"Backdoor Roth IRA contributions are indeed legal"

  • Category: Blog
  • Published: Tuesday, 13 February 2018 12:28
  • Written by Super User
  • Hits: 20

 

The terminology may seem a bit underhanded, but this is a way for taxpayers to put money into a Roth IRA who may not otherwise do so, and yes, it is 100% legal. Hello again, Lynn Spencer here. Today I wanted to share how Backdoor Roth IRA contributions are becoming a popular financial tool to save more money towards your retirement.
 
If your Modified Adjusted Gross Income (MAGI) exceeds $135,000 (single) and $199,000 (married filing joint) or you are a widow(er) for 2018, you are NOT permitted to contribute to a Roth IRA - unless it's through the Backdoor. Just so we are clear on a few important points, a Roth IRA is a retirement savings plan where "after tax" contributions are made, assets grow tax free, and then upon your retirement, distributions are also tax free. In addition, distributions are not subject to RMD's or Required Minimum Distributions. Stop for a moment and think how valuable an investment could become in your lifetime if you never again had to pay taxes. This is a big reason why Roth IRA's have become so popular, and you can pass them down to a future generation (but they must begin taking RMD's by Dec 31st of the year following your death).
 
The way a Backdoor contribution works is that you and or your spouse contribute $5,500 each on an AFTER-TAX basis to an IRA ($6,500 each if you are age 50 or over). You must then wait a couple of days and then roll over the money to your Roth IRA. If your MAGI income exceeds the amount stated above, the only way to roll over to a Backdoor Roth IRA is if you are a participant in an Employer sponsored retirement plan such as a 401(k) or 403(b). 
 
At Killingsworth Spencer we help our clients understand the complex and often misunderstood nuances of the tax code to help improve their lives. We work in concert with your financial advisor to help you get the most out of what you work so hard to accomplish. When you need to understand complex tax ideas, be sure to give us a call.
 
Have a great week

ALLOW US TO DEMONSTRATE
HOW WE MIGHT BE ABLE TO HELP YOU
 
TO SCHEDULE AN IN-PERSON MEETING OR PHONE CALL
 
 
CALL Lynn Spencer
(770) 552-8286
email @ This email address is being protected from spambots. You need JavaScript enabled to view it.
 
TO RECEIVE YOUR NO OBLIGATION 
30 MINUTE CONSULTATION, 
 
We can schedule Saturday appointments if necessary
Appointments available between 1pm and 4pm
 
(For more details see the following link)
 

"Unearned income can be taxed at 37%"

  • Category: Blog
  • Published: Friday, 02 February 2018 17:59
  • Written by Super User
  • Hits: 39
 
Congress first enacted the so-called Kiddie Tax rules as part of the 1986 tax reform. Yes, ancient history but the reason given was to prevent parents and grandparents who were in high income tax brackets from shifting income (especially from investments) to children and grandchildren who were in a lower tax bracket. Congress revamped this tax under the new Tax Act (TCJA).
 
Hello again, Lynn Spencer here. The Kiddie Tax remains in place, but the rate structure has changed effective January 1st, 2018 and sunsets at the end of 2025. The TCJA now taxes a portion of a child's net unearned income at the rates paid by trusts and estates - which can be as high as 37%. For long-term capital gains and qualified dividends, the rates can be as high as 20%, plus you must also add in the state income tax rate. Please note that this "Kiddie Tax" does not apply to children who work a part time job and have EARNED income from wages and tips. There are generally four rules that apply to children through age 24 regarding the Kiddie Tax.
 
If your child or grandchild expects to have in excess of $2,550 in UN-EARNED income in 2018, the tax law here is complex. Call Killingsworth Spencer in Roswell to have a CPA look into your particular situation to determine the effects and to strategize to reduce the kiddie tax.   
 
Have a great week

ALLOW US TO DEMONSTRATE
HOW WE MIGHT BE ABLE TO HELP YOU
 
IF YOU LIKE WHAT YOU HEAR
WE WILL REVIEW YOUR DOCUMENTS
WITHOUT COST OR OBLIGATION
 
TO SCHEDULE AN IN-PERSON MEETING OR PHONE CALL
 
 
CALL Lynn Spencer
(770) 552-8286
email @ This email address is being protected from spambots. You need JavaScript enabled to view it.
 
TO RECEIVE YOUR NO OBLIGATION 
30 MINUTE CONSULTATION, 
 
We can schedule Saturday appointments if necessary
Appointments available between 1pm and 4pm
 
(For more details see the following link)
 
11115 Houze Rd., Suite 100
Roswell, GA 30076
(770) 552-8286
www.killingsworthcpa.com
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"Georgia Heart 180 update"

  • Category: Blog
  • Published: Friday, 08 December 2017 15:50
  • Written by Super User
  • Hits: 134
Hello again, Janet Killingsworth here. I want to THANK YOU ALL so much for the overwhelming response to my blog earlier this week. Our client, Drew Owen has expressed his gratitude of our willingness to help the rural hospitals in our growing state. Drew has been kind enough to put together some "talking points" to make it easier to explain how we as citizens of Georgia can do our part to help through our GA income tax payments. It takes less than 3 minutes to sign up at: https://www.georgiaheart.org/my_georgia_heart/tax_contribution_type. 
There are ZERO service fees or charges to go through this site.
 
Here are the "talking points:"

Rural Healthcare nationally is in a major state of undeniable crisis
  • o   Nationally, 1 in 3 rural hospitals are "at risk" or "at high risk" of closing
  • o   In Georgia, that number is 2 out of 3...Georgia's healthcare is the 2nd worst in the entire country!
  •   When a rural hospital closes the impact is devastating
    • o   Thousands of people are often left without basic and emergency care
      •   The next closest hospital is usually 30-50 miles away
  • o   The economic implications are severe
    •   Rural hospitals are typically the largest and highest dollar employer in a community
    •   When the hospital closes, the doctors leave as do nurses who are not imbedded in the community creating a brain and economic drain on top of the financial impact of all those other lost salaries.
    •   Businesses like hotels, pharmacies and florists are all materially impacted
    •   Insurance premiums will go up for local businesses...especially ones that have higher risks associated with their employees.
    •   Companies will struggle to attract and retain talent in the absences of reasonable healthcare.
  • o   Since 2010, more than half of all hospitals that closed nationally have been in the South.
  •   Reasons for much of the problem
    • o   The people who have remained in rural communities tend to be older, are unhealthier, are poorer/high poverty instances and are less insured than ever before. Rural populations are in decline. 
      •   Treatment for very sick people is more expense
      •   Bad/uncollectable debt is increasing
      •   Reimbursement rates are lower
  • o   The PPS (payment system) that was implemented was built on a high-volume metric that works for the urban settings but not for the low population rural settings.
  • o   Privately insured patients are opting to go elsewhere further hurting the hospital payer mix and hurting "perception"
  •   The solution
    • o   At the hospital level:
      •   Finding hospitals and administrators who recognize the problem for what it is and who are willing to explore innovative and structural changes that have a greater chance of generating sustainable revenue for the long term.
      •   Finding hospitals that don't merely use money and donations to fund ongoing operating losses
      •   Finding hospitals and administrators who recognize the answer to their problem is not a brand new $450,000 piece of medical equipment that they will never get enough use out of to justify the cost or a "cancer wing" that will never house enough patients to pay for itself  
      •   Finding administrators willing to share their successes and collaborate to solve the challenges they face.
      •   If merely throwing money at the problem was going to work, it would have worked a LONG time ago. 
  • o   At the State/donor level
    •   Georgia's political leadership has recognized the crisis the state is in and the potentially devastating impact on surrounding communities.  They passed the GA Rural Healthcare 180 bill which allocates 60mm for 3 years to be used as tax credits to help the 50 most in need or at-risk rural hospitals in the state.
      •       I spoke to the Senate Majority Leader's chief of staff today and he informed me only $8,061,804 of the $60mm has been allocated for this year!
      •   This is a major priority for the Governor and Lt Governor.
      •   The bill effectively allows money to be redirected from the DOR General Fund directly to these needy hospitals.
      •   A jointly filing couple can apply to give up to $11,111 to a designated hospital for which they will receive (90%) a $10,000 GA tax credit good for 5 years.  A single filer can do half of this. 
        •       The out of pocket cost is approximately $700 to give $11,111!!
          • o   The $1,111 difference (b/w $11,111 gift and $10,000 credit) is Federally deductible
          •       Under full AMT, the donor actually makes ~$2,600!
      •   The donor must apply through the DOR (GA Tax Center) to first get approval (for which the only denial can come if the hospital has reached its annual $4mm limit (which none have)) which can take "up to" 30 days but we are hopeful applications will be processed much faster which would allow an opportunity to get money and credit in place for 2017.
 
Please have anyone email me at This email address is being protected from spambots. You need JavaScript enabled to view it. or call or text me at 404-441-8823 with any questions!  Thanks, Drew
 
Have a great week

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HOW WE MIGHT BE ABLE TO HELP YOU

 

 

 

 

 

TO SCHEDULE AN IN-PERSON MEETING 

 

 

 

 

CALL Lynn Spencer

 

(770) 552-8286

 

email @ This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

 

TO RECEIVE YOUR NO OBLIGATION 

 

30 MINUTE HOUR CONSULTATION, 

 

 

 

We can schedule Saturday appointments if necessary

 

Appointments available between 1pm and 4pm

 

 

 

(For more details see the following link)

 

 

 

 

"HELOC interest is STILL deductible"

  • Category: Blog
  • Published: Monday, 29 January 2018 18:09
  • Written by Super User
  • Hits: 49
 
 
You may have heard radio advertisements that Home Equity Lines of Credit (HELOCs) are no longer deductible after 12/31/17 as a result of the new tax law. The announcer says that you should roll up your HELOC into your current debt and refinance your new mortgage now. Hello again, Lynn Spencer here; today I want to discuss why it may not be advantageous for you to refinance as the ads suggest. Interest expense from HELOCs IS still deductible for home improvements up to $100,000 or for the funds necessary to purchase another home. The final regulations should be out this summer on the question whether you can deduct HELOC interest for the purchase of an investment property. It will be necessary from now on to track what the HELOC loan was for (even if prior to 12/31/17) so that you may continue to claim the interest deduction. In case you are not clear, HELOC interest is no longer deductible for vacations, tax payments, car loans, personal expenses and the like.
 
At Killingsworth Spencer in Roswell, we are here year round to provide expert tax advice. If you have any questions concerning your HELOC, give one of our CPAs a call or click the Hyperlink below to learn more about how we can help to make your financial life easier to understand.

Have a great week

ALLOW US TO DEMONSTRATE
HOW WE MIGHT BE ABLE TO HELP YOU
 
IF YOU LIKE WHAT YOU HEAR
WE WILL REVIEW YOUR DOCUMENTS
WITHOUT COST OR OBLIGATION
AND THEN PROVIDE YOU WITH
A WRITTEN OVERVIEW OF OUR FINDINGS
 
TO SCHEDULE AN IN-PERSON MEETING OR PHONE CALL
 
 
CALL Lynn Spencer
(770) 552-8286
email @ This email address is being protected from spambots. You need JavaScript enabled to view it.
 
TO RECEIVE YOUR NO OBLIGATION 
30 MINUTE CONSULTATION, 
 
We can schedule Saturday appointments if necessary
Appointments available between 1pm and 4pm
 
(For more details see the following link)
 
11115 Houze Rd., Suite 100
Roswell, GA 30076
(770) 552-8286
www.killingsworthcpa.com
See what's happening on our social sites
Facebook
Twitter
LinkedIn
Pinterest

The most Wonderful Time of the Year

  • Category: Blog
  • Published: Wednesday, 15 November 2017 15:05
  • Written by Super User
  • Hits: 165


 

Introduction to Killingsworth Spencer
Introduction to Killingsworth Spencer

... for family and tax planning too! Hello everyone, Lynn Spencer here. Today I want to give you all encouragement to begin preparing for your 2017 federal and state income tax returns.  As we begin the final six weeks of 2017, most of us are focusing on the upcoming Thanksgiving and Christmas holidays. However, while you are busy with menu planning, travel itineraries, and gift buying, you should invest some critical time to make certain you take full advantage of tax deductions. Today's post will be the first of a series helping you to not lose out on important tax deductions and opportunities for 2017.
 
The fourth quarter is the time of year we typically meet with our business owner clients to review their situation to determine the best way to handle the current year's tax liabilities and the new year's strategies, including purchase or lease a new business vehicle, whether or not you should incorporate your business, change the format, set up a retirement plan, etc. Actually, the checklist we go over if you are a business owner is quite detailed.
 
Taxpayers who do not own businesses, but do itemize and own assets, should also use tax planning as a tool. The stock market continues to reach record highs, and one of the most frequently missed opportunities is a failure to match up losses and gains to reduce your taxes. However, you must go over your portfolio to find and sell poorly performing securities to zero out the gains as much as possible. The IRS allows $3,000 net capital losses to reduce your overall taxable income. Are you considering giving away an auto, boat, or a piece of real estate to a qualifying 501c(3) charity? If so, view our YouTube® channel for this topic about what happened to a client of ours who gave his boat away.
 
Next time I will continue a list of things you should be looking out for to maximize your 2017 tax deductions. A little effort now can pay HUGE dividends to you and your family in the form of tax savings and peace of mind.
 
HAVE A WONDERFUL AND SAFE THANKSGIVING HOLIDAY
 
ALLOW US TO DEMONSTRATE
HOW WE MIGHT BE ABLE TO HELP
YOU
 
IF YOU LIKE WHAT YOU HEAR
WE WILL REVIEW YOUR DOCUMENTS
WITHOUT COST OR OBLIGATION
AND THEN PROVIDE YOU WITH
A WRITTEN OVERVIEW OF OUR FINDINGS
 
TO SCHEDULE AN IN-PERSON MEETING OR WEBINAR
 
 
CALL Lynn Spencer
(770) 552-8286
email @ This email address is being protected from spambots. You need JavaScript enabled to view it.
 
TO RECEIVE YOUR NO OBLIGATION 
30 MINUTE CONSULTATION, 
 
We can schedule Saturday appointments if necessary
Appointments available between 1pm and 4pm
 
(For more details see the following link)
 

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