Let’s say your and your spouse’s taxable income is $110,000 in 2020. NOTE that your taxable income is calculated after all the tax deductions. So your actual total earned income would be higher than $110,000. For the tax year 2020, we have the standard deduction of $24,800. Assuming you did not have any other deductions […]
Many people have this question of where they should invest money first. It really depends on your situation, on your age, on your current income, on your projected future income, current income tax rates, and future expected income tax rates. Currently, federal tax rates are at an all-time low. Most pros agree that in the […]
What is Gross Income (GI?) Gross Income is your total income from salary (wages), interest earned, and dividends. It also includes alimony, capital gains, business income, royalty income, rental income, unemployment income, retirement distributions, and other income What is Adjusted Gross Income (AGI)? It is Gross Income (GI) minus certain payments you’ve made during the […]
What is an IRA? IRA stands for Individual Retirement Arrangement. Its an investment account for your retirement savings. However know some tax tricks ad how to access money – you can use it as a rainy day fund account, highly leveraged investment account, etc. Now with this investment account, you can invest in all those […]
The contribution limits for 401(k) for tax year 2020 is $19,500. If you are 50 and above its $6,500 extra. Now if you are planning to contribute the max amount there are a few ways to do it. $19,500/12 will be the most common way i.e. $1,625 each month. Here’s how I have done in […]
Tax Year 2020 Federal Income Tax Brackets (Due April 2021) Tax rate Single MFJ MFS Head 10% $0 to $9,875 $0 to $19,750 $0 to $9,875 $0 to $14,100 12% $9,876 to $40,125 $19,751 to $80,250 $9,876 to $40,125 $14,101 to $53,700 22% $40,126 to $85,525 $80,251 to $171,050 $40,126 to $85,525 $53,701 to $85,500 […]
The IRS plans to begin sending out coronavirus stimulus check or “Economics impact payments” as soon as April 9, 2020. They will be distributed automatically for people but for those who do not file tax return they will need to submit a simple tax return to receive economic payment. For paper checks, the priority would […]
Deadlines for most of the filing and contributions have been changed from April 15, 2020, to July 15, 2020: Tax return filing date and tax payment date. “To avoid interest and penalties, pay your taxes in full by July 15, 2020“ Also, note that this change of deadline only applies to federal tax and does […]
Best is to contribute to both but let’s say you have a cash crunch and you have only 8K that you can set aside to contribute to your retirement accounts. This is the money you are not going to need in the next 1-6 months. First is the free money that you get with your […]
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How to save medical receipts for HSA
Do you want an average HSA or a supercharged retirement account? This is one of the best tax loopholes (of course legal!). If you want to make your HSA a supercharged retirement account you need to withdraw money from HSA once it has been compounded tax-free for a number of years rather than withdrawing every […]
