Tax Planning Strategies: EDU #2539

This week, with Jim away at a conference, Chris is joined by Jake for an EDU episode that takes the shape of a Q&A, focusing on tax planning strategies. The guys cover a series of emails that highlight how different tax rules and opportunities intersect with retirement planning, income management, and financial decisions.

(10:30), the first question explores how the new OBBB changes—particularly the $40,000 SALT deduction and $6,000 senior deduction—are affecting Roth conversion strategies. Chris and Jake break down who might benefit from larger conversions, who may want to scale back, and how the extension of lower tax brackets plays into long-term planning.

(26:45), a listener with high health care costs asks what qualifies for deduction, how the 7.5% AGI threshold works, and whether items like chiropractor visits and insurance premiums count. The guys walk through the rules, the limits, and which expenses can make a difference.

(39:00), the third question looks at the backdoor Roth. A “long-lost” 401(k) rolled into an IRA raises concerns about the pro rata rule and whether it threatens the clean execution of annual conversions. The guys explain how to handle the rollover and keep the strategy on track.

(49:45), tax-loss harvesting and the wash sale rule take center stage. The listener wants to know how dividend reinvestments across different accounts might complicate reporting and whether timing strategies can keep things clean. Chris and Jake lay out how the rule works and what to watch for.

(1:02:45), a self-employed listener asks if funding a solo 401(k) before converting to Roth could save self-employment tax. The guys explain the mechanics, the limits on employer contributions, and the modest but real savings this tactic may offer.

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