Advertising is better than charity, getting you AGI to a lower tax bracket , health savings accounts, Inherited IRA

Here is some helpful tax information based on some of my contacts with clients:

1.  One couple has taxable income of around $72,000.  Because their AGI (adjusted gross income) is over $100,000, they are limited on the amount of rental real estate losses they can deduct.  If their AGI was under $100K before the rental loss, they would be able to take the full $25,000 loss.  By simply contributing to a regular traditional IRA in the small amount of $3,000 (Warning: there are eligibility rules!), they will get a tax a tax savings of nearly $900 (assumes Federal rate of 25% and State rate of 5%) AND they will have reduced their marginal tax rate (federal) down by 10%!

2. be careful to make sure you have enough of a partnership or S corporation profit to avoid wasting your self-employed health insurance. SE health insurance is ONLY deductible to the extent of Partnership/S Corporation profit. Example, if you business profit is $8,000 and your SE health insurance is $20,000, you can ONLY deduct $8,000 of the SE health insurance!  What is a simple way to avoid this issue:  adjust the way your depreciation is being calculated on your business so you have less depreciation this year and save more for the future!

3. Health Savings Accounts. If you have health insurance with a high deductible and medical prescriptions and doctors/dentists/labs/hospital, then you will save money by adopting a Health Savings Account (H.S.A.)

4.  You should never have your living trust as the beneficiary of your tax deductible IRAs!  You should have your kids as the beneficiary.  If you hopefully live a long life to age 90 and have your estate as the beneficiary, your kids will get taxed on about 100% of your IRA. If the kids were the beneficiaries, they could stretch the IRAs over their life expectancy and pay tax over a long period of time! 

Please let me know if you have any questions or comments!!

Thank you!  Jeff Brooks  CPA




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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009