I’d like to thank you for joining us for our webinar on tips for filing taxes like a pro and maximizing your refund brought to you by Finpath University. And I’m joined today. I’m Aaron Hennigan. I’m joined by Matt Anderson. Matt is a senior wealth advisor that works with us and he’s got Specialties and tax planning and financial planning and Investment Management. So he’s really the perfect one to walk us through maximizing attacks refund and not heard him speak on this subject before and know that he’s a very good resources of good information so Matt, thank you so much for joining us. Yeah, thank you for having me. Well good. Thanks everybody for being on the call today Aaron. Thank you for the introduction. Today, we’ll talk a little bit about. You know filing taxes for this upcoming year and in, but I wanted to start with just a little bit of a background. I myself I am an enrolled agent for those you do not know what an enrolled agent is essentially. It’s the highest honor given by the IRS to sit in front of the IRS with taxpayers which you know, trust me is, you know, quite an honor this year as everyone knows the IRS is quite delayed. There’s gonna be some things going on. So hopefully we can make sure that we maximize all of our filings going into the season. That’s now upon us. So first, let’s go back and look a little bit about kind of history of Federal taxation. So first just want to kind of point out some things here that last year there was some projections that we would see some higher tax rates this year that did not go through by the end of the year last year. So for our tax season, the marginal rates are staying the same if you look at this chart here, that’s up on And you will actually see that back in the s during the Reagan Administration. We had a pretty sizable drop of tax rates ever since then they’ve stayed pretty flat with every new president that’s come in we’ve seen a little bit of a change there, but our predictions are that, you know, we’re gonna probably remain flat for some period of time.
So here we have the marginal tax rates. Now, you will see that for the majority of Americans what we see on a day by day basis is the bulk of all of us kind of fall into that to percent range. So you can see for individuals that’s between you know, and for married filing joint filers. That’s between roughly. So for the bulk of you know those that we see out there we kind of Falls somewhere in there. Now remember this is your marginal rate. So how the tax code works is, you know, your taxed on various different amounts of income. So, you know, let’s say that a married filing joint return, you know makes a hundred thousand dollars collectively, you’re effective rates probably gonna be close to about %And then I went ahead and updated some of these numbers just to kind of highlight some changes that we’ll see next year. There is an inflation amount to this. Now. I will say that the inflation rate is not nearly as high as what we’re seeing in actual inflation right now as many of you have seen at the gas pumps in the grocery stores, but it does go up every year. Now for a lot of you maybe in the past, I know I say back in the old days. I’ve been doing this a long time. We saw a lot of people itemized essentially if you owned a house and that house was not paid off. There was a pretty much a hundred percent chance that you were itemizing on your tax return. In today’s world. It’s actually quite the opposite. So we see that most of our clients are actually not itemizing on their returns any longer. They’re usually taking the standard deduction. Now, here’s the here’s how we itemize on our tax return. So here is schedule a many of you probably have felt this the salt cap as we call it the state and local income tax deduction. Essentially what this is is this is where you claim things like property tax state income taxes. If you live in a state that has state income tax various other types of taxes like DMV registration or taxes that you might have when you buy a new car. These are all those items that go in on the top section here. Now what you’ll see is that this is capped at,. Now this came out with the jobs act in and that remains today now on your mortgage interest. That’s kind of the next line down. That’s usually where we see our highest deduction for most Americans, you know, who own a home that’s usually are our biggest write-off. We are captain now at, which means if you carry a mortgage or carry a note that’s greater than that. You can only deduct up to that, now again where I had said that although it’s easier to just take the standard some of us do itemize. I always recommend that you at least put this information in because you may be Christ right.
So look at your s. Look at your property tax bills. Look at all these things and throw that information in if you’re doing your own tax return or give it to your tax person just to see if you do qualify some of us make qualify because of charitable donations. I know that, you know a lot of people I work with, you know, give a lot to churches or other types of charitable organizations. And that’s where you know, we make it some benefit here all so if you have some very large medical expenses always make sure that you just give those to your tax person or put those in your tax return to see if you do qualify for itemization. So looking at the now again the new s and you can see is the but the tax forms have not changed since in. We actually saw the biggest overhaul to the tax code that we’d seen in over years. So over the last couple of years, you know, we’ve made a lot of adjustments but what you can see here is we used to call these above the line deductions. Now, it’s essentially page one page two now, unfortunately, we can go back in time. Now. I will say this Aaron heard me say this many times. My clients heard me say this several times that Your tax return really should be nothing more than the end result of a proper’s years worth of planning. I think as Americans we tend to be very retroactive in our tax planning, you know all year long. We make money we give away money, you know to Charities we spend money we save money we do all of these things and at the end of the year, we gather up all of our receipts and we take it to our tax person or we sit in front of computer and we decide well, you know, was it good or was it bad? We’re very retroactive in nature. So although some of these items, you know, we can’t go back in time. Here’s some things that we can think about maybe for this year as you’re doing your taxes to see where you fell and maybe there’s some adjustments that can be made for the year to make your taxes look better one of which is dividends for those of you that might buy stocks bonds mutual funds things of that nature, you know, look where you fall in the tax bracket. And see you know, should you be investing in things that are you know, more qualified versus ordinary should your bank accounts and your savings accounts and your bond accounts? Should they be tax-exempt or should they be taxable based on your tax rate? You know, look at the way that you’re Distributing if you’re you know getting close to retirement or you have a spouse who’s in retirement, you know where they taking their distributions and how do we maximize that year over year?Now you’ll see on the next page here. We have what we call below the line now above the line those are deductions. So essentially deductions reduce your income taxation. So let’s say you make $ you know, after all of your deductions your taxable amount is let’s say, and that’s what we determine your tax rate on after you’ve determined your tax rate and determine your adjusted gross income or your taxable income. We that we now get to credit credits are called again below the line because they are a dollar for dollar reduction of the actual tax you owe. So let’s again go to that same scenario and say okay on you know, my total taxation on that is $,. Then we take credits and those credits could be anything from retirement savings credits child tax credits adoption credits residential energy credits, whatever it might be those dollar amounts directly reduce., that is owed. So credits are extremely powerful. Now we’ll go through just a couple of the schedules because this will probably pertain to some of you so part one of schedule this shows additional incomes. So these are incomes that are outside of W wages at your job or let’s say income dividends things of that nature. So this would include tax refunds. If you’re in a state that has tax.
So for instance, you know, when California and New York, Illinois, if you pay state income tax and you overpay you get a refund that refund is actually taxable to you the next year on your federal income tax return. So what I always try to recommend is for those that live in a high tax state try to really really reduce that refund amount on the state side and try to get that to a net zero because it ends up kind of coming back to us the next year other items in here could be alimony received if you were prior to your grandfather did in or prior to the change of . This income for those of you that either yourself you own a small business. You have a spouse or a partner that has a business. This is where that would be reported anyone with rental incomes or farming income. That would be reported here as well as unemployment compensation. So this is where you get a good idea of what other types of income I might be receiving now something that’s important here is pay attention to how much this income is. It could be a benefit to you to start looking at doing quarterly estimated payments ahead of time because a lot of this kind of income unlike our W-s with our jobs. We don’t prepay that tax so there could be some good strategy here to prepay some of that. Now part two is kind of a below the line type of deduction. These are adjustments to income. So I would imagine we have a lot of Educators on the call today, you know, we still have those educator expense credits of per person. If you have an HSA through your employer or outside, you know, where you put tax deductible money into a health savings account. You’re going to want to report that here. If you do have a small business is where yourself employment taxes is put in make sure that that’s being calculated correctly. Then you look at things like again Ira deductions, which will go into in a second alimony paid student loan interest Etc. Now schedule two this is additional tax. So on schedule one is where we put additional income in. That’s also where we take additional deductions again, you know that are not actually on the schedule. And then this is where we look at additional tax. So this would be sort of a you know, an adjustment to the other taxes that you own AMT Alternative Minimum Tax these would be for you know, those who have a very high income and invest or have other passive incomes that you know, basically pull additional tax in this is where we might see an excess premium tax credit on health insurance. So if you’re on a state-funded health insurance plan and you make you know, either make too much to qualify or they overpaid you you’ll see that here this will this is also where you’re gonna see things like self-employment tax and any distributions that you may have taken from a retirement account early now with that too just always want to you know recommend, you know, there’s always times where you know, we have we’re in a pinch we have trouble we’re trying to find income where we can find it. We want to try to avoid those early retirement plan distributions as much as possible because they do incur an additional . penaltyOkay, so now we’re looking at additional credits. So this is where we’re going to see, you know, some of the things that are going to really save us on taxes some of the things that maybe you did throughout the year that you you know didn’t account for thinking that it was going to be a tax savings to you or these are things that maybe you can take advantage of going forward.
If you have these planned out throughout the year some of these things are foreign tax credits. This would be if you have anybody in your family that works in the military, you’re maybe worked overseas and paid taxes overseas or work for you know, a consulting or construction job where they were sent overseas and they paid for in taxes. Make sure that you get that documentation of what tax may have been paid to another country because if that we have a tax treaty with that country, which the United States has a taxi with the majority of countries in the world, you can actually get a credit for that tax paid back against your taxes here. So that’s extremely important child depending care if you have a young child that’s in daycare or has a babysitter a nanny any of those kinds of things that’s really important to make sure that you capture how much you paid you may qualify for a deduction or an additional credit there. For those of you, you know don’t know you can call directly to the the organization that’s providing the care. Let’s say it’s a daycare and just tell them that you’re looking for a breakdown of what you paid. They’ll know exactly what that is and they willApply a sheet with a tax ID how much you paid amount per child all those kinds of things and you can put that directly in your tax return. If you have a you know, someone that comes into the home, you know, and you you were paying them a certain amount bag and essentially was not cash you would would need to get their information like a social in order to claim that credit education credits like the lifetime learning credit or the American Opportunity tax credit. These are for those you may be in you know higher education still in college or in grad school. There could be some benefits to claiming a lot of that tuition. Then you got your retirement Savings Credit and residential energy credits, which will go to into here in a minute. Okay. So this is kind of a big one that changed due to covid there was a lot of changes during with the cares act that came out in when we kind of first went into quarantine because of covid and a lot of those things didn’t stick they essentially they stuck around for year one and then you know, they took them out of the tax code. This is one that they decided to keep. I don’t know how long they will keep it but I do know that for it is still available to us. Essentially what this is is when you give to charity let’s say you give to a church you give to a charitable organization when you give cash of any kind you have to itemize in order to get that deduction. So you may give, a year and tithing whatever it might be. But if you don’t have enough in mortgage interest medical expenses or property tax to really get above that standard deduction amount. You’re not getting any tax benefit now again, I always tell people don’t look at it, you know giving to charity is justDeduction do it because you like to do it. However, you know, if you can get a benefit at the same time great. So what this is is there is up to $ that we can all take as a charitable deduction, even if we do not itemize. So even if you claim the standard deduction, if you gave at least $ in cash donations throughout the year, you do want to make sure that you deduct that off your tax return. This does not include things like Goodwill, you know, giving away a bunch of old stuff in the garage. This is specific to cash donations.
Now you’ve also I mean you probably if you’ve been through a Finpath before if you’ve gone through a lot of our courses, you do know that a big part of creating wealth a big thing that we stress as you know, helping you become financially independent is contributing to your retirement plans. Whether you have a four or three beef or or any other kind of plan being able to defer a lot of your income today, when you’re at a higher tax rate while you’re earning higher incomes to then be able to distribute in the future and potentially a lower tax rate is a huge benefit. Now with your four or three bees for the sevens. These all have a year in contribution deadline. So what I mean by that is for are we have passed that deadline December st was it we cannot go back and put money into those kinds of plants. However, you can put money potentially into an IRA and that is due by April th of this year. So talk to your tax person. See if you qualify based on income. You may be able to defer a little bit more or for those of you who have a business or a spouse who runs a business look at the potential to do a set by array on some of that income to be able to defer some more taxation. okay, so now we’ll get kind of into the the meat here of you know, what we might be able to do today to make sure that we maximize our refund and that’s talking about credits. So we’ll go ahead and we’ll start at the top here with the child tax credit. So what is the child tax credit well?It’s been around for a long time. It’s actually been around since the the late s child tax credit is typically up to $, per dependent and those dependents have to be under years old. They have to live with you at least halfway through the year. You have to essentially provide for over % of their care. SoAnd as I am a parent, I you know, I provide all of my care for my kids and they live with me all the time maybe too much unfortunately, so I’m sure that you you know, everyone understands what that looks like. This has been changed in in recent years. So in, there was a slight change but then actually due to covid in last year. There was a big change and a lot of you probably saw this so we were actually being prepaid a portion of our eligible child tax credit this last year. That credit was also expanded from up to,. And it was actually as high as, if you have a child that’s under the age of six. so what happened was is last year about halfway through the year started in July. We started getting prepayments of our child tax credit. So if you haven’t received it yet. You should be receiving a letter. It’s coded . This is coming from the IRS and it breaks down how much they prepaid to you last year. Now that income that was prepaid to you is not taxable income. It’s not added to your address to gross income. It is purely a prepayment of the credit. so if you have a child that’s under, and you do qualify based on your income, which will go in a second here. Then again, you you would have been pretty prepaid half of that. Which means that when you file your tax return you’re still going to want to make sure that you add those dependents in there and you will essentially receive the other half of that child tax credit as a credit against what you owe or to add to your refund. Now, if you have a child that’s over, we’ll get into that there is still a potential credit that you can claim for them many you may have children in college something like that. So make sure that you still include them now again, the credits worth of, for for most children, if they’re under six and there’s no limit on how many kids you have. So right it’s not as if they cap us off at two kids or three kids. So however many children that you can claim, you know for you will get that credit. This is a partially refundable tax credit.
So essentially that means is even if you Zero income for the year or zero taxable income you can still qualify for a portion of that credit. Now again, the credit is income restricted, which means that based on your income. There are phase-outs and we’ll go through that in the next slide. So in order to take full full advantageIf your income is under $, and you’re single file or under, for head household and then, for married filing. Jointly, you receive the full credit. So if you have children under six, it’s . You would have received half of it so far. You’ll receive the other half upon filing your tax return. umBut it does start to phase out. So the the first phase out is if your income exceeds. The threshold so if exceeds, but it’s below, if you’re married filing jointly or then same thing with single if you exceed but you’re under two hundred thousand. Your child tracks credit will be reduced by $ for each, that you exceeded essentially reduce all the way down to two thousand dollars. So if you’re within those threshold the worst case scenarioIs that you’ll still receive $, now, what does that mean regards to the prepayment be careful of this that let’s say because what they do is they Factor all of your prepayment on the prior years taxes, so they they’re basing it on taxes. So let’s say in you had a certain income in your income went up sizably. Well, they’re not predicting that income so there could be a situation where they paid you the full amount, but you have a reduced amount based on your income to be aware of that. Now the second phase out here is on income that exceeds, for married filing. Jointly or, for single again, essentially. It’s the same thing the phase out, you know starts kind of knocking you down bucks per thousand, but you can actually be disqualified altogether and receive no credit. So again, if for whatever reason you had a situation, let’s say a single filer where last year in you had, of income but this year you had, of income and you receive that credit be aware of that that in your tax return may actually owe that back. So now some of the other eligibility requirements again, we can’t talk about you got a pretty you know provide at least, you know, % of the care for this child. They have to have lived with you for at least half the year. They can’t file their own tax return or a joint tax return and you had to have lived in the United States for at least % of the year last year. So for again, the child tax credit is fully refundable, which is great. So that means it can reduce your tax bill or if you don’t know anything, it could increase your refund. So make sure that you are filing that accurately again. Just want to kind of harp on. If you did receive those Advanced payments look for that in the mail. I’ve already received mine. I would imagine most everybody has if you haven’t you can actually go to the IRS website and you know, essentially putting your information make sure that you receive that info not sure if anybody had opted out of the advanced payments. I haven’t come across anybody who did but if you did opt out of them when you file you simply just need to put in there that you’re eligible to claim the credit and you would get the full credit back on your taxes.
So for whatever reason you opted out make sure that you talk to your tax person or code that in your tax return when you do it that you did not receive any but that you were fully eligible for the the full credit. And then if you don’t normally, you know file taxes, let’s say your income really low or you’re just on social security or you know, something along those lines again, you can go to the IRS website and look into receiving that credit. So again going back to will you have to pay this back? So unfortunately, although it is a credit if you were overpaid there is a chance or likelihood that you would have to pay that back. So just be very cognizant of that again the things that might you know affect your taxes would be you’re filing status, you know your income when a custody Arrangements maybe if you you know, the divorce family situation about who’s claiming who and maybe you know, you claim to a child so you receive the credit but then in your spouses X your ex spouses is claiming them. So but they didn’t get the credit make sure that you you have that conversation because it will affect your taxes. And then again, it does look like that you’re overpaid it will essentially just be a negative credit on your tax return meaning that you know, let’s say that you were overpaid by, your refund is supposed to beI was in it will reflect in the return itself. And so there would be a net back to you. so I did mention a little while ago thatyou still can get credits for other dependents. This could be an elderly parent that lives in the home that you take care of. This could be a child. That’s over, but still in school. I could be a multitude of different things. You can still file for a credit on their behalf. It is not the full child tax credit, or essentially it boils down to a $ credit. So I just I clearly point that out because I have a lot of people that come to me and say oh, yeah, I can’t claim my kid this year. They’re and you know, they’re off starting a business or they’re trading crypto or buying nfts or whatever. They’re not going to college. I still don’t do they live at home. Claim them put them on your tax return you’re still you know, essentially providing for more than % of their care. So again, this kind of goes a little bit deeper into that. So some of the things that you have to remember in order for this person to qualify as a dependent, you have to have earned income right? Are you and your spouse? Um it you know, the oh, I’m sorry that this is for the dependent care. So I I took a step forward. So the depending care this is what we talked about regards to if you have a nanny if you have a babysitter, if you have a daycare service that you bring your child to make sure that you add all of those numbers up make sure that you get those numbers from the facility or from the organization that you you use because it can be a good benefit to you. Again, a couple of different things. Yeah. This is Agi restrictive what I mean by that is if you do make a certain amount, you will end up disqualifying for this now again that usually hits at about, of income. So I always recommend just like itemized deductions. I always recommend that you input this into your tax return because there’s various phase out limitations and we want to make sure that you are at least getting some of that benefit back. The credit itself is worth between and percent of as much as $, of qualifying expenses for your child or again, it’s and it’s per child, right? So same thing with the child tax credit whether you have one child or children, you’re not limited on the upside there. But again, it is dependent on your total adjusted gross income whether or not you get the full % or it faces out to zero now lastly. This is kind of a pre-planning thing. So again, unfortunately,Me this would not be for . But while you’re doing your taxes this year, if you are finding that you do have a pretty hefty depending care expense and whether or not you’re even getting a credit for it, especially if you’re not getting any benefit for it. Go to your employer and look at to see if you either you or your spouse have the option of setting up a flexible spending account. Typically an FSA, you know, we think of as just for health insurance needs, right, you know going to CVS and buying prescriptions or buying eyeglasses or something along that line and it can be a real nuisance because unlike an HSA an FSA. You have to spend it that year. If you don’t spend all that income it doesn’t roll over to the next year. So a lot of people honestly when they go through their, you know HR and they look at all their you know benefits they kind of look over this one. But it does qualify for child and dependent Care Credit.
So essentially all that means is let’s say that you put in, into your FSA for the year and your total dependent care expenses for your children is,. Well, of that you paid for with tax-free dollars. So it’s actually far greater than even trying to qualify for a credit of or percent. You’re getting a % tax write-off on that full amount that you used from the FSA. So that’s just kind of a pre-planning tip that everybody should look into if you have children that ageOkay. So now we go into the the Earned Income Tax Credit. So this is a fully refundable tax credit. It’s essentially designed to reduce the financial burden on lower income workers specifically or particularly those with children. So essentially what this is is, you know, if you are employed or you have a self-employment you can file for an additional credit based on your total income. Now one caveat here is you cannot have more than, in investment income meaning, you know, stocks bonds mutual funds cryptocurrencies, whatever it is that you might have Investments out there. You have to be very limited on that but for the here’s a guides you can kind of see so, you know, essentially let’s say you’re a married filing jointly tax filer. You have three children and your your total adjusted gross income is less than,. You may qualify for an Earned Income Tax Credit. Now the reason why I say this is a lot of tax preparers overlook this in TurboTax, you have to essentially tell them you have to put in the software that you qualify for this. It’s just one of those things that gets overlooked a lot and if you do qualify, it can be a big benefit if you look there on the right hand side, there is some significant tax credits there. Okay, the retirement contribution Savings Credit so we had talked about the four or three b’s the ‘s, you know, those those are great because they essentially reduce your income dollar for dollar. So let’s say you make $, and you put $, into your four or three b or you’re now only taxed on,. So you have that’s a significant tax savings. However, if you’re income falls into a certain lower threshold, not only do you get that tax write off, but you also get an additional Savers credit. So you can see here that you know based on your your income.
Let’s say that you know, you’re married filing. Jointly and you know, you’re you’re underneath that, range, you know, you could get a % credit up to what you put away. So let’s say that you you know, you’re in that income range you put $, away. You could get $ in credit. Now remember that’s not a deduction off your income. That’s a full tax credit. So it’s extremely powerful when you start looking at you know how to save and where should I put money’s because again the essentially the government is incentivizing everybody to put as much money away as possible and this could be something that you look at even this year when you look at okay, should I put money into a traditional IRA a Roth IRA a step Ira if I own a business you have up until April th to make that determination talk to your tax advisor or do some in your own calculations and see if you qualify for this additional credit because if you look at the both the savings of income on aAdditional type of Ira and the credit it could be, you know a pretty sizable change in your overall tax refund. Okay, so now we’re getting into the education credits. So if you are in school, whether it’s undergrad, or maybe you’re going back to grad school to get higher credentials to get raises or move up, you know within your organization look at the two different types of credits and toggle between them. You can either ask your Tax Advisor to you know, determine what makes the most sense for you or I know when some of these online do it yourself type programs. They do have some you know abilities to to see what makes the most sense. The more lucrative of the two is the American Opportunity tax credit. So again, this is if you are paying tuition in some way in order to qualify the student who the tuition was paid for must be pursuing a degree, right? So, unfortunately, I think things likeCooking schools and golf schools you got to be careful with but usually it’s got to be an accredited University. The student has to be enrolled at least half time and they must be completing one of their first four years or a post-secondary. So they’re American Opportunity credit is pretty much specific to undergrad right you’re four years like most all other credits. Obviously, there are Income limitations.
So you’re modified Jessica gross income of, for a married filing join or, for single. They are pretty high, you know, like said a lot higher than your earned income tax credit or retirement Savings credit, but they they do start to phase out at a certain level. If you do qualify for the American Opportunity tax credit, you’ll see that you know, you can get a hundred percent of the first two thousand dollars. So essentially a two thousand dollar credit and then you get % off the next from there. So it’s a pretty sizable credit. You want to make sure that you’re you’re correctly if that does pertain to you. The second of which is the lifetime learning credits. This is going to be more for those seeking higher education again, the posts undergrad this is designed for you know, those who pay tuition for qualifying higher education expenses and maybe you know, you don’t meet the restrictions of the American Opportunity tax credits. So you can look as this can be taken and almost any higher education expense. So again any grad school of any kind it’s a lot less restrictive when it comes to income so you can seeYou know it you have a little bit more flexibility there. And if you do qualify for it, it’s worth as much as % of $, in higher education. So, you know, essentially if you paid $, that could be worth a $, credit now. You can’t take them at the same time. You got to choose one of the other but I will say that you can actually take your American Opportunity credit during undergrad and your lifetime learning credit during grad school. So if you feel like you’ve already used one don’t hesitate to continue to include those expenses in your tax return to see if you qualify for the other. Um, this one’s obviously not as common but it’s becoming more common if there’s anybody on the call that you know, either adopted themselves or know somebody who who adopted you can see that the for the adoption tax credits is worth as much as, per child. And again, this is a tax credit. This is not a deduction off of income. So it’s a pretty sizable credit the credit can either be taken for the maximum amount on your actual adoption related expenses or your actual adoption really expenses. Whichever is is lower. So usually we exceed those expenses when we adopt. There’s a lot that goes into it. So for the most part when I see clients that, you know are adopting children, we usually end up utilizing that entire credit the expenses can include things like agency fees legal expenses travel costs, you know, if you had to travel somewhere to get this done and that would include things like hotel stays if there’s Hospital, you know, all that kind of stuff. So you want to make sure that you really add those up again. This one is, you know, income restricted which means you know for those in the kind of really high marginal tax brackets, you know you tend to lose that but it is pretty high, you know. You can see that you know for you know, the AGI limit is the full document is up to, and starts to phase out from there to,. So something to consider.
And then lastly this one’s a strange one the residential Energy Credit because when this started it was extremely it was a lot higher than it is today for . It’s still at % this year in . It actually drops down to % and then it phases out to zero after that. So the idea when this got started was essentially a trial run where you know, the first year was very lucrative. I think as high as % and it is ratcheted down from here, but if you did any type of repairs or any improvements to your house last year that were, you know, specifically energy efficient things like new windows or solar on your house. I would make sure to gather all of those costs and give them to your tax preparer or you know, have those ready when you file your tax return because there is still some credit allowed there you claim the credit for solar when you fileYour tax return as long as you know, you own it, you’re eligible for the credit, right? You can’t buy it for a friend or loved one. It’s got to be part of a property that you own and if you you know, if you don’t essentially have enough liability in one year you roll it over. So what I mean by that is thisYou know, let’s say that your solar tax credit is $, your total tax liability for the year was,. They’re not gonna the IRS does not allow you to net that to zero and then give you $, what they’ll do is they’ll get you down to zero tax liability. And then that $, credit will roll over until the next year that was a little bit more powerful back when we were at a much higher deduction, right, but that could be the case for you. And then the plugin electric Drive motor vehicle again, this is for those that you know may be looking at buying some of these new Fords that are coming out there all electric. I know Volkswagens doing a lot Tesla, you know, obviously, you know a big player in the space. The federal incentives usually is as a flat but it that’s only worth that much if your tax bill being with or more. So just like the the solar tax credit, you know, you essentially if you don’t owe that much you just roll that over now the goofy thing about this is that each car company essentially got a certain amount of credits. So essentially the government’s phasing this out because the electric vehicle Market has gotten so big so just to give you an idea Tesla ran out of tax credits in . So my prediction is that going forward we’re going to have a big push for this again. We’re probably gonna see something similar to this either in this presidency or the next one. So do some research and look into you know, if you are looking at buying a car if you bought one for last year, I would recommend, you know calling the manufacturer to talk to them about hey, you know, do I qualify for any of these credits because it could be one of those things that we didn’t think about and you you might get some benefit out for for last year. And that’s all I had a lot of fun tax stuff there. I look forward to your questions and Aaron. I’ll let you take it from here.
Awesome. Thanks Matt. I appreciate it. Um, just a lot of really really good information. Um, you know, one of the things that’s kind of stands out to me is is your comments onon being more proactive in in our tax planning rather than reactionary, you know, it’s just off the top of your head Matt. Would you mind sharing kind of what are your top two one or one or two things that someone can do to to be more proactive in how they approach taxes?Yeah, yeah, excellent question. So one of the the things that I always recommend is, you know taxes are not fun, you know, it’s just something we all have to do. I personally enjoy them but you know as a tax filer, we recognize it they’re not we don’t look forward to it every year. So it typically happens is as soon as you get your tax return it goes in a drawer and you take it off your mind for an entire year. What I recommend all my clients is as soon as you get your tax return done this year sit down and and look at it sit down with your spouse or even sit down with your Tax Advisor and start looking at. Okay, where did I end up? So some of those things that we pointed out like qualified versus ordinary dividends tax exempt interest versus tax interest. How much did you put in retirement accounts? And what was the benefit to you? Where did you fall on the marginal tax bracket right is actually as soon as you get your tax return this year. The number one thing to do would be okay. Let’s sit down and project. Is it gonna be the same next year? What can we do differently this year? Because again, we normally just kind of put it out of our minds. Um, the second thing I’d really like I said focus on is is finding out what your cash flow is do some budgeting and really look into that retirement contribution, you know for W workers. It’s the biggest deduction we have, you know, if you do run a business or you have a spouse who runs a business as you probably are some what aware you have. Limited amount of deductions, but as W- wage earners whether you know, you make, or million. Our biggest deduction is that retirement plan? Make sure that we you know, look at fully, you know taking advantage of that. Awesome. That’s really good advice. Thanks for sharing that Matt.
So in a few minutes, we’ll go to Q&A. So, you know, I know there are some questions out there and I expect you know. Quite a bit of questions on this on this particular topic, but it just makes me want to kind of re-emphasize, you know, utilizing fin path and all those resources that are available to you for free, you know, it’s it really is our goal to utilize resources. We have like Matt to plug you into the experts that can get you sound sound consultation when it comes to your finances. Now, I did mention at the beginning of this that we have our financial journey within path and so to take advantage of that because there are prizes that are going to be involved along the way visit Finn path wellness. com and login to your account. If you don’t have one you can just register a little Pro tip is use your work email because that’s what we’ll have on file. And then once you’re in Finn path for this month’s activity just click Financial Health tools and complete your understanding understanding. paycheck and W-and and we’ll update that every month so that you guys can stay on Pace with those activities because obviously the more you participate the higher your chances of winning prizes are going to be later on and at the end of the day, I mean, it’s just that knowledge is is more valuable than any price that we can offer. If you do have any trouble navigating fin path or getting logged in or anything like that just contact us at Finn path that TCG services. com and we’ll get you the support you needed so that you can take advantage of that resource. And make that available to you and you’ll hear us say this often, you know, we’re we’re here to help. So please reach out with any questions you have and take advantage of these free resources. You know, we’re we’re provided or we’re committed to providing the support. You need to reach that Financial well-being and and along with the fin path platform. We provide one-on-one coaching to help you set and Achieve Financial goals develop good money habits, you know such as like Matt mentioned such as budgeting and paying off debt strategically planning and savings goals, you know, or even guidance on what to do with with your tax refund when you put Matt’s advice to work and then if you need to be connected to one of our financial advisors such as Matt, you know, we’re definitely here to help and assist with that as well. So this is how you can reach us. Please reach out schedule those one-on-one coaching sessions and we’re here to help.
