2026 Tax Planning

This is the Truth Network. Um Welcome to Finishing Well, brought to you by CardinalGuide.com with certified financial planner Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes.

Now, let's get started with Finishing Well. Welcome to Finishing Well with Certified Financial Planner Hans Scheil. Today's show is 2026 tax planning. And connected to the seven worries we always talk about on the show. And believe me, we're going to get into some details of how this new tax plan is pretty exciting stuff.

And so it's kind of cool that if you look in Ecclesiastes 8:5, the Psalm of Wisdom, I mean, the wisdom of Solomon tells us the wise heart will know the proper time and procedure. In other words, you notice scripture doesn't say wisdom is only knowing what to do, but it's also knowing when to do it.

So God builds his world around timing, right? Caesar planted in one season, harvested at another, missed the season, and you miss the opportunity. And that's why we really like to concentrate on what's the season right now when it comes to our taxes, because they really affect every single one of the. Seven worries of retirement that Hans talks about all the time.

So 'tis the season, right? In so many different ways, Hans.

Well, it is. You know these techs. Rates and tax brackets for 2026. They come out about October, early November. And we did a video and a radio show on them.

But they were still new to us and We hadn't really placed them everywhere, and so we did a show on that. And so now when it's almost twenty twenty six and But we we we we got our handle around these and so I thought it would be good to just take the seven worries. all seven subjects that we apply our financial planning to. and talk about How do taxes and tax rates and just paying taxes. Affect you and our financial planning in all seven of these areas.

So let me. Let me name them real quick: Social Security, Medicare, long-term care. IRA 401K. Income planning. Estate planning.

in taxes. And so what we're doing today is we're starting with the seventh one, taxes. And we're working backwards through the other seven. And we're just applying taxes to each one.

So, right here in the video, we had. The to the tax brackets.

So if we look at somebody So Um the married vial and joint. And under the new tax law, In 2026, you're going to have a standard deduction if both people are 65 plus. of thirty five thousand five hundred dollars. And if your income is $150,000 or less, You've got $6,000. for each of you of additional deduction.

So there's going to be $47,500. of deductions If your combined income is 150 grand or less, That you're writing right off the top.

So That's kind of cool. Yeah, it really is exciting and I gotta tell you, I'm really looking kinda forward to it when I get a chance to actually look at that up against, you know, what's going on this year.

Well, yeah.

So, you know, and if if your income is You know, let's just say your Social Security checks for two people. are $5,000 a month. You know, so that's sixty thousand a year. But not all of those are going to count in your taxable income.

So I don't want to get too technical on this thing, but somebody could. really make a couple could make like $170,000 a year. But only you know, 40,000 of the Social Security counts.

So they have an income of really $150,000 a year. and then they get to take a straight-off deduction of like 47 grand, it's going to get their income down around 100 grand. and the federal tax on exactly a hundred grand for a couple is eleven thousand six hundred dollars. And you got to remember these people's taxable income. The way they saw it was 150 grand.

Or a hundred and seventy grand. And so The tax rate on that, the effective tax rate of $11,600 on $150,000. is really low. It's under 10%. It's more like 6 or 7.

Yeah. People don't know this.

So it's just right off the bat listening to this show. in retirement taxes federal and state are probably less than you actually think they are.

Okay? But just knowing that, that ain't gonna do much for you. And we're going to go over the single in a sec. But Um for a married couple You know, just knowing that if you have money in an IRA Then you are in control of the level of income tax. that you pay.

Let's say your income is lower than that. Let's say your income is like 80 grand. And that's a lot of seniors, a lot of our clients. And maybe of the eighty grand. Half of it is Social Security.

And so you know, they they go down and they've got Um you know, like 80 grand, but they pull off the Social Security, they have a taxable income of about 60 grand. And then you take $47,000 of deductions. Your taxable income is very low. I mean, it's going to be.

So That's cool to know that, but it also, if you have money sitting in an IRA, You know, you may want to look at converting some of that to a Roth Simply because you're not using it. Yeah, you're living off of what whatever you're living off of, your Social Security and a little extra.

So you're able to manage these tax brackets year by year. And if you come into us, you can actually through Roth conversions be in control of your income.

So I don't want to beat that point over and over and over again. But that's why we're such students about this. And then when we bring in clients, We work to make them educated on this so that they can make some moves and Generally, they lower their tax bill over their lifetime and maybe pass some of their IRA money. tax-free onto their kids. when they pass away.

So let's go to the single for a minute. And so now if we have a single Making But you know $100,000 a year, which is a lot of money for a single to make. And let let's say that 30,000 of that is Social Security.

So their taxable income is really going to get down around. you know eighty Something like that, and they're going to have a standard deduction if they're 65 and over of 18,000. Clock the six thousand dollar senior deduction so it's like twenty four thousand Um So now they're going to be down around 50. and the taxes on fifty grand For a single are $5,800 to the federal.

So Um Again, it's helpful. And I could go on with several exemptions. Just to know what your bracket is, kind of generally know what you pay in taxes. And then we can show you. moves that you can make, things you can do.

around timing, things you can sell. Um Things you can convert. to generally it might raise your tax bill in the short term. But lower it over the long term. Make sense?

Yeah, I think so. That that uh again, if you Um, had a bunch of money in the IRA. And you know it that you're like a partner with the IRS there that At some point in time you're gonna have to pay And While we've got these lower tax brackets, and based on the income that you have that year, by studying the bracket that you're in, you can see that, wow, I can. push through this much into converting it into a Roth IRA or some other product that would be after tax. That Again, taking advantage of the season that I'm in.

Yeah. Put me in a position to pay a whole lot less taxes later because you can't spend tax money, from what I understand. Sure.

So now let's talk about Estate planning And how do taxes affect the state plan? And You know, one thing I'm going to tell you right off bat, the estate tax. is for the very rich. because the exclusion in twenty twenty six is fifteen million a person.

So You know, you or I are not going to have to worry about that too much. Actually, with a couple and a little planning, it's 30 million. And so Um I know I don't have to worry about that a little bit. I know you don't. But there's some of you people out there and we could really help you.

But that's not our average listener. Our average listener is saying I'm not anywhere near that. I think that the modern estate tax is beneficiaries paying taxes on traditional IRAs when they inherit them. And what we were just talking about, the example earlier, there's a lot of people live off their Social Security. A little bit of something else.

Everything's paid for and they just keep their IRA, only take minimum distributions, they pass away. They leave a big amount. to their kids and it's taxable money and at least one of their kids if they have mobile adult children. is going to cash the thing in and pay a huge tax bill. Ordinary income tax on a very big year, and that happens.

So When I get to estate planning and income taxes, I'm talking about the same thing in this next section. Plan your IRA, plan the taxes on your IRA.

so you're not handing over a burden to their kids. Yes, absolutely.

So The next one is income planning.

Okay, and what I was you know, telling everybody is that we got to plan taxes, we got to plan tithing. I mean if you you know, if you've got a hundred shekels, is that You know, if you got a hundred shekels and you're going to give ten shekels to the Lord or ten percent. then you only got ninety to work with. And then if you got to pay Caesar, another thirty percent or so in taxes. 30%, 32%, 24%.

I mean, you're down, and you got to pay the state. Um you know, you're down to 65, 70 cents. And when we do income planning, we've got a plan with seventy cent pieces. Does that make sense? Yeah, absolutely.

Yeah. Okay.

So that you know we're going to build an income plan from the bottom up so we're going to We're we're going to say these people need five grand a month. out of their investments, out of their retirement accounts. plus their Social Security.

So To get five grand a month, we've got to plan for eight thousand a month worth of withdrawals out of the IRA.

Well, this would be a good time again to remind you that this show is brought to you by Cardinal Guide, CardinalGuide.com. And if you go to CardinalGuide.com, you're going to find the seven worries tabs. And you can find out we're talking about all seven today in their own way, but how they're related is to taxes. And so if you look at the taxes tab. and click on that, you're going to find a video with this exact same title, right?

2026 Tax Planning with the Seven Worries. And it'll have show notes and other examples of the things that we're talking about around all seven ideas that we're going to talk about. In today's video, to see how your particular tax bracket may be opening up an opportunity for you in one of these ideas. And so, when we come back, you can, well, before I get to that, I should remind you that at cardinalguide.com, you can find Hans's book, The Complete Cardinal Guide to Planning for and Living Your Retirement, as well as the Contact Hans and Tom page.

So, when we get back, we're going to be talking a whole lot more about 2026 tax planning and the seven worries. We'll be right back. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM. A registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.

Well, welcome back to Finishing Well with Certified Financial Planner Hans Scheil. And today's show is 2026 tax planning. On the seven worries and the seven worries, so to speak, looking at those that we talk about every week. And so we got past income.

So, Hans, what's next? Yeah, so we talk taxes, estate planning and income, and now we're to number four, IRA 401 planning. It's all around distribution planning. But the 2026 tax change numbers, I'm really speaking now to the people. That haven't retired yet.

They're still working. and they're still making money and they're still adding to their retirement account. Or, you know, and so in 2026, the 401k maximum, if you're over 50. is thirty two thousand five hundred dollars. that you can put in there.

That's the most that doesn't include the employer match. That's for somebody fifty plus.

So if you are still working. And we run into this a lot where people, they're empty nesters, the kids are grown, they're educated. Maybe the house is paid off or close to paid off and They're still working. Maybe both both in the couple are still working. And they're really making more money than they're spending because They know retirement's coming and All I'm going to suggest is to all of them, and I do is that take a look if you're in that boat.

Let's look at your four hundred one K contributions And let's bump them up a little bit if you can afford to. That's the smartest thing you can do, is let's make that thing even bigger. Even if we take a big bite out of your check.

So that's thirty two thousand five hundred is the max. I know you would suggest, and since we're right here, we might as well suggest it. is if you're in that boat and You know, we have. Here at Truth Broadcasting, you know, we have a 401k, but you have your choice of that being a Roth or a traditional IRA. And so when you're in that fifty plus category like me, it's Great idea to switch over to the Roth, right?

Absolutely. And again, I'd like to give you a consultation on that, and then there's people that would argue with me about it.

So The idea is bump it up and most of these same people that I've just described They're coming to me to figure out how to convert the whole thing of their Rob, and we're going to get to that. But the simplest way to get more Roth money is just make your contributions Roth.

Okay.

I mean just Or make half of it Roth, or do something in that. And I'll be glad to help you with this if you want to give me a call. And we kind of think our way through it. Um The other thing that has changed is the IRA contribution for people fifty plus. is eighty six hundred dollars.

And a lot of people say, well, I can't put money in an IRA because I'm I make too much money. And those thresholds are pretty low for working professionals. But we have such a thing, and I'm not going to do a show on it today. when this is a subsection called the backdoor Roth IRA. Yeah, and I do these myself every year, so does Tom.

And I actually do one for my wife who's not working. Yeah. boils down to putting $8,600. in a non-deductible IRA. which you don't get any tax benefit, but you got $8,600 in an IRA.

and are non-deductible, and then you immediately convert it. And now you've got $8,600 in a Roth that you didn't have. And you can do that on top of the 401k contribution.

So, if you want to find out about that, wait for a later show or give me a call, and I'll tell you how to do that. a couple in fact if you've never done it And you want to consider doing it like in January or February, we can actually do two years. In January or February. because we can do the January for twenty twenty five for January, February, and then we can also do twenty twenty six because we're in twenty twenty six.

So now we're up to 17,200 a person. Yeah, it's called a backdoor Roth IRA. Don't try to do one of these on your own. I'll talk to you about it.

Okay.

Good, yeah. The Q C D qualified charitable distribution. annual maximum is $111,000.

Now I'm sure a lot of you You know, you say, well, great. I mean, put $111,000 in a QCD. You know, there's a lot of people listening that you just say, what are you talking about? I mean and and But that's the federal maximum.

So, you know, and All I want to do is I'm going to talk about QCDs for a minute. And once you're 70 and a half, You can donate. to the church. You can donate to any charity. directly from your IRA.

And again, this is one of those. Don't try one of these at home. We'll help you with it. Because you make a mistake and then you you know, you're going to end up paying taxes on the money. But if you send it directly to the qualified charity, It'll Go to them, you won't pay taxes, and it'll count as your required minimum distribution.

So Pretty cool. Absolutely. Um Long-term care, how do taxes affect long-term care?

Well for starters there's a per diem amount That you can collect without proven receipts.

So, when we talk about these indemnity long-term care policies, where you're buying a policy that just sends you a check every month. as long as you're qualifying. Um you can collect $430 a day, that's a little over $12,000 a month. in an indemnity policy. That money that went up for 2020.

Um But we watch that, and it has an inflation adjustment. And we have some very well-to-do people. that by Indemnity long-term care. They specifically plan to stay home. live in their nice big house, and they hi plan to hire people to take care of them if they need long-term care.

And this policy is going to send you a Check. This is just the IRS maximum, it's $430 a day. that you can get tax-free out of a policy. Um As far as the premium deduction, And again, I want to do a whole show on deducting long-term care premiums. It's kind of hard to do.

But if you have a business, it's not hard to do. Um And we do a lot of these. People 61 to 70. Each the premiums $4,960 a year is deductible. or up to five grand a year each.

Again, when somebody owns a business or they're a key employee, we can pay for long-term care insurance out of the business.

Well, they're still working. and right off the premiums.

Okay.

Yeah. So And those go up a little bit every year. And then when we get to Medicare, the second worry the tax implications of Medicare is Irma. And we've talked Irma quite a bit and Irma is You know, it can be I I've got listed here. It could be as much as Somebody paying maximum Irma.

is paying nine thousand three hundred and seventy one Each annually for their Medicare.

So If you think that the well-to-do are not interested in Medicare, you know, as some financial planners think that. Just show 'em Irna Irma and they get real interested.

Now again, we're talking about this. Most people don't pay that amount, but there's a whole lot of people That you know, sell their house for more than the exclusion. They get paid. a bunch of stock when they retire or they have to redeem it. They cash in something.

And so they can even have one year where they're you know have income of three hundred thousand dollars or something, that's going to drive some Irma. We're educated on Irma. We have separate videos about that. It is a tax, and there's ways to appeal it, and there's ways to juggle things around. in the accounting of your money.

that we can reduce it or make it go away.

So Uh That's about it on Irma. It's very annoying to people because they don't see it coming. Yeah. Um once they understand it Uh some people Make it um like the end all be all. I mean, it's kind of like a priority in tax planning.

And I would suggest that that's you. Let's back off that a little bit because you know, it I don't want to run your whole finances if you're well to do. around trying to make Irma lower.

Sometimes it's better to just pay it. and make other decisions that are wise. Um And then Social Security taxes. Let's talk about that a little bit. On your Social Security check if you're a retired person.

You're either gonna Like none of it's going to be taxable. or fifty percent of it's going to be taxable. or up to 85% of his taxes. Always, no matter how much money you make, fifteen percent of it is going to be tax free. Um And the way they calculate that is really pretty much by your other income.

How much other taxable income do you have besides Social Security? That's going to drive. the income taxes that you pay on Social Security. Those numbers haven't changed for years.

So and that didn't change for 2026. Um The maximum check for Social Security That a A person who earned the maximum for thirty five years of their working years they're going to qualify for a check of four thousand one hundred fifty two a month. That's the highest possible um check at full retirement.

Okay.

Um Yeah. the wage base for Social Security is one hundred eighty four thousand five hundred next year. That means that you pay the Social Security tax on every dollar up to 884,500. And when you would exceed that, if you're a highly paid person, then you don't pay any more social security tax above that. But the number is 184.5.

And then the maximum earnings. that you can make from a job If you took your Social Security early before full retirement, The maximum earnings. you can make from a job is twenty four thousand four hundred and eighty dollars. in 2026.

So be careful, you folks. They want to start it at 62 or 63 or 64. If you go back to work and you make too much money, you're going to be giving it back. Yeah, that's a really good place to spend some time on the video. If that's something that you're considering when you're 62.

Boy, um Tom does a great job in the video that you guys did on 2026 tax planning again on the seven worries tab right there. And that's a really point of caution. Because unfortunately, those folks that make those decisions are often not in a position. to withstand what it does to 'em when when they gotta give it back. Yeah.

Yeah, I hate where we're out of time, but we've got to remind you this show is brought to you by CardinalGuide.com. And if you go to CardinalGuide.com, you'll see the Seven Warriors tabs, which we've talked about all seven, but mostly about tax. And so there is an amazing video. Again, it goes into all what we just described. It's all there at cardinalguy.com under this again, tax worry of the seven worries.

And then we want to remind you that Hans's book is there: The Complete Cardinal Guide to Planning for and Living in Retirement, as well as the workbook and, of course, the Contact Hans and Tom page. Great show, Hans. Thanks. Thank you, and God bless you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station.

All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone.

Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation. Finishing Well is designed to provide accurate and authoritative information with regard to the subject covered. Investment advisory services offered through Brookstrone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency.

We hope you enjoyed Finishing Well, brought to you by CardinalGuide.com. Visit CardinalGuide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Han's best-selling book, The Complete Cardinal Guide to Planning for and Living in Retirement and the Workbook. Once again, for dozens of free resources, past shows, or to get Han's book, go to CardinalGuide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's CardinalGuide.com.

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