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Tax Planning For 2022

Finishing Well / Hans Scheil
The Truth Network Radio
August 6, 2022 8:30 am

Tax Planning For 2022

Finishing Well / Hans Scheil

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August 6, 2022 8:30 am

Hans and Robby are back again this week with a brand new episode! The topic this week is about tax planning in 2022. Often times it is good to have a plan in place. Proper planning can be the difference between success and failure. Hans and Robby want to help you be successful when it comes to planning your taxes.

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

You can contact Hans and Cardinal by emailing or calling 919-535-8261. Learn more at  Find us on YouTube: Cardinal Advisors.

Finishing Well
Hans Scheil
Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore

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Thanks for listening and thanks for choosing the truth podcast network. This is the Truth Network welcome to finishing well brought to you by Cardinal guy, certified financial planner and Shiloh best-selling author and financial planner helping families finish well for over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes. Now let's get started with finishing well, finishing well is a general discussion and education issues facing partner advisors on trial CFP insurance this show does not offer investment products or investment advice welcome to finishing well was certified financial planner Hans Shaw Island today show is tax planning with the emphasis on planning for 2022 and honestly as I looked over the material and saw the video that it already been done. There you to Hans. I thought about the idea. There's this big arc of opportunity knocking for 2022 and you know you can answer the door, so to speak. So as I thought the course led right to revelations 320, where Jesus said, you know, behold, I stand. Instead, pay attention, I stand at the door and knock right. That's opportunity knocking. If ever there was one incident to things after that, he says, for he who opens right outcome in step four. Eat with him and then him with me as actually as I was reflecting about that thinking about the show today. I thought all what's the second part of that about because obviously he doesn't say anything. He doesn't waste words. Jesus doesn't do that.

So she says I'm to come in and meet with you but really, the invitation is man urinated his table which is going to be like talk about opportunity knocking like that's the big table that's that's the wedding supper of the Lamb and what went my world. Will that be like a minute so amazing.

If we make that simple step to open the door to the opportunity and so we do have an opportunity for tax planning in 2022 Hansson so what's not well survey that I had to go by people in the money they have saved by the law.

Client coming in to do business with me and I get the opportunity to look into the hat and see how much money they have words invested and then whether it's in an IRA or 401(k) or some pretax or whether it's in a savings account with invited taxes on the money. It most of America and most of their savings in still an IRA about people in their 60s and then some in their 70s, some in their 50s and to the extent that they have money, you know, 80, 90% of her more in pretax money, and it just floors me how many people that are in their 60s.

They know that there's they know that there is a minimum distribution, and on that thing in their 70s allow still think it's 70 1/2, but it's actually 72 so they think is somewhere out in the future. I know I gotta take something and they got a little research with 72, under 4% of the amount in the IRA that they got take out so that is that they and so this is a problem that people have kicked down the road and I think that you know my experience when I set out these people is they think they're doing right there doing good because intuitively they know that they wouldn't have this much money if they hadn't saved it in an IRA or taken out of the paycheck court got the tax deduction for me this for most of America.

These are people where their parents and their grandparents maybe didn't have that much money as they do because if they had it all. They had a penchant and they really just became of age and retire before 401(k) and IRA account. Regardless of people and whether this is $150,000 in a 401(k) or $750,000 3 million 4 million. Generally is a good-sized percentage of people well for their financial well okay I'm thinking that the people experiencing is they really feel like they're doing right on touch that I want to pay taxes that keeps time going to keep on growing and you know so they really feel like you are doing right there in favor been there in the last paragraph in a month for and I really push them on that they usually end up believing like or just in case I need it when I get all eliminate the really don't even have a purpose for them so that they told the truth. My purpose is not to pay taxes on okay so what today's show is about is becoming familiar with the tax brackets and I sent this on the video I need to and I'll say here that most people is there coming into me have no idea of the breakpoints in the tax bracket mean.

In other words, you know where and what point do you pay 32% tax and most people really don't even have any idea of the percentages that they pay in each of the brackets are buried in the percentage they paid of tax on their last tax return."

Don't. I mean, they just they just wait till the end of the year.

Gather all the climate on the computer decide whether their own money there to get money back and so what this video is about is planning that in planning your distributions from your qualified money and planning them according to how much tax you can stand because I want to get people as a general rule the start: some of that money paying taxes right opportunity is knocking this year right and it closes December 31 on this year in 2025 of the bigger close right. Example so we have a lot of clients that in the 12% married couple. They fit in the 12% tax bracket you know which goes up to $83,000 to another Ricky Pickering come together to put part of their Social Security thrown in narratives depending on the percentages and they come up less than $83,000 and so they're paying 12% income tax on some of their money and the reality is they could have an income of 100 hundred and $10,000 and by the time you take the standard deduction there down under 83 when actually paying the tax, and bracket and they're not even aware that there paying 12% federal tax which is historically distant, extremely low rate. We have at the very least, it probably makes sense if these people income was $60,000 combined taxable income after deductions for them to say 20,000 or 23,000 to go right up to the 12% bracket and just do you do a Roth conversion or just pull it out dated 12% tax and you have to pay the state wherever you are here and state taxes actually have a pullout pay them a little bit, but you get to keep most of the money and so that's what goes away is a chance in 2022. Take full advantage of the 12% bracket is gone come. December 31.

If you realize this after you do your taxes back to you so we left $23,000 on the table. You can't go withdraw money out of your IRA in April. That will be a 2023. Distribution, so you really need to look at this before the end of the year or before December because it takes a while to get money out of his cell, but jump to the next bracket nine nonmarried couples here, but will get the single people in the second for married couple. The next bracket of the 22% bracket is 178 that and this is where a lot of people do Roth conversion. So we got a couple they could be where that other couple lies or they could be further along in a lot of these people that live off of a relatively welded average sort of money like 60 grand a year like the example I gave for a lot of them have big IRA. They just don't need a drawdown in their 60s and what I would is perhaps the standard 22% bracket may look Heidi two people that it 22% is like a bargaining and to go to 178,000 and if we use that same couple or so. Instead of doing a Roth conversion, or distribution of 23,000 we do a withdrawal Roth conversion of 128,000 somewhere in that department and then we pay 22% federal tax on that amount of 278 grand and you know, so we might leave a little putty room. Some people don't mind going over a little bit but the whole point of this is now you can take money that was already in there gonna be tax come across some poorly thought out and were moving it over into the column of Artie been tax you can do that in a Roth IRA or you can do in a savings account or you could spend the money you can enjoy it being my whole point is we want to start whittling away at that IRA balance that by the time you get the minimum distributions.

The government is for you and the minimum distribution thing is I can't force you into a higher tax bracket well with break coming up so we got a lot more this planning to do and we got some stories along those lines. When we come back, so stay tuned much more on this opportunity knocking of tax planning for 2022. Don't forget, in the meantime you can find all this information enhances website of Cardinal as well as show notes with these charts and also with information. Even the video on the same subject. Are there on the seven ways to have someone named Hans on the website. will be right back.

Hans and I would love to take our show on the road to your church and Sunday school Christian or civic room.

There's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security care and long-term care.

Just go to Cardinal and contact time to schedule a live recording of finishing well at your church, Sunday school or civic contact time to Cardinal guide.that's Cardinal welcome back to finishing well, a certified financial planner Hans tile in today's show is tax planning for 2022 and opportunities knocking move on to the single people you think about married people talk about married people know about that.

My husband died like item you know I'm single and how these things apply to me will first of all you get smaller tax bracket.

The government decide that because you just one person to you.

You gotta pay taxes at a higher percentage so you know where the married couple was the top of the 12% tax bracket was 83.

For a single person that 41 grant at about half the time so you have a lot of people that are single that live office of security and some other money and their end of the 22% bracket because the top of that is 89 S. for a single person filing alone, but there's still room for you no more than a little down and IRA and there's lots of ways to whittle it down. Roth conversions are one way you can buy life insurance over several years, pay for over several years of creating a positive, Artie paid the tax money or tax treatment. And so the top of that, for a single person. The 22% bracket is 89,000 in the top of the 24% bracket is 170 and so we have a lot of single people get on the same strategy using 170,000 as the number that are going to work up again so whatever they are paying taxes on after they take deductions.

The analysis say that for a single person listed as 70 grand and then the cat up to hundred and 70 the 24% bracket they can do hundred thousand dollars year conversion over several years and they can get a lot of their money to the after-tax after-tax park and say well maybe I want pay the taxes later will that there is a lot of advantage of one of the money just sit there and you don't use it you pass away because I dear air dear air and inherited tax-free and beneficiaries never complain about receiving tax-free money. And a lot a lot of decision-making processes. When your way I can just take this time yeah enjoy or spend it on your kids spend it on education, spend it on your retirement. Do whatever it unencumbered, but that one of the advantages for you will give later on.

You need that you can make any withdrawals that you need to either a lot IRA you made these conversions to or life insurance cash value which has a lot of same features as a raw you can just pull money out of their and now you have to pay taxes on it that it doesn't drive up taxes on your Social Security because by this point you may have only so here is your only income, and so you're not not paying any taxes and so all of a sudden having a big IRA distribution when you're older strike into a tax bracket which is all the time so there's all kinds of advantages of getting your IRA money moved over into something we do not have to pay taxes to your heirs, and I can have pay taxes in the future so that it brings up another point, like I have a lady that I'm just dealing with right now she's 68 years old. Her husband passed away in March.

He was 67 and things are a little bit of a mess. He needed help will guide with no will and so he's gonna be real interesting example and not like it were alert something she certainly can learn a lot about dying. You know, without a will you know doing doing intestate probate and just in a number of things and then you can add that with only property into state of Virginia and North Carolina restart a lot about that last night but my point is that we she was sitting here looking at this you should should I do a conversion this year and I said with all his craziness going on. My initial reaction is don't even think about it, but I think we have to think about it because this is can be your last year of married filing jointly, and I read these brackets to her and I said you can do a Roth conversion or moving money from that IRA up to $340,000 and only for 24% federal tax and so and next year when she filing single she can only go up 289. Excuse me know up to hundred and 70 for the same rate. So once I through those numbers that are reset both. She probably gonna convert some of the some of the IRA money that was both his and hers is complicated but my point being is in our planning, we pointed out to people is that one of you dies significantly before the other. The other lives on as a single person, then these are the bracket that were dealing with, and so the taxes are actually getting up for the single person if we got the same amount of income or close that usually quite shocking to people that some medicine happen more often than not right for yeah I manage it. You know, as most people I'm talking to her in their early to mid 60s and share immune activity while the guy in the 70s and the other one live another 90 you know you could be one on Diane at a year low 80s and the other 11 into the 90s can be all kinds of scenarios but it's very common when my mom lived 14 years longer than my dad, so she was even a little older than my dad says she was a single taxpayer for 14 years and so we got put that into our planning and I'm thinking that if you put off this problem of reducing the size of the IRA because you just want to, leave it for protection. Then you can have have a compounded problem were later on grow into a bigger amount and you have to pull it out your minimum distributions and then one of years passed away the other one is a single filer and identity pan even higher rates. These rates are going up in 2026. This is a problem you want to address now that's an angle to John R excuse me Hans that I never and I mean need you made the point that I just described, I go absolutely. When you when you go to the single filing. You know that you don't have near the deduction and I would imagine that that almost always happens but not the minimum due attribution. Still later this is pretty Most of your money and then this is going happen at the same time that your Social Security check to the household is gone down because one of the Social Security checks goes away when that you know the first spouse dies so that all kinds of things that we gotta prepare for. If there's going to be a single person living in the household for several years passed the word planning because that's definitely the case, how I was looking actually Social Security just came out in a statement, now they did. They sent me a letter, they change the formatting of a little bit just to show man as I was looking at her.

They had a Meredith showed you know what their what your spouse would expect to receive. If you were passed away and absolutely you, you would have to Social Security checks and now you're down to one so security check and a course. It's obviously less income. But you know I had even thought about the fact that more taxes minute to see messed up then, but it's later on the provisions of the IRA started taken in your 60s planets.well and also the standard deduction cuts found about half an hour flight from 27,000 for people over 65 per married couple down the 14,002 the whole thing is slanted against single people unfortunately and you know what I know talking to a lot of married people so you could say what favors married people and if they read manual great AMI take advantage of what you can, but we have a single person and without that, like who were looking out for and try to do that in the planning and I wanted to challenge for many Windows you know my best friend passed away and we both sleep and work with you my friend and she just feel so unsure about every move that that we suggest because you know and that's part of what you leave your legacy with your wife if you're the one doing the planning is once you're gone out a lot of times the wife doesn't feel all that secure in making decisions right. I have a friend of mine is turning 65 and he has that concern, because it would come talk about everything is by Medicare and the Skype at no financial problems at all of you.

Just because millions p.m., both in an IRA outside of their but you know he can't tell me it's all taken care of but could just deal with Medicare but it really hard to deal with Medicare with a well-to-do person because of the time we just talked about everything and Social Security dinner menu is IRA and then beyond just showing how much tax he's not the one I'm worried about. By Pam Kazan's advisor, but I you easily find that his father was single and been single for a long time is like 90 and his father has a pretty big IRA because he didn't taken the minimum that's kind of all the money and he was telling me this friend of mine that he's getting here at this point for half of the split with his sister and I was just pointing out your dad is probably in the 10% or 12% tax bracket that taken much out of that IRA and he's going to give you all this money that he saved after the death of beneficiary. And then you're in the 37% tax bracket.

It wouldn't make sense for you to go. Your dad and have him start: some of that money out of the just paid the taxes of those low rates, rather than the savings account and then leave that to you.

Believe after-tax money. This applies to wealthy people.

It applies to not so wealthy people want to mention that you can go to Cardinal and they're looking to the seven worries tab on the taxes you'll see the video that the YouTube videos there as well as the show notes in those brackets that Hans is talking amount of course is always cardinal I'm sorry, did I say Cardinal Vyas that I got from Magic with resident and then the YouTube is Cardinal advisors all right with thanks again Hans. Great show. Thank you. Finishing well is a general discussion and education of the issues facing retirees cardinal Cardinal advisors upon trial CFP some insurance this show does not offer investment products or investment advice. We hope you enjoyed finishing well brought you by cardinal visit cardinal for free downloads of the show or previous shows on topics such as Social Security, Medicare and IRAs, long-term care, life insurance, investments and taxes as well as constant 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 what again Hans book go to cardinal if you have a question, and suggestion for future shows. Click on the finishing well radio show on the website and send us a word. Once again, that's cardinal cardinal this is the Truth Network

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