Latest / Money In Motion with Klaas Financial / Funding the Gap: How to Lower Your 2025 Tax Bill Today

Transcript

Funding the Gap: How to Lower Your 2025 Tax Bill Today · Money In Motion with Klaas Financial

• 0:00
  Speaker 1: At our phone lines. They are open for you if
• 0:02
  Speaker 1: you have questions for our retirement planning professionals from Class
• 0:06
  Speaker 1: Financial love to have you join us this morning telephone
• 0:08
  Speaker 1: umber to get on the air six soh eight three
• 0:10
  Speaker 1: two one thirteen ten. That's six soh eight three two
• 0:13
  Speaker 1: one thirteen ten. Joined this week by c J. Kloss
• 0:17
  Speaker 1: and Kyle Kaite again, they are our retirement planning professionals
• 0:20
  Speaker 1: from Class Financial. The website to learn more Coss Financial
• 0:23
  Speaker 1: dot com. That's coss k l aa s Financial dot com.
• 0:26
  Speaker 1: Not only can you learn about COSS Financial, you can
• 0:28
  Speaker 1: learn about their separate divisions. You can get to know
• 0:30
  Speaker 1: the team. You can also schedule a complementary chat right
• 0:34
  Speaker 1: online Colossfinancial dot com. That's coss k l aa s
• 0:38
  Speaker 1: Financial dot com and their telephone number six oh eight
• 0:41
  Speaker 1: four four two five six three seven. Don't forget no
• 0:44
  Speaker 1: charge for that initial get to know your appointment dot
• 0:46
  Speaker 1: Coss Financial. It will be complementary to you again their
• 0:50
  Speaker 1: number six oh eight four four two five six three seven.
• 0:53
  Speaker 1: And if you have any retirement related question, we'd love
• 0:56
  Speaker 1: to get you on the air six oh eight three
• 0:57
  Speaker 1: two one thirteen ten. That's six oh eight three two
• 1:00
  Speaker 1: one thirteen ten and joining us this morning our CJ
• 1:02
  Speaker 1: Closs and Kyle Kite from Class Financial. CJ, how you
• 1:06
  Speaker 1: doing this week?
• 1:07
  Speaker 2: I'm doing great. Sean? How are you?
• 1:09
  Speaker 1: I'm doing really well. Great to have you on with
• 1:11
  Speaker 1: us this morning. Kyle Kite, welcome back. How you been thanks?
• 1:15
  Speaker 3: Sean?
• 1:15
  Speaker 4: Yeah, I've been doing well.
• 1:16
  Speaker 1: Got the umbrella this morning, stand dry.
• 1:19
  Speaker 4: Yeah, absolutely, Anchol Showers are here for sure.
• 1:21
  Speaker 1: Absolutely absolutely. And speaking of April and things we can
• 1:25
  Speaker 1: count on in April tax season, and we're going to
• 1:28
  Speaker 1: talk about lowering your and this people like, wait, what,
• 1:31
  Speaker 1: how queen do this? How you can lower your twenty
• 1:33
  Speaker 1: twenty five tax bill. Today we'll talk about the power
• 1:37
  Speaker 1: of HSA's and iras and that window that is rapidly closing.
• 1:42
  Speaker 1: We'll get the details from CJ and Kyle this morning
• 1:45
  Speaker 1: on the program Do Forget As I mentioned the website
• 1:47
  Speaker 1: classfinancial dot Com mentioned the teleph number six so eight
• 1:49
  Speaker 1: four four two five six three seven didn't want to
• 1:52
  Speaker 1: mention too on the website. Not only can you listen
• 1:54
  Speaker 1: back to this program, but you can listen back to
• 1:55
  Speaker 1: the previous shows and subscribe to the podcast right at
• 1:58
  Speaker 1: Class Financial. Before we get rolling on this week's conversation
• 2:03
  Speaker 1: about taxes and tax seasons and lowering your tax bill.
• 2:07
  Speaker 1: One of the cool features of the program, it's the
• 2:08
  Speaker 1: class Quiz question the week. Your chance to win a
• 2:10
  Speaker 1: fantastic prize this week is no exception. Our friends from
• 2:13
  Speaker 1: Class Financial have provided a twenty five dollars gift card
• 2:16
  Speaker 1: to Best Buy. Tell you a little bit later on
• 2:19
  Speaker 1: in the program, specifically how you could win that twenty
• 2:21
  Speaker 1: five dollars gift card. Before we get rolling though on
• 2:24
  Speaker 1: the program this week and this week's conversation, let's actually
• 2:26
  Speaker 1: look back at last week's show and get the class
• 2:28
  Speaker 1: quiz question the week and answer there as well.
• 2:30
  Speaker 4: Kyle, Yeah, and again thanks everybody for listening, and congratulations
• 2:34
  Speaker 4: again to our winner from last week. So last week's
• 2:37
  Speaker 4: question was a true or false. So the advisors at
• 2:40
  Speaker 4: Coss Financial belief financial planning and portfolio management is as
• 2:44
  Speaker 4: much in art as it is a science, and that
• 2:46
  Speaker 4: answer is true.
• 2:47
  Speaker 1: Who congratulations to our winner from last week. Don't forget
• 2:50
  Speaker 1: you could be a winner this week as well. Little
• 2:53
  Speaker 1: tip listen closer to the program. A couple of reasons
• 2:55
  Speaker 1: why you want to do that one. There is a
• 2:57
  Speaker 1: lot of great information in every program, but also just
• 3:00
  Speaker 1: about every show, the question and answer to the class
• 3:02
  Speaker 1: quiz questionally come up during the program. And so today
• 3:05
  Speaker 1: we're going to be talking about the April fifteenth tax deadline,
• 3:09
  Speaker 1: and of course your twenty twenty five tax planning options
• 3:12
  Speaker 1: that you still have access to. Let's kind of break
• 3:15
  Speaker 1: that down CJ.
• 3:17
  Speaker 2: Yeah, that's right, Seans.
• 3:18
  Speaker 5: As the April fifteenth tax deadline draws near, clients may
• 3:22
  Speaker 5: not be aware that they're likely to have a couple
• 3:24
  Speaker 5: of tax planning opportunities still available to them and that.
• 3:28
  Speaker 2: Can lower their tax bill even right now.
• 3:31
  Speaker 5: So even though the twenty twenty five tax year is
• 3:35
  Speaker 5: closed on December thirty, first, you actually have up until
• 3:39
  Speaker 5: April fifteenth to do some we'll call them tax mitigation strategies.
• 3:45
  Speaker 5: So we're going to go through some of the particulars
• 3:47
  Speaker 5: about the tax deductions related to iras and other types
• 3:52
  Speaker 5: of contributions. So there's ability to do pre tax IRA contributions,
• 3:59
  Speaker 5: and then there's also they to do something called an
• 4:01
  Speaker 5: HSA or a health savings account contribution up until that
• 4:04
  Speaker 5: April fifteenth deadline for the prior tax year. And both
• 4:08
  Speaker 5: of these are tools that could reduce your taxable income.
• 4:12
  Speaker 2: So let's start with the traditional IRA.
• 4:14
  Speaker 5: A traditional IRA is a personal retirement savings account that
• 4:17
  Speaker 5: offers valuable tax advantages.
• 4:20
  Speaker 2: Anyone who earns taxable.
• 4:22
  Speaker 5: Compensation during the year can contribute, regardless of age or
• 4:25
  Speaker 5: whether they participate in an employer sponsored retirement plan. So
• 4:29
  Speaker 5: that's the first point. You would need to have earned
• 4:31
  Speaker 5: income in twenty twenty five equal to or greater than
• 4:35
  Speaker 5: the amounts of the contribution you intend to make. So if,
• 4:38
  Speaker 5: for example, you're a retiree with income only from pensions
• 4:43
  Speaker 5: or from interest or dividends or social security, well that's
• 4:46
  Speaker 5: not earned income and therefore you can't contribute to a
• 4:50
  Speaker 5: traditional IRA, and therefore you can't receive the correlating tax deduction.
• 4:55
  Speaker 5: Earned income can include things like wages, salaries, tips, and
• 5:00
  Speaker 5: self employed earnings. Second, there are maximums as to how
• 5:05
  Speaker 5: much you can contribute to a traditional IRAH year. For
• 5:08
  Speaker 5: the twenty twenty five tax year, you can contribute. You
• 5:11
  Speaker 5: can contribute up to seven thousand dollars if you're under
• 5:14
  Speaker 5: the age of fifty, or eight thousand dollars if you're
• 5:17
  Speaker 5: age fifty or older. And keep in mind that these
• 5:20
  Speaker 5: limits apply to your combined traditional and wroth contributions. So
• 5:24
  Speaker 5: you can't do both a traditional and a wroth.
• 5:28
  Speaker 2: You could do a little bit of both, or you
• 5:30
  Speaker 2: could do all of one.
• 5:31
  Speaker 5: But those maximums that were just mentioned are the individual
• 5:35
  Speaker 5: or combined maximums.
• 5:36
  Speaker 1: Really important distinction there. As we talked this morning with CJ.
• 5:39
  Speaker 1: Closs and Kyle Kite, they are our retirement planning professionals
• 5:42
  Speaker 1: from Class Financial. Forget about that website, check it out
• 5:45
  Speaker 1: Cossfinancial dot com. That's Coss Klaas Financial dot com. Del
• 5:50
  Speaker 1: forh number sixtoh eight four four two five six three seven.
• 5:53
  Speaker 1: Make an appointment at Coss Financial. No charge to you
• 5:55
  Speaker 1: that first visit. That appointment will not cost you a thing.
• 5:58
  Speaker 1: The number six oh eight four fourteen five six three seven.
• 6:01
  Speaker 1: If you want to join us this morning, love to
• 6:03
  Speaker 1: have you get in with your question telve one number
• 6:05
  Speaker 1: six oh eight three two one thirteen ten. That's six
• 6:07
  Speaker 1: soh eight three two one thirteen ten. CJ mentioned there
• 6:11
  Speaker 1: Kyle that the deadlines have been extended. Why why has
• 6:15
  Speaker 1: that happened?
• 6:16
  Speaker 4: Yeah, it's a great question, Sean. And for the answer,
• 6:18
  Speaker 4: we got to go all the way back to when
• 6:20
  Speaker 4: traditional iras were created, which was all the way back
• 6:22
  Speaker 4: in nineteen seventy four, and the idea was to create
• 6:26
  Speaker 4: a retirement savings vehicle for workers that didn't have access
• 6:29
  Speaker 4: to an employer sponsored retirement plan, so think like a
• 6:32
  Speaker 4: four to one K or something like that. And then
• 6:35
  Speaker 4: later the eligibility for these accounts was expanded more broadly.
• 6:38
  Speaker 4: So from the start they treated IRA contributions as a
• 6:42
  Speaker 4: tax attribute tied to the prior year, not as a
• 6:46
  Speaker 4: calendar year only event, which makes sense because many people
• 6:49
  Speaker 4: don't exactly know how much their income is going to
• 6:52
  Speaker 4: be until the year is overrun, like December thirty first,
• 6:54
  Speaker 4: for instance, and they wanted the taxpayers to be able
• 6:58
  Speaker 4: to make their decision based on complete knowledge of how
• 7:01
  Speaker 4: much their income was going to be and things like that.
• 7:04
  Speaker 4: So the deadline is tied to the tax return filing process,
• 7:08
  Speaker 4: which again makes sense because the tax deductions associated with
• 7:11
  Speaker 4: those contributions need to be reported on the tax return
• 7:14
  Speaker 4: that you're filing.
• 7:15
  Speaker 1: Why you do this really important stuff this morning, great
• 7:18
  Speaker 1: opportunity if you've got questions. Of course, as we talk
• 7:20
  Speaker 1: with our retirement planning professionals from Class Financial, if you
• 7:23
  Speaker 1: had a question about this week's topic or anything related
• 7:25
  Speaker 1: to retirement planning. See Jan Kyle. They are here for you.
• 7:28
  Speaker 1: They'd love to chat with you. Love to answer your question.
• 7:30
  Speaker 1: I gotta do this pick up pone give us call
• 7:32
  Speaker 1: six oh eight three two one thirteen ten. That's six
• 7:34
  Speaker 1: soh eight three two one thirteen ten. You can learn
• 7:37
  Speaker 1: more about COLSS Financial on their website cossfinancial dot com.
• 7:40
  Speaker 1: And they're telephon number for the office right here in
• 7:41
  Speaker 1: Madison six soh eight four four two five six three seven.
• 7:45
  Speaker 1: We'll talk about how much of a tax deduction now
• 7:48
  Speaker 1: we're looking at here and also take your call next
• 7:51
  Speaker 1: as Money in Motion with COSS Financial continues right here
• 7:54
  Speaker 1: on thirteen ten double UiB eight full lines are open
• 7:57
  Speaker 1: six oh eight three two one thirteen ten. That's six
• 8:00
  Speaker 1: eight three two one thirteen ten. If you've got questions
• 8:03
  Speaker 1: for c Jen Kyle, love to have you join us
• 8:05
  Speaker 1: this morning, get your ride on the air the website
• 8:07
  Speaker 1: of course, ce Jan Kyle come to us from Claus Financial.
• 8:10
  Speaker 1: Their website is class financial dot com. That's Colss k
• 8:13
  Speaker 1: l Aas Financial dot com. The telephon number six O
• 8:16
  Speaker 1: eight four four two five six three seven. No charge
• 8:19
  Speaker 1: for that initial get to know your appointment dech Claws Financial,
• 8:21
  Speaker 1: it will be complimentary to you again their number six
• 8:24
  Speaker 1: oh eight four four two five, six three seven. Talking
• 8:27
  Speaker 1: this week about ways to lower your twenty twenty five
• 8:30
  Speaker 1: tax build, you're saying, wait, wait, we're not even twenty
• 8:33
  Speaker 1: twenty five anymore. At that's pasted. Oh, there's still some opportunities,
• 8:36
  Speaker 1: but that window is rapidly closing. And Ty Kyle, just
• 8:39
  Speaker 1: before the break, we started talking about about that extension
• 8:43
  Speaker 1: and why those deadlines extended to April fifteenth of each year.
• 8:48
  Speaker 1: Let's talk then about how much of a tax deduction
• 8:50
  Speaker 1: we're talking about here and how much tax savings can
• 8:53
  Speaker 1: can folks realize?
• 8:55
  Speaker 4: Yeah, it's so this is again where financial planning is.
• 8:58
  Speaker 4: It's all situation will depend. So the exact dollar amount
• 9:01
  Speaker 4: of tax savings is going to vary depending on each
• 9:04
  Speaker 4: person's circumstances. But how much you save in taxes depends
• 9:08
  Speaker 4: on your marginal tax rate and whether your contribution is
• 9:11
  Speaker 4: fully or partially deductible. So if you can deduct the
• 9:14
  Speaker 4: full contribution, you'll save current taxes equal to your contribution
• 9:19
  Speaker 4: amount multiplied by your marginal tax rate. So what that
• 9:23
  Speaker 4: means is that if you're in the twenty two percent
• 9:25
  Speaker 4: tax bracket, and you contribute the maximum seven thousand dollars
• 9:28
  Speaker 4: or eight thousand if you're over the age of fifty
• 9:31
  Speaker 4: for the twenty twenty five tax year, the fully deductible
• 9:34
  Speaker 4: contribution would save you fifteen hundred and forty dollars on
• 9:37
  Speaker 4: that seven thousand or seventeen hundred and sixty dollars in
• 9:41
  Speaker 4: your current federal income taxes for the year, and that's
• 9:45
  Speaker 4: not counting any state income tax savings as well. So
• 9:49
  Speaker 4: set another way in this example, for each dollar you
• 9:52
  Speaker 4: contribute to a traditional IRA, you can save about twenty
• 9:56
  Speaker 4: two cents in current taxes. So that's not a bad
• 9:59
  Speaker 4: deal anytime you can say taxes is generally a good thing.
• 10:02
  Speaker 4: And not only that, but you're also investing for your future.
• 10:05
  Speaker 4: And for those listening closely, you can kind of figure
• 10:08
  Speaker 4: out that this means that there's something called a relative
• 10:10
  Speaker 4: value in contributing to these iras, which means the higher
• 10:14
  Speaker 4: that marginal tax break twenty four twenty eight, you know,
• 10:16
  Speaker 4: twenty four thirty two, whatever it is, you're actually going
• 10:19
  Speaker 4: to get more benefit from doing a current year or
• 10:23
  Speaker 4: contribution for your twenty twenty five tax year. And this
• 10:27
  Speaker 4: is again part of the reason why they put a
• 10:29
  Speaker 4: cap that you can only put the seven thousand and
• 10:31
  Speaker 4: eight thousand into it. But they also have what they
• 10:33
  Speaker 4: call phase out limitations for super high earners as well.
• 10:37
  Speaker 1: That's fascinating stuff. Talking this morning with Kyle Kite and CJ.
• 10:40
  Speaker 1: Closs of Colass Financial online coss Financial dot com. That's
• 10:43
  Speaker 1: Claus k l aa S Financial dot com to talk
• 10:46
  Speaker 1: a little bit more. I'm NASCJ a bit about about
• 10:49
  Speaker 1: some of the some of those tax benefits associated with
• 10:52
  Speaker 1: those with those traditional iras. But first caller calling in
• 10:56
  Speaker 1: with an IRA contribution question. Tim, Welcome to the program.
• 11:00
  Speaker 1: You're on the air with CJ. Closs and Kyle kaitef
• 11:02
  Speaker 1: Klass Financial.
• 11:04
  Speaker 6: Good morning, Thank you. I am going to pull in
• 11:08
  Speaker 6: my parking spot here and ask my question. I am
• 11:13
  Speaker 6: seventy years I'm seventy years old. I contribute to my
• 11:20
  Speaker 6: four or three B roth Ira. I'm trying to reduce
• 11:25
  Speaker 6: my gross income because I'm collecting Social Security also while
• 11:28
  Speaker 6: still working, keeping my gross income below on the income
• 11:36
  Speaker 6: tax guide. So what is the max I can contribute
• 11:41
  Speaker 6: to the annually? And that to that roth Ira, I
• 11:44
  Speaker 6: have thought I heard you say eight thousand, but I
• 11:48
  Speaker 6: just I just increased my contribution to twelve thousand a year?
• 11:53
  Speaker 6: Can I do that?
• 11:55
  Speaker 5: A great question and love the question. Thank you so
• 11:58
  Speaker 5: much for calling in and ask. Here's here's the subtlety
• 12:01
  Speaker 5: of what you are missing and by the way of
• 12:03
  Speaker 5: what a lot of people miss. We are talking right
• 12:06
  Speaker 5: now about roth iras and traditional iras. These are individual
• 12:10
  Speaker 5: retirement accounts. What you are referencing, at least from what
• 12:14
  Speaker 5: the way you describe your question is a WROTH four
• 12:16
  Speaker 5: to H three B that is, an employer sponsored retirement plan.
• 12:21
  Speaker 5: And employer sponsored retirement plans have a couple of things
• 12:24
  Speaker 5: that iras do not. Employer sponsored plans. Number one have
• 12:28
  Speaker 5: no income limit or phase out, so you can't earn
• 12:31
  Speaker 5: too much to become ineligible or not to be able
• 12:34
  Speaker 5: to do deductions on a pretax basis. And number two,
• 12:37
  Speaker 5: the contribution limits are much higher. So in the case
• 12:41
  Speaker 5: of your age being at seventy years old, tim and
• 12:44
  Speaker 5: having a four to oh three b AKA and employer
• 12:47
  Speaker 5: sponsored plan, your max contribution would be I think it's
• 12:50
  Speaker 5: thirty and a half thousand dollars, Kyle, Is that the
• 12:52
  Speaker 5: right number for twenty twenty five or twenty six.
• 12:55
  Speaker 2: Is that about right?
• 12:55
  Speaker 4: I think yep, it does.
• 12:56
  Speaker 5: Okay, so that's that's the base contribution plus a count
• 13:00
  Speaker 5: since you're over the age of fifty. So I know
• 13:02
  Speaker 5: I'm rambling here, but your you have a lot higher
• 13:05
  Speaker 5: contribution limit.
• 13:06
  Speaker 2: Now, well, you asked us, but it's wroth and that's true.
• 13:10
  Speaker 5: But you can do a WROTH inside of an employer
• 13:12
  Speaker 5: sponsored plan as well, like a four to oh three B.
• 13:15
  Speaker 5: And then finally you mentioned wanting to bring down your
• 13:17
  Speaker 5: taxable income or to keep it below certain thresholds. Well, warning,
• 13:21
  Speaker 5: warning warning, WROTH four to oh three b's or WROTH
• 13:25
  Speaker 5: four to oh one k's do not bring down your
• 13:28
  Speaker 5: taxable income. That is a post tax contribution. So if
• 13:32
  Speaker 5: you're looking to bring down your taxable income or stay
• 13:35
  Speaker 5: below MAGI thresholds, you're going to want to do a
• 13:38
  Speaker 5: pre tax also known as a traditional contribution, not a WROTH.
• 13:42
  Speaker 2: I hope that's how fall it was.
• 13:45
  Speaker 6: Thank you. I did answer my question, Jim, Okay, do.
• 13:49
  Speaker 1: You too, great call? Great question. I love that stuff, Sea,
• 13:51
  Speaker 1: I love ce j Kyle. I love when we get
• 13:53
  Speaker 1: calls from folks with those just great, great questions that
• 13:56
  Speaker 1: is and great answers as well as we talked with
• 13:58
  Speaker 1: CJ and and Aisle of colss fancial. Don't forget you
• 14:01
  Speaker 1: can always call in during the program. You can also
• 14:03
  Speaker 1: email if you head on over to cossfinancial dot com.
• 14:05
  Speaker 1: If you've got a question, can email there we'll answer
• 14:07
  Speaker 1: it on the program. Another way to reach colss FANCIALI
• 14:10
  Speaker 1: is simply give them a call six SOH eight four
• 14:11
  Speaker 1: four two five six three seven. Then initial gets to
• 14:14
  Speaker 1: the appoyment at Costs Financial will be complementary to you.
• 14:16
  Speaker 1: Again the number for the office six SOH eight four
• 14:18
  Speaker 1: four two five six three seven. So CJ. As as
• 14:23
  Speaker 1: Kyle was talking there talking about some of the tax brackets,
• 14:26
  Speaker 1: let's talk about some of those tax brackets associated with
• 14:29
  Speaker 1: those traditional IRA contributions. Uh, and the limitations that were
• 14:35
  Speaker 1: briefly mentioned there.
• 14:37
  Speaker 5: Yeah, And let me just say, you know, everybody can
• 14:40
  Speaker 5: see the value of people calling in because you can see,
• 14:43
  Speaker 5: right there's these narrow rules and exceptions and how it
• 14:46
  Speaker 5: applies to you can be complicated, right, and so it's
• 14:50
  Speaker 5: one thing to know the rules, it's another thing to
• 14:52
  Speaker 5: apply the rules. So thank you so much for the
• 14:56
  Speaker 5: call in, and I just want to encourage everybody else
• 14:57
  Speaker 5: listening feel free to call in with your question as well.
• 15:00
  Speaker 2: But yes, so, we previously mentioned.
• 15:02
  Speaker 5: The relative value topic based on the present tax savings
• 15:05
  Speaker 5: being related to your current federal marginal income tax bracket
• 15:09
  Speaker 5: and your state income tax bracket. However, believe it or not,
• 15:12
  Speaker 5: it's even more complicated than that. You leave it to
• 15:16
  Speaker 5: Congress to make these things confusing. So there are other
• 15:18
  Speaker 5: things that come into play in the tax return at
• 15:21
  Speaker 5: the lowest tax brackets, like the Saver's Credit, which can
• 15:25
  Speaker 5: give a real boost to the tax savings related to
• 15:27
  Speaker 5: your IRA contribution.
• 15:29
  Speaker 2: You should speak with your.
• 15:29
  Speaker 5: Accountant or tax professional to learn the ins and outs
• 15:32
  Speaker 5: of your particular circumstances. But again there's the savers Credit.
• 15:36
  Speaker 5: As with almost all things in the Internal Revenue Code,
• 15:39
  Speaker 5: the Saver's Credit comes with eligibility requirements and income limits.
• 15:43
  Speaker 5: The saver's Credit is essentially the government matching your retirement
• 15:47
  Speaker 5: savings if you're a modest earner and the IRS might
• 15:51
  Speaker 5: actually pay you to save. Believe it or not, now,
• 15:55
  Speaker 5: I mentioned earlier income caps and that your contributions may
• 15:58
  Speaker 5: be fully or partially tax deduct ble. This depends primarily
• 16:02
  Speaker 5: on whether you're covered by an employer's retirement plan like a.
• 16:05
  Speaker 2: Four toh one K or four to H three B.
• 16:07
  Speaker 5: Just like our last caller called in about, if you
• 16:09
  Speaker 5: are covered by an employer sponsored retirement plan, the deduction
• 16:13
  Speaker 5: phases out, and we're talking about the deduction to your I,
• 16:18
  Speaker 5: not your employer plan.
• 16:19
  Speaker 2: Okay, So just to be real clear.
• 16:21
  Speaker 5: If you're eligible to contribute to an employer plan and
• 16:25
  Speaker 5: you're wanting to on top of that, contribute to an IRA,
• 16:30
  Speaker 5: the deduction phases out on your modified adjusted gross income,
• 16:35
  Speaker 5: also known as your MAGI. For married filing jointly, the
• 16:38
  Speaker 5: phase out range is one hundred and twenty six thousand
• 16:41
  Speaker 5: to one hundred and forty six thousand, and for single
• 16:43
  Speaker 5: filers or head of household filers it's seventy nine thousand
• 16:46
  Speaker 5: to eighty nine thousand for the twenty twenty five tax year. Now,
• 16:51
  Speaker 5: if you're not covered by an employer retirement plan but
• 16:54
  Speaker 5: your spouse is, then your phase out range goes up
• 16:58
  Speaker 5: and it begins.
• 16:58
  Speaker 2: At two hundred and thirty six th of MAGI.
• 17:01
  Speaker 5: And finally, if neither of you are covered by such
• 17:04
  Speaker 5: a plan, the phase out rules don't apply and you
• 17:07
  Speaker 5: can perform maximum.
• 17:08
  Speaker 2: Pre tax traditional IRA contributions.
• 17:10
  Speaker 5: Regardless of your MAGI, assuming you have earned income. So listen, everybody,
• 17:17
  Speaker 5: I'll be frank with you. I've done this long enough
• 17:20
  Speaker 5: to become pretty good at my job.
• 17:22
  Speaker 2: I hope Lord willing, but I'm not the sharpest tool
• 17:27
  Speaker 2: in the shed. It took me a professional who studied this.
• 17:31
  Speaker 5: It took me all of five to eight years just
• 17:34
  Speaker 5: to understand how these rules crossed over one another, and
• 17:38
  Speaker 5: what about this, and what about.
• 17:40
  Speaker 2: That, and how about this.
• 17:41
  Speaker 5: It's kind of embarrassing tom On to admit on the air,
• 17:43
  Speaker 5: but it's just the harsh truth. So my comment to
• 17:46
  Speaker 5: you would be, if you're looking to do some sort
• 17:48
  Speaker 5: of creative contribution or maxing things out or doing WROTH
• 17:53
  Speaker 5: or pretex, you're gonna probably want to talk to a
• 17:56
  Speaker 5: CFP like Kyle, or talk to a CPA or your
• 18:00
  Speaker 5: accountant just to make sure you're following the rules. Because
• 18:04
  Speaker 5: not only do those numbers impact you and crossover, but
• 18:07
  Speaker 5: on top of all of that, they change every year.
• 18:11
  Speaker 5: So as soon as you think you got it figured
• 18:13
  Speaker 5: out in a year, like okay, I both know the
• 18:15
  Speaker 5: numbers and I know how they cross over, well just
• 18:17
  Speaker 5: wait because come next year, they're gonna change again.
• 18:20
  Speaker 2: So so just a little bit of free advice here.
• 18:22
  Speaker 5: If you're gonna get gonna get tricky on this stuff,
• 18:25
  Speaker 5: work with a good advisor or a good accountant.
• 18:28
  Speaker 1: Talking this morning with CJ. Closs and Kyle Kite of
• 18:31
  Speaker 1: CLAW our retirement plant professionals from Class Financial online, Class
• 18:34
  Speaker 1: Financial dot com. That's Closs, k l A A S
• 18:37
  Speaker 1: Financial dot com. CG. I've got the notes in front
• 18:40
  Speaker 1: of me and like, wait, what now? I know you
• 18:44
  Speaker 1: mentioned marginal tax rate. The word marginal always applies when.
• 18:48
  Speaker 2: I'm thinking about myself.
• 18:49
  Speaker 1: Yet we've got a got another great question and we'll
• 18:53
  Speaker 1: get right back to this. We got John on the
• 18:55
  Speaker 1: phone with a question about our m d s. John,
• 18:57
  Speaker 1: welcome to the program here on the air with CJ.
• 18:59
  Speaker 1: Closs and Kyle Kite of Class Financial.
• 19:02
  Speaker 3: Oh, thank you. I I'm long retired and I'm collecting
• 19:09
  Speaker 3: rmds now.
• 19:10
  Speaker 6: I'm boy.
• 19:12
  Speaker 3: It seems like they make you take out quite a bit.
• 19:16
  Speaker 3: But is there anything a person can do to avoid
• 19:20
  Speaker 3: some of that or not?
• 19:23
  Speaker 2: Yeah? Great question, John.
• 19:25
  Speaker 5: Again, I just can't say enough to you, John and
• 19:27
  Speaker 5: every other listener.
• 19:29
  Speaker 2: I love this. This is so real and authentic.
• 19:31
  Speaker 5: Instead of me you know, reading off a script and
• 19:34
  Speaker 5: telling you so, John, thank you for the question.
• 19:36
  Speaker 2: The answer is yes.
• 19:37
  Speaker 5: So what John is referencing is he is over and
• 19:40
  Speaker 5: it depends on when John's turned certain ages. But he
• 19:43
  Speaker 5: is either over seventy and a half, seventy two, seventy three,
• 19:46
  Speaker 5: or seventy five, depending upon when his RMD began. Actually,
• 19:50
  Speaker 5: I know he's over seventy three. That's all we have
• 19:52
  Speaker 5: to say. John, I know something about you because you're
• 19:54
  Speaker 5: pulling rmds. But so John is over a certain age.
• 19:59
  Speaker 5: He is drawing required minimum distributions, probably off of something
• 20:02
  Speaker 5: called the uniform lifetimetable.
• 20:05
  Speaker 2: He may not even know what that table is, but
• 20:07
  Speaker 2: it doesn't matter.
• 20:08
  Speaker 5: There's a calculation in the background that says every year
• 20:10
  Speaker 5: he must pull a required minimum distribution from all of
• 20:15
  Speaker 5: his pre tax retirement accounts, assuming he's not saving into
• 20:19
  Speaker 5: any of those retirement accounts. So then John is saying, well, gosh,
• 20:22
  Speaker 5: it's a lot of money, and that amount tends to
• 20:24
  Speaker 5: grow every single year, especially if the market has a
• 20:26
  Speaker 5: good year and you age, those rm ds get pretty large.
• 20:29
  Speaker 5: So John's question is like, well, hey, this is jacking
• 20:31
  Speaker 5: up my taxable income. I'm hitting higher tax brackets. Is
• 20:34
  Speaker 5: there anything I can do? And John, the answer is yes.
• 20:37
  Speaker 5: Your primary get out of jail free card is qualified
• 20:41
  Speaker 5: charitable distributions known as qcds. Now, you would have to
• 20:45
  Speaker 5: be charitably inclined. You'd have to want to give to charities, right,
• 20:50
  Speaker 5: And I'm not saying you should, or that you should
• 20:52
  Speaker 5: feel guilty to or anything like that, but one of
• 20:55
  Speaker 5: your only ways to John, think of it as like,
• 20:57
  Speaker 5: if I've got to pull out fifty grand or thirty
• 21:00
  Speaker 5: grand in a year from an IRA to meet my
• 21:01
  Speaker 5: minimum distribution, that's going to hit my AGI jump up
• 21:05
  Speaker 5: my tax rates. The only clean way to avoid that
• 21:10
  Speaker 5: is to actually, instead of having those distributions, those required
• 21:14
  Speaker 5: distributions paid to you, have them go directly from your
• 21:17
  Speaker 5: IRA to a qualifying charity. And two things will happen.
• 21:21
  Speaker 5: It will go towards meeting your minimum distribution. Right, So
• 21:25
  Speaker 5: if it's fifty grand and I give ten grand to
• 21:27
  Speaker 5: a charity, that counts towards meeting my minimum, but it
• 21:31
  Speaker 5: never shows up as taxable income on my federal ten forty,
• 21:35
  Speaker 5: thereby reducing my above the line income. So again, don't
• 21:41
  Speaker 5: know if that applies to you, John, you may be
• 21:42
  Speaker 5: sitting here going no, no, no, no if that's not what
• 21:44
  Speaker 5: I want to do.
• 21:45
  Speaker 2: But your question was is there anything you can do?
• 21:47
  Speaker 2: The answer is yes.
• 21:48
  Speaker 5: Qualified charitable distributions would be your get out of jail
• 21:51
  Speaker 5: free card.
• 21:52
  Speaker 1: Great question, Great call, John, Thank you for calling in.
• 21:55
  Speaker 1: Don't forget if you ever have a question friends from
• 21:57
  Speaker 1: Class Financial, they are there for you. If you had
• 21:58
  Speaker 1: an over Class financial dit can schedule a complimentary chat
• 22:02
  Speaker 1: right from the website or call the office six oh
• 22:04
  Speaker 1: eight four four two five, six three seven. No charge
• 22:07
  Speaker 1: for that initial get to know your appointment at COSS Financial.
• 22:09
  Speaker 1: It will be complimentary to you again. Their numbers six
• 22:11
  Speaker 1: oh eight four four two five six three seven will
• 22:14
  Speaker 1: take it down the home stretch next as Money in
• 22:16
  Speaker 1: Motion with Coss Financial continues right here on thirteen ten,
• 22:19
  Speaker 1: WIBA just moments away from your chance to win a
• 22:22
  Speaker 1: twenty five dollars gift card to Best Buy with our
• 22:24
  Speaker 1: Coss Quiz question week. Talking this week though about how
• 22:27
  Speaker 1: you can lower your twenty twenty five tax bill today,
• 22:31
  Speaker 1: and as you heard in that last segment, very complicated
• 22:35
  Speaker 1: stuff and when you when you start digging in, as
• 22:37
  Speaker 1: CJ was mentioning, not only is it hard to learn,
• 22:40
  Speaker 1: but then once you've got it down, they keep changing things,
• 22:43
  Speaker 1: so it's always a continuing education, something that the folks
• 22:48
  Speaker 1: at Class Financial are keeping up on every single day.
• 22:51
  Speaker 1: And one thing I did want to ask about about Kyle,
• 22:54
  Speaker 1: is I see this word triple tax benefit and health
• 22:59
  Speaker 1: savings accounts that we talked a little bit about earlier.
• 23:02
  Speaker 1: What are we talking about. What do we need to
• 23:03
  Speaker 1: know in that area? Kyle?
• 23:05
  Speaker 4: Yeah, it's great. Sean, Yeah, triple tax benefit sounds.
• 23:08
  Speaker 1: Really really good, right.
• 23:09
  Speaker 2: You don't hear that very often.
• 23:10
  Speaker 4: So hsas are one of my favorite accounts because I
• 23:13
  Speaker 4: feel like they're underutilized for a lot of people because
• 23:16
  Speaker 4: people just don't understand what they're there for and how
• 23:18
  Speaker 4: to use them properly. So what an HSA or health
• 23:21
  Speaker 4: savings account is is it's a tax exempt savings account
• 23:25
  Speaker 4: held at a bank or a trustee that you are
• 23:27
  Speaker 4: an and or your employer can fund for the purpose
• 23:30
  Speaker 4: of paying certain medical expenses. Then one big thing here, though,
• 23:35
  Speaker 4: to qualify for an HSA is you have to be
• 23:38
  Speaker 4: enrolled in what they call a high deductible health plan
• 23:42
  Speaker 4: through your group insurance or your personal insurance, and that
• 23:45
  Speaker 4: kind of stuff. So that is the caveat that you
• 23:48
  Speaker 4: have to be enrolled in one of those high deductible
• 23:50
  Speaker 4: health insurance plans. So when we're talking about the three
• 23:53
  Speaker 4: pronged tax benefit here is that First, the contributions that
• 23:57
  Speaker 4: you put in are deductible, even without itemizing your deduction.
• 24:02
  Speaker 4: So think of it very similar to how we're talking
• 24:04
  Speaker 4: about with the iras. You put the money in, you
• 24:06
  Speaker 4: get the tax deduction in the year that you do that.
• 24:09
  Speaker 4: Now you can invest it or you can leave it
• 24:11
  Speaker 4: in like a money market account and things like that.
• 24:13
  Speaker 4: So the earnings and interest that it makes inside this
• 24:16
  Speaker 4: HSA account accumulate tax free. And then third, as long
• 24:21
  Speaker 4: as you use these for qualified medical expenses, which that
• 24:25
  Speaker 4: definition continues to expand, those distributions out are also tax free.
• 24:31
  Speaker 4: So those are the three taxes. You get a tax
• 24:33
  Speaker 4: deduction when you put it in, it grows tax free,
• 24:36
  Speaker 4: it comes out tax free. So these are huge and
• 24:39
  Speaker 4: most people today are going to have access to an
• 24:42
  Speaker 4: HSA through their employer. They're very common now, and if
• 24:46
  Speaker 4: you choose that high deductible health insurance plane like we mentioned,
• 24:49
  Speaker 4: it could be that the employer is part of your
• 24:52
  Speaker 4: benefits puts a contribution in on your behalf. It could
• 24:55
  Speaker 4: be something small, you know, five hundred bucks a year,
• 24:57
  Speaker 4: one thousand bucks a year, whatever it is. But again
• 25:00
  Speaker 4: we always like free money and if they're willing to
• 25:02
  Speaker 4: give you money towards it, and it's a great thing obviously.
• 25:06
  Speaker 4: And then furthermore, when it's offered through an employer through
• 25:09
  Speaker 4: their benefits package, they can you can contribute on a
• 25:13
  Speaker 4: pre tax basis up to the maximum alliable contribution. So
• 25:16
  Speaker 4: think of this as it gets deducted out of your paycheck.
• 25:19
  Speaker 4: You never paid taxes on that money before it went
• 25:22
  Speaker 4: over into this HSA account, So again a good way
• 25:25
  Speaker 4: to reduce that taxable taxable income.
• 25:28
  Speaker 1: But even if you.
• 25:29
  Speaker 4: Don't have it through the employer or you don't have
• 25:32
  Speaker 4: it payroll deducted, you can still make a contribution for
• 25:36
  Speaker 4: as an account holder. And then that's again going to
• 25:40
  Speaker 4: just not be deducted on your paycheck as a pre tax,
• 25:43
  Speaker 4: but you're going to get the tax deduction when you
• 25:46
  Speaker 4: file your taxes at the end of the year. Great
• 25:48
  Speaker 4: great benefit, great option right there, And let me let
• 25:51
  Speaker 4: me see and CJ will bring you in on this
• 25:53
  Speaker 4: conversation as well. Is if I'm understanding, right, if your
• 25:56
  Speaker 4: employer hasn't met that maximum amount to contra to your
• 26:01
  Speaker 4: HSA and for twenty twenty five, you then would have
• 26:04
  Speaker 4: an opportunity to make that contribution before filing taxes.
• 26:08
  Speaker 1: Understand that, right, That's correct.
• 26:10
  Speaker 5: Yes, so the HSA is powerful and that it has
• 26:13
  Speaker 5: that triple tax benefit to tax deductible contributions, tax regrowth,
• 26:17
  Speaker 5: and tax re withdrawals as Kyle was talking about. And
• 26:20
  Speaker 5: there are penalties of course for not adhering to that.
• 26:24
  Speaker 5: But yes, I mean kind of the takeaway here everybody
• 26:26
  Speaker 5: is if you have access to NHSA, and that's an
• 26:32
  Speaker 5: f but if you have an access to an HSA
• 26:34
  Speaker 5: and you did not already perform that pre tax contribution,
• 26:39
  Speaker 5: it's possible that you could do so before April fifteenth,
• 26:42
  Speaker 5: and thereby bring down last year's taxable income. Now a
• 26:46
  Speaker 5: lot of people listening to me are going, well, that's
• 26:48
  Speaker 5: that would have been great information if I had it
• 26:49
  Speaker 5: three weeks ago when I filed my income taxes.
• 26:51
  Speaker 2: CJ. We get it right.
• 26:53
  Speaker 5: April fifteenth, most people have already completed filing for the
• 26:56
  Speaker 5: prior year, but maybe carry this into future years from member,
• 27:00
  Speaker 5: you technically have through traditional iras and through health savings accounts,
• 27:05
  Speaker 5: you have the ability to make a prior year contribution
• 27:08
  Speaker 5: up until the tax filing deadline in two really powerful ways,
• 27:12
  Speaker 5: assuming you're eligible, that brings down your taxable income.
• 27:16
  Speaker 2: So there's the.
• 27:17
  Speaker 5: There's the big encouragement for everybody, whether it be for
• 27:19
  Speaker 5: twenty five, twenty six, or any future year, be working
• 27:23
  Speaker 5: with your accountant, for your financial advisor to take advantage
• 27:26
  Speaker 5: of these rules.
• 27:27
  Speaker 1: Really great opportunities, really really really nice, nice ways to
• 27:31
  Speaker 1: really maximize savings and of course maximize not just savings
• 27:36
  Speaker 1: on taxes, but savings for retirement as well. A lot
• 27:39
  Speaker 1: of great information this week's program. Don't forget as always,
• 27:42
  Speaker 1: if you miss any part of the show or you
• 27:44
  Speaker 1: want to listen back to previous shows, you can always
• 27:46
  Speaker 1: subscribe to the podcast right from Colssfinancial dot com. That's
• 27:49
  Speaker 1: coss Klaas Financial dot com. You can also schedule complimentary
• 27:53
  Speaker 1: chat right from the website or call the office right
• 27:55
  Speaker 1: here in Madison at six soh eight four four two
• 27:58
  Speaker 1: five six three seven no chart for that initial gets
• 28:00
  Speaker 1: to know your appointment TECHLWS Financial. It will be complimentary
• 28:03
  Speaker 1: to you again their number six oh eight four four
• 28:05
  Speaker 1: two five, six three seven. You're going to hold on
• 28:07
  Speaker 1: to that telephone number because it's time now for the
• 28:09
  Speaker 1: Closs Quiz Question the Week. It works like this, In
• 28:11
  Speaker 1: just a moment, I'll ask you the class quiz question
• 28:14
  Speaker 1: in the week. You will then have thirty minutes from
• 28:15
  Speaker 1: the end today's program to call the Class Financial office
• 28:17
  Speaker 1: right here in Madison at six oh eight four four
• 28:20
  Speaker 1: two five six three seven. And if you are the
• 28:22
  Speaker 1: first call with correct answer to win this week's prize,
• 28:24
  Speaker 1: which is say, twenty five dollars gift card to Best Buy.
• 28:28
  Speaker 1: This week's Closs Quiz question the week is this for
• 28:30
  Speaker 1: the twenty twenty five tax year, how much can you
• 28:33
  Speaker 1: contribute to a traditional IRA if you are over the
• 28:37
  Speaker 1: age of fifty Telephone number six oh eight four four
• 28:40
  Speaker 1: two five six three seven. First call with correct answer
• 28:43
  Speaker 1: won that twenty five dollars gift card to Best Buy.
• 28:44
  Speaker 1: Don't forget as well. That's Coss Financial's office right here
• 28:47
  Speaker 1: in Madison, that number six oh eight four four two
• 28:50
  Speaker 1: five six three seven.
• 28:51
  Speaker 4: C J.
• 28:52
  Speaker 1: Kyle. Great chatting with both of you. You guys, enjoyed
• 28:54
  Speaker 1: this great day and we'll talk real soon. Thanks Chean,
• 28:57
  Speaker 1: Take care, guys. News comes you way next right here
• 28:59
  Speaker 1: on thirteen dn w y b r