Tax Issues

Year-End Tax Savings

This week, Angela discusses five tax savings strategies to consider before the end of 2025. She emphasizes the importance of planning and understanding tax implications for financial success. The topics include charitable gifting, itemized deductions, investment and retirement portfolios, business equipment purchases, and seeking professional advice.
Key Takeaways 💡
Charitable Gifting Strategies: Due to upcoming changes in 2026, individuals in higher tax brackets should consider accelerating charitable gifts to maximize tax benefits this year. Using a donor-advised fund allows for immediate tax deductions while distributing the funds to charities later. Gifting appreciated stocks or securities to a donor-advised fund offers a double benefit: a charitable deduction and avoidance of capital gains taxes.
Itemized Deduction Changes: State and local tax (SALT) deductions have increased to $40,000 this year, but limitations will apply next year for those in higher income tax brackets. Prepaying state and local taxes this year can help maximize deductions before the new limitations take effect. Consider prepaying property taxes or purchasing a vehicle this year to take advantage of the current deduction rules.
Investment Portfolio Tax Savings: It's important to understand the tax implications of different investment accounts, such as taxable, IRA, and Roth accounts, to avoid future tax burdens. Tax loss harvesting within investment portfolios can offset gains and reduce overall tax liability. Actively managing taxable portfolios to maximize returns, minimize fees, and optimize tax efficiency is crucial.
Retirement Savings and HSAs: Maximizing retirement savings contributions and utilizing vehicles like traditional and Roth IRAs can provide tax benefits and diversify retirement income. Contributing to a Health Savings Account (HSA) offers a triple tax advantage: tax deduction on contributions, tax-free growth, and tax-free withdrawals for qualified healthcare expenses. Reviewing health plans to ensure eligibility for an HSA can be a valuable retirement planning strategy.
Timing Income and Expenses: Instead of solely focusing on buying equipment for tax deductions, consider the timing of income and ordinary business expenses. Delaying income or prepaying rent, taxes, or other necessary expenses can provide tax benefits without acquiring depreciating assets. Prepaid rent strategies can offer ongoing tax deductions if consistently implemented.
Seeking Professional Tax Advice: Consulting with a tax planner, accountant, or tax preparer is essential to identify tax-saving opportunities and make informed business decisions. A tax professional can provide personalized advice based on individual financial situations and goals. Building a team of financial professionals should be a priority to ensure comprehensive financial planning.

Big Beautiful Tax Opportunities

This week, Angela joins the Slice Podcast to talk about the latest tax legislation and how it impacts families, business owners, and retirees. She discusses the extension of current tax rates, the SECURE Act 2.0, 529 plans, charitable giving, Roth conversions, estate tax exemptions, and Trump accounts. She also emphasizes the importance of planning and optimizing financial strategies to take advantage of available opportunities and achieve long-term financial confidence.
 
Key Takeaways 💡
The extension of current tax rates is a significant benefit, as reverting to old rates would have negatively impacted many, especially middle-class married couples. Under the old rates, a married couple with taxable income just under $80,000 would have faced a 25% tax bracket, whereas the current rate at that income level is 12%. Additionally, the standard deduction would have been lower, leading to higher tax burdens for many.
The SECURE Act 2.0 and expanded 529 plans offer new opportunities for financial planning. 529 plans can now be used more flexibly for online academies, tuition, books, and services for individuals with special needs. Grandparents can contribute to 529 plans without it affecting the student's eligibility for student aid, making it a valuable tool for generational educational funds.
Charitable giving strategies can be optimized by using donor-advised funds and gifting appreciated assets. Gifting appreciated assets allows individuals to avoid taxation on the gain and reset their portfolio. Additionally, the cash deduction to charity starts this year, and you get $1,000, which goes to $2,000 next year.
Roth conversions should be considered, especially during market downturns, to convert assets at a lower value and benefit from tax-free growth. By converting during a downturn, individuals pay taxes on a smaller amount and can see significant gains when the market recovers. Planning for Roth conversions should be done in advance to be ready to act when opportunities arise.
Estate tax exemptions are currently high, but nothing is permanent, and planning is essential to take advantage of the opportunity. With estate tax exemptions around $26 million for couples in 2026, families have a chance to transfer wealth without incurring estate taxes. However, it's crucial to stay informed about state estate tax laws and plan proactively, as estate tax laws can change.
Trump accounts, while offering some benefits like government contributions for newborns and employer contributions, require caution due to potential estate tax implications. Gifting to a Trump account requires using some of the lifetime gift exclusion, necessitating the filing of an estate tax return. Individuals with estates over $10 million should exercise caution and consider potential estate tax issues.
Planning is a continuous process that requires annual review to optimize financial strategies and adapt to changing laws. Changes to Trump accounts, 529s, charitable giving, standard deductions, and the SECURE Act all necessitate ongoing review and adjustments. Additionally, the rising costs of healthcare and potential changes to healthcare tax credits make planning more critical than ever.
High-income earners in the 37% tax bracket face caps on itemized deductions, impacting their ability to give back through charitable gifting. The cap on itemized deductions is calculated using a complex formula involving 2/37ths of $100,000 or 2/37ths of the excess over $650,000 of taxable income. Planning is essential to maximize charitable gifting within these limitations, and waiting until the last minute will make it impossible to take advantage of opportunities.

Pocketbook Power Plays

Inflation has made everything feel tighter—but there are ways to put money back in your pocket. In this episode, Angela shares five practical strategies to help you stretch your dollars without sacrificing your lifestyle:
✅ Reevaluate home and auto insurance✅ Use credit card rewards wisely✅ Make your cash actually earn interest✅ Cut interest costs on existing debt✅ Adjust your tax planning before 2026 hits
Talk is cheap—action saves money. Tune in and start putting these ideas to work today!

What is Your Money Really Making?

In this episode, Angela discusses the importance of considering taxes and inflation when evaluating investment returns. She emphasizes that ignoring these factors can significantly reduce the real rate of return and impact long-term financial planning. She also touches on the potential financial challenges facing future generations due to factors like boomer spending habits, healthcare costs, and tax implications on inherited retirement plans.
Key Takeaways 💡
When evaluating investment returns, it's crucial to consider the impact of taxes and inflation to determine the real after-tax rate of return. A seemingly good return of 10% can be significantly reduced to around 2.9% when factoring in a 40% tax rate and 3% inflation, highlighting the importance of tax-efficient investment strategies. Ignoring these factors can lead to an inaccurate understanding of how much money you're actually making and whether your investments are truly keeping pace with the rising cost of living.
Even seemingly safe investments like money markets and interest-bearing instruments can result in negative real returns after accounting for taxes and inflation. For example, a 4.5% return on such investments can turn into a negative 0.29% real return when subjected to a 40% tax rate and 3% inflation, illustrating the need to consider all financial planning aspects. This underscores the importance of seeking professional advice to navigate the complexities of tax planning and investment strategies.
Boomers like to spend money, and the X and Y generations should not rely on inheriting their parents' money for retirement. Boomers may be spending more than they can sustain, and long-term healthcare costs could deplete their funds. Additionally, inherited qualified retirement plans are subject to taxes within 10 years of inheritance, which could significantly reduce the amount received.
Ignoring taxes and inflation in financial planning is a mistake, as Uncle Sam and inflation can significantly erode investment gains. However, there are strategies to mitigate these effects, such as creating tax-free investment vehicles and adjusting investment strategies. It's essential to consult with a financial professional to develop a comprehensive financial and tax plan that addresses these challenges and helps achieve long-term financial goals.

How Much Will Uncle Sam Benefit from the Sale of Your Business?

In this episode, Angela discusses tax planning strategies for business owners considering transitioning or selling their business. She emphasizes the importance of proactive tax planning to maximize benefits and avoid common mistakes that could negatively impact the sale and future financial security. The episode outlines three critical 'don'ts' related to tax planning when transitioning a business.
Key Takeaways 💡
Business owners should not be ignorant about potential taxes when selling their business, as guessing or adding estimated taxes to the business price can deter serious buyers. Understanding the tax implications for both the seller and the buyer can create negotiating power, potentially structuring the sale in a way that benefits both parties through deductions and favorable tax avenues.
Business owners should seek professional advice to obtain accurate tax assessments, as demonstrated by an example where a second opinion significantly reduced the initial tax estimate. Many business owners incorrectly assume they cannot sell their business due to high taxes, but strategic tax planning can significantly mitigate these taxes, potentially creating tax savings during the sale and throughout retirement.
Business owners should not wait until the last minute to engage in tax planning, as some tax strategies require years of implementation to be effective. For example, Section 1202 allows an exemption of up to $10 million or 10 times the basis when selling a business, but to maximize this benefit, planning needs to start six to seven years in advance.
Business owners should not ignore estate planning when preparing to sell their business, as it presents an optimal time to mitigate estate tax risks. Gifting shares of the business to trusts or heirs can be done at a lower valuation, potentially saving millions in estate taxes and future growth.
Business owners need expert assistance to navigate the complexities of tax planning during a business sale, as most lack the experience to simultaneously mitigate taxes during the sale, afterward, and at death. A team of professionals, including accountants and tax attorneys, can provide comprehensive support and specialized knowledge to optimize tax outcomes.

Where Are You Getting Advice?

In this episode, Angela discusses the importance of seeking sound advice and avoiding common pitfalls. She shares humorous anecdotes of bad advice and emphasizes the need to be cautious about the voices influencing our decisions. Angela highlights the significance of having a trusted team of professionals to address various aspects of life planning, including business, finances, and legacy.
Key Takeaways 💡
It is important to be mindful of the sources of advice we receive and how they impact our decisions, not only in faith but also in relationships, raising children, business, and financial matters. There is a lot of advice available on every topic, but it's crucial to discern whether it's accurate and appropriate for your specific situation, especially with the rise of AI and readily available information on the internet.
Relying solely on a single professional, even a trusted one, can lead to gaps and overlaps in financial plans because they may not have a holistic view or the necessary expertise in all areas. It is important to ensure that the professional is equipped with the right tools and knowledge to provide comprehensive guidance, as even well-intentioned professionals can give bad advice if they lack expertise in a particular area.
Bad advice from even skilled professionals can stem from two main reasons: they may not know what they don't know, leading them to offer advice outside their expertise, or the right questions are not being asked, resulting in a limited or biased perspective. For instance, asking a banker how to pay for a business succession plan may lead to solutions involving banking products, while a broader approach might consider tax benefits, insurance, or alternative funding methods.
As financial situations grow more complex, individuals outgrow the need for a single professional and require a team of experts, with a quarterback to lead the charge and coordinate efforts. The role of a life planner is to help individuals define what it means for them to live life on purpose, understand their future goals, current situation, family dynamics, and feelings about risk and money, and then identify the right professionals to involve at the appropriate times.
When seeking advice for business, money, or legacy matters, it's beneficial to consult with a life planner first to help formulate the right questions and avoid costly mistakes down the road. Life planners can help identify holes in financial plans, determine which professionals need to be involved, and ultimately guide individuals towards living life on purpose.

One Big Beautiful Bill Act - Part 2

This week Angela continues the discussion on the One Big Beautiful Bill Act. This episode focuses on student loans, charitable gifting, new tax legislation for individuals, and new tax legislation for businesses and farmers. The aim is to provide a broad overview to prompt listeners to inquire about potential impacts on their financial situations.
Key Takeaways 💡
The One Big Beautiful Bill Act introduces a lifetime borrowing cap for student loans, with graduates capped at $100,000 and medical/law students at $200,000, and further limitations for part-time students. Parent Plus loans now have a cap of $65,000, and repayment options have been simplified to just two choices, making it crucial to understand the implications for financial aid planning.
The new tax legislation introduces a 0.5% income floor for charitable write-offs, impacting the ability to deduct charitable gifts, and this floor also applies to corporations. This change means that individuals must now exceed this income threshold before they can begin to deduct their charitable contributions, potentially reducing the tax benefits of charitable giving.
The "no tax on tips, overtime, and Social Security" claims are misleading, as the legislation only provides exemptions on some tips, some overtime, and some Social Security income. There's an above-the-line exemption of $25,000 for qualified tips, but this phases out for higher incomes, and overtime has a $12,500 exemption with the requirement of separate reporting on the W-2, both clauses being eligible for only three years.
The "no tax on Social Security" is more of a senior deduction of $6,000 for those over 65, but it phases out for individuals with incomes starting at $75,000 or $150,000 for married couples filing jointly. This means that the promised benefits may not be as substantial as initially perceived, especially for seniors with higher incomes.
The legislation allows for 100% depreciation and bonus depreciation in one year, increasing the limits around Section 179 expensing up to $2.5 million. Additionally, certain qualified property used for manufacturing, agriculture, chemical production, or refining can be expensed at 100% in one year, though there are strong recapture rules over 10 years to consider.
Environmental quality incentives programs, conservation steward programs, and the agriculture conservation easement program have been funded through 2031, with increased funding due to the redirection of Inflation Reduction Act funds. There is also renewed funding through 2031 for smaller initiatives like well water programs and incentivizing farmers to open land for hunting and recreation, plus a feral swine eradication program for Texas.
The bill includes $66 billion in new spending for farm programs, the largest infusion since 2002, covering commodity programs, crop insurance, conservation, trade promotion, research, education, rural development, energy programs, and support for specialty crops. This presents numerous opportunities for farmers and ranchers to tap into various resources and programs.
The qualified small business stock exemption has been expanded, reducing the holding period to three years for partial gain exemptions, with 50% of gains not taxed at three years, 75% at four years, and 100% at five years. The exemption cap has also been increased to $15 million or 10 times the owner's basis, offering significant benefits for small business owners planning their exit strategies.

One Big Beautiful Bill Act - Part 1

In this episode, Angela discusses the "One Big Beautiful Bill Act" and its implications for individuals, business owners, farmers, and ranchers. She provides an overview of the bill, focusing on key aspects such as permanence and stability in the tax code, student and child-focused provisions, charitable gifting, state and local taxes, and new tax legislation.
Key Takeaways 💡
The extension and expansion of the 2017 Tax Cuts and Jobs Act brings permanence to several provisions, preventing taxes from reverting to 2016 rates and rules, which includes the alternative minimum tax (AMT). This stability allows families and business owners to make informed decisions about their financial future without the uncertainty of fluctuating tax laws.
The estate tax exemption is set at $15 million per person, adjusted for inflation, providing a stable foundation for estate planning. This permanency helps small business owners, farmers, and ranchers plan their estates with more certainty, although significant inflation may still require additional planning for larger estates.
The Section 199A business owner deduction, which allows a 20% deduction on business income for pass-through entities, has been extended and expanded. This extension includes higher income phase-in amounts and a minimum deduction, offering significant benefits to small business owners by reducing their taxable income.
Businesses can once again depreciate 100% of assets placed in service after January 19th, 2025, regaining the first-year bonus depreciation. Additionally, the ability to expense depreciation on equipment has increased to $2.5 million, up from $1.25 million, providing valuable tax benefits for business investments.
Opportunity Zones have been made permanent, offering a rolling five-year deferral of capital gains for investments in designated areas. Investing in rural Opportunity Zones may qualify for a 30% basis increase, enhancing the tax benefits and incentivizing investment in these areas.
Businesses that utilized the Employee Retention Credit (ERC) should seek counsel to ensure compliance, as the audit time has been extended, clawbacks are being enforced, and penalties have been elevated. The IRS is scrutinizing ERC claims, and businesses need to verify their eligibility and documentation to avoid potential issues.
Several electric vehicle and clean energy credits are set to expire soon, including credits for commercial clean vehicles, new clean vehicles, and previously owned clean vehicles. To take advantage of these credits, purchases must be made before September 30th for electric vehicles and December 31st for solar, wind, and home energy improvements.
The cap on the federal deduction for state and local taxes (SALT) has been temporarily increased to $40,000, but it begins to phase out with $500,000 of income and reverts back to $10,000 in 2030. However, the pass-through entity workaround, which allows deducting property expenses within a pass-through entity, remains a viable strategy to regain missing state and local tax deductions.

Retirement Accounts and Trusts

In this episode, Angela discusses the implications of the SECURE Act and its amendments on retirement accounts, particularly when trusts are named as beneficiaries. She emphasizes the importance of reviewing trusts written before July 2024 to ensure compliance with the IRS's final RMD regulations and to avoid unintended tax consequences. The episode aims to educate listeners on the complexities of tax laws and the need for professional guidance in estate planning.
Key Takeaways 💡
Naming a trust as a beneficiary of a retirement account can be beneficial for several reasons, such as managing inheritances for underage children, protecting assets from spendthrift heirs, creditors, or divorces, and ensuring that assets are distributed according to your wishes even if your heirs predecease their spouses or face financial difficulties.
Updating an estate plan without updating the titling of assets and beneficiary designations can lead to unintended consequences, as retirement accounts are contract property that are paid out per their beneficiary designation; therefore, integrating trust updates with beneficiary designations can simplify estate planning and ensure that assets are distributed according to your wishes.
The IRS released its final RMD regulations on the Secure Act 2.0 of 2022 and Secure Act of 2019 in July 2024, which requires a review of trusts named as beneficiaries of IRAs, and it is important to be aware of these rules to avoid potential tax implications and ensure compliance with the latest regulations.
The SECURE Act eliminated the ability to stretch inherited IRAs over the beneficiary's life expectancy, mandating that the account be fully distributed within 10 years, which can result in significant tax implications for beneficiaries, especially those with high incomes, and there are still planning strategies available to mitigate these tax consequences.
If an IRA is left to an estate, a charity, or certain trusts, the distribution timeframe is reduced to five years, which can significantly increase the tax burden on the beneficiaries, and this highlights the importance of carefully considering beneficiary designations and trust language to avoid unintended tax consequences.
To qualify for the more favorable 10-year distribution rule, a see-through trust must allow the trustee to identify the beneficiary to the IRS, treating them as if they inherited the IRA outright, and the trust must also contain language allowing for the division of subtrusts before the grantor's death and specifically state the percentage of the retirement account allocated to each subtrust.

Thinking About Gifting to Your Children?

This week Angela discusses the complexities and risks involved in gifting significant assets to children, such as land or businesses. She emphasizes the importance of proper planning and professional advice to avoid costly tax consequences and unintended liabilities. The episode focuses particularly on the tax implications of gifting versus inheriting assets and the importance of understanding cost basis.
Key Takeaways 💡
Many parents consider gifting significant assets like land, money, or business interests to their children as they age, but often do so without seeking comprehensive advice, which can lead to costly mistakes. Even when advice is sought, it is frequently from professionals who may not have a holistic understanding of estate and tax planning, resulting in overlooked risks.
Gifting assets without proper planning can expose the family to various risks including lawsuits, creditor claims, divorce risks affecting gifted assets, business liabilities of the recipient, and strained family relationships. Additionally, gifting can unintentionally disinherit grandchildren or transfer assets to unintended parties, such as a new spouse of a child’s widow(er).
One of the most significant and common financial pitfalls of gifting assets is the increase in taxes, particularly due to the transfer of the original cost basis to the recipient. When a gifted asset is sold, the recipient pays capital gains tax based on the original purchase price, which can be much higher than if the asset was inherited.
Cost basis is the original value of an asset for tax purposes, usually the purchase price minus any depreciation taken. When an asset is gifted, the recipient inherits the donor’s cost basis, meaning they may face large capital gains taxes upon sale. In contrast, if the asset is inherited after the donor’s death, the cost basis is stepped up to the asset’s fair market value at the time of death, potentially eliminating capital gains tax if sold immediately.
This difference in cost basis treatment between gifting and inheritance can result in significant tax savings if assets are held until death rather than gifted during life. For example, land purchased decades ago often has a very low cost basis compared to its current market value, so gifting it can trigger large capital gains taxes for the recipient upon sale.
Even if the family does not plan to sell the gifted assets, the cost basis remains important for other reasons, such as depreciation recapture on inherited rental properties or equipment. Inherited assets receive a stepped-up basis, allowing heirs to depreciate the asset anew, which can provide substantial income tax savings over time.
Farmers and ranchers may not realize they can depreciate certain components of their land, such as nutrients, which can offer additional tax benefits. This is an often-overlooked opportunity that can improve cash flow and reduce tax burdens across generations.
Angela stresses the importance of not making gifting decisions alone or without thorough professional guidance. While gifting can be beneficial in some cases, it must be done strategically to avoid unintended tax consequences and other risks. There are creative planning strategies available to mitigate these issues, especially in states like Texas.
The podcast concludes with a reminder that tax laws are complex and constantly changing, and that even accountants and tax professionals may not have complete knowledge of all relevant details. Therefore, a holistic life planning approach involving multiple professionals is essential to protect family wealth and minimize tax liabilities.

Are You Taking Your Financial Supplements? (Rebroadcast)

Recently I was speaking with a client about how important it is to take preventative measures in regard to health - eating right, exercising, and taking the right supplements. It is just as important that we take preventative measures in regard to our finances - planning for the worst-case and best-case scenarios, exercising good financial habits, and revisiting your plan on a regular basis to make necessary changes.

12 Tax-Smart Charitable Giving Strategies (Rebroadcast)

Using an efficient, tax-smart approach to maximize the impact of your charitable giving has never been more important. This week we give you 12 ways to increase your giving power while potentially reducing your taxable income this year and beyond.