The Motley Fool

OCTOBER 27, 2024

Unfortunately, like other forms of income, Social Security benefits are subject to tax rules. Most retirees can avoid Social Security state taxes The good news about Social Security taxes is that most states do not tax Social Security benefits. The IRS uses your "combined income" to calculate your tax bill.

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The Motley Fool

OCTOBER 15, 2024

One of these is the maximum amount of earnings that are subject to Social Security tax. Now that September inflation data is out, the Social Security Administration has announced several adjustments for 2025. Here's what the new limit is and what it means for high earners in the United States.

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Taxes 246

The Motley Fool

DECEMBER 3, 2024

Tax-deferred retirement accounts like traditional IRAs and 401(k) plans let investors reduce their tax burden in a given year by deducting contributions from their gross income. But the tax payments cannot be postponed indefinitely. However, the excise tax can be reduced to 10% if the issue is fixed within two years.

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The Motley Fool

NOVEMBER 25, 2024

The wage cap is rising Workers don't automatically pay Social Security taxes on all of their earnings. There's a cap set every year that limits the amount of wages taxed to fund the program. Higher earners will owe Social Security tax on an additional $7,500 of income, increasing their total added tax burden by $930.

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The Motley Fool

NOVEMBER 23, 2024

This cap is the highest annual income subject to Social Security tax, and the closer your wages are to this limit, the higher your benefit will be. If your earnings land at or above the limit, you'll face taxes on more of your income year after year. In 2024, the cap is $168,600 per year.

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The Motley Fool

OCTOBER 19, 2024

Franklin famously said, "In this world, nothing is certain except death and taxes." Well, it turns out that while none of us can avoid death, you can avoid some taxes in retirement and retirement planning. And that is a good thing, because creating a retirement plan that avoids taxes to the extent possible is smart. What to do?

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The Motley Fool

NOVEMBER 24, 2024

Make the most of tax-advantaged accounts Tax-advantaged accounts can make it a little easier to save for retirement. Traditional IRA contributions reduce your tax bill today, while a Roth IRA gives you tax breaks further down the line. You put in post-tax dollars and can then make tax-free withdrawals once you've retired.

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The Motley Fool

OCTOBER 10, 2024

Fortunately, most states do not tax Social Security benefits. Here's a look at which states do and don't tax Social Security. Know that each state has its own rules for how it taxes Social Security benefits, and in some taxing states, you may not pay any tax at all. But nine states do. Image source: Getty Images.

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The Motley Fool

DECEMBER 1, 2024

An increase in Social Security taxes for higher earners You've probably noticed that a portion of your paycheck is used to fund Social Security. But without Social Security taxes, the program wouldn't exist. Each year, there's a wage cap established that determines how much income is taxed for Social Security purposes.

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The Motley Fool

NOVEMBER 8, 2024

One is to fund a traditional IRA, which gives you an immediate tax break on your contributions. You could also fund a Roth IRA, which doesn't come with an up-front tax break but offers perks galore. With a Roth IRA , your investments gains are tax-free, and withdrawals are tax-free in retirement.

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The Motley Fool

OCTOBER 21, 2024

To this end, here's a rundown of four simple strategies for minimizing the tax bills created by required minimum distributions -- or RMDs -- from your IRA accounts once you can no longer postpone them. This won't sidestep a tax bill. What's a required minimum distribution? Most people end up outliving at least some of their savings.

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The Motley Fool

OCTOBER 23, 2024

The big advantage of those accounts is that you can deduct your contributions from your taxes. With a lower tax bill, you'll have more money to invest and save for your future. By the time you retire, you could have a sizable nest egg in those pre-tax accounts along with some money in a taxable brokerage account.

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The Motley Fool

OCTOBER 28, 2024

And in an ironic twist, the less competitive you are, the better you'll be able to stick with a strategy that can lead you to after-tax returns that beat 98% of professionally managed mutual funds. In real life, investors have to pay taxes. And more often than not, active mutual funds are very tax-inefficient.

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The Motley Fool

NOVEMBER 6, 2024

The tax-free growth and income you get to enjoy in retirement. You could withdraw that money during retirement without taxes chipping away at your portfolio. You'll just need to wait until you're 59 1/2 and meet the five-year rule to access those earnings tax-free. Its main appeal? Image source: Getty Images. The best part?

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The Motley Fool

NOVEMBER 3, 2024

One of the biggest benefits of saving in traditional retirement accounts like a 401(k) or IRA is the upfront tax break you receive. You won't owe any income taxes on contributions in the year you make them. But you can't defer those income taxes forever. That can give you extra cash now, enabling you to save more for retirement.

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The Motley Fool

OCTOBER 2, 2024

Social Security benefits could be on the chopping block Social Security has historically brought in more in tax revenue than it's paid out in benefits. Social Security paid out more in benefits than it collected in tax revenue and earned on its investments. The answer lies in the dynamic between tax revenue and COLA.

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The Motley Fool

OCTOBER 8, 2024

One of the most important is you can defer the taxes on your contributions. Instead of paying taxes on your income during the year in which you earn it, you can wait until you withdraw your savings in retirement to pay taxes, giving you more money to invest upfront. But you can't wait forever to pay your tax bill.

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The Motley Fool

OCTOBER 6, 2024

Increasing the Social Security payroll tax: This is the tax all workers pay on their income up to an inflation-adjusted ceiling ($168,600 in 2024). Currently, this tax is 12.4%, split evenly between employer and employee. These taxes leave some retirees with less money to put toward their expenses.

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The Motley Fool

OCTOBER 6, 2024

Taxes are important, too. Pennsylvania is one of the 41 states that do not tax Social Security benefits. In fact, it doesn't tax any kind of retirement income -- not pension income, not withdrawals from 401(k) and IRA accounts, nothing. The state has no estate tax , either, though it does have an inheritance tax.

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The Motley Fool

OCTOBER 3, 2024

Tax concerns may be another reason For shareholders, the best possible reason for the sales would be if Michael Dell were selling for personal reasons or tax reasons. The tax issue looms, as capital gains tax rates may go up under a new administration next year. Still, AI server margins are worth monitoring going forward.

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The Motley Fool

OCTOBER 12, 2024

When it comes to taxes, Vermont is not among the 41 states that do not tax Social Security benefits , because it partially taxes them. There is an estate tax in Vermont, too, but it kicks in at a fairly high level -- applying to estates worth more than $5 million. Federal estate taxes still apply, of course.)

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The Motley Fool

NOVEMBER 11, 2024

Tax-advantaged retirement accounts are wonderful financial vehicles that can help you build wealth and plan for retirement. IRAs and 401Ks allow you to invest with pre-tax dollars, allowing the wonders of compound interest to grow your nest egg until it can help support you when you are no longer working. There is a limit, however.

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The Motley Fool

OCTOBER 19, 2024

If this provisional income goes above a certain level, then you get taxed on part of your benefits. If you are a single tax filer, up to 50% of benefits could be taxed with a provisional income between $25,000 and $34,000. That's actually a big issue that has resulted in a growing number of retirees owing taxes on benefits.

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Taxes 244

The Motley Fool

OCTOBER 28, 2024

The wage base limit doesn't get nearly as much attention as the COLA, but it has tax and potential benefit implications that make it worth paying attention to. workers pay Social Security payroll taxes all through their careers. The current tax is 12.4%, typically split in half between workers and employers at 6.2% 2022 63,795.13

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Taxes 244

The Motley Fool

OCTOBER 14, 2024

Continuously writing covered calls also isn't a tax-effective strategy because the seller books the premiums as capital gains with each options expiration. To simplify that process and reduce those taxes, some ETFs will trade equity-linked notes (ELNs), which are tethered to covered calls instead of directly writing and selling the options.

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The Motley Fool

OCTOBER 18, 2024

Many families see 529 plans as the go-to college savings accounts because of their tax benefits. Your contributions might reduce your state income tax liability, depending on your plan, and interest grows tax deferred. If you use the money for qualifying educational expenses, you won't owe any taxes on withdrawals.

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The Motley Fool

OCTOBER 20, 2024

Current workers may owe more money in Social Security taxes The other big announcement affects current workers, and specifically those who earn a higher income. It relates to how much of your income is taxed by the Social Security Administration. As prices go up and people earn more money, they're taxed on a larger share of it.

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Taxes 246

The Motley Fool

NOVEMBER 28, 2024

Since withdrawals in retirement are tax-free, housing aggressive growth investments in a Roth can maximize the benefits of long-term capital appreciation. The long-term view A Roth IRA's tax advantages make it particularly well suited for aggressive growth investments. A Roth IRA offers unique advantages for growth investing.

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The Motley Fool

OCTOBER 24, 2024

These funds can be invested and ultimately withdrawn tax-free. Parents try to start saving as early as possible and take advantage of the effects of long-term, tax-free compounding. A Roth IRA is a retirement account in which people contribute after-tax dollars, but the earnings can grow and be taken out tax-free.

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The Motley Fool

NOVEMBER 11, 2024

Social Security's wage cap is rising It's not a given that you'll pay Social Security taxes on your entire salary. Each year, there's a wage cap put in place that determines how much income is taxed to fund the program. So if you earn $200,000 a year, you won't pay Social Security taxes on your last $23,900 of income.

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The Motley Fool

DECEMBER 4, 2024

Each year, there are several inflation-based changes, as well as one that depends on wage growth, and here's how these could impact your current and future Social Security benefits, the taxes that are withheld from your paycheck, and more. Each year, there is a maximum amount of earned income that is subject to Social Security tax.

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The Motley Fool

OCTOBER 15, 2024

Some workers will pay more in payroll taxes According to Nationwide, 74% of its survey respondents incorrectly marked the following statement as true: "Workers pay Social Security taxes on all of their income." In fact, while Social Security is funded by a payroll tax, the amount of their income subject to taxation is capped.

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The Motley Fool

OCTOBER 26, 2024

The wage cap for Social Security taxes is going up Social Security is funded primarily by payroll taxes. Each year, there's a wage cap set that dictates how much income gets taxed for Social Security purposes. For this reason, it pays to be mindful of the earnings-test limit and try staying below it.

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The Motley Fool

OCTOBER 21, 2024

These funds typically boast lower turnover rates compared to actively managed alternatives, a characteristic that substantially reduces investors' tax liabilities. To put this into perspective, a $10,000 investment at the fund's launch, with dividends reinvested and assuming no tax liabilities, would have burgeoned to $69,250 today.

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The Motley Fool

OCTOBER 25, 2024

There are two main types of IRAs -- traditional and Roth -- and each has a unique benefit and tax break. Contributions to a traditional IRA are potentially tax-deductible in the year you make them, but you must pay taxes on money withdrawn in retirement.

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The Motley Fool

NOVEMBER 4, 2024

Some workers will have to pay more in Social Security taxes If you're a high earner, you probably don't have to pay Social Security taxes on the entirety of your income. For 2024, any wages earned above $168,600 aren't subject to the tax. Your employer will also have to pay an extra $465 in payroll taxes.)

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The Motley Fool

OCTOBER 13, 2024

West Virginia is one of the 41 states that do not tax Social Security benefits. It does tax withdrawals from 401(k) and IRA accounts, though, and pension income is taxable, too, with some exclusions. The state has no estate tax. West Viginia's winters, meanwhile, can be cold and snowy, so factor that into your thinking.

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