351 | Year-End Tax Planning Strategies

ChooseFI | Financial Independence Podcast

Jonathan Mendonsa & Brad Barrett | Choose FI Media, Inc

Investing, Business, Careers

4.8 • 5.2K Ratings

🗓️ 15 November 2021

⏱️ 59 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Congress is about to eliminate the backdoor Roth IRA — and you have until December 31st to act. Sean Mullaney returns to help you squeeze every last tax benefit out of 2021 before year-end deadlines slam shut. This year's tax landscape looks different: backdoor Roth conversions face a new deadline, modified adjusted gross income thresholds determine who qualifies for key tax credits, and early retirees have a shrinking window to optimize Roth conversions. Whether you're racing to max out 401(k) and HSA contributions, considering donor advised funds to eliminate capital gains taxes on charitable donations, or planning income levels to maximize tax credits in early retirement, this episode covers the year-end moves that matter most for financial independence. Timestamps & Key Takeaways: [00:02:05] Sean Mullaney discusses his popularity in the tax planning space. [00:02:30] Backdoor Roth IRA Expiration Discussion Important changes this year regarding the backdoor Roth IRA deadline. Complete your backdoor Roth IRA by December 31st to avoid future restrictions. [00:09:01] Understanding Modified Adjusted Gross Income (MAGI) MAGI affects eligibility for tax benefits, including Roth IRA contributions. Ensure you're aware of your MAGI and how it impacts Roth IRA eligibility. [00:11:12] Maximizing Contributions to Lower Taxable Income Contributions to 401(k)s and HSAs can lower taxable income before year-end. [00:39:30] Donor Advised Funds as a Tax Strategy Utilize donor advised funds for charitable donations to optimize tax efficiency. Contribute appreciated stocks to donor advised funds to eliminate capital gains taxes. [00:49:30] Early Retirement Tax Planning Opportunities How early retirees can optimize their tax strategies. Plan Roth conversions and consider income levels for maximizing tax credits. Key Quotes: [00:06:32] "Act now; there's no downside to completing your backdoor Roth IRA by December 31st." [00:25:49] "Ensure your retirement accounts are streamlined before proceeding with the backdoor Roth IRA." [00:42:54] "Utilize donor advised funds to permanently eliminate capital gains taxes while donating." [00:54:36] "Don't let year-end tax strategies pass you by; take action now." Action Items: Review your retirement account structure for optimal tax planning. Clean up old retirement accounts before doing a backdoor Roth IRA. Assess your investment portfolio for potential appreciated stocks to contribute to a donor advised fund. Related Resources: Sean Mullaney's article on Year-End Tax Planning ▶ Listen Next: Ep. 352 — DIY Financial Planning: Create Your Own Financial Plan | Essential Listening

Transcript

Click on a timestamp to play from that location

0:00.0	Alright guys, it's not every episode that we start with Amia Copa, but we're going to be doing year in tax planning for 2021.
0:06.2	And I remember viscerally doing it for 2020 and episode was appreciated.
0:11.4	But the feedback we got was, as I wish you had given us a little bit more time to process this.
0:17.4	You know, I think we were doing it literally going into the last week or so of December.
0:21.4	And while I think it's critical that we do this type of episode on an annual basis,
0:25.1	we're going to commit to you when we do these episodes to make sure we give you enough time to notice
0:29.0	to actually take action on it.
0:30.2	So we've invited Sean Malaney by tax guy from bytaxguy.com to join us back on the show today and help you lock in your 2021 year in tax planning events.
0:40.3	Remember, so the five community, welcome to the ultimate Crown source personal financial.
0:43.4	This is Choose FI your listening to choose FI radio.
0:47.4	The blueprint for financial independence lives here.
1:00.0	If you're looking to unlock this secrets to financial independence and early retirement, you're in the right place.
1:06.8	Stay tuned and join a community of like-minded people who are getting off the answer.
1:11.7	And taking control of their lives in the pursuit of financial independence. Choose FI your home for financial independence online.
1:32.6	Alright guys, very excited to dive into this week's episode and to help me with this, I have my co-host Brad here today.
1:36.3	How you doing, buddy?
1:37.0	Hey Jonathan, I am doing quite well. Yeah, it's always a treat to have Sean back on the show, of course.
1:41.8	And like you said, most importantly, we're not waiting until the absolute last minute this year.
1:46.0	So we're giving people good 45, 46 days here ahead of publication date to make some changes for the December 31st deadlines.
1:54.6	But as Sean is certainly going to go into, there are some deadlines into 2022 as well.
1:59.5	So you have plenty of time this year, which is nice.
2:02.0	And yeah, Sean, with that, welcome back to Choose FI.
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Jonathan Mendonsa & Brad Barrett | Choose FI Media, Inc, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Jonathan Mendonsa & Brad Barrett | Choose FI Media, Inc and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.