1
00:00:00,040 --> 00:00:07,000
Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

2
00:00:09,039 --> 00:00:13,000
Speaker 2: They're billing mombs? What about schools are falling?

3
00:00:13,640 --> 00:00:16,759
Speaker 3: Tell me what in the hell of pay taxes for?

4
00:00:17,880 --> 00:00:19,480
Speaker 1: Well? What a little?

5
00:00:20,120 --> 00:00:26,200
Speaker 2: Stop paying text? Stop, what a lit Stop paying taxes?

6
00:00:27,240 --> 00:00:28,720
Speaker 1: Stop paying tax.

7
00:00:30,360 --> 00:00:33,960
Speaker 3: It's that time of year. You still have Christmas gifts

8
00:00:34,040 --> 00:00:36,800
Speaker 3: left to buy, but you have to be aware that

9
00:00:37,000 --> 00:00:41,800
Speaker 3: April fifteenth is just around the corner. Consider this your

10
00:00:41,920 --> 00:00:45,320
Speaker 3: nudge that you have less than three weeks to make

11
00:00:45,640 --> 00:00:50,479
Speaker 3: whatever year end tax moves you're planning for the calendar

12
00:00:50,560 --> 00:00:54,440
Speaker 3: year twenty twenty five. I'm Barry Riddolts, and on today's

13
00:00:54,520 --> 00:00:58,200
Speaker 3: edition of At the Money, we're gonna discuss the moves

14
00:00:58,200 --> 00:01:02,560
Speaker 3: investors should be thinking about in order to reduce their

15
00:01:02,680 --> 00:01:05,920
Speaker 3: twenty twenty five taxes. To help us unpack all of

16
00:01:05,959 --> 00:01:08,839
Speaker 3: this and what it means for your money, let's bring

17
00:01:08,880 --> 00:01:13,600
Speaker 3: in Bill Artsmarnian Full disclosure. Arts Ronian is the director

18
00:01:14,040 --> 00:01:17,880
Speaker 3: of tax services at Richholt's Wealth Management and we've been

19
00:01:17,920 --> 00:01:21,640
Speaker 3: working with him for just about five years. So Bill,

20
00:01:22,000 --> 00:01:27,679
Speaker 3: let's start with a simple overview. You've said before tax

21
00:01:27,720 --> 00:01:32,080
Speaker 3: advice is financial advice. I want to unpack that. How

22
00:01:32,080 --> 00:01:36,120
Speaker 3: should investors be thinking about the role of tax planning

23
00:01:36,240 --> 00:01:40,680
Speaker 3: in their overall wealth strategy, especially here in December.

24
00:01:41,880 --> 00:01:44,559
Speaker 1: Well, thanks Barry for having me. Let's just think about

25
00:01:44,600 --> 00:01:46,960
Speaker 1: a financial plan for a second. What part of a

26
00:01:47,000 --> 00:01:50,080
Speaker 1: financial plan does not touch on taxes? I mean think

27
00:01:50,080 --> 00:01:53,240
Speaker 1: about just space of cash flow planning. Taxes For our

28
00:01:53,280 --> 00:01:56,960
Speaker 1: investors are often the largest expense in their annual budget.

29
00:01:57,560 --> 00:01:59,960
Speaker 1: It's mortgage and taxes. Those are the largest costs. Life

30
00:02:00,080 --> 00:02:02,640
Speaker 1: insurance is thinking about a tax free inheritance for the

31
00:02:02,680 --> 00:02:05,720
Speaker 1: next generation or for your errors. State planning is all

32
00:02:05,760 --> 00:02:07,960
Speaker 1: about taxes. If there was no estate tax, we wouldn't

33
00:02:08,040 --> 00:02:10,560
Speaker 1: really have to think about estate planning. And then basic

34
00:02:10,639 --> 00:02:16,160
Speaker 1: portfolio management is purely you know, not purely tax centric.

35
00:02:16,200 --> 00:02:18,040
Speaker 1: But our investors are thinking about tax all the time.

36
00:02:18,040 --> 00:02:20,880
Speaker 1: Our clients would rather save one thousand dollars on taxes

37
00:02:20,919 --> 00:02:23,560
Speaker 1: than make six figures in a trading day. So it's

38
00:02:23,639 --> 00:02:26,560
Speaker 1: all connected. And the end of the year is like

39
00:02:26,680 --> 00:02:30,400
Speaker 1: the report card. Tax planning should be happening proactively for

40
00:02:30,440 --> 00:02:32,840
Speaker 1: twelve months, but we don't even stop there. We're not

41
00:02:32,880 --> 00:02:35,160
Speaker 1: thinking about taxes as a current year item or even

42
00:02:35,160 --> 00:02:37,960
Speaker 1: a lifetime item. We're thinking about this generationally. We're thinking

43
00:02:38,000 --> 00:02:40,600
Speaker 1: about how can we set up the next generation of

44
00:02:40,639 --> 00:02:45,040
Speaker 1: client children, client grandchildren for tax success.

45
00:02:44,800 --> 00:02:46,919
Speaker 3: So we have a few weeks left in the year.

46
00:02:47,480 --> 00:02:50,239
Speaker 3: What are the big boxes that you think investors should

47
00:02:50,240 --> 00:02:54,120
Speaker 3: be checking and what important items do they ignore? What

48
00:02:54,160 --> 00:02:55,560
Speaker 3: are the big mistakes people make?

49
00:02:56,200 --> 00:02:59,119
Speaker 1: I think one of the misunderstandings is on tax deferral

50
00:02:59,320 --> 00:03:03,400
Speaker 1: rather than tax avoidance. Many strategies can avoid taxes or

51
00:03:03,520 --> 00:03:06,480
Speaker 1: can defer taxes, but that bill will come do at

52
00:03:06,480 --> 00:03:08,440
Speaker 1: some point. You know, think about even just a four

53
00:03:08,480 --> 00:03:11,200
Speaker 1: oh one K a pre tax contribution, You're going to

54
00:03:11,240 --> 00:03:14,880
Speaker 1: recognize that income at some point. Things like accelerated depreciation

55
00:03:15,000 --> 00:03:16,960
Speaker 1: will come back to bite you on the recapture when

56
00:03:17,000 --> 00:03:21,160
Speaker 1: you sell the asset. Opportunity zones are a tax deferral mechanism.

57
00:03:21,480 --> 00:03:24,200
Speaker 1: These are all very useful because time value of money

58
00:03:24,280 --> 00:03:27,680
Speaker 1: says that a tax deduction today is worth more than

59
00:03:27,680 --> 00:03:30,920
Speaker 1: a tax deduction in the future, but eventually that there's

60
00:03:30,919 --> 00:03:32,160
Speaker 1: going to be a tax hit. So I think that's

61
00:03:32,160 --> 00:03:36,360
Speaker 1: a common misunderstanding. A few other mistakes is on capital

62
00:03:36,400 --> 00:03:41,160
Speaker 1: gain timing. We see clients not really understand or consider

63
00:03:41,240 --> 00:03:45,320
Speaker 1: the timing of when they recognize games. When we onboard folks,

64
00:03:45,360 --> 00:03:49,080
Speaker 1: we're often pushing gains from the fourth quarter of say

65
00:03:49,080 --> 00:03:51,640
Speaker 1: twenty twenty five, into the first quarter of twenty twenty six,

66
00:03:51,880 --> 00:03:54,240
Speaker 1: because that gives us a full twelve months to tax

67
00:03:54,280 --> 00:03:57,920
Speaker 1: lost harvest and create losses to offset any capital gains.

68
00:03:58,320 --> 00:04:01,280
Speaker 1: The flip side of that, of course, is even a

69
00:04:01,280 --> 00:04:04,280
Speaker 1: small movement in a stock price can cost more than

70
00:04:04,320 --> 00:04:07,040
Speaker 1: a tax bill just to sell it, so you have

71
00:04:07,080 --> 00:04:09,240
Speaker 1: to be pretty comfortable holding the position for a couple

72
00:04:09,280 --> 00:04:12,640
Speaker 1: weeks or even a couple months. And then the last

73
00:04:12,680 --> 00:04:17,280
Speaker 1: mistake is misunderstanding just basic payment obligations. There are safe

74
00:04:17,360 --> 00:04:22,640
Speaker 1: harbors to avoid estimated tax penalties. But on the flip

75
00:04:22,680 --> 00:04:24,800
Speaker 1: side of that is, if you pay too much, there's

76
00:04:24,800 --> 00:04:27,360
Speaker 1: opportunity cost. If you have a big refund in April,

77
00:04:27,400 --> 00:04:28,839
Speaker 1: that means you paid a little bit too much and

78
00:04:28,839 --> 00:04:30,320
Speaker 1: that money could have been better put to use.

79
00:04:30,960 --> 00:04:36,080
Speaker 3: So Bloomberg has a fairly sophisticated audience of high earning professionals.

80
00:04:36,520 --> 00:04:39,800
Speaker 3: What are the three top moves you see for folks

81
00:04:39,839 --> 00:04:43,080
Speaker 3: like that, they have a portfolio, they have a pretty

82
00:04:43,080 --> 00:04:47,120
Speaker 3: decent income, and they can expect to continue that for

83
00:04:47,160 --> 00:04:48,239
Speaker 3: the foreseeable future.

84
00:04:49,480 --> 00:04:50,679
Speaker 2: Let's start with charitable giving.

85
00:04:51,839 --> 00:04:54,760
Speaker 1: We'll talk about it more throughout the show, but it's

86
00:04:54,800 --> 00:04:57,400
Speaker 1: often the most accessible lever to pull for tax savings.

87
00:04:58,000 --> 00:05:00,480
Speaker 1: The caveat being you need to be conscious of where

88
00:05:00,640 --> 00:05:04,240
Speaker 1: your total deductions fall. We see some clients give a

89
00:05:04,240 --> 00:05:07,159
Speaker 1: certain amount of charitable gifts and they don't even itemize

90
00:05:07,160 --> 00:05:09,920
Speaker 1: their deductions. So from a federal tax standpoint, maybe they

91
00:05:09,920 --> 00:05:12,600
Speaker 1: gave away ten k, but they're still taking that standard deduction.

92
00:05:12,960 --> 00:05:15,880
Speaker 1: They're not benefiting from that charitable gift. So that's where

93
00:05:15,920 --> 00:05:19,400
Speaker 1: bunching strategies and some other strategies with don'tant advice funds

94
00:05:19,400 --> 00:05:22,480
Speaker 1: can come into play. Number two is on the equity

95
00:05:22,480 --> 00:05:27,839
Speaker 1: comp side. Equity compensation for folks compensated through their company stock,

96
00:05:28,040 --> 00:05:30,840
Speaker 1: the timing of the income can often be flexible. Think

97
00:05:30,839 --> 00:05:34,680
Speaker 1: about stock options company stock options. We should be asking

98
00:05:34,680 --> 00:05:37,679
Speaker 1: the question, how much can we recognize in stock option

99
00:05:37,839 --> 00:05:39,760
Speaker 1: income before the end of the year before we bump

100
00:05:39,839 --> 00:05:41,280
Speaker 1: up against the next federal or.

101
00:05:41,240 --> 00:05:42,320
Speaker 2: State tax bracket.

102
00:05:42,560 --> 00:05:45,720
Speaker 1: How much if these are incentive stock options, how much

103
00:05:45,720 --> 00:05:48,560
Speaker 1: can we recognize without paying a MT alternative minimum tax.

104
00:05:48,600 --> 00:05:51,880
Speaker 1: These are questions we should all be asking if we're

105
00:05:51,880 --> 00:05:53,800
Speaker 1: paid through equity, or if we have clients that are

106
00:05:53,839 --> 00:05:56,440
Speaker 1: paid through equity and the last one is for small

107
00:05:56,480 --> 00:05:57,440
Speaker 1: business owners.

108
00:05:57,200 --> 00:05:59,800
Speaker 2: There's a whole lot on the small business side of this.

109
00:06:00,760 --> 00:06:03,640
Speaker 1: I'm focused a lot on qualified business income, which is

110
00:06:03,680 --> 00:06:07,320
Speaker 1: a twenty percent deduction for past through income, but there

111
00:06:07,320 --> 00:06:11,000
Speaker 1: are limitations, and those limitations can be on based on

112
00:06:11,040 --> 00:06:13,760
Speaker 1: how much you pay your employees or yourself in a wage.

113
00:06:14,240 --> 00:06:16,960
Speaker 1: If you don't meet a certain wage number, that QBI

114
00:06:17,120 --> 00:06:19,920
Speaker 1: benefit could be significantly reduced or even reduced down to

115
00:06:20,000 --> 00:06:23,000
Speaker 1: zero if you're really screwing this up. And then on

116
00:06:23,360 --> 00:06:25,920
Speaker 1: the small business side, we should be looking at are

117
00:06:25,960 --> 00:06:29,360
Speaker 1: we prepared to maximize retirement contributions? The max four one

118
00:06:29,440 --> 00:06:33,039
Speaker 1: K is seventy thousand dollars this year between employer and

119
00:06:33,080 --> 00:06:35,680
Speaker 1: employee contributions, and so you have to be ready to

120
00:06:35,680 --> 00:06:38,240
Speaker 1: have that cash available to fund those contributions. Say you're

121
00:06:38,600 --> 00:06:41,840
Speaker 1: a mom and pop shop to owners zero employees, maybe

122
00:06:41,839 --> 00:06:44,400
Speaker 1: you're structured as an es corp. You're gonna have to

123
00:06:44,400 --> 00:06:46,240
Speaker 1: come up with some cash to meet the four to

124
00:06:46,240 --> 00:06:48,240
Speaker 1: one K obligations either before the end of the year

125
00:06:48,279 --> 00:06:49,200
Speaker 1: before the tax filing.

126
00:06:49,600 --> 00:06:52,880
Speaker 3: So I'm glad you brought up tax advantage accounts. Like

127
00:06:52,920 --> 00:06:55,680
Speaker 3: for a one k's there always seems to be a

128
00:06:55,800 --> 00:06:59,640
Speaker 3: last minute frenzy to maximize not only for A one

129
00:06:59,720 --> 00:07:03,320
Speaker 3: k's but IRA's health saving accounts five twenty nine. So

130
00:07:03,360 --> 00:07:07,440
Speaker 3: how have the rules changed around credits and ceilings for

131
00:07:07,560 --> 00:07:09,679
Speaker 3: this year and for twenty twenty six?

132
00:07:10,440 --> 00:07:13,560
Speaker 1: Right at least once a year with our clients, we're

133
00:07:13,600 --> 00:07:17,400
Speaker 1: running through the quote unquote basics of all of these contributions.

134
00:07:17,560 --> 00:07:19,640
Speaker 1: Are you on track to hit each of these with

135
00:07:19,760 --> 00:07:21,200
Speaker 1: a four oh one K? We just talked about it

136
00:07:21,200 --> 00:07:23,560
Speaker 1: a little bit, but there's a seventy K limit. Now,

137
00:07:23,600 --> 00:07:25,840
Speaker 1: if you're a W two employee and you don't own

138
00:07:25,880 --> 00:07:30,240
Speaker 1: the company, you're going to make employee contributions, Maybe there's

139
00:07:30,240 --> 00:07:32,240
Speaker 1: a megabackdoor, a WROTH option in there for you. We

140
00:07:32,280 --> 00:07:34,920
Speaker 1: talk to folks all the time who have this eligible

141
00:07:35,040 --> 00:07:36,920
Speaker 1: or eligible in their plan, but they don't even know

142
00:07:36,960 --> 00:07:38,840
Speaker 1: about it. Nobody's talking to them about this when they

143
00:07:38,920 --> 00:07:41,520
Speaker 1: join the company, and that megabackdoor WROTH allows you to

144
00:07:41,560 --> 00:07:43,960
Speaker 1: put after tax dollars into the four to one K,

145
00:07:44,360 --> 00:07:46,560
Speaker 1: convert it to WROTH, and have a nice Roth tax

146
00:07:46,600 --> 00:07:49,720
Speaker 1: free bucket growing alongside the pre tax contributions that you

147
00:07:49,800 --> 00:07:52,680
Speaker 1: already made. I raise don't come up a lot in

148
00:07:52,720 --> 00:07:55,320
Speaker 1: our world for a few reasons. Number one is most

149
00:07:55,360 --> 00:08:00,280
Speaker 1: of our clients are employed with a retirement plan and

150
00:08:00,440 --> 00:08:03,200
Speaker 1: through their employer, and if that's the case, deductible IRA

151
00:08:03,320 --> 00:08:08,040
Speaker 1: contributions may be limited. However, there is a backdoor option

152
00:08:08,200 --> 00:08:11,040
Speaker 1: in the IRA. If you don't have any pre tax

153
00:08:11,120 --> 00:08:14,640
Speaker 1: money in any iras, you can make after tax contributions

154
00:08:14,640 --> 00:08:17,160
Speaker 1: and again convert to ROTH in the IRA just as

155
00:08:17,200 --> 00:08:18,520
Speaker 1: well as you can in the four to one K.

156
00:08:18,960 --> 00:08:21,920
Speaker 1: And then the HSA. I love tax owners love hsas.

157
00:08:22,520 --> 00:08:24,760
Speaker 1: You need to be on a high deductible plan, which

158
00:08:24,800 --> 00:08:27,960
Speaker 1: isn't for everybody. My colleague Bill Sweet and I we

159
00:08:28,080 --> 00:08:31,440
Speaker 1: ran an analysis on high deductible plans and we found

160
00:08:31,440 --> 00:08:35,360
Speaker 1: that there's a pretty there's a pretty attractive break even

161
00:08:35,480 --> 00:08:38,400
Speaker 1: on high deductible plans because the premiums are lower and

162
00:08:38,480 --> 00:08:42,400
Speaker 1: the long term benefit of investing deducting HSA contributions and

163
00:08:42,440 --> 00:08:45,360
Speaker 1: treating those as another retirement vehicle. Again, those are like

164
00:08:45,480 --> 00:08:48,640
Speaker 1: roths where they're tax free. Those those can compound very

165
00:08:48,760 --> 00:08:51,800
Speaker 1: very nicely. Where maybe you retire early and let's say

166
00:08:51,800 --> 00:08:54,000
Speaker 1: you retire sixty instead of sixty five, you have a

167
00:08:54,040 --> 00:08:56,600
Speaker 1: five year gap where you need to cover probably significant

168
00:08:56,640 --> 00:08:59,600
Speaker 1: healthcare premiums that HSA can be used in that case,

169
00:08:59,640 --> 00:09:01,560
Speaker 1: and it's nice tax free bucket to have.

170
00:09:02,120 --> 00:09:04,240
Speaker 3: And what do the ceilings look like on all these

171
00:09:04,360 --> 00:09:07,160
Speaker 3: tacks of entergs accounts for twenty twenty six? How has

172
00:09:07,200 --> 00:09:11,800
Speaker 3: the recent legislation changed the max people can kick into those?

173
00:09:12,400 --> 00:09:16,880
Speaker 1: The big change in twenty twenty six is that catchup

174
00:09:16,880 --> 00:09:19,959
Speaker 1: contributions for folks over age fifty are now forced to

175
00:09:20,000 --> 00:09:25,040
Speaker 1: be ROTH contributions again starting twenty twenty six. Historically, catchup contributions,

176
00:09:25,080 --> 00:09:26,920
Speaker 1: which are going to be seventy five hundred this year

177
00:09:27,040 --> 00:09:29,880
Speaker 1: seventy five hundred next year, Folks in their fifties are

178
00:09:29,880 --> 00:09:33,000
Speaker 1: often in their highest earning years. Therefore the pre tax

179
00:09:33,000 --> 00:09:37,800
Speaker 1: option is usually preferred. However, starting next year, the catchup

180
00:09:37,800 --> 00:09:40,960
Speaker 1: contributions that seventy five hundred are going to be required

181
00:09:40,960 --> 00:09:45,280
Speaker 1: to be WROTH contributions. My theory is, I don't mind

182
00:09:45,280 --> 00:09:48,360
Speaker 1: this at all. Nobody ever regrets a ROTH contribution. Nobody

183
00:09:48,360 --> 00:09:51,400
Speaker 1: ever really regrets a ROTH conversion because once you pay tax,

184
00:09:51,400 --> 00:09:54,040
Speaker 1: you don't really think about it. And so you know,

185
00:09:54,040 --> 00:09:55,920
Speaker 1: if we have investors in their fifties and sixties that

186
00:09:55,960 --> 00:09:58,120
Speaker 1: are forced to make a small ROTH contribution instead of

187
00:09:58,120 --> 00:10:02,560
Speaker 1: a pre tax contribution. That just gives them exceedingly more

188
00:10:02,600 --> 00:10:04,760
Speaker 1: flexibility down the line, because now they're going to have

189
00:10:04,760 --> 00:10:06,960
Speaker 1: different buckets of money to pull from in retirement.

190
00:10:07,720 --> 00:10:12,240
Speaker 3: Sounds really interesting. You mentioned earlier tax loss harvesting. We've

191
00:10:12,280 --> 00:10:16,320
Speaker 3: been using Canvas as our direct indexing product, but it

192
00:10:16,520 --> 00:10:19,880
Speaker 3: seems like this has become ubiquitous. What are your thoughts

193
00:10:19,880 --> 00:10:24,600
Speaker 3: on tax loss harvesting. What does thoughtful harvesting look like?

194
00:10:25,440 --> 00:10:28,680
Speaker 1: I think the term thoughtful there implies to me that

195
00:10:28,679 --> 00:10:30,920
Speaker 1: there should be an ongoing activity, not just a year

196
00:10:31,040 --> 00:10:37,760
Speaker 1: end item. Historically, taxpayers, sell DIY, investors and even advisors,

197
00:10:37,760 --> 00:10:40,000
Speaker 1: they'd look at the portfolio in December, they'd say, okay,

198
00:10:40,080 --> 00:10:43,880
Speaker 1: what's underwater. Let's book those losses through direct indexing. This

199
00:10:43,920 --> 00:10:45,960
Speaker 1: is now an ongoing activity, but you don't need a

200
00:10:46,000 --> 00:10:50,320
Speaker 1: direct indexing portfolio to look at your portfolio. Even if

201
00:10:50,360 --> 00:10:52,640
Speaker 1: you're not in a direct indexing setup, you can still

202
00:10:52,679 --> 00:10:56,440
Speaker 1: tax lost harvest throughout the year. Why just December? This

203
00:10:56,440 --> 00:10:59,120
Speaker 1: should happen with regularity. There's nothing saying we can only

204
00:10:59,120 --> 00:11:01,600
Speaker 1: book losses in December. Now a lot of this is

205
00:11:01,640 --> 00:11:06,520
Speaker 1: dictated by individual stock market volatility, but with an ultra

206
00:11:06,760 --> 00:11:10,280
Speaker 1: diversified bucket of stocks. Some will ultimately be losers, so

207
00:11:10,360 --> 00:11:13,040
Speaker 1: you sell those, you pick up tax losses, you invest

208
00:11:13,080 --> 00:11:15,000
Speaker 1: in a similar company, so you keep the fidelity of

209
00:11:15,000 --> 00:11:18,679
Speaker 1: the portfolio, and then you don't trigger wash sale rules.

210
00:11:18,960 --> 00:11:23,440
Speaker 1: The only caveat here is state by state stuff. New Jersey,

211
00:11:23,480 --> 00:11:26,160
Speaker 1: for example, does not allow tax loss carry forwards. So

212
00:11:26,200 --> 00:11:28,480
Speaker 1: we're doing in December, we're doing a bit of the

213
00:11:28,480 --> 00:11:31,600
Speaker 1: opposite with our New Jersey clients. We're actually we're looking

214
00:11:31,720 --> 00:11:34,520
Speaker 1: historically over the first eleven months, what did we realize

215
00:11:34,520 --> 00:11:37,839
Speaker 1: in losses. Let's go make a game's harvest. Instead of

216
00:11:37,880 --> 00:11:40,040
Speaker 1: realizing more losses, We're going to realize capital gains so

217
00:11:40,040 --> 00:11:41,640
Speaker 1: we can use them at the state level this year.

218
00:11:42,480 --> 00:11:46,880
Speaker 3: That's really interesting. So I know the deductions have changed,

219
00:11:46,880 --> 00:11:51,360
Speaker 3: the standard deductions have become permanent. There are new floors,

220
00:11:51,360 --> 00:11:55,000
Speaker 3: There are new ceilings for that for itemized and chatterable gifts.

221
00:11:55,480 --> 00:11:59,520
Speaker 3: How should those people who are charitably inclined think about

222
00:11:59,559 --> 00:12:03,959
Speaker 3: you mentioned and bunching donations or donor advice funds. Give

223
00:12:04,040 --> 00:12:05,959
Speaker 3: us a little more detail about how people should be

224
00:12:06,080 --> 00:12:07,160
Speaker 3: using these vehicles.

225
00:12:07,880 --> 00:12:09,600
Speaker 1: Yeah, we're doing a lot of this with our clients

226
00:12:09,880 --> 00:12:12,040
Speaker 1: throughout the year. But specifically at the end of the year.

227
00:12:12,080 --> 00:12:14,319
Speaker 1: We kind of tee up charitable planning. I'm like, hero,

228
00:12:14,400 --> 00:12:16,160
Speaker 1: let's think about what we want to accomplish, and then

229
00:12:16,240 --> 00:12:17,439
Speaker 1: let's take a look at the end of the year

230
00:12:17,440 --> 00:12:18,800
Speaker 1: and figure out how we're going to get this done

231
00:12:18,880 --> 00:12:21,040
Speaker 1: and if it's the right year to do it. What

232
00:12:21,080 --> 00:12:23,800
Speaker 1: we need to be conscious of is all the other deductions. Right,

233
00:12:23,880 --> 00:12:27,079
Speaker 1: Like I mentioned previously, you might have a hurdle rate

234
00:12:27,120 --> 00:12:29,720
Speaker 1: before you even start to deduct your charitable gifts. And

235
00:12:29,760 --> 00:12:34,160
Speaker 1: that's where you might want to consider bunching maybe three years,

236
00:12:34,160 --> 00:12:36,760
Speaker 1: maybe five years, maybe ten years worth of charitable gifts

237
00:12:37,040 --> 00:12:40,240
Speaker 1: into twenty twenty five. For example, twenty twenty five. Maybe

238
00:12:40,240 --> 00:12:43,520
Speaker 1: it's a high income year. Maybe you're paying down your mortgage,

239
00:12:43,559 --> 00:12:46,000
Speaker 1: so you're not getting that mortgage deduction anymore, and you

240
00:12:46,040 --> 00:12:49,160
Speaker 1: want to take advantage of an appreciated security that you

241
00:12:49,960 --> 00:12:51,960
Speaker 1: gift for charitable purposes.

242
00:12:52,400 --> 00:12:53,280
Speaker 2: We do a lot of this.

243
00:12:53,320 --> 00:12:56,080
Speaker 1: We take maybe a client comes to us, they've worked

244
00:12:56,120 --> 00:12:58,840
Speaker 1: at a tech company. The tech company, they've been compensated

245
00:12:58,880 --> 00:13:02,520
Speaker 1: well in that stock. They have charitable intent. We say, okay,

246
00:13:02,600 --> 00:13:04,839
Speaker 1: let's use that stock. Let's send it to a donor

247
00:13:04,880 --> 00:13:08,000
Speaker 1: advised fund. Let's bunch five years worth of gifting, and

248
00:13:08,040 --> 00:13:10,160
Speaker 1: now you have your own little charitable fund that you

249
00:13:10,200 --> 00:13:12,559
Speaker 1: can make grants out of over the next five years.

250
00:13:12,920 --> 00:13:15,439
Speaker 1: So we're gonna time the deduction, but we're not actually

251
00:13:15,480 --> 00:13:16,760
Speaker 1: going to change the way you're giving.

252
00:13:17,600 --> 00:13:21,400
Speaker 3: Really really interesting. So I'm in New York, you're in Philly.

253
00:13:22,080 --> 00:13:26,840
Speaker 3: These are big salt regions. I know. The most recent

254
00:13:27,200 --> 00:13:31,560
Speaker 3: big beautiful bill changed all sorts of things. Where are

255
00:13:31,600 --> 00:13:33,960
Speaker 3: this is a question I hear all the time. Where

256
00:13:34,000 --> 00:13:37,200
Speaker 3: are we with salt deductions today? How has this changed?

257
00:13:37,520 --> 00:13:39,680
Speaker 3: I know we're not quite back the way we were,

258
00:13:39,840 --> 00:13:42,480
Speaker 3: but it seems to have improved for a lot of people.

259
00:13:43,200 --> 00:13:45,360
Speaker 3: Tell us what's going on with the state and local

260
00:13:45,400 --> 00:13:46,319
Speaker 3: tax deductions.

261
00:13:47,120 --> 00:13:50,200
Speaker 1: Well, it's good news for most folks. For some folks,

262
00:13:50,200 --> 00:13:52,560
Speaker 1: it's not going to change the damn thing. It's gonna

263
00:13:53,040 --> 00:13:56,680
Speaker 1: what we have here is for since twenty seventeen, the

264
00:13:56,720 --> 00:13:59,360
Speaker 1: state and local tax deduction as part of your total

265
00:13:59,360 --> 00:14:03,079
Speaker 1: itemize ABOUTS was limited to ten thousand dollars for folks

266
00:14:03,200 --> 00:14:07,600
Speaker 1: bury in New York, California, New Jersey, Connecticut, Pennsylvania.

267
00:14:07,800 --> 00:14:09,760
Speaker 2: Ten thousand dollars just wasn't cutting it. A lot of

268
00:14:09,920 --> 00:14:10,760
Speaker 2: you know, We see.

269
00:14:10,600 --> 00:14:14,120
Speaker 1: Tax returns here every day where there are sometimes six

270
00:14:14,160 --> 00:14:16,520
Speaker 1: figures of state and local taxes between real estate and

271
00:14:16,559 --> 00:14:19,720
Speaker 1: income taxes. The new limit is forty thousand dollars. That

272
00:14:19,840 --> 00:14:24,760
Speaker 1: was maybe the most talked about provision of Trump two

273
00:14:24,760 --> 00:14:27,680
Speaker 1: point zero tax bill. It's an increase from ten k

274
00:14:27,760 --> 00:14:30,920
Speaker 1: to forty k, with caveats. If you're earning more than

275
00:14:30,920 --> 00:14:34,120
Speaker 1: five hundred thousand dollars of total income, you start to

276
00:14:34,120 --> 00:14:37,280
Speaker 1: get phased out. These are for both single filers and

277
00:14:37,360 --> 00:14:40,240
Speaker 1: married filers. Once you had six hundred thousand, you're all

278
00:14:40,240 --> 00:14:42,480
Speaker 1: the way back to ten k. So we have some

279
00:14:42,560 --> 00:14:44,680
Speaker 1: clients that are not going to see a change at all.

280
00:14:44,720 --> 00:14:46,240
Speaker 1: They make a million dollars a year. They're not going

281
00:14:46,280 --> 00:14:48,680
Speaker 1: to benefit from this whatsoever. We see other clients where

282
00:14:48,720 --> 00:14:53,240
Speaker 1: we're having tactical discussions on all kinds of income. Maybe

283
00:14:53,280 --> 00:14:55,880
Speaker 1: we'd defer a capital gain into next year because we

284
00:14:55,920 --> 00:14:58,440
Speaker 1: want to take full advantage of that salt deduction this year,

285
00:14:58,640 --> 00:15:01,320
Speaker 1: or maybe vice versa. There's a lot more planning to

286
00:15:01,400 --> 00:15:04,200
Speaker 1: do on all of these deductions. We talked about charitable

287
00:15:04,240 --> 00:15:05,760
Speaker 1: This is along the same lines.

288
00:15:06,080 --> 00:15:08,840
Speaker 3: What else from the Big Beautiful Bill has changed the

289
00:15:08,840 --> 00:15:12,120
Speaker 3: way you think about year end planning. Do any of

290
00:15:12,120 --> 00:15:15,960
Speaker 3: these provisions show up as actual savings for clients.

291
00:15:16,520 --> 00:15:18,760
Speaker 2: I think it's back to the charitable piece.

292
00:15:18,960 --> 00:15:20,920
Speaker 1: There are some changes next year that are going to

293
00:15:20,920 --> 00:15:24,200
Speaker 1: impact charitable giving, which make twenty twenty five perhaps more

294
00:15:24,200 --> 00:15:28,120
Speaker 1: attractive from a charitable landscape. Next year, there's going to

295
00:15:28,120 --> 00:15:31,200
Speaker 1: be a quote unquote a floor on charitable gifts where

296
00:15:31,360 --> 00:15:34,280
Speaker 1: the first zero point five percent of your agi will

297
00:15:34,280 --> 00:15:36,400
Speaker 1: not be deductible for charitable purposes. So if you make

298
00:15:36,440 --> 00:15:38,680
Speaker 1: a million bucks, the first five k you give away

299
00:15:38,720 --> 00:15:42,480
Speaker 1: to charity provides zero federal tax benefit. The other change

300
00:15:42,520 --> 00:15:45,160
Speaker 1: for the highest earning folks, folks in the thirty seven

301
00:15:45,240 --> 00:15:48,200
Speaker 1: percent bracket, they are going to be limited on their

302
00:15:48,440 --> 00:15:51,479
Speaker 1: overall deductions. They'll be treated as thirty five percent taxpayers.

303
00:15:51,600 --> 00:15:54,120
Speaker 1: So that two percent delta can can really add up

304
00:15:54,120 --> 00:15:56,400
Speaker 1: when we're talking about when we're talking about big deductions.

305
00:15:56,480 --> 00:16:00,680
Speaker 1: So we're doing a lot of shifting of charitable deductions,

306
00:16:00,760 --> 00:16:04,360
Speaker 1: even mortgage even mortgage reductions. We're trying to get most

307
00:16:04,360 --> 00:16:06,760
Speaker 1: of that into twenty twenty five, especially for our highest

308
00:16:06,800 --> 00:16:08,320
Speaker 1: income tax paying clients.

309
00:16:08,520 --> 00:16:11,080
Speaker 3: So to wrap up, there's still plenty of time before

310
00:16:11,120 --> 00:16:15,080
Speaker 3: the year ends. There are lots of moves individual investors

311
00:16:15,080 --> 00:16:18,920
Speaker 3: can make to not only reduce the taxes they're going

312
00:16:18,960 --> 00:16:22,280
Speaker 3: to owe for the twenty twenty five year, but also

313
00:16:22,360 --> 00:16:27,840
Speaker 3: to think about long term planning their estate, maximizing every opportunity.

314
00:16:27,920 --> 00:16:32,080
Speaker 3: The government gives us lots of ways to either reduce

315
00:16:32,640 --> 00:16:37,120
Speaker 3: or defer our current tacts. Bill, everybody should take full

316
00:16:37,160 --> 00:16:41,880
Speaker 3: advantage of what's on offer. I'm Barry Ridults. You're listening

317
00:16:41,920 --> 00:16:48,160
Speaker 3: to Bloomberg's at the Money, all right,