65 or older receive a temporary $6,000 tax deduction in addition to the standard deduction for the years 2025-2028 [4] - The $6,000 deduction for seniors is phased out for individuals with income at $75,000 and couples at $150,000 [4] - Changes to Medicaid may impact seniors, potentially raising costs related to long-term care [5] State and Local Tax (SALT) Deduction - The SALT deduction has increased to $40,000 [5] - Taxpayers in states with high local and state taxes who itemize their deductions could significantly benefit from the raised SALT deduction [6][7] Tax Planning Strategies - Bunching deductions, such as charitable contributions, can help taxpayers exceed the standard deduction and maximize tax savings [8] - Bunching can also be applied to medical expenses to surpass the required percentage for write-offs beyond the standard deduction [9]