Let's Talk Money

Good morning, Thank you for tuning in. This is Nicole Goebel, one of the wealth advisors and director of Financial Planning here at Bouchet Financial Group. Thank you for tuning in this morning. It is bright and beautiful here, so nice to see sunshine. As I know, we've had quite a lot of rain and snow mixed in the last few weeks, so as my colleague Harmon Harmony Wagner mentioned yesterday, just giving Steve a well deserved break today,

but certainly he will be back with you in the near future. I appreciate everybody listening this morning. We certainly have a lot to cover as it is the last week of tax season and one of my designations here at Bouchet I am a certified a public accountant as well as a certified divorce Financial Analyst, which we always joke that we do not want our current clients to use that designation of my so certainly we are nearing that April fifteenth deadline this year.

Harmony did do a recap yesterday of the markets, but I'll talk a bit about that as well, and some of the economic data that we're seeing. But as always, we would love to hear from our listeners. So you know, while we have plenty to talk about and help educate our listeners, we would love to hear what's on your mind and what we can help with. So please give us a call this morning eight hundred eight two five five nine four nine. That's eight hundred talk WGY. We'd love to hear from

you. So, as I mentioned, I'm part of the Bouchet Wealth Advisor team here, and you know, we work with many of our clients not only to manage their investments, but really with any of their financial matters in their lives. So whether that is you know, helping them to determine when they can retire, helping them to determine, you know, how to save for retirements and the best ways to do that, or funding education for their children, or buying a home. But we also help them with tax planning.

So we will get that to that later in today's show. But again, it is the last week of tax season, so if you have not already filed your taxes, make sure you're doing that or filing an extension before April fifteenth. So the week in the markets, as Harmony mentioned, yesterday, we were down. However, you know Friday we saw on uptick, which was really promising. So just a quick recap, you know, the Dow was down a little over two percent, the S and P five hundred

over about one same with the Nasdaq. But really, again we've still had some really strong year to date performance out of the three indexes, right, So the Dow up not as much, I mean, that's again going to be not as tech heavy as some of the other indexes, but the S and P nasdeks still showing really strong performance at a little over nine and eight for the year. So as Harmony mentioned yesterday, it is an election year as well, and also when we typically see a first quarter this strong,

we do end the year at an average around ten percent. So again we feel confident that we're still going to come out of this year on the positive side pretty significantly. Is our hope. Also treasuries, right, so you know we have seen an uptick in treasury yields on the ten year, But really I was looking at my notes as I prepare for the radio show, and a couple months ago in February, we were right around the same point.

So again I guess my thought there is we've had a lot of noise in the last two months, but at the same time, we're kind of back in the same place. So really treasury yields or you know, right around they were back in February, and the aggregate bond index that we kind of use to track again that market where you're you know, maybe investing in bond funds, so then you do have the ability to have that price appreciate.

But again, as a harmony mentioned yesterday, an inverse relationship, yields go up, our interest rates go up, and bond prices go down, and vice versus. So if we do see rates come down as the Federal Reserve cuts later this year, you could see that bond index increase as well.

And oil has had a run up, you know, so we have seen, you know, certainly last week, about a four percent increase in oil and over twenty percent year to date, but you know, again certainly nowhere near the highs that we saw a few years ago, you know, due to both supply restraints and inflation. So what's affecting the market and why did we have kind of a negative start to the week and then eventually,

you know, we saw a bit of a turnaround on Friday. Well, one of the big things was the manufacturing report that came out, and the reason for that is, you know, actually things looked good. So it was one of those times when good news was bad news in that we are in expansionary territory for the first time since late in twenty twenty two, so

you know, that's important to note. And you know, there are a number of taxes cives that have been put in place to try to keep manufacturing in the US, which we certainly feel is good, you know, both for our economy and for the labor market. You know, but the concern there was, Okay, well, if manufacturing is growing, you know, maybe the Federal Reserve is not going to cut rates because that could again continue

this wage inflation. But then Friday, the job report came out and it was stronger than expected, with three hundred and three thousand jobs added in March compared to the analyst expectations of two hundred thousand. So again another big positive surprise. And again I remember doing the show in February and having very similar numbers to report for January, in that it was a big positive surprise.

And in the areas of healthcare, the government, construction, leisure, and hospitality, so these are sectors that are getting back to pre COVID levels at this point. You know, so again, if you think about it, we certainly aren't yet at the place where we would have been had we not seen that economic pullback back in twenty twenty twenty twenty one. But you know, we are again back to pre COVID level, so that's a good sign.

Unemployment moved down slightly to three point eight percent, so you know, we this is the longest streak with unemployment being under four percent. It's been twenty six months, so two years and two months since nineteen sixty seven to nineteen seventy, so that's a pretty long streak. You know, back then it was twenty seven months. But you know, certainly something to be said for having low unemployments for over a two year period. But you know,

really that's not necessarily a bad sign, right. The stock market, at least post World War two has had very strong performance when unemployments remained under four and a half percent, and even as we've seen unemployment rise of that first two years, when unemployment begins to rise is also good performance for the stock market. So you know, again, I do think that we have room

to grow. Harmony did a great job yesterday talking about how, you know, is this a good time to invest because we're at all time market highs, and she discussed momentum and how that does help. And when you see all time highs in the market, you often see success of all time highs.

And here too, we have some you know, good reasons to be optimistic that there's more room to grow with low unemployment, room for that to still go up, but us not be in a recessionary environment with the positive reaction in the stock market to the jobs report, but really a lot of this is going to be dependent on the consumer price index, the inflation rating. This week, wage growth, you know, we did still see you know, some really strong wage growth about a four point one percent annual pace

reading in March. However, it's the lowest since June twenty twenty one. So in the wage market, while we are happy the labor market remains strong, we are seeing a bit more softness and that we're seeing less people quit their jobs, right, so that tends to be a sign that there's not

better opportunities out there if people are sticking with their current jobs. But again, all of this I think, you know, this Wednesday when we see that CPI report, the expectations right are that it would have dropped from three point eight percent in February to three point seven percent, kind of that main

number. So you know, we shall see. But as my colleague Carmeny mentioned yesterday, and we've talked about so many times on the show, that last percent coming down from a three percent to the target two percent that the Federal Reserve really wants us to get to. I think that's where you know, we're having certainly going to be some hard work that still needs to be done. So recap again. Manufacturing report good news. Market reacted negatively concerns

that the Fed won't cut rates. Jobs report surprisingly was you know, even though it was a positive, the market reacted favorably, which we're happy about, and that was really a positive sign. Wage growth remaining strong but still coming down, you know, from where it had been. And so again, you know, all eyes on the inflation report coming this week. So we're going to take a quick commercial break, but again we'd love to hear from you, so please give us a call eight hundred eight two five five

nine four nine. That's eight hundred talk WGY. We'll be right back. Good morning, Welcome back to Let's Talk Money with Bouchet Financial Group. I'm again Nicole Goebel, wealth advisor and director of Financial Planning here at Bouchet Financial Group. So I've just talked a little bit about what's been going on in the markets this week and some of the economic numbers out there, but agains

and we'd love to hear from you. So if you have a question, odds are someone else out there has that same question and maybe a little bit too timid to ask, So give us a call eight hundred eight two five

five nine four nine and we'd love to answer that for you. So, as I mentioned one of my roles, I am a CPA, So I do a lot of tax planning for many of our clients, and one of the most important things we do for clients is help them to understand, you know, when they transition to retirements, where should they be taking funds from you know, So that's something you know, really important to understand, not only when you get to that point, but as you're saving for retirement.

So we do a lot of you know, education for our clients. We do monthly webinars, we do weekly blogs, which we love doing, and also you know, certainly we're happy to speak at any community events. So we do a number of dinners and events for different organizations that ask us to speak because we want to make sure everybody, not only our clients, but everybody you know, has access to this type of note and and that's something, as Harmony said yesterday, it's really important to us just you know,

promoting financial literacy. So one type of thing to think about is, you know, long term planning. So if for example, you're young and maybe you're in a lower tax bracket now, then you might want to save into a rass ira. So that's something that you know, you don't get a tax deduction today, but it grows tax free and you know, can be taxed three upon withdrawal. Well, it looks like we have a caller and

from Skin and how can we help you today? Yes, I just like some information in regard to how I transfer the ownership of my house to a name beneficiary without the need for uh, you know, upon death, without the need for probrate. So basically you're looking to to ensure that your home

is passed to your errors without going through the probate process. Correct, Okay, so you know the way you can do that because unfortunately, unlike a retirement account or a bank account or taxable account where you can add what's called a TOD or POD payable on death or transfer on death designation, you can't really do that for a home. So the way to do that for a home is you really have to create a revocable trust. So a revocable trust.

There is obviously a cost to setting that up with an attorney, but the idea there is you're retitling your home in the name of the trust during your lifetime. Now there's no you know, difference for tax purposes, and the type of trust I'm talking about does not protect that asset for medicaid purposes. It's simply transferring it to the trust. So I'm I'm going to use as an example, so the and from Schenectady revocable trust, so it still

holds your name, it's still in your Social Security number. But then the trust document itself would specify that that asset passes to and you know, as an example, a child or you know, a sibling or whatever that air might be. But because it's passing according to the trust, it does not need to go through probate as a will does, so that is really the best way to simply avoid probate. But again it does not protect that asset

for medicaid purposes or you know, tax purposes. It's still considered yours for all other purposes, just it only passes according to that trust document versus having to go through the courts. Oh okay, all right, thank you, You're welcome. Thanks for calling in. We appreciate you listening. Again, if anyone else has a call, please give us a call at eight hundred and eight two five five nine four nine. We'd love to hear from you.

Although we are not attorneys, we work with quite a few and I know there's a number of shows on w g I as well from area expertise. But we do again try to guide our clients and ensure that they at least have that basic estate plan in place, so changing gears for a second for state planning. You know, we do have a great webinar on our website at bouchet dot com that Harmony who you listened to yesterday and my colleagues Scott Shohacker did last year. It also we do on that website have cheat

sheets to think about. You know, what are the things that you have that you might need to get in order for your airs and to be organized, as well as you know, a list of basic documents to put in place. So again that's free and available to anyone. You don't need to be a client of ours to see that and to watch that webinar and to access those, So please feel free to give us a call at our office if you need help accessing that. But one eight seven two zero three three

three three. But again we do have that free resource on our website for basic estate planning needs that we'd like to share with anyone in the community. So heading back to taxes for a moment and distribution planning. So, as I was mentioning, if you're young and you're in a lower tax bucket now than you hope to be in the future, you might want to put money into a roth for a one k or roth ira. We're going the tax deduction currencily with the hope that those funds are going to grow tax free for

many years and be tax free upon distribution. Also because there are income limits for people to be able to put into a roth ira, so once you get into the you know, for a married couple two hundred thousand plus range. You know, you'd no longer really have access to putting funds into roth IRA. It is good to do it early because at some point that's phased

out. And we'll talk a little bit about another option there in a moment, but if you're in a high tax bracket, you might want to do pre tax deductions right, more of your traditional four to one k pre tax or IRA, and that gives you the tax deduction today, and those funds grow tax deferred, but they are taxable upon retirement. And the other big difference there between the row and the pre tax funds and the retirement account is

those are subject to required minimum distributions. So right now the age is seventy three and leader will be seventy five. But at that point, even if you don't need or want funds from those accounts, you will need to start taking them down based on a table. You know, the IRIS has for life expectancy, so you will have to start drawing that down around four percent the first year and that increases, so that is something to think about that

you'll have to take those distributions. And another great way to save is into a taxable investment account, right well, you know, this is the type of account you can use throughout your lifetime. So we often recommend, you know, to build this up in addition to an emergency savings that Harmony mentioned yesterday. Three to six months is our recommendation. But a taxable investment account

can be used for everything else in between now and retirement. So you know, again, whether that's a home, whether that's of vacation property, whether that is improvements on your house, a big vacation, So think about investing in a brokerage account as well. Looks like we have Bob from Castleton on the line. Bob how Hello, Hi Bob, how can we help you

today? Yeah? I guess was listening to your program and at the news time apparently someone won the lottery and it was a huge amount of money, and I was just wondering, how would one handle that if they won, like I don't know, they said they got annwity of something like six hundred million dollars. I mean it's more money than maybe some countries, Uh yeah have as a GDP in a year. I mean, how would you handle

something like that? That's a great question, you know, I would say there's a whole other level of complexity to that, right, So I would say, you know, we don't have a client that has six hundred million. We manage about one point three billion total, which we're very proud of. But you know, there's at that point you're you're really enlisting the help of you know, multiple advisors, and you know you're you're investing, you

know, and very high end attorneys certainly to protect yourself as well. We have had lottery winners in fact become clients, not to that level of course, but you know, you're ensuring that you're you're you know, putting funds in the type of assets that that you're going to need long term. So again, if this is an annuity that they're receiving, then they're going to

be getting it all at once. So it would be understanding how much are they going to be getting on an annual basis, you know, what what does their life look like? So is it something where they're going to be, you know, they want to do some gifting. Is it is there you know a case where you know they've always wanted a home, So it would really be sitting down with that person and gaining an understanding. And that's a long you know that's going to be a process, right, an ongoing

process. But I think it's also ensuring that this person understands the tax consequences of that. And again, if it's an annuity and it's going to be taxed each year versus upfront in that case, you know, however, that

that's determined on the lottery side of things. You know, it's really looking at, okay, how does one envision their lifetime and protecting that person certainly to ensure that they're setting aside everything they need for not only basic living expenses, right, but the lifestyle that they really want before they're you know, take an advantage of by anyone else. I think is the key there for somebody you know, that might be moving from you know, into a totally

different, you know, caliber of of wealth. You know, So I'd say that you have to I would surely you have to put it in a would you have to put it in some kind of a trust, and then would you simply take that money if you had to park it somewheres, you

simply would put it in the treasury market. Because obviously we the government is spending lots of money, so I imagine they're issuing lots of debt, so I imagine you could simply yeah, I mean certainly, I would think certainly a portion of that you would put into something safer like treasuries or CDs and

things. You know, Remember, though a bank, you're only protected for up to two hundred and fifty thousand dollars per person per bank, so you'd really have to spread that across a number of organizations, you know, treasury certainly, But again, you know you don't want to so you would still want to diversified portfolio, right, even if are not necessarily looking to grow those funds. But again, I did not see the headline as I'm doing the radio show, so you know, as far as the detail says the

house, so I was just curious about it. Wonderful you. Okay, thanks for calling up. Okay, I do think we had another caller from Schenectady. Good Carol, Good morning, Good morning, Carol. How are you doing well? Thank you? Question about what happens to your mortgage when you pass away. Let's say my husband and I we have two homes, we have two small mortgages, we have heirs. How should I should I be setting something up? I don't want to pay them off. How do

you handle that? Well, again, if you don't necessarily need to write they they would just take over the debt, you know, so that would be something that they would take over as well as the asset. So if at the point you passed on, they wanted to keep the home, they would just you know, need to determine what the bank how to handle that and potentially paid off with other assets or get a loan in their names right

because you know so again this is upon the second of you passing. But you know, if they went to sell the home, obviously that mortgage would be paid off as part of that sale. And again you can still put it into that revocable trust if there is a mortgage. Typically again that you're just retitling the home. So I have certainly seen many homes go into that

with still a mortgage outstanding. I think we're coming up to the news break at the moment, so please stay with us through the break and we'd love to hear from you. Eight hundred and eight two five, five, nine four net. So you are listening to Let's Talk Money, brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we

manage their wealth for life. Thanks for tuning in here you after the break, Good morning, and thank you for staying with us through the break. This is again Nicole Goebel, TPA, certified Divorce financial anas and Director of

Financial Planning here at Bouchet Financial Group. So we had Bob Colin earlier regarding the power Ball and I just heard that myself during the news break as well, so in Oregon, although we do have clients in Oregon, so you know, can't say whether it's a client forest yet, but all kidding aside, you know, he was asking how do you handle something like that?

And you know, in certainly our intro to the show, we talk about sudden money, and you know, we feel really strongly about making sure that clients are working with us fiduciary and working with somebody who's not going to try to sell them something and earn an upfront commission. So that's really important to us. So I just wanted to kind of go back to Bob's question.

You know, every situation is unique. Obviously, someone winning that much money, whether it's the annuitized amount or six hundred and twenty one million lump sum, that they're going to receive that is life changing, you know, and certainly again unless that person was extremely wealthy to begin with, which I I doubt they. You know, to that level, things are going to change. And there may be honestly people coming out of the woodwork looking for money,

looking for to pitch business opportunities. And you know, if you think about shark tank and not you know, oh, you know, I'll let you in on this business or that business or this scheme. So you know, it is really important for anybody, whether it's to this level or you know, as I said, you know, we've had other people come to us, whether it was winning the lottery or you know, an inheritance they didn't expect, or a malpractice suit you when they come into you know,

a large sum of money. So we appreciate that they're seeking our guidance because they want somebody that is going to give them, you know, advice as to how to manage that long term, you know, how to make that money last and provide for them and potentially the next generations right in their family and and really not squander that opportunity. And so many times you hear about these but you know, ultra wealthy celebrities. Recently, I was, I

was. My husband was mentioning one that he said, you know, this person had x amount of millions, you know, billions even, and you know squander it it through gambling, you know. So so again, just because somebody is wealthy and has the ability to earn or win a lot of money does not mean they're immune from losing it all. So, you know, that's certainly something to think about. Is again, working with someone you

trust. So, as Harmony mentioned yesterday, Steve started the firm you know, over thirty four years ago, but has been a fiduciary for over thirty years. So that means that we have to act in the best interest of our clients. We're fee only, We're part of NATFA, the organization of fee only financial advisors. So when someone comes to us, you know,

we're not selling them an annuity or an insurance product. We're not putting them into a portfolio where we're getting some type of incentive from that fund family or from that investment manager. You know, we utilize Schwab as our custodian,

but it's only because we feel they're the biggest and the best. We get nothing from them and you know, if we choose to use a Schwab fund in our in our portfolio, it's only because we've done our due diligence to determine that that is the best within that market sector that or lowest cost as well that we're looking for. So you know that we, our whole team takes so much pride in the fact that we are a fiduciary and we're always

going to do what's right for our clients. And oftentimes we have to be very direct with our clients. Someone else, you know, that they may be trust and work with, is trying to sell them something or get them involved in, you know, a business or a Pyramids game that we don't

feel as appropriate. So you know, we we do, you know, have to do that sometimes and they may not like us for us, and we may even get fired, you know, by that client for being honest with them, But you know, we feel so strongly about making sure that we are doing the right thing for our clients and helping them to achieve their

goals long term and leave any legacy that they want to as well. So thank you Bob for bringing that up, and Carol also for asking the question as well as Anne about you know, leaving a home or what to do with a mortgage when passing that asset down. So again we're here if you have any other calls eight hundred eight two five five nine four nine would love

to hear from you. So before we we got a few callers, I was talking about kind of saving for retirements and understanding kind of you know, the tax impact of how to save funds, but also you know, for the purpose of really you know, what are the funds you're going to use when you do retire or have access to before retirement for those other needs.

So you know, that is a really important part of what we do is when someone is leaving their job, and you know, unfortunately it's few and far between the people who have a pension, right who have a paycheck other than Social Security that's going to be coming in. Certainly, we work with quite a few people who retire from the state or from some of the larger companies that you know in the area, like a ge or a provisor that they may have been there long enough to still have a pension, or a

teacher. But aside from kind of those individuals, most people are going to have to supplement Social security with a significant amount of savings that they've put away. So that's one way that we really help our clients is to determine, you know, where to take from or even you know, should they be doing rock conversions early in retirement, you know, to move some money into that bucket. So that is something that each and every client situation is different,

so that there's not one right answer. But again I like to talk to younger clients to help them think about filling up those three different buckets. Right, filling up the roth bucket that's going to be tax free and that you don't get the tax deduction on the way in, but it's a huge benefit later on. Filling up the pre tax bucket, so in those higher earning years, getting a tax deduction for putting the funds in and letting that grow tax deferred, but knowing you know, you are going to be taxed

later on. And that's where for now the employer contributions are going into that bucket. But there is going to be a change to allow you know, basically employers to put into the ross bucket as well going forward from the Secure Act two point zero. And then last, as I said, the taxable investment account. I really truly feel everybody should have one of these accounts. Above and beyond their emergency savings, open a brokerage account, where again you

can invest it differently than your retirements account. Right, you might want to invest it more conservatively in that you think you're going to need to access those funds near term for a new home or a car, or you know, again to supplement education costs, although we'd like five twenty nine plans better for

that. So that taxable investment account is great because again you're only taxed on interest, dividends and capital gains, So if you're letting that grow, right, it's not causing a huge tax impact until you need to withdraw that and hopefully you've had some gains in that account at that point. So again, give us a call if you have any questions. Eight hundred and eight two five, five, nine, four nine. So I mentioned a couple of

times. It's April seventh, so not this Monday tomorrow, but the following Monday is going to be a tax day. So make sure that if you haven't already, you're preparing your taxes or an extension, you know, to ensure that you're filing that in a timely manner. As Harmony mentioned yesterday, there is still time to fund an IRA or a roth IRA. So that's six thousand, five hundred for anyone under fifty, seven thousand, five hundred

anyone over fifty for twenty twenty three. Now, of course you need to understand, you know, did I make enough money earned income or did I make too much to contribute? So you know, that's something certainly you want to make sure you're you're working with the tax prepare or I know, Turbo tax you know, will let you know if you're eligible to deduct that contribution based on other factors in your return as well, so you know, even

a tax software will let you know that. And for twenty twenty four, right since January, you've been able to contribute for twenty twenty four, which has increased five hundred dollars to seven thousand and eight thousand, respectively. Now, one way that we have a number of clients that you know, do contribute to a raw but are maybe over where that income limit is called the

backdoor off. And I know we've talked about this on the show before, but essentially you're making a non deductible contribution into an IRA, so you're not getting a tax deduction. It creates basis, right, just like when you buy something that's your basis in that stock or home or whatever that may be, and then you convert it to that rath IRA before it grows it all.

And this only works if you don't have other IRA balances, So for the most part, it works for younger individuals that are higher earning or someone that's been with the same company their entire career, so they don't have an IRA from a former employment retirement account rollover, they only have their four oh one K or four oh three B, So something to think about. And again, you know, we work with our clients to determine is it a

right fit for them. For you know, twenty twenty four, there's also a slight increase in four oh one K four h three B contribution from twenty two thousand, five hundred to twenty three thousand, but the ketchup of seventy five hundred remains the same. So at this point you might be, you know, finalizing your tax returns and be in a position that you're you're kind of questioning what should I do for this year, So it may be you

know, you're getting a big refund. And while people like to get a refund, and as Harmony said yesterday, you know a good a little refund is okay, you don't want to be giving that interest free loan to the government. So if you get received a significant refund, we try to coach our clients on this, you know, make sure that you're thinking about, you know, the lost earnings on that right So basically you've given that money

in advance to the government. They're not giving you any interest back when you receive it back April of the following year. What could that have earned right now with interest rates you know, doing really well, you know, you could have put it into a money market account and made four and a half to five and a half percent over that year. So you know, that's lost earnings that you could have had if you had planned a little bit better. So again, don't aim to have a big refund, you know,

try to keep it as close to break even as possible. You might be in the opposite right. I just help someone yesterday who owes a significant amount of money, and it's because their earnings went up very you know, a significant amount in twenty twenty three, compared to twenty twenty two, So they didn't adjust their withholdings appropriately, and you know, really it just means that they're now in this higher tax brack than they need to make some adjustments.

So if you owed a lot and you know, hopefully you didn't have penalties or interest, but you want to be prepared for this year again, look at that withholding and fill out another withholding form for your employer. Again, single zero is going to be the highest, So filing as single with zero exemptions is going to be the highest base amount. So even if you're married with three kids, you know, if you file single zeros, but they

were going to withhold the the most amount of taxes from your paycheck. But in some cases people are in a high enough tax bucket they need to add an additional amount per paycheck, you know, dollar amount, just to cover

what they owe. Or again, if you have significant investment income right interest dividends or capital gains or self employment income that you're not withholding on and you need to make estimated tax payments, so you know, think about again what is will be the same as last year different than last year, and how to be prepared. What you want to focus on to avoid penalties and interest

is either paying in one hundred percent of the previous year taxes. Right, So looking at now your twenty twenty three taxes and saying, okay, I've owed. You know, I paid my total taxes for federal purposes, we're

fifteen thousand dollars. As long as I pay fifteen thousand dollars in twenty twenty four, anything else I can pay, you know, come April of twenty twenty five when I pay my taxes, or if your adjusted growth income right, So that's your income before you take a standard deduction or itemized deductions was over one hundred and fifty thousand dollars. If you're married, you have to

pay one hundred and ten percent of last year to be protected. Or the other alternative is making sure you're paying in at least ninety percent of the current year, right, So what makes more sense for you? If your income's going up, you want to probably protect based on last year's number, right, because that may be the same or less than ninety percent of this year. If your income's going down again, you move to part time work,

you know you're retiring. You know someone has decided to stay home with the kids than ninety percent of the current year, right, you don't want to be based on last year and have a big refund come back to you, but ninety percent of this year. And again thinking about that transition, So what's going to happen when you stop getting that paychecked and stop withholding all your

taxes? You know, how should you handle that? Well? You know, again you can certainly make estimated tax payments, but you need to start them April fifteenth, so you know, sometimes that's a little bit too quick for people to really understand what their whole year is going to look like. But ideally you want to be paying those equally throughout the year. So April fifteenth, June fifteenth, September fifteenth, and then January of the following year

you get to pay for the fourth quarter of this year. So you know, that is important to think about. But what we often do with our clients is if they are taking distributions from a retirement account, right, we adjust their withholding, so they might withhold a much higher percentage than they need to cover just that income, but then it avoids them having to make those

estimated payments. So again, I might be withholding thirty percent or forty percent from an IRA distribution that a client's taking out or the required minimum distribution, but that's offsetting the tax that they're not paying on interest in dividends and capital gains or any other sources of income they're drawn from. You know, you can also elect to withhold federal taxes on your Social Security. Thankfully, in New York, social Security is not taxable. That's a wonderful benefit for anyone

who chooses to retire here in New York. So you know, basically you can withhold up to twenty two percent of federal tax on your Social Security. And you know, also, as I've mentioned many times on the show before, you get the first twenty thousand dollars of your retirement income excluded once you

reach fifty nine and a half. So that first twenty thousand dollars you take either you know, from a pension, you know, not a state pension as obviously that's not taxable as well, but any other pension or IRA distribution, you know, the first twenty thousand dollars for each person once you're over fifty nine and a half, you don't have to pay New York tax on. So whan't we take a quick break here and we'll be right back.

Good morning, and welcome back to Let's Talk Money with Bouchet Financial Group. I'm Nicole Goebel, director of financial planning and wealth advisor here at Bouchet, here with you this morning. So again, we do have a few minutes left, so if anybody has a question, please feel free to give me a call. Eight hundred eight two five five nine four nine. That's eight hundred talk WGY. So I was just talking a little bit about the rules

around protecting yourself so that you don't owe interest in penalties. No, it is okay to owe a little bit once with your tax return, you know. For example, I just owed a little bit on my federal tax return when I filed it, but was getting a refund back from New York. And I think that's the case with a lot of my clients. And that's simply because you know, things are treated differently for federal versus New York purposes.

Now I'm not retired, so I don't get the benefit of the two items I just mentioned of you know, being able to take out of my retirements account if I'm over fifty nine and a half, that twenty thousand dollars exclusion, and I'm not receiving Social Security benefits thankfully, But you know, there's other things that are different for New York purposes, and many more people still itemize for New York purposes, but take the standard deduction for federal purposes.

So for a married couple as an example, the federal standard deduction is

twenty seven thousand, seven hundred dollars. And since you know, state income taxes and property taxes are capped at ten thousand dollars, that means you have to have either a pretty hefty mortgage, a lot of charitable contributions, really high medical expenses, you know, to get over that twenty seven thousand, seven hundred right, because it means you have to have seventeen thousand, seven hundred dollars more above your state income taxes or property taxes and other deductions before

dollar one you know, improves your situation for federal purposes in New York. So the deduction is only sixteen thousand and fifty dollars. So there's many people that again you don't get to deduct your state income taxes, but you still get to deduct your property taxes, and it's not capped at the ten thousand dollars as federal is. So if you have multiple properties and they're you know, you're paying over ten thousand dollars in taxes, now you get to benefit

from your full property taxes. Again, you still get your mortgage interest, you still get your charitable deductions, but also the itemized deductions that were subject to the two percent limits. Right, So this was a category that was done away within the Tax Jobs and Cuts Act along with setting up that ten thousand dollars cap for state taxes. These are things like investment fees, tax preparation fees, unrem burst employee expenses that still exists for New York purposes.

So again, if we have a client that has a large taxable investments account and they're paying fees to us, they're potentially getting to deduct those fees or tax operation fees. And again if they have you know that higher real estate taxes, oftentimes you know those amounts are getting to be above that sixteen fifty dollars standard deduction as a married couple. So just something to think about.

And again, if you're doing your own taxes and turbo tax or H and R block, you know, I would think you know, you might need to force the program to basically put in those numbers just so that it has it for the state purpose, even if again you know, for federal purposes, you're not going to be itemizing. But that brings me to kind of

another topic that we've talked about is charitable giving. And I see so many clients who want to be charitable, who are still giving to different organizations or their churches, but they're not getting any benefit for it because again they're taking that standard deduction, at least for federal purposes. So I know my colleague Vinnie has also talked about this on the show and harmony, But charitable giving, there's other ways to really set this up so that you are receiving a

tax benefit. Right, So if you're not yet seventy and a half, and I'll talk about that in a moment, you can do a couple of things. One, you can bunch deductions into one year. Right, So if your intention is to give, let's say hypothetically five thousand dollars a year to your church, right, you might want to put again maybe five years worth of that kind of save up and do it all in one year.

Now, again, that's difficult because if that you know, organization is counting on those donations every year, it might be hard and you know to do that, but again for your purposes to be able to deduct them and to give more because again you're now paying less in taxes and can afford to give a bit more. Bunching them into a single year makes sense because that one year you itemize your deductions and then in subsequent years you go back to using

the standard deduction. Donating appreciated assets is another great way to do this. So we have a lot of clients who come to us right that might have a legacy stock that they've held or they inherited, for example, and it

has you know, basically they've held onto it. So like the perfect example is maybe they have apple stock right that they bought it a very very low cost and it's not that they necessarily want to get rid of that stock, you know, or but if they need it right for cash flow purposes,

they're going to be paying a huge capital gain. Well, they can actually gift that stock right, or any appreciated mutual fund or asset to an organization and that organization receives the full current fair market value of that asset and you never pay capital gain tax on it because that has gone to a charitable organization. So when they need to, they can liquidate that stock and utilize those

funds without ever paying capital gain. Right. So I had a client that we did that with Google stock in about ninety nine percent of you know, the value of that stock was appreciation above their call basis. So that's a great way. That's also a great way if you have too much of a single stock, maybe your employer stock. Right, maybe you've built up over the years so much in employer stock and it's highly appreciated gifting that to an

organization. If you don't want to gift it all at once, you can set up a donor advised fund. This is a charitable account, and we do set them up for a clients at Schwab, where again you can donate a large chunk in one year get a current tax deduction. So again maybe it's fifty thousand dollars worth of stock. But then through that fund, right, that's again let's call it the Nicole Global Charitable Account. At Schwab, I can give donations to different organizations over many years. Right, I only

get the one upfront tax deduction. But now that account will continue to be invested and grow, and I can give donations over the long term and take the standard deduction in those years and then last but not least, if you're seventy and a half for over and you have an IRA, you can do qualified charitable distributions and you can do up to one hundred thousand dollars per year per person. But this allows you to take funds from your IRA and give

them directly to a qualified charity. So the great thing about this is this is now taking off that income from your IRA distribution for federal and New York purposes, so it doesn't even count. It's before deduction, so it's better for tax purposes. So I think we're coming to the end of our show, but if you have questions on any of these items, feel free to give our office a call or check out our website. We appreciate you tuning

in today. Please tune in again next Saturday at ten am. Thank you for listening to Let's Talk Money, brought to you by Bouchet Financial Group, where we help our clients prioritize their health while we manage their wealth for life. Have a wonderful Sunday