“If something sounds too good to be true, it probably is.” This axiom has been drilled into our heads — often since our youth — and most of the time, it’s absolutely true. But, like many of the adages we’ve grown up with, there are exceptions.
With its austere, “cut and dried” sensibilities, the IRS tax code would seem to be the last place you would find these exceptions. The agency itself has an almost mythically ominous aura to it. In its more than 160 years of existence, the IRS has forged a reputation so fearsome that, come tax time, if you’re like most people, you tend to navigate the process with the utmost conservatism. Yet, we’re all familiar with those tax time “fish stories” told by friends and family — tales of minimizing tax liability through methods that, at best, seem a little “iffy” and, at worst, seem downright illegal.
But are they? Join us for the latest episode of A Place of Possibility as Richard and Angela shine a light on ten different financial strategies that, at face value, may seem illegal but aren’t! A number of these approaches are so obscure that you’ve probably never even heard of them before — let alone have had the opportunity to consider them for yourself. And, of course, there are some caveats, but as you’ll see, in some cases, you can also make the necessary financial moves to conform to these caveats and take full advantage of the substantial benefit these strategies have to offer.
We’ll be talking about:
- How, if you’re self-employed and file in certain tax categories, hiring your children, parents, or spouse can yield some serious tax advantages.
- How parents can start their children on home ownership without adding to their tax burden.
- Why a little-known take on a 401k account may provide tax advantages over the SEPP IRA that your CPA might still be recommended for self-employed people.
- A workaround that will allow you to contribute to a Roth IRA, even if you’re well over the IRS’s income limits for Roth contributions.
- How to “superfund” your 401k, reap the rewards at tax time, then shield your contributions from taxes for the long term.
And more!
Having a healthy concern for staying within the rules of the IRS is understandable. There can be serious consequences for taking certain liberties with the tax code. But paying more taxes than necessary leaves money on the table and detracts from your ability to build the life you want to lead in the years to come. Join us for this episode of A Place of Possibility as Richard and Angela examine these little-known methods of minimizing tax liability while building a brighter financial future.
P.S. Looking to meet with Richard or Angela at our office in Alamo, CA? Want to discuss more of what you heard in this episode? Wondering where the heck you need to get started or what all of this means for your retirement plans? Schedule a free 30-minute session and find the peace of mind you deserve for the rest of your life. You can also reach us by calling 925.736.6410 or sending an email to Info@APlaceOfPossibility.com.
“You can take that after-tax contribution and immediately convert it to Roth money. So, let’s say your employer gives you nothing in a matching contribution, and you put in $22,500. You could also put $43,500 a year into a Roth IRA and never pay a dime of taxes on any of those earnings.”
We’re proud to present you with our “Know Your Possibilities Guide,” a tool and free resource for you to take notes, review, keep on hand, or even share with your friends and family. So, grab your copy, click the play button and follow along. You’re just minutes away from discovering your next Place of Possibility.
A Glance at this Episode:
0:00 Introduction
1:33 With the recent changes in the interest rate landscape, you should earn about 4.5% on your Money Market account. If you aren’t, we recommend you go back and listen to our cash management show, episode 20.
2:32 If you’re self-employed, you can hire your kids or family members and pay no employment taxes for them like social security tax, Medicare tax, unemployment tax, no state disability payment – none of it. Talk about saving money!
4:09 You might be surprised at just how high your adjusted gross income must be before you have to pay federal capital gains tax… it can be up to $116,000 before you start paying – what?! Listen in as Angela tells you how to use this to your advantage.
5:28 For retirees whose income is mainly from their pension and social security, this strategy can save you a lot of money when you’re looking to pull cash out of your trust account. Hint: You may also be able to avoid capital gains taxes here too.
6:41 Are you self-employed and making a lot of money? Opening up a solo 401k will allow you to sock away more retirement savings and reap some big tax benefits – much more than what you could save or do with a Simplified Employee Pension Plan (SEPs).
8:33 Make too much money to contribute to a Roth IRA? There’s a way around that limit. It’s called the backdoor Roth. Angela will walk you through how to do it.
10:27 If you have dependent children, you may want to consider this tax hack – if they put $6,500 away for just five years as a young child, they will have more than $3.6 million in their Roth account that will be TAX-FREE when it comes out. Mic drop.
11:49 Did you know that if you take social security out early and have a child under 18, you can get extra money to help pay for them until they are of age? In this episode’s Moment of Possibility, we’re talking about how we helped a client through this decision-making AND how this money helped pay for their child’s college.
13:39 Think you can only put $22,500 into your 401k at work? Think again. You can put a total of $66,000 into your employer-sponsored 401k. Here’s how to do it.
15:45 Building a solid credit history will get your children off to a better start on their financial future. You can help them, even before they’ve turned 18, by opening what is called a secured credit card.
17:07 In some cases, your adult child — or any adult close to you, for that matter — may need some help building credit. You can add them as an authorized user to a credit card with a really good history, and boom, after 30 days, that entire credit history transfers to them. Talk about speedy results.
17:53 We don’t advocate investing in crypto, but if you’ve got crypto losses that you want to realize, but don’t want to be out of the crypto market for 30 days, then here’s good news, it’s just property, so it’s not subject to the wash sale rule. So you can repurchase it.
19:51 Health savings accounts were meant to facilitate saving for major medical events down the road, but it offers benefits you might need to learn about. Here’s how to use it to your maximum advantage.
23:00 If you have a 529 account with money in it and no more college-age kids, here’s what you can do with the money left over.
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Links/Resources Mentioned in this Episode:
- A Place of Possibility Episode 20: Yes, Cash is Still King and Here’s Why You Shouldn’t Leave it in the Bank
- Set up your own Health Savings Account with LivelyMe by visiting https://LivelyMe.com.
- Ensure your family’s wealth will live on for generations to come. Order your copy of Endless Inheritance by Richard Del Monte today! https://aplaceofpossibility.com/endlessinheritance
- To open a Health Savings Account as suggested in this episode, go to https://livelyme.com/partners/how-to-open-an-hsa.
- If you’d like to know more about DMG’s approach to investing, we encourage you to download a copy of The Investment Answer, which we now have available as an Ebook. It’s a very easy read — you can probably get through the entire Ebook in just one evening — but it has the potential to revolutionize your relationship to investing and help you avoid many, if not all of the mistakes you may be making without even knowing it. To get your copy, go to https://APlaceofPossibility.com/DMGInvestmentAnswerEbook.
- Del Monte Group offers a variety of free resources to help you make innovative and educated financial decisions so that you can keep, grow, and enjoy your wealth starting now. Find them by visiting https://aplaceofpossibility.com/resources
“One-size-fits-all” won’t fit you here! The Del Monte Group team understands that everyone’s financial goals are unique. That’s why we always provide customized advice. No matter where you are in life, you can depend on our proven expertise to provide financial planning support for long-term success. Ready to get started? Schedule a meeting with Richard or Angela in our Alamo, CA based office today or we can meet via Zoom! >> You can select a date and time that works for you via our calendar, call us at 925.736.6410, or send an email to Info@APlaceOfPossibility.com. We can’t wait to help you!
