0:11 good afternoon and welcome to people making money one of the way to wow shows I'm your host Kevin bemel and through December 6th we will be here every Thursday uh I'm sorry every Wednesday at 12:30 p.m. Pacific Time 3 :30 p.m. eastern time to talk about all things related to our professional lives to wealth building and and uh all of those things related to people making money right um and the reason I say until um through
0:48 December 6th was starting on December 13th we're going to be moving to 10 a.m. uh and that will align all of the all of my shows at a 10: a.m. Pacific Time start time so that we can be together or plan to be together at the same time um Monday through Wednesday and uh who knows maybe Thursday and Friday as well as I extend uh the various shows but that way um it's not sort of fluctuating during the day which um I'm not sure why I did it
1:24 that way in the beginning but you know you live and you learn so um today uh it's a a lovely rainy day here in Los Angeles and for anyone who's ever lived here you know that um lovely and rainy um don't often not not often words used to describe Los Angeles but um in indeed uh it started raining here about an hour ago and um it's it's on the chil side it's finally you know kind of fall weather here it is you know what halfway
1:59 already halfway through or more than halfway through the fall season two-thirds of the way through so um I have my uh you know candle here to uh remind me that it's um a little gloomy out wet and gloomy outside I have another candle back there see um so you can tell how excited I am about the rain my daughter and I have been exchanging text messages because we love the rain uh one of our favorite things is to put on raincoats and rain boots and go walking in the wet weather but I'm working and she's in school so so not
2:35 today um but uh you know who knows maybe uh maybe over the weekend so getting back to our purpose and being here you don't you don't tune in to hear me ramble about uh you know beautiful rainy weather in in Los Angeles so uh it it being the middle of December um excuse me it is time if if you haven't already to start thinking about planning for taxes right they say there's nothing sure but death in taxes um and um we are
3:11 making progress um on the first one um lifespans keep getting longer and longer although they did shrink a little bit because of covid um but I don't think we're ever going to get rid of taxes that's just the The Way of the World so um prepared a um little a talk today on um tax breaks for 2023 that you may want to take a look at um see if these will help you improve your tax situation and we're going to be focusing
3:46 specifically on those things that need that that need attention before the end of the calendar year okay so as has been my um ever more frequent practice I I did put together um a little uh PowerPoint and you can see this is this is the PowerPoint theme for people making money first of all it's green although I'm not sure why a wheat field is green but it is I mean maybe the wheat isn't uh um uh you know
4:21 quite quite ripe yet um but I don't know there's something about Fields rolly fields of grain that uh you know is is is attractive so um as as is the case with all for those of you who you know watched the shows before as is the case with all of the way toow shows they're all based on the three pillars of attainment we generally are here in the Pursuits pillar and the finances realm and we're going to be really staying there today other times we do drift into the other two pillars at least parts of them
4:56 so we're going to be looking at seven issues for you to um consider before year end preferably as soon as possible so if you do need to make some changes or some plans you have um time to do that okay so really don't want to wait until you know the week between Christmas and New Year's uh to be dealing with these things first of all you know people want to sort of relax into the last few days of the year
5:31 second of all there are a lot of parties going on it's a time for socializing and all of that and third there just may may plain not be enough time to execute any particular strategy so I do encourage you um if if you if you do your own taxes um that you jump on these things uh right away and take a look at them yourself if you work with a tax preparer an accountant or whatever uh I encourage you get in touch with your accountant um and see you know what it is that you may
6:08 need to do or can do um to positively affect your track uh your tax situation so we're gonna go through these one by one oh it's just so I don't not sure why it does that so weird how it advances itself okay so let's start out with withholdings withholding an estimated taxes so for most people they're having uh income taxes deducted from their salary with each paycheck okay however that doesn't
6:44 mean um that you're having that that doesn't necessarily mean you're having enough withheld to cover your tax liability um so before I get into the specifics of this I I I do do feel obligated to explain something and that is that while um withholdings are a a part of how pay of how salaried uh or you know employees work the reality is when we have taxes
7:19 withheld from our paycheck what we're doing is we're giving the government an interest free loan okay so let's say over the course of a year um you know you you pay uh $155,000 in uh withholding so what what that means is instead of accumulating that money in a savings account and paying it out at the end of the year and earning some kind of return on that
7:55 maybe it's just 5% maybe it's 10% um um you're getting nothing on it okay so let's let's let's look at this if it's let's just let's take $10,000 that's an easy number to deal with so if you have if you have $10,000 deducted in you know from your paycheck roughly $800 a month okay over a one-year period you're you're losing out on what amounts to probably somewhere between um $300 and $500 in
8:30 interest okay even just at 5% now if if you could have put it in some kind of uh money market fund I'm not money market fund I mean mutual fund um that that does well maybe you're losing maybe you're you're you would have gotten a 10% return and at at you know at at a $10,000 accumulated over the year you know that may be more like5 to $700 in Lost income to you now I'm not saying therefore that you shouldn't have withholdings all I'm saying is we need to recognize what we're doing and what
9:06 we're giving up so as long as if you get to the end of the year and you have um not withheld enough in taxes as long as you've got the money there to pay it um that's not a big deal okay and in fact in some ways it's better because you've been getting um hopefully some kind of return on those funds over the year and and and that that works to your benefit okay the flip side is if
9:41 you have underwithheld and you do not pay enough estimated taxes at the end of the year in order to meet the threshold you'll pay an underpayment penalty of 8% Okay so so excuse me let's say that um you have a come April your tax liability was is $10,000 um but you only H um you only um have had withheld
10:18 $88,000 so that $2,000 is now subject to an under underpayment penalty of 8% or $160 that's that's a big penalty by the way um there can also be interest on an underpayment so here's the thing in order to avoid an underpayment penalty you either have to pay 90% of your tax liability by the April deadline um
10:56 um sorry yeah um uh yes um I'm sorry I'm I'm having a moment here so you have to pay 90% of your tax liability by the April deadline or you can pay 100% of um of your of the amount you paid in 2022 um for if you have an adjusted gross income of up to
11:32 $150,000 for this year or 110% of your 2022 tax liability if your adjusted gross income for this year exceeds $150,000 okay so that that may sound a little bit complicated but let's say you took a you you got a big increase in salary this year so let's say you went from um you know $90,000 last year or let's make it even let's say in 2022 you made
12:07 $100,000 and this let's say this year 2023 you're going to make $200,000 okay part of that let's say a lot of that is in bonuses or whatever well as long as you pay a 100 as long as you've paid 100% of your 2022 taxes taxes for this year you're okay even though you'll end up owing a lot of money come April and it may be better for you to do that because in the meantime that additional money that you would have P that you'll have to pay in
12:42 taxes can be earning additional interest or additional income and then come April you'll pay the balance okay and and and then you all right your taxes are paid you paid no penalties all right and and and you're good so my point in bringing this up is um it is as long as you are making sure that you have the money you need to pay the taxes by the spe the different deadlines the fact that you may owe money to the government is not a bad thing okay you certainly certainly when
13:18 you get a I know a lot of people look forward to getting um a refund when they file their taxes what that really means is not all not only have you lent money to the government taxfree during the tax year but they've held additional money that belonged to you uh you know interest free during that time and that's money that you that you definitely could should be earning a return on so give some thought to that obviously the higher your salary the higher the potential overpayments the
13:54 larger the amount that that that is being withheld the more relevant this becomes okay but this is definitely something to talk to your Tax Advisor about to make sure you're hitting the right balance based on how you work the flow of your payments okay so that's that's the first one second one are you going to take a standard deduction or are you going to itemize deductions so it used to be a lot more people itemize but now less than 10% of people item I okay so most people end up
14:32 taking the standardized deduction which for this year you can see there on the screen it's going to be little under uh $14,000 for single filers or merried people filing separately it's going to be um a little under $28,000 um for married filing jointly or qualifying widows or widowers which 26 27 yeah okay it's double okay and for head of household it's 20 $2,800 okay
15:09 now just because you took the standardized deduction last year doesn't mean you need to do it this year or next year so you may want to consider bunching deductions so if you if if you have certain expenses that you want that that you need to take okay and and and and you're anticipating those to be ongoing expenses next year it may be more beneficial to wait until after the first of the year to start those expansions
15:45 kind of push them into 2024 and then at the end toward the end of 2024 any that you may you might have delayed into 2025 sort of pull into 2024 so for 202 before it'll make sense to itemize because you've pulled in a bunch of additional deductions that justify itemizing and then 2023 and 2025 you'll just use the standard deduction so again this is something to examine with your accountant or your tax prepare can you
16:21 Bunch deductions in a way that will make it beneficial for you to at times um itemized deductions and then the rest of the time just take a standardized deduction okay so um what are some of those um bunching deductions well they may have to do with um unreimbursed medical expenses they may have to do with with moving expenses um they may have to do with um uh there was another one that came to mind and now I lost it okay but in any
16:57 event oh charitable deductions so it may be that the way that you do your charitable deductions if you Bunch them in a way where instead of always giving at the end of the year you actually give you know um for 2023 you actually give on January 1st 2024 basically for 2024 you give in 2024 and for 2025 you actually give on uh December 31st 2024 that way you Bunch them into 2024 and that and if especially if
17:32 you're giving large contributions so then there they're they're they're um aggregated in such a way that it might make sense for you to itemize for 2024 whereas you don't for the other years and and that's more beneficial okay so again something to talk to your um Tax Advisor about all right and I don't know now it doesn't there we go Okay so charitable deductions so in past years um there were amounts that you could deduct even for non-
18:08 itemizers meaning people who took the standard deduction $300 $600 that that that can't do that anymore okay those those deductions are not for non itemizers are no longer available so that's why they're talking about this is what I was just talking about in terms of charitable deductions you you may want to um bunch contrib utions in such a way that um as a tax deduction um they become more valuable okay another type of charitable deduction to consider is to donate um appreciated
18:44 Investments held longer than a year okay and um in this way um you're not NE you're not having to pay the um capital gains taxes on them okay and so it's it's as if by by deducting them not only you're getting a chable deduction but you're also getting out of uh paying the taxes on it okay um for taxpayers um 70 and a half years and older um they can um donate up to
19:24 $100,000 um from a traditional IRA um without um and and then they they don't again they don't have to pay um the taxes on it okay so these are different uh chable deduction strategies that especially if you're if you're bunching contributions may make it um uh worthwhile for you to itemize in a particular tax year okay um and thereby um give you and thereby reduce your your tax
20:01 liability okay so look Americans in general are are pretty generous people um I know you know this has been a tough year for many between inflation Etc so you may not be giving charitable deductions this year and most of the Charities over the next six weeks are going to be coming out with end of the year pitches for contributions and it may be that um if you're sure you're it's not worth itemizing um this year so it may be worth it to instead of making end of the year contributions you still want to support that charity so then make a you
20:37 know January contribution um and and you know you may just say them hey I'm gonna make a contribution right after the first of the year so I can include it in the next tax year okay all right so that's chable deductions I think that was the third one okay fourth large investment payouts so if you have mutual funds real estate Partnerships or other Investments you check if they haven't already um dealt with this issue I you know it's a good idea to check with them and see are are
21:12 there going to be any large payouts before year end okay and and if if the answer is uh yes so then this is something that you're going to want to deal with now okay so one way to deal with them um is to harvest offsetting losses so let's say that you've got a a a mutual fund that's going to be be reporting a big capital gain and let's say you own you happen own another stock and it's it's
21:49 really you know it's it's dropped a lot this year and so you're going to have if you sell it there's going to be a loss well it may may be worthwhile to go ahead and sell that stock and take the loss to offset the gain from the mutual funds that and thereby um not pay any taxes on the mutual fund uh gain okay you might say well wait a minute but if I if I sell it at a loss I'm I'm losing money well that's that's true um I mean
22:25 you're going to want to speak to your your um you know financial advisor and see whether it it is advisable to you know sell any particular investment at a loss um in order to offset another gain um and and so you know nothing I'm give none of the none of things I'm talking about you should just go out and do these are things to talk to your advisors about but it may be a way of reducing your tax liability okay and and you know if you if you do sell a stock at a loss well you still have the funds from selling it
23:01 and you can invest them in something else maybe redeploy that capital in into something that will perform better in the future okay so that's the kind of conversation you want to have with your advisors um if you're if you're not going to you know Harvest offsetting losses the other thing you may need to do is look at increasing your withholdings or making an additional payment such that you don't get caught with that you know underpayment penalty that we were mentioning back here right you don't want to get caught with this
23:36 under 8% underpayment penalty okay and that's based on your adjusted gross income which is going to include income from Investments okay so excuse me that's why again you want to take a look at this now because you may need to make some adjustments to ensure that you don't end up owning owing the government you know even more money because you know you you didn't meet the various deadlines for when uh taxes need to be paid okay
24:13 next um an EV purchase so um there is a $7500 credit uh uh tax credit available if you purchase an electric vehicle okay now um you've probably heard if you've been following the news that a lot of car companies um have uh really what amounts to excess inventories of EVs and they're they're cutting prices and they're making deals so if you are
24:50 considering buying an electric vehicle um it's this is probably a good time to look into it in earnest to see um should you buy it this year or should you buy it next year now there's a couple of at least a couple of factors that need to go into the mix of making that decision in 2023 if you buy a car an EV this year you don't get the $7,500 tax credit until you file your return now if you're
25:25 going to file your return right after the first of the year that may not really be S if you're going to buy it you know December 30th and file your tax return on on January 2nd maybe that's not a big deal um but you know if you're thinking about buying it now um and you're and you typically don't file your tax return until March or April so then there's a several month Gap there next year in 2024 when you um when you buy an EV you'll get the 7 $500 tax credit at the
26:00 time you purchase the car so you get it essentially immediately okay here's here's the thing though there may be fewer eligible Vehicles next year so if you wait until next year to to buy an EV um you there may be you may not be able to get the particular vehicle that you want and still get the tax credit okay so these are the various issues to look into if buying an electric vehicle is on your you know your your to considerer or
26:37 to-do list okay um and and and even if you you know even if you're not at all sure you want to buy one um this year um but but you're pretty sure next year you're going to buy one I I I do recommend you take a look at it now um because you may find that for your particular circumstances it actually would be better to accelerate that purchase into this year um rather than waiting till next year the flip side is you know you may find hey it really doesn't matter whether I buy it this year or next so since I'm not motivated
27:14 to buy in 2023 okay I haven't lost anything except for the time to investigate it and and and you know not wasted time at all okay because we are talking about you know significant sums of money here okay so looking into an EV purchase is another um potential tax break to consider for this year okay next um if you have IRAs okay typically you have you have required distributions you have to make so I I wrote These out because they can be a
27:49 little bit complicated normally you know I don't write out paragraphs on my PowerPoint slide so for an owner of a traditional IRA that was born in 1950 or earlier meaning you're either uh you're 73 or older okay you must take required withdrawals for 20233 by the end of this year okay and the payouts are based on the account value as of December 31st of
28:24 2022 now um can be tricky to calculate what the minimum required distribution is so this again this is a situation where you're you really want to talk to your uh tax preparer your accountant whoever it is you're working with to make sure that it's done right so you don't end up paying penalties the penalties can be very high I think as much as 50% all right so you really don't want to do that okay now um for air of traditional IRAs whose owners
29:00 died in 2020 or later they normally take required withdrawals this year however the IRS is allowing heirs to skip them for 2023 now there may be some qualifications on these to your particular circumstance so again I wouldn't just I wouldn't recommend you just skip taking a withdrawal talk to your accountant make sure that you're in compliance so you don't get hit with penalties but in any event if you have any Ira counts at all and you are you
29:38 either already have started to take um required distributions or you've hit um I forget what the age limits are 59 and a half in some cases um and and and and so it may be time for you to start taking distribu ions or you may be eligible to start taking distributions okay it's it's worth a conversation with your tax preparer your accountant to make sure that you're handling these things correctly okay 20
30:13 15 20 minutes talking to your accountant even if you have to pay him is is a small price to pay for not making a mistake when it comes to IRA distributions okay so now these are these generally we're talking about traditional IRAs Roth IRAs have have different uh rules um and so um you know you you don't don't have to be as concerned about those but for a traditional IRA um definitely take a look at them um you know in the very near future the next couple of weeks to
30:49 make sure you can do any um uh planning or any make any changes um before a year end if necessary okay so what can wait then this is the last of the seven issues so contributions to traditional IRAs Roth IRAs health savings accounts for 2023 can typically be made until the the deadline for filing taxes next year April 15 2024 okay and in Maine and Massachusetts for some reason it's extended to April 15th I don't know why that is all right
31:24 now for some self employed filers um they can make 2023 contributions to solo 401ks until October 15 of 2024 which is the extended extended deadline to file your taxes okay so maybe you had a really tough year this year and next year things improve and and again this is something to talk to your accountant about um does it make sense to use some of the addition additional money you got some
31:59 of some of the additional income you got next year to fund a solo 401K for 2023 to reduce your um uh uh yeah to reduce your 2023 uh tax liability so those are the kind of things you can look at um but you don't you don't this these These are ones that can wait till after the beginning of the year generally speaking now if you're going to have a tax planning meeting with your account anyway so then I I would go ahead and discuss these matters too just make it as comprehensive as possible and even
32:35 though you may not execute on the strategy until next year at least you know what to do so you know be as comprehensive as you can I know um my uh from from when I was um in my real estate company business um my accountant insisted that we have a sit down usually I think end of October early no November um to go over all the various tax issues um that might affect uh me and my business um so that I knew what to do over the next you know three to four
33:10 months between that meeting and when he was going to be filing my tax returns so it was always a worthwhile meeting it was money very well spent um and and over the years he saved me a tremendous amount of money in uh in in in taxes as a result okay so that's that's all I've got for you it's kind of a short uh show today um only only a half an hour normally we spend about an hour together on Wednesdays but uh but today like I said it's going to be shorter um so if
33:45 you have any questions comments thoughts concerns you can always contact me all these uh will be in the show notes if it's something as always if it's something of a personal nature please don't post it um on uh please don't post it on social media um you know send me a direct message or an email um and and even on an email um you know don't please don't send me documents and that kind of stuff um you know those things can go astray and all of a sudden your personal information um is is now out of
34:22 your control um but I'm happy to if it's within my scope of knowledge and answer your questions and if it's not uh refer you to uh the appropriate professional to make sure that you get good advice okay and we have just the legal stuff here to finish it up back and forth we go um to finish things off so let's go ahead and uh stop the share so that's what I have for you today and that wraps up our shows for this week uh so I thank you very much for joining me I hope you found this useful and um next week
34:59 starting on Monday at 10:00 a.m. is trusts and Estates weekly and then on Tuesday now now at 10: am we were meeting at 11: am these are all pacific times so now 10: am. Tuesdays is business lessons from the military okay and we're going to be continuing our discussion of intelligence and then seven days from today on Wednesday uh I'm sorry take that back next week is Thanksgiving week so um we'll have some classic episodes for you at 10 o'clock Monday
35:35 for trust and Estates weekly 10 o'clock Tuesday business lessons from the military and at uh 12:30 pm Pacific Time on Wednesday a classic episode of people making money and then we'll be back with uh live episodes again the following week so wishing you a wonderful rest of the week and wishing you a a wonderful Thanksgiving week I hope you get to spend your time with with family and friends and relax for the holidays and uh you know as always probably eat a little bit too much turkey and pumpkin
36:11 pie that's the only time I eat that stuff really um but enjoy and uh again thanks for uh thanks for joining me um here on people making money one of the way to wow shows and um while while we're um um talking about uh Thanksgiving and gratitude here for a minute I do want to thank um all of my subscribers for um subscribing to the show I really appreciate it um the sort of vote of confidence it gives um as as I grow my audience and and if there's a
36:47 topic you want to learn about or hear about please don't hesitate to let me know um and if you're a subscriber tell me you're a subscriber it's like Hey Kevin I'm a subscriber I've been a subscriber for you know two years I've never seen you do a show on the following topic it's like wow okay so there you go I will I will do a show on that topic um and uh and for those of you who are not subscribers if there is a show you want to see by all means uh tell tell let me know about that I'm happy to uh to to put together a show um based on your interests and concerns um
37:23 and and uh finally um if you are involved in uh trusts and Estates if you're uh former uh trust and state so and and think you have a a topic that our our viewers would be interested in let me know about that perhaps we'll have you as a guest likewise if you're involved in the military either you are a service member or you're a military historian something like that um by all means let me know about your idea for a show on business business lessons from the military would be uh happy to uh you
38:01 know talk with you about that and if you have an interesting way that you make a living or an interesting way that you've gained uh professional success if you're involved in helping people build wealth um by all means let me know about that because I'd love to have you as a guest here on people making money I do have a number of guests coming up in the next several weeks um I'm think you will find them interesting um as well as informative and and who knows maybe you will be the next guest that I schedule so once again thank you for joining me
38:37 and I hope wishing you a wonderful rest of the day and week and signing off as I always do Marie you're my bell darling all the best folks