Taxes
a fine charged by the IRS when a taxpayer does not pay enough of their income tax throughout the year
underpayment penalty
True or False: The Roth Conversion tool will give a recommendation on how much to convert, similar to the ISE tool.
FALSE
True or false: IRMAA applies to Medicare part A
FALSE
an informal term for the higher federal income tax burden a surviving spouse faces after shifting from a "Married Filing Jointly" status to a "Single" or "Head of Household" filing status
widow tax
For someone retiring at age 67, creates a 6-year period before RMDs begin known as the _____ during which income and associated taxable income might be lower, potentially resulting in lower tax rates.
income valley
a federal surtax applied to certain net investment income of individuals whose MAGI exceeds specific IRS threshold amounts
Net Investment Income Tax (NIIT)
TRUE
Annual income, household size and resident state go into the calculation for this Marketplace credit
Premium tax credit (PTC)
Tax brackets for single filers are narrower than those for married couples, meaning a survivor's income reaches higher marginal tax brackets much faster.
tax bracket compression
a direct transfer of funds from an IRA to a qualified 501(c)(3) charitable organization
Qualified Charitable Distribution (QCD)
used to determine your eligibility for certain tax deductions and credits, in addition to some other government benefits and surcharges
modified adjusted gross income (MAGI)
A strategy where an IRA owner who has earned income above the limit to contribute directly to a Roth IRA, can make non-deductible contributions to an IRA then convert to a roth shortly after
backdoor roth conversion strategy
2 year look back
True or False: beneficiary of an inherited Roth IRA is required to meet original owner 5 year rule in order to make tax free withdrawals.
TRUE
The maximum percentage amount Social Security benefits may be taxable
85%
a fixed dollar amount set by the government that you can subtract from your income before your taxes are calculated
standard deduction
a tax strategy where you combine multiple years of planned charitable contributions into a single tax year
charitable bunching
financial assistance provided under the Affordable Care Act (ACA) to help individuals and families lower the cost of health insurance purchased through the Health Insurance Marketplace
ACA subsidy
the average amount (percentage) an American will pay in taxes on the income they earn over their lifetime
34%
Name this formula: AGI + nontaxable interest + 50% of Social security benefits
combined income
an additional federal tax break that allows individuals aged 65 and older to deduct up to a certain dollar amount from their taxable income.
senior deduction
an IRS tax regulation that dictates how withdrawals or conversions from retirement accounts are taxed when the accounts contain a mix of both deductible and non-deductible money.
Pro-rata rule
extra surcharge added to your Medicare Part B and Part D premiums if your income is above a certain threshold
Income-Related Monthly Adjustment Amount (IRMAA)
Percentage of heirs over 50 who don't learn about their inheritance until the reading of the will
50%
a tax deduction that allows you to help reduce your federally taxable income based on certain taxes you paid to state and local governments
state and local taxes (SALT)