A Wiser Retirement®

262. Optimizing Your Tax Plan for 2025: Key Moves to Make

• Wiser Wealth Management • Episode 262

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Curious about how to optimize your tax plan for 2025? Join us on this episode of A Wiser Retirement® Podcast as we share key tax moves to make this year. We cover key topics like charitable giving, the SECURE Act 2.0, upcoming legislative changes, monitoring AGI, and optimizing business deductions.

Related Podcast Episodes:
- Ep 239: How can I reduce my current taxable income?
- Ep 229: How do I avoid capital gains tax?

Related YouTube Videos:
- Reduce Your Taxes and AGI by Giving to Charity
- How to Reduce Taxable Income as a Business Owner

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- About Wiser Wealth Management
- Schedule a Complimentary Consultation: Discover how we can help you achieve financial freedom.
- Access Our Free Guides: Gain valuable insights on building a financial legacy, the importance of a financial advisor for business owners, post-divorce financial planning, and more!

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This podcast was produced by Wiser Wealth Management. Thanks for listening!

Tax Planning and Retirement Contributions Tips

Speaker 1

Usually it takes a one to two pay cycles to change your contribution. So just make sure you're looking at that and what it is and that you're maxing out. If you can paying yourself first, you know that's. That's a way to grow wealth. Good rule of thumb is to save at least 10% of your income generally.

Speaker 2

Welcome to a wiser retirement podcast. Are you curious about how to optimize your tax plan for 2025? I'm Casey Smith. Today, I'm joined by Shauna Theriault, wiser's most decorated advisor. She's a CPA, she's a CFP, she's a CDFA Right, and she's a part of the 8.30 pm workout crowd and she'll beat you up if you need it.

Speaker 1

I don't know about that. I'm not violent.

Speaker 2

No, that's true, You're not very violent. She's a teddy bear, but just a very determined person. We've already done the math before this podcast, I've worked out 35% of this year.

Speaker 1

I've worked out 100% of this year.

Speaker 2

Shauna's worked out 100%. There's no chance of me catching her unless we can get her off her game somehow. Anyway, each week we bring you practical advice on retirement, investing and planning for your financial future. Shauna, let's get started.

Speaker 1

Sure. So today we're going to be talking about taxes and planning for 2025, which could be boring, but there's things to think about at the beginning of the year and things you need to consider. But there's things to think about the beginning of the year and things you need to consider.

Speaker 2

You know, we did a pilot video recently focused around Roth versus traditional savings and I'm getting lots of feedback from people on that.

Speaker 1

Did they say I talk too fast?

Speaker 2

There's just so much information you got to get it out. No, there was. No, there was no critique on our delivery. I assume our delivery was pretty good, but people are questioning our advice. Oh, and it's very interesting. I think we should bring them on the show, these people, and we should have a match pilot CPA tax knowledge versus the real CPA tax knowledge. I don't know, I mean, I know who'd win, I know who'd win, but I just, I just I just chuckle. So there's really not. There's a ton of views, but there's not direct commentary. Necessarily there's. I think there may be two comments. The comments are happening inside the Facebook page where someone had posted the link, and I've been getting uh little snapshots of the different comments and they're all like all wrong, uh, and are all have tons of assumptions that are not law as of today, anyway, right, but um I

Speaker 2

think. I think we might have. We might have to do this year like a a 2.0 on that and then take all the comments and give like a rebuttal Okay, so maybe, maybe that's coming in the next next month or so. I have to work that into our, our show docket here. But it you know, I'm not angry about it at all. I just kind of smirk and think, huh, it's amazing how smart some people think that they are but they're missing out on these things and and all the guys are in like in the market-based cash balance plan that are actually they're being, they're being bullied for being going into the plan, they're being called idiots and worse, worse stuff. Yeah, it's horrible.

Speaker 3

It's horrible, worse stuff.

Speaker 2

Yeah, it's horrible. It's horrible. Um, you know, I don't know it's. I want my pilot to feel confident, quite honestly, but sometimes that confidence bleeds into other things that they're not actually trained in. That, uh, that that kind of makes me chuckle, yeah, but, um, I don't know, sometimes the loudest people are also the minorities and, based on helping over 500 pilot families here just in the last year alone, I would think that, um, that most of them don't really think that way. It's just a few squeaky wheels, right.

Speaker 1

Right, exactly.

Speaker 2

But anyway, let's uh, you know when is the right time to be thinking about tax strategy. If you're tuning into this episode because you're concerned about your 2024 tax return, you need to tune back out because there's nothing you can do now for 2024, unless you're a business owner. There's a few small things you could do there, right, but as a W2 employee, there's not much else really you can do at this point.

Speaker 1

So the only thing you can do after the fact is maybe some retirement contributions, but they're most likely not going to be deductible and correct.

Speaker 2

Correct. So now maybe you've had a crazy 2024 and you're thinking, Hmm, I need to get on top of this tax stuff Now. You probably want to tune back in and let's talk about some tax strategies for 2025 at the front of the year, as opposed to doing it after the fact.

Speaker 1

Right, and not everything can be planned in the beginning of the year, obviously, because it depends on things changing throughout the year with your income. If you have portfolio income, different things happening.

Speaker 2

So and, just to be clear, we're talking to everybody now. This is not a pilot episode like we do maybe once a once a month or so, but this is just a regular episode, talking to everybody, everybody who's out there. We're talking to you, so let's talk about first, maximizing retirement contributions. Give me a walk down on oh my gosh, shana. I forgot Hadley put it right here in front of me and I missed it. I'm supposed to ask you guys to subscribe to our podcast. Anywhere you're listening to this podcast, anywhere you're listening to If you're listening on Apple or Spotify wherever you're listening, make sure you subscribe to the podcast. It helps us in our rankings and also alerts you when we post new episodes. Don't forget to do that. Sorry about that, hadley. We got us back on track here, all right. Maximizing retirement contributions let's start there.

Speaker 1

Yeah, sure. So I mean just thinking about you know I would look back to what you did last year and just think about you know what changed this year. Think about you know, should I do pre-tax or Roth? There are some situations potentially to do Roth. If you're in a low tax bracket, think about that. Make sure there are a lot of bonuses happen, or seem to happen, in the beginning of the year. So think about how you're going to maximize your retirement contributions efficiently.

Speaker 1

If you're in a higher income bracket you know there's, there's you get to a point where your income is so high that they stop contributing and so be thinking about that. But you know, if you're still the steady Eddie saver, you know the four and five percent first of all, make sure that you're getting enough to get your match, employer match and contributing enough for that. But try bumping it up too, you know I mean. So bump it up each year. If you're not maxing out, pay yourself first. That's very important, you know, since we are talking to everyone. So consider bumping it up. And you know, making do with a little bit less than the paycheck potentially because you're paying yourself for the future. So understanding that. But also the catch-up rules changed a little bit this year. There's this weird funky rule that they threw in this year. So catch-up if you're over 50 is 7,500. So for ages between 60 and 63, it's 11,250.

Speaker 2

So weird the industry is so what are we doing with that 64 and 65 year olds haven't saved? I know.

Speaker 1

It's just, it's really odd. So if you're between 60 and 63,.

Speaker 2

You can put in an additional $11,250 in 2020.

Speaker 1

Yeah. So it's really like what a 4,000 more than you can do at 50? That's not on top of the 7,500.

Speaker 2

No, that's just right, in addition to the standard contribution, which would be 23,500.

Speaker 1

23,500 this year is the standard deferral max for W-2 employees, and then the catch up is 7,500, unless you're in that when you know that age bracket which is completely strange.

Speaker 2

I don't know where they got that, but I bet you that if we looked at Congress, I wonder if most of Congress is between the ages of 16 and 63.

Maximize Tax Savings Through Retirement Planning

Speaker 1

Maybe I was trying to think like did the people during COVID four years ago how old they would have been. I was trying to figure out what was the thinking, but it's fair, I'm sure it's really confusing and annoying for HR and ADP payroll processing companies trying to figure that out. But so just make sure you're maximizing where you can there and just looking at that, there's something that came up and thinking about. We've had this question a lot, talking about Ross, but also looking at you know, the beginning of the year where secure act 2.0 allowed workers to have the option to have the employer match treated as a Roth contribution. So and I know a lot of people are interested in that what they didn't know is that you know the company's getting a deduction for that, so it's being taxed to somebody, so it's actually being taxed to you.

Speaker 1

Right, right, right, making sure that you're changing. You know some people change their percentages at the end of the year before you know either they maxed out and it stopped or they changed it at the end of the year. Um, so make sure that what? Usually it takes a one to two pay cycles to change your contribution. So just make sure you're looking at that and what it is and that you're maxing out If you can um paying yourself first. You know that's, that's a way to grow wealth. Um good rule of thumb is to save at least 10% of your income generally, but if you can max out, that's.

Speaker 2

I mean, this is the this is the optimizing your tax plan episode. So people really tuning in here probably don't have any debt necessarily. They were trying to eliminate. We're just trying to save money on taxes. I would say pay more tax, eliminate debt first. Um, but the tax strategy here typically is to get everything in pre-tax because you're in a higher tax bracket. If you're in the mid-level tax brackets, then maybe you split up 50 pre-tax, 50 Roth and remember we're talking to thousands of people. We have thousands of downloads on these podcasts. So if you're already a client of Wiser and we've already given you a recommendation, don't call us up and say, hey, you said on the podcast, we're talking to a lot of people, right?

Speaker 1

right right. We're looking at your specific situation individually.

Speaker 2

If you've asked us directly, then yes, keep with that. And then obviously we review that during our tax planning strategies and our review meetings.

Speaker 1

Absolutely so, just looking at that. The other thing so making sure you're maximizing retirement contributions. The other way to save tax is, if you're in a high deductible healthcare plan is doing the HSAs health savings account and maxing those out.

Speaker 2

Man, that's a free free.

Speaker 1

Yeah.

Speaker 2

You get tax tax free on the front end and you get it tax free on the back when you pull it out. I think that's the only thing that's a free-free. Yeah, you get it tax-free on the front end and you get it tax-free on the back when you pull it out. I think that's the only thing that's like that Right $4,300 for an individual, $8,550 for a family, and typically what we tell our higher wage earners is you don't spend it, you just keep saving it and you can invest it.

Speaker 2

Now it's going to grow tax-free. Just keep saving it and you can invest it.

Speaker 1

Now it's going to grow tax-free and then when you get to retirement, you get to do what pull from it? Yeah, to pay for your expenses pay for your health, especially in that nice window, you know, between retirement and rmd and you know then maybe you that's when you want to look at roth conversions then, and so then you can pull money from an hsa for free to pay for those premiums if you're before Medicare age.

Speaker 2

And this is again planning that takes place well before your retirement to actually build something that's significant enough to do that.

Speaker 1

Yeah.

Speaker 2

Which is why planning is so important.

Speaker 1

Exactly, exactly, looking at your you know check withholding. Some people adjust their withholdings each year. You don't want any surprises, so you know, just making sure, starting out the year, if you had made changes to anything as far as your withholding, you know you'll. You have more clarity, probably in April when you run taxes to see you know, did I owe taxes? Or if you're doing tax projections throughout the year, you'll kind of know where you are, hopefully, um, but just adjusting your withholding and thinking about that, especially if you're going to be making less or more this year, you know, maybe you're getting close to retirement and your income's going to go down or maybe it's going to go up this year. So just making sure that you're paying attention to your withholding going forward.

Speaker 2

Or starting to pay estimated payments, especially for business owners. Absolutely it's important to stay on top of that.

Speaker 1

And if you're starting to create those opportunistic funds, you know where we're doing brokerage accounts, et cetera. You may have capital gains interest dividends. You may not be able to do enough withholding. You may have to make estimated payments in those regards too. So another thing to consider is, you know, looking, considering Roth conversions I don't I'm not a huge fan of converting at the beginning of the year just because you know you don't.

Speaker 1

Sometimes you don't know what the taxes are going to hold later in the year on your portfolio potentially, or there's other opportunities that come up. But just thinking about, do I need to do that? Looking at your required minimum distributions from either IRA if you're required minimum distribution age or inherited IRAs. So you know, non-spouse beneficiaries, you have that 10 year window where you have to take money out and you know, distribute it by the end of 10 years, and so with Roths you don't have to take anything out generally until the 10th year. That's kind of what I usually say is wait till the 10th year, it's not taxable, let it grow tax-free. But with the pre-tax and traditional IRAs, looking at what is my income going to be this year, should I take a portion out? You may have to take some out anyway, just depending on other things, like when they passed, if they were taking it, et cetera.

Speaker 2

But but just be on the lookout for thinking about that. So those values are determined on the 1231 value of the year prior. So by January 2nd you now know what the RMD is going to be for that particular year. You can use that in your tax planning. You have to pull it out.

Speaker 1

Great point.

Speaker 2

And typically by September, we kind of know what the income's going to look like for the year, and so that's when you start taking your RMDs and making other money moves for taxes, obviously.

Speaker 1

Right. So if you can find a way to save tax and then have to take those you know it's just a and sometimes you can't sometimes you just have to take it and maybe your income's not going to change over the 10 year period and you just have to take it, and maybe your income is not going to change over the 10 year period and you just have to take it, maybe equally over 10 years. You know, just to spread it out, maybe it doesn't matter. But just taking all that into consideration, but just be aware of it, um, I, especially you know thinking about that too. I'm always thinking ahead. Is my income going to change in the next few years? So be thinking about that too, instead of, you know, potentially bundling up all the income one year and maybe your income is going to go down the next couple of years because you're getting closer to retirement or, I don't know, there's a job change or something's happening. Sometimes we don't know about it, but sometimes we do in advance and so, just taking all those things into consideration, just know what you're. You know. You kind of know my pay is going to be this. My RMD required minimum distribution is going to be this. This is kind of what my you know portfolio income was for last year. We don't know, potentially, what it's going to be because of capital gains sometimes. You know, just taking all those things into consideration, just know where you stand for the year, adjusting your withholding accordingly, potentially, you know how much should I defer to my 401k? Can I put more in there? All of those things you know.

Speaker 1

The standard deduction most Americans now have the standard deduction and we talk about that. That it's. It's so much higher now. It's 30,000 for married filing jointly and $15,000 for single this year. There's other considerations, like if you're above $65,000, et cetera, but it's generally $30,000. And so what that means is if you don't have deductions greater than $30,000, then you just get the standard and there's no reason to track expenses necessarily through the year. Sometimes we don't know what that is, and so there's a couple of rules that are. So you may want to track your expenses just in case, but there's a couple of rules that are changing. So we have this. You know this TCJA that expires at the end of 25, it sunsets and it affects a few things. It, you know, as far as deductions are concerned, it limited our state and local taxes to 10,000, which is like your real estate taxes, your state taxes, et cetera, that you can deduct on your tax return. It limited it to 10,000. We don't know what they're going to do in Congress. We don't know what they're going to change.

Speaker 2

You still get that for 25 or that expired in 24?.

Speaker 1

You get that in 25. So I mean it's capped in 25 still. I mean it was a cap. Most people used to have a higher deduction than that. Yeah, so it was kind of a bad deal for you know, but they made the standard so high they tried to make up for it, if you will.

Speaker 2

Sure.

Speaker 4

So that's where the10,000 for that piece and that sunsets and expires in 2020, at the end of 2025. Are you curious why annuities keep coming up as a potential investment option? People are often told that annuities can effectively mitigate investment risks and help secure their financial future. However, annuities often benefit the salesperson and might not be the best choice for you as a consumer. To learn more about the various types of annuities, the negatives of owning them and better investment alternatives, we have a free ebook on our website just for you To download our ebook. Buyer, Beware, why Do they Keep Trying to Sell you that Annuity? Simply click the link in the episode notes or visit wiserinvestorcom slash guides. Now let's get back to the episode.

Speaker 1

The other thing with that, you know, and just understanding the legislative changes. So taxes change every year, but this, this, the TCJA came into place in 2018. It was through 2025. There's a lot more, but it's just a couple high level it's.

Speaker 1

The estate tax exemption also is going to be changing at the end of this year. So for someone in a really large estate, they may want to consider looking at gifting and talking to an estate planning attorney about that, et cetera. So that's going to be changing. Most Americans won't be affected by it, because most of us don't have $14 million each in assets, or even $7 million each in assets, which is what it's going to go back down to in 2026 if they don't do anything. Okay, but the other thing that it changes is the tax brackets. So they adjusted the mid-tier tax brackets. So I personally think they're going to change it and maybe make it permanent, or what have you, because if they don't do anything, the mid-tier tax brackets are going to jump back up from 22 to 24, for example. You know they're going to it will slightly go up, but it's going to affect so many people.

Speaker 2

I think this is interesting. So we get feedback from clients. You know, every day in our review meetings and it's some people. I guess I should say it like this there's a lot of people that assume that it's actually going to change back, and I think that's a wrong assumption. I think, with how the election went, we can assume that it's going to at least stay the same, if not possibly go lower in some categories. So I feel more optimistic about this where prior to the election, I was like oh wow, this is going to be a huge burden for a lot of people at least at a wealth man, clients of a wealth manager firm, right, yeah, yeah, um, is that how you feel about it as well?

Speaker 2

I do that. We feel like that. This probably it all be legislated out by, at least for two years.

Speaker 1

Yeah I mean I, I at least for two years, depending on you know what happens in two years in the mid-term elections yeah, um, and then maybe just nothing.

Speaker 2

at that point they could make it go for four years right now.

Speaker 1

Yeah.

Speaker 2

Yeah, Well, after January 20th, I guess.

Speaker 1

But I don't know. I feel like if they raise taxes, they're cutting interest rates right now, right, and so if they raise taxes, it's kind of converse to what they're trying to do. They're trying to pause inflation. I just I don't see them letting it.

Speaker 2

No, I don't see taxes going up. I see, which is what would happen if they didn't adjust those brackets. The rhetoric that we're seeing is is is excess of spending is going to be cut, so you, you essentially could do the same thing have lower taxes and lower spending, and that might get a balanced budget. But no one's ever said the word balanced budget ever. And this administration that's coming in or the one that's going out, I don't even.

Speaker 1

I don't even know if my lifetime I don't know like a 40 something, I don't know, was it like 20 some years ago, maybe when I was little, I think.

Speaker 2

George W Bush had a balanced budget. I believe, and possibly Clinton. Our listeners probably know more than I do about that era.

Speaker 1

I didn't mean to throw you on the spot, because I literally don't know Newt Gingrich, right.

Speaker 2

Didn't he have a balanced budget? Somebody can tell me?

Speaker 1

I feel like my whole career. We haven't had one you know in the industry for like 27 years and it's like it's just the norm right.

Speaker 2

Fought a bunch of wars and it all just went crazy. But yeah, I think from a tax standpoint, that you pay more tax, that that whole rhetoric is probably politically motivated and it's not really factual at this point. Yeah, it's a fair statement.

Speaker 1

Yeah, but they do have to do something, or it's going to sunset at the end of this year, so you either have to like make it permanent or extend it, or kick the can like they do, or you know, I think I think they make it either permanent or they extend it for another four years.

Speaker 2

That's how I see it.

Speaker 1

Yeah, probably Most likely.

Speaker 2

Probably a lot of nastiness around it, but again, if you're listening to a Wealth Management Podcast, you probably are a beneficiary of any changes that are happening.

Speaker 1

Yeah yeah. The beginning of the year for charity. I like to just think about this because some aren't aware and we've talked about it before the beginning of the year for charity.

Speaker 1

Yeah, I like to just think about this because some aren't aware and then we've talked about it before, but someone are aware that you can give either part of your required minimum distribution to charity or appreciated securities directly to charity.

Speaker 1

And some will realize it throughout the year and go oh well, I've already been contributing monthly. So this is the time if you have appreciated securities in your taxable account, you could gift those to your church or what have you, whatever charity you have, versus doing monthly cash distributions. And so the beginning of the year is a great time to say OK, if you are charitably inclined and you gifted last year and you're doing cash, maybe consider those other two options and then stop the cash contributions and think about how you're gonna give to charity this year, because sometimes you get halfway through the year and you're like well, I've already done half of it and you know I'll just look at it in january so if you're 70 and a half or older, you could be gifting out of your ira right, it has to go directly from the ira to that, correct, yeah?

Speaker 2

um, also, if you want to do a donor advised fund versus giving yourself, you could put that into play. Um, I think that's probably two big things right, that why you would change yes and and or just doing a donor advised fund or gifting appreciated securities from your brokerage now.

Speaker 1

I mean, you know the market was up huge the last few years, so I mean especially last year, and so this is a time to say, okay, you know, in thinking about, I kind of put on here the allocation considerations.

Speaker 1

It's like okay, you know, am I getting closer to retirement, since the market's been up so high, should I trim some back and take some off the table? And if I'm going to do that in a brokerage account, just to be a little, maybe because you're getting closer to retirement, so be thinking about that, it's a good time to take a little bit off if you want to get a little more conservative and start. You know, if you're retiring in a couple years, for example, maybe you take some profits off the table. But if you're going to, you know, gift to charity, maybe before you sell those profits in your brokerage account. This doesn't work for a retirement account because even if it's appreciated, you're not being taxed on it right. So then you can think about well, maybe I'll gift a portion of this stock to my church whenever you want to during the year it doesn't have to be right now and just not sell that portion and gift it to them while you're thinking about the allocation and things like that.

Speaker 2

I would also add that this is the great time to start direct indexing. So if you have, I'd say, over half a million dollars inside a brokerage account so non-IRA, non-retirement money there's a good chance that you should be doing direct indexing versus just buying ETFs directly.

Speaker 4

Right.

Speaker 2

Such a powerful investment direct indexing versus just buying ETFs directly. Such a powerful investment but it takes because of all the gains that are in the portfolios. It takes a little time to work those back out through the tax loss harvesting mechanism through direct indexing. So you would want to start that at the beginning of the year. So you now have a full 12 months to be able to hopefully work those gains off into losses and you have a tax credit instead of taxable gains at the end of the year. So now's a great time to be considering that in brokerage accounts and for the most part I think we've gotten through all the clients who've come in for review meetings in the last year have transitioned to those direct indexing accounts.

Speaker 1

Absolutely.

Speaker 2

I'm amazed. I have spent time with other advisors and I'm always amazed how people don't do direct indexing. I think it's because maybe it's hard. It is hard and it's more labor and people want easy even advisors, but we have a process that makes it pretty straightforward here at Wiser and man. When you see the tax benefits that we're able to provide, it's amazing.

Speaker 1

It is huge, especially when you're talking about those brokerage accounts and then wanting to trim stuff back. It just helps in the future to create those credits and if you have a market downturn, that's when it.

Speaker 4

I mean, we don't want to have a market downturn.

Speaker 2

It's inevitable, it's going to happen, but those are the times you can take the opportunity to take some losses or even just volatility. If you have extreme volatility, you can also do that as well.

Speaker 1

Absolutely.

Speaker 2

Monitor your adjusted gross income. What do you mean by that?

Maximizing Tax Savings for Business Owners

Speaker 1

Well, it's just you know there's certain sometimes you can't help it, there's certain credits or you know, or tax advantages you may have for having lower income. And so just understanding where your adjusted gross income is, taking into consideration any bonuses, your W-2 income, self-employment income, managing it that way, but also the IRA, RMDs, like we talked about, and just other portfolio income. So just understanding where your adjusted gross income is, because it could what your earnings do and your other income impacts potentially tax benefits that you have. Now, I'm not a proponent of reducing income just to save taxes, meaning like I would still rather earn 200,000 and pay tax on it, versus like I'm just not going to, I'm just going to try to earn 50. So I have less taxes, I mean.

Speaker 2

I always, I always chuckle when people say this statement you know, I did. I didn't take on that project. Or I didn't do that because all the money just goes to the government. There is no tax bracket, that that's even possible.

Speaker 1

Yeah.

Speaker 2

So it's like, even if you're in the highest tax bracket, you're still going to keep what? 40 cents to the, oh, 42 cents to the it's going to go out. So let's just round to keep it simple. You're gonna keep 60 cents on the dollar.

Speaker 3

Yeah.

Speaker 2

Yeah, it's like so you would. Would you rather have 60 cents or no sense? Most people go, I'd rather have this 60 cents or no, sense this sounds like no cents. I know no cents. It's a different statement when you go. I have enough. I'm just tired of working.

Speaker 1

Right, that's a lifestyle decision. That's a lifestyle decision, sure.

Speaker 2

But when you hear people and most people who say it again, that's why I chuckle Most people who hear it say it, they're like in the 20% tax bracket. You're like in the standard American tax bracket, Like what do you mean? The government's going to take it all. It just means you're not planning properly and a lot of times I feel like it's said by people who work for themselves and so they're not doing tax planning and they get to the end of the year and it's a surprise what kind of tax bill they get.

Speaker 3

And that's why they feel that way.

Speaker 2

That's all going to go to the government. Well yeah, Cause you didn't. You didn't do quarterly payments, you didn't do the planning.

Speaker 1

But Well, I don't know. I feel that, though, because you know raising kids and you know being in the throes and we see it all the time where it's like you know individuals come into us and they're they're trying to build their wealth now, and you know Trump, you know it's like building wealth meaning being retireable and being able to be comfortable, and you know, when you're raising kids and doing that, and you know working and you're trying to buy a house it just all the things that come with it it feels really hard in the messy middle.

Speaker 1

Yeah, Like is it ever going to be there, you know. And so when you, then when you have a tax bill on top, of that. I don't feel like I'm rich making this much money. I have kids and buying a house and running my household and everything costs so much. I feel that Americans feel squeezed.

Speaker 2

Oh no, there's no doubt about that.

Speaker 1

But our tax rates are not that high.

Speaker 2

But if you look at, if you did planning, then you would know that what was coming up.

Speaker 1

Exactly, exactly, completely.

Speaker 2

This is my favorite section entrepreneurs, small business owners. Optimized business deductions. That's so important, um, that you, that, you, that you really don't wait till the end of the year, but you can. You can launch out a 401k plans, you profit sharing plans. Um, if you're a small business owner working for yourself, I love the solo 401k plan you can pack away like over 60 grand in there.

Speaker 2

If you're doing well, if you got $250,000 in profits or so you can. You can put away a lot of money um all kinds of opportunities that you can um they can do as a business owner.

Speaker 1

Yeah, yeah, absolutely.

Speaker 2

Uh, tell me about the QBI deduction.

Speaker 1

So that is the. It was a deduction that allows them to duct up to 20% of their qualified business income. This is part of you know, it was to help. They set that in 2018. Again, that's part of the deduction that was set to expire at the end of this year. I think that will be extended to potentially again. I think that will be extended to potentially Again, I think they're going to extend the whole thing. So it was just help to reduce taxes for business owners, you know, and reduce the corporate tax rate.

Speaker 3

So it's the section 19-199.

Speaker 1

That's supposed to expire this year as well. Yes, that is part of that whole bill, the TCJA Act.

Speaker 2

Yeah, I see that sticking around too.

Speaker 1

Yeah, I do too. So, especially if they feel like business owners are getting squeezed, and you know, so again we, I think. I agree with you that they may just extend it for four years or just make it permanent, but it is up to subject to change. So it's just good to think about that now if you want to take advantage of it, since it could expire at the end of the year.

Speaker 2

These are all things that a financial advisor needs to think about when they're working with their client. Shauna and Missy do a great job of this. I don't know. You know, as our fearless leader here, I have to think why is Wiser different? And you know, honestly, robots can invest in these ETF portfolios. Today, you don't have to have a financial advisor to find a company that can just deploy a portfolio for you.

Speaker 1

But that's such a small piece of the pie.

Speaker 2

It is. It is, but advisors have to understand tax, and so many advisors today simply say, oh, you have to consult with your tax person, or they don't even do tax loss harvesting. Some of the biggest firms in the country household names. Those advisors don't do tax loss harvesting, and so it's such an important component that our advisors here fully understand tax and work that into the overall planning strategy. It's a value add that's not seen in the portfolio directly, but it's there. The rate of return is higher because you have a more competent tax strategy. It's about how many dollars are you keeping on the other end?

Speaker 1

long term. Right, yeah, and it's about understanding the recommendations you're making. Years ago I saw that and I didn't understand tax, and you don't have to be a CPA to understand the tax ramifications of what you're doing. But that's exactly why I got the CPA so that I would understand when making recommendations, because it affects so many other things.

Speaker 2

Absolutely Well. Thanks for listening to today's episode. If you're interested in learning more about Wiser Wealth Management or want to schedule a consultation to meet with one of our fiduciary financial advisors, you can do so by going to wiserinvestorcom or you can click on the episode notes below. Thanks again for listening. We'll see you guys next week.

Speaker 3

Thanks for listening to a Wiser Retirement Podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review. If you have any questions about anything that was discussed today, head to wiserinvestorcom and reach out.

Speaker 3

This episode was produced by Rachel Dotson. This podcast is strictly for informational purposes only and is not to be considered as investment advice or solicitation to buy or sell any financial products, securities, digital assets or any other investment vehicles or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. The host and or guests may personally own securities, digital assets or other investment vehicles mentioned on this podcast. Neither the host nor guests of the show are compensated for their participation and no referral fees are paid to or received by any host or guest for clients, listeners or similar interests. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional and or legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.