Can You Help Me Understand the Implications of My Financial Decisions on My Taxes?
Yes, at Phoenix Tax Consultants, we can help you better handle the financial decisions you make and the attending tax implications. Tax considerations are exceptionally challenging, but with the focused professional guidance of a Pennsylvania tax consultant backing you up, you’ll be well prepared to make financial decisions with confidence.
Buying or Selling Your Home
If you’re preparing to sell your home, you’re looking at capital gains tax on the profit you make. It’s important to know, however, that you may be eligible for a capital gains tax exclusion on your first $500,000 of profit if you’re a married couple filing jointly or $250,000 if you’re single.
Qualifiers
The qualifiers for this exclusion include the following:
- The house is your primary residence.
- You and your spouse lived in the home for at least two of the last five years.
- You haven’t benefited from this capital gains tax exclusion in the last two years.
Making the Right Choices for You
If you’re considering selling your home and buying another, waiting until you meet the two-year mark could save you a considerable amount in taxes. You should also keep in mind that any home improvements you make can be added to the cost of the home, which reduces the amount – if any – you’ll need to pay capital gains tax on.
Considering Healthcare
If your employer offers a health plan with a high deductible that allows you to contribute to a qualifying health savings account (HSA), your contributions to the HSA will be tax deductible – if you meet the eligibility requirements. Earnings and withdrawals from these accounts aren’t taxed by the federal government. Medical savings accounts have the potential to save you tax dollars, and a seasoned tax consultant can help.
Selling Stocks and Bonds
There are tax consequences when it comes to selling investments in order to realize financial gains, but the same tax rate doesn’t apply to all investments. Very generally, it’s beneficial to keep investments that don’t produce income, such as growth stock, in taxable accounts and to keep corporate bonds that generate income in tax-deferred accounts. Discuss your unique financial situation with a knowledgeable tax consultant.
Investing for Retirement
When you make traditional 401(k) contributions, it’s on a pre-tax basis, which affords you immediate federal tax savings. This investment income isn’t subject to federal taxes until you begin taking money out at retirement. Contributions to a Roth 401(k), on the other hand, are made with after-tax income, but your qualified withdrawals – beginning at the age of 59.5 years – have the potential of being tax-free.
Discuss Your Financial Decisions with a Seasoned Pennsylvania Tax Consultant Today
The dedicated Pennsylvania tax professionals at Phoenix Tax Consultants have the experience, insight, and know-how to help you make solid financial decisions that limit your tax liability, and we welcome the opportunity to serve you. Learn more by contacting us online or calling 610-933-3507 today.