Author: WP ADMIN
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How Roth Conversions Affect ACA and IRMAA Subsidies
When planning a Roth conversion, it’s easy to focus only on the income tax impact. But if you’re on ACA health insurance or Medicare, the conversion can also trigger changes in your ACA subsidies and IRMAA surcharges. In this example, we’ll quantify: Problem Setup We compare two scenarios: Our goal is to measure how much…
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A Guide to U.S. Income Categories for Tax Planning
When it comes to tax planning, not all income is created equal.Two people could both “earn” $100K a year and still end up paying very different amounts in federal and state taxes – simply because of what type of income it is. At Princeton Asset, we think the first step to building a bulletproof tax…
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IRA to ROTH conversion: The Basics
Roth conversions are often used as a retirement tax planning tool. They offer the opportunity to pay taxes now — often at a lower rate — in exchange for tax-free withdrawals later in life. In this post, we’ll walk through the standard, conventional guidance for when and why to convert funds from a traditional IRA…
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A Beginner’s Guide to Investment Account Types
When it comes to investing, choosing the right type of account is just as important as choosing what to invest in. Investment accounts come in several forms, each with its own rules, tax implications, and best-use scenarios. Whether you’re saving for retirement, a child’s education, or simply building wealth, understanding the types of accounts available…
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Healthcare costs: IRMAA premiums
If you’re enrolled in Medicare, you may have encountered the term IRMAA – the Income-Related Monthly Adjustment Amount. This additional premium can significantly impact your Medicare costs, but understanding how it works and knowing about potential discounts can help you better manage your healthcare expenses. What is IRMAA? IRMAA is an extra charge added to…
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Healthcare costs: ACA subsidies
The Affordable Care Act (ACA) provides health insurance subsidies to help lower-income individuals and families afford coverage. These subsidies are determined based on a taxpayer’s income and the cost of health plans available in their area. Understanding how ACA subsidies work, particularly the role of Modified Adjusted Gross Income (MAGI) and the benchmark silver plan,…
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Understanding the Child Tax Credit and Other Dependent Credit
Navigating the tax system can be complex, but understanding tax credits like the Child Tax Credit (CTC) and the Other Dependents Credit (ODC) can significantly impact your tax bill. This post clarifies these credits, detailing who qualifies and how they work, including the often-overlooked scenario of older, disabled dependents. Child Tax Credit: not only for…
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Decoding your W2: a guide to understanding your wage and tax statement
The W-2 form – is a document we are likely to see at least once a year, but do you truly understand what it all means? This seemingly simple form is a crucial record of your earnings and taxes withheld throughout the tax year. Understanding the different boxes and codes on your W-2 is essential…
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How to choose the right Tax Filling Status
As the tax season approaches, it’s essential to understand the different filing statuses available to you and how they can impact your tax liability. In this article, we’ll break down the five filing statuses: single, married filing jointly, married filing separately, head of household, and qualifying surviving spouse. We’ll also discuss how to choose the…
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Smart Tax Planning: how our “Income Tax Calculator” can help (01/25 release)
Introduction: Tax planning is a critical part of financial success. Whether you’re working, investing, or preparing for retirement, understanding how taxes impact your income is essential. Princeton Asset’s Income Tax Calculator is designed to help users gain deep insights into their tax situation by offering a comprehensive and customizable approach to tax estimation. Key Features…