Tag: planning
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Building Wade Pfau style Tax Maps with Princeton Asset’s Income Tax Calculator
A standard tax return answers one question: what do you owe this year? A tax map answers something harder: what does additional income actually cost you – after taxes, Medicare premiums, ACA subsidies, and every other variable that shifts when your income does? The distinction matters enormously for tax planning. For example, a $10,000 Roth…
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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…