In today’s episode we are going to continue our discussion about taxes and how to mitigate surtaxes.  Those taxes typically faced by high-income earners

Thoughtful, proactive planning can help high-earning taxpayers reduce their net investment income tax and additional Medicare tax bills.

Every investor should have a thoughtful tax strategy, and for those that exceed certain income thresholds, proactive planning is all the more important.

Defining the terms Sandwich geration and boomerang children, and how to care for aging parents and young adult children .

Welcome to the Ready Set Retirement Pod Cast, my name Derrick J. Glencer, I am a Certified financial planner professional with Raymond James and your intrepid host.

Expect straight talk about retirement and financial planning.  I’ll be discussing the issues that matter most...to you, your family and your future!  

Be sure to listen to the whole show to hear the hot tips sprinkled throughout.

So as Marvin Gaye once said “let’s get it on.”Make sure you listen to the whole show to hear the hot tip later in the pod cast.

In today’s episode we are going to discuss one your favorite subjects….Taxes and how a dollar can add up to more when it comes to taxes

It seems silly how one measly dollar can have impact, but it’s more than you think—especially during tax season and on your taxes.

Not only can an extra dollar of income push you into the next highest tax bracket (thankfully, with a progressive tax system, only those excess dollars will be subject to the higher incremental tax).

For those of you who aren’t really familiar with how ordinary income tax is paid there are two ways of looking at it.  

1)      What is my average tax rate.  For example if your Adjusted Gross income is $200,000 and you paid $50,000 in Federal Income Tax, your average rate is 25%.

2)      Your marginal rate is something completely different.  Whether Single or Married filling Jointly, Married Filing Separately and Head of Household.  Each has a series of backets.  For example if you are Single and your AGI is $147,000.  You pay 10% on the first $9,950, you pay 12% from $9,951 to $40,525, 22% from $40,256 to $87,375, and 24% on $87,376 to $147,000.  So your top marginal rate is 24%.  This is final bracket in which your last dollar was earned.

That dollar can mean you’re paying more taxes in other ways. Let’s take a look at two of them. 

Medicare tax

If your wage or compensation exceed certain thresholds ($200,000 for those filing single or head of household in 2021 and $250,000 for those married filing jointly) by even $1, you’ll be subject to the 0.9% additional Medicare surtax on the excess. 

While $1 over only means you’ll pay an extra cent or so, it can add up quickly the further you are over the limit. Your employer will withhold the tax for you, but here is the rub, you will have to file and additional tax Form. 

Here is a hot tip:

Form 8959 is used to report the excess income that is subject to this tax. Please note that the calculations are a little more complicated if you have self-employment income in the mix, so and I can’t stress this enough be sure to discuss this with a qualified tax professional.  A lot of folks like to go it their own on taxes and that is a reasonable thing if your taxes are straightforward, however when you start getting into the Medicare Tax and Net Investment Income Tax it might be time to seek out a qualified tax professional.

Hot Tip #2 coming your way:

This is important for those of you who are retired and enrolled in Medicare so listen closely.  You will have to pay an income-related adjustment in addition to your standard Medicare Part B premium if you made even a dollar over the applicable threshold, which is based on your income from two years ago. For example, those who made $91,000 or less (single) or $182,000 or less (married filing jointly) in 2020 paid $170.10 per month for this coverage in 2022. But those who made $91,001 (single) or $182,001 (joint) paid $238.10 per month, an extra $816 over the course of the year. 

The next tax that could be triggered by just one dollar is Net investment income tax (NIIT).

Certain individuals, trusts and estates may be subject to an additional 3.8% net investment income tax (NIIT) on the lesser of their net investment income or the amoun

Today’s Episode  we are going to talk about RSU’s or Restricted Stock units, how they differ from Non-Qualified Stock Options or SAR’s Stock Accumulation Rights.  We will also look at how they are taxed and the benefits to each.