Posts by Jacob Sturgill

Ask Jake: What is FIRE (Financial Independence, Retire Early)?

When it comes to discussing retirement planning, it’s hard to overlook trends that come in this area. One current trend that’s getting attention in the financial world is financial independence, retire early (FIRE).

Today, we’re talking to Jake Sturgill about the FIRE trend, which investors might qualify for FIRE, and some takeaways that can strengthen any retirement plan, regardless of investor age.

How Early is FIRE Retirement?

Financial independence, retire early. Investors who choose the FIRE route want to retire earlier, rather than later. For some, this could be extremely early, say, in their 30s or 40s, but the goal to become financially independent and retire early certainly isn’t limited to younger investors.

FIRE is more about how you approach retirement planning than when you retire. It’s a lifestyle choice that shapes your entire approach to financial planning. When you choose to set a goal to retire early, you choose to save aggressively to achieve that early financial independence and set aside savings to see you through an extended retirement.

Typically, people who choose FIRE are higher income earners who opt to live a minimalist lifestyle in order to save even as much as 50-80% of their incomes annually until they achieve their retirement savings goals. If you are able to maintain this lifestyle and desire to leave the workforce early, the strict savings required can pay off with that early retirement date.

Even if, for reasons of age, income, or other life circumstances, FIRE isn’t a reasonable retirement objective, it doesn’t mean that ambitious savings goals and a desire to prepare your lifestyle for retirement aren’t for you.

In fact, if anything, the FIRE movement should inspire you to re-evaluate your retirement savings plan and determine whether it is aligned with your desired retirement age — even if it’s a more traditional one.

I Missed the FIRE Truck. Do I Have Other Options?

Maybe you think you’re beyond the point of saving for an early retirement. You missed the boat… Or in this case, you could pardon the pun and we could even call it the “FIRE truck”. I think my toddler, who frequently plays fireman, would appreciate this phrase!

Truly, it’s never too late to consider your financial future and look for ways to double down on important savings goals. If your goal is early retirement, you want to work your way back to the present moment and evaluate how you can balance your investments, savings rates, and lifestyle choices to enable your future self the option to reduce the number of years you “have” to work.

If your goal isn’t early retirement, or if that’s not a realistic goal, provided your age and/or circumstances, there are still ways that FIRE thinking can apply to your retirement planning, especially when you consider how your current lifestyle plays into your financial future.

It’s all about balance.

Whether you are aiming for early retirement or want to explore options for a more traditional retirement, you want the scope of your financial planning to encompass the things that are important to you personally. Your career, your family, your desired retirement lifestyle… All of these are factors to bear in mind when strategizing for the future.

Retirement planning typically isn’t something that you finalize in one session and recognize within the next year or decade. Yes, FIRE is an attractive option, but it’s not the only route that leads to a satisfying, well-funded retirement. At the end of the day, you and your financial planner need to be on the same page about planning a retirement that makes sense for you, your priorities, and your ideal financial future.

Want to learn more about retirement planning? Have another burning financial question? Reach out to Jake Sturgill today with your financial questions or for an in-person consultation!

    Ask an Advisor: How Much Do I Need for Retirement?


    David: 00:08

    Hello, I’m David Hemler, and we’re here with Jake Sturgill on our Ask An Advisor series with Puckett & Sturgill Financial Group. And Jake, one of the questions that I know you’re often asked as well as I am is: how much do I need to retire?

    Jake: 00:23

    Saving for retirement is an incredibly complex decision and conversation. And, to your point exactly, it’s got to be one of the most common questions that we’re asked. And there’s a lot of rules of thumb out there. But, at the end of the day, it’s an incredibly personal decision, and there’s no ‘one size fits all’ approach.

    David: 00:42

    Those rules of thumbs, they can be both a benefit and maybe, at times, a detriment as well. Yeah.

    Jake: 00:48

    Especially if you don’t understand the decisions and the pros and cons involved with all the decisions. Some basic tenets that you are going to want to consider and then really factor into this decision-making framework are: what sort of lifestyle do you want to live? In other words, how much money do you think you’d like to spend? When would you like to retire? And how long do you think you’re going to need that money to last? Because, at the end of the day, nobody knows when their final day will be. There’s no way of predicting that, but these are all critical elements.

    David: 01:19

    A lot of pieces to the puzzle to put together, figuring it all out.

    Jake: 01:24

    Absolutely, but I think if you’re like most people, you don’t want to necessarily live a lesser standard of living, you want to maintain your standard of living throughout retirement.

    David: 01:34

    I know I’ve read and see a lot of things in the literature in financial planning about this 60 to 80% of your preretirement income needed in retirement. Would you agree with that rule of thumb? Does that fit into the picture a lot?

    Jake: 01:47

    Certainly, and I think it’s well-documented that you don’t necessarily need to replace all of your income in retirement. Because, after all, in retirement you’re not going to be saving for a retirement. You might pay a little bit less in taxes, and you might even spend less or just spend differently than you were in those years saving up to retirement.

    David: 02:05

    Mm-hmm (affirmative). Where do we go from here then, Jake?

    Jake: 02:08

    I would encourage you to meet with your financial advisor to get an objective opinion and look at things like: how much have you accumulated so far? What’s your asset allocation? What’s your savings rate? And what’s your time to retirement?

    David: 02:22

    Mm-hmm (affirmative). So, a lot of pieces to this puzzle for us to figure out. And we, the folks here at Puckett & Sturgill, the advisors, we’re happy to help you. Just give us a call, or click on our email and send us a question of your own. Thanks.

    It’s Your Turn to Ask

      Ask an Advisor: What Do I Need to Know About Social Security?


      Jake: 00:08

      Hi, I’m Jake Sturgill, with Puckett & Sturgill Financial Group, and our Ask An Advisor series. Today, I’m going to be asking Paul Sorenson about Social Security, and the things that our clients need to know about Social Security.

      Paul: 00:24

      Social Security, Jake, as you know, is one of the first things that many clients ask us about, is, “I know I have a decision to make at some point in the future, whether it’s now, or 20 years from now, or next year, or I already made a decision.” It’s something that we get asked about a lot.

      Paul: 00:41

      The bottom line is, everybody’s circumstance is different when it comes to Social Security. So the planning surrounding Social Security is very specific, and there’s a lot of complexity involved with that decision. It’s something we talk about regularly. And as a part of that, people ask us, “When should I start thinking about it?” With our clients, we start thinking about it, no matter their age, we at least add it as a part of the plan. Because we do approach things from a holistic standpoint. So it’s always top of mind as a part of our planning, as a baseline, a foundational piece of the planning that we do for a client.

      Jake: 01:12

      Right, and so if we’re starting and incorporating it into the planning process, really as soon as possible, when should people start to think about actually taking it or claiming Social Security?

      Paul: 02:28

      Right. Just because you can start at 62 doesn’t mean you should do it as early as possible.

      Paul: 02:33

      Yeah, yeah. You may have a whole pool of assets that help you delay that decision, or help change that decision for you. It’s a very individual decision.

      Jake: 02:41

      It’s such an important decision, because pensions are, as I’m sure you’ve seen with your clients, largely going away. Maybe fewer and fewer people have them. So Social Security is becoming such a foundation and core component of a retirement income plan. Taking all these factors into consideration, there’s a lot that goes into that process, and it’s unique to everybody.

      Jake: 03:06

      If you have any questions about Social Security or your retirement income plan, please contact us. Visit our website, email us, give us a call at the office. We’re always just a phone call or an email away.

      It’s Your Turn to Ask

        3 Career Transition Options to Consider

        Going from full-time employment to retirement is a major transition, both personally and professionally. With modern life expectancies and new medical breakthroughs every year, statistically speaking, you may look forward to a longer retirement than any previous generation.

        But with that extended retirement come some challenging questions: How much do I need to save for an extra 5-10 years of retirement? Will I get bored of early-bird specials and parcheesi every day for 25 or more years?

        For many retirees, a planned career transition that extends the working years by some measure into the retirement period makes sense both personally and financially. After all, a job can be about so much more than the paycheck. Working as you transition to, or even during, retirement can provide fulfillment and allow you professional flexibility that suits your changing lifestyle.

        Here are a few career transition options you might consider:

        Part-Time Employment

        Transitioning from your full-time job to retirement may be as simple as paring down your role as a full-time employee and taking on certain responsibilities as a part-time one. If you appreciate the benefits at your current job or love your company’s mission, it may be worthwhile to explore what a part-time employment option might look like.

        On the other hand, you may want to look at part-time employment in an entirely different field. If you’re eager to escape office life but want a steady paycheck that will keep you from dipping too far into your savings, look into part- or flex-time jobs in your community.


        Have an old idea that refuses to let go? Maybe your retirement transitional period is the time to flex your entrepreneurial muscle and see what happens.

        Whether your new time flexibility allows you to spend more time turning a beloved craft into a full-fledged artisan brand or you want to chronicle your retirement travels on a monetized blog, there are endless options for exploring entrepreneurship during your retirement. If you plan carefully, you may even be able to supplement some of your retirement income needs with income from your small business.


        Many retired professionals find themselves facing retirement with not only too much time on their hands, but too much knowledge that simply has no outlet. If you want to put your years of industry knowledge to good use, you may consider consulting or coaching.

        Business consultants have the ability to control their schedules by choosing which projects to take and how many they want to take on during a year. They can also command a decent hourly or per-project rate that can offset retirement expenses and help to support a robust retirement lifestyle. If you have already have people asking you for advice during your spare time or have unique skills to offer to the next generation, consulting might be a worthwhile career transition option.

        When considering a career transition option, it’s important to look at the big picture: where do you see yourself in your retirement years? While an extra paycheck might be nice, if the idea of working during your retirement or postponing full-fledged retirement as you phase out of the career world makes you uneasy, then you may want to consider other ways to meet your retirement ideals.

        As always, when piecing together the unique components of your retirement, it’s important to consult your financial advisor. They can provide insight to your retirement budget, feasibility of retirement dates, and ways to fill financial gaps in your retirement plan.

        To get started with your personalized retirement plan, contact Jake Sturgill today for a consultation!

          Don’t Forget the Quantity – Quality Balance when Planning Your Retirement

          Finding balance in your retirement planning goes beyond having a diversified portfolio or a monthly income number to match your projected budgets. After all, you’re probably not going to spend your entire retirement watching every penny come in and go out.

          Yes, planning financially for retirement is crucial. However, planning for quality of life during retirement is an important aspect of retirement planning that is often overlooked.

          As Americans prepare to live longer during retirement than previous generations did, you need to consider how the shift toward a longer life expectancy impacts your retirement as a whole. Are you planning for a quality retirement alongside the quantity of retirement savings you’d like to have in place?

          Quality of life conversations contribute to the financial projection for retirement, since the type of retirement lifestyle you plan on is an essential aspect of the retirement budget. But beyond your weekly tee times or macrame classes, what are some other quality of life issues to focus on in retirement planning?


          Your Location

          Your retirement location contributes to many of the financial factors of your retirement plan. From tax rates to cost of living, you will need to factor in the cost of where you plan to retire.

          If you don’t already live in the city or state to which you plan to retire, consider how a move will impact your financial situation. If you move sooner, are there benefits to be gained? How will a house sale factor into your financial plans, present and future?

          Your financial advisor can provide insight into how these factors will contribute to your retirement planning and can provide advice on timing these steps.


          Your Network

          You’ve probably heard that having a solid support network of friends and family can make all the difference during your retirement years. And research supports the idea that individuals in community tend to live longer, happier lives than those who are isolated.

          If you want to enjoy the quality of life associated with being in a community of people you care about, it’s time to start making those connections now. If you want to maintain close relationships with your siblings, children, and/or grandchildren, make it a point to foster those relationships right now.

          For other connections, look into hobby groups, charitable organizations, and community groups that focus on something you care about and would like to make time for during your retirement years. For example, if you enjoy crafting and would like to spend your retirement making quilts for the homeless, try to find crafting groups or classes that will help you to hone your skills and meet others that share common goals.


          Your Health

          While longer life expectancy is good news for everyone, it’s important to consider how your health might fare during your extended retirement years. If you’re dealing with health issues, the quality of these extra years may not be as high as you’d like.

          Of course, you certainly can’t look into a crystal ball and predict exactly what your health will do as you age, but there are steps that you can take now to improve your odds moving forward. For starters, you can work to prioritize your health now so that making healthy choices becomes habit.

          Look into ways that you can adjust your diet or lifestyle to combat the likelihood of developing chronic conditions. And consider insurance options that will support your healthcare needs, should you require long-term care or care for a unique situation.

          The consideration of retirement quality of life is an important one as you navigate the path toward retirement. For more information about developing a personalized plan to balance the quantity-quality factors in your retirement, contact Jake Sturgill for a consultation!

            Ask an Advisor: What’s a CFP?


            Jake: 00:10

            Hi, I’m Jake Sturgill with Puckett and Sturgill Financial Group in our Ask an Advisor Series. Today I’m with David Hemler. David, one of the questions that we’re often asked, what’s a CFP, and why does that matter?

            David: 00:23

            Yes, it is a great question, and I take the time when I first meet with clients to educate them about the CFP letters. And so, CFP stands for certified financial planner professional. And it’s a designation, it’s awarded in recognition of an individual who was passed through a rigorous process that’s set forth by the CFP board of standards that outlines the four E’s that really kind of show the public what the CFP letters really entail for the individual who is using that credential.

            David: 01:02

            And the four E’s are, they stand for education, examination, experience and ethics. And so, the public can feel very confident when they’re working with an individual who has attained the CFP designation, that that person has competency in all the dynamic levels of financial planning. And so, they can feel very good about the person they’re working with has, actually has oversight, constant level of oversight to a rigorous body of education that they had to go through, as well as the examination and the experience levels that are required in order for us to use the designation in.

            Jake: 01:46

            So, it sounds like it’s really about taking more of a broader holistic approach, looking at everything and going above and beyond just having something to be able to sell you something.

            David: 01:57

            By all means the CFP professional is somebody who actually has spent at least a year of classroom work at the graduate level. And again, it encompasses a body of financial planning. We’re educated in many, many areas, estate planning, taxation, risk management, investment planning, all of the different dynamic approaches that are necessary in order for us to build sensible financial planning outcomes on behalf of our clients. And we’re very proud at Puckett and Sturgill to be five individuals who’ve given the dedication to ourselves to provide guidance to the folks that we meet with and our clients as a certified financial planner professionals.

            Jake: 02:42

            Differences do matter. And so, thank you for answering that question, David. And we welcome any future questions from our clients. So, please feel free to shoot us an email, give us a call, visit our website. We’ve got tons of great content there. We’re always just a phone call or email away.

            It’s Your Turn to Ask

              Ask an Advisor: Common Estate Planning Mistakes


              Jacob Sturgill: 00:09

              Welcome to Puckett and Sturgill Financial Group’s Ask An Advisor segment. I’m Jake Sturgill and today, I’m interviewing Deborah Williams about common estate planning mistakes we oftentimes see clients make.

              Deborah Williams: 00:20

              That’s right. We do, as partly because of what we, as advisors, what we help clients with. They will seek us out for help with estate planning. But I would say the first common mistake that I see a lot is not having any estate plan in place. There’s no will. There’s no living will, no power of attorney.

              Jacob: 00:38

              See that often.

              Deborah: 00:39

              Right. That’s easy for us to fix because we have relationships with attorneys, so we can put the client in touch with that attorney and then, they can draw up the legal documents that are needed and we can be involved in that plan and make sure that everything is coordinated so that assets will transfer as the decedent wishes.

              Jacob: 00:59

              Yeah, I think it’s really important to work as part of a team and utilize our network if clients don’t have existing relationships or if they have existing relationships, continue to work with their existing relationship and really integrate it as part of a holistic financial planning team.

              Deborah: 01:15

              Absolutely. That’s how we can avoid other mistakes. One of the easy things that we can do is make sure that beneficiaries are named on retirement plans or other accounts. Transfer on death beneficiaries are popular now. That’s another area that we see common mistakes happen, when there’s either a missing beneficiary or an out of date beneficiary, like an ex spouse.

              Aaron: 01:12

              Yeah. We want to see that they’re educated and that they are extremely competent.

              Jacob: 01:39


              Deborah: 01:40

              That it was overlooked in the divorce and it was never removed.

              Paul: 01:43

              Sometimes the simplest things to fix can be pretty costly in the end. In the state of Maryland, if you don’t have a named beneficiary or don’t have your estate planning documents in order, it’s not you that is dictating, it’s the state of Maryland and other statutes.

              Deborah: 02:00

              Right. It’s the laws of the state that dictate where your assets go, which may not be what the decedent wished. If you have no beneficiary listed on your retirement plan, then your estate is assumed to be the beneficiary and if you have no will, then it would just be divvied up according to that state’s laws.

              Jacob: 02:17

              Exactly. Really great point. Thank you for going into more detail on that. If you have any questions, we’re here to help you. Please visit our website, send us an email or give us a call. We’re here to help.

              It’s Your Turn to Ask

                Tax Considerations for the Working Individual Reviewing 2018 Returns – Qualified Plans

                When you’re planning your 2019 tax strategy, you’ll find a review of your 2018 return a helpful tool in determining your potential tax responsibility for this year. Many tax issues are covered in consideration of family issues, income, and investments, but if you have qualified plans, there are just a few more loose ends to wrap up during your tax review.

                This article is third in a series on Tax Considerations for the Working Individual. Read of the series here:

                1. Tax Considerations for the Working Individual – Family and Filing Issues
                2. Tax Considerations for the Working Individual – Investment Income and Other Issues
                3. Tax Considerations for the Working Individual – Qualified Plan Issues


                Here are some of the qualified plan issues you should consider:



                Are You Contributing to a Traditional IRA?

                If you’re actively contribution to a traditional IRA, bear in mind that the maximum contribution is $5,500 ($6,500 if you are above age 50). Consult Schedule 1, Line 32 for more information and ask your tax advisor for information about whether or not you can make any further deductible contributions.


                Are You Contributing to a Roth IRA?

                Similarly, Roth IRA contributions cap at $5,500 ($6,500 if you are above age 50) per year. However, unless you’re taking advantage of the Retirement Contribution Savings Credit, you will not report these contributions on Form 1040.


                Do you Have an Inherited IRA?

                If you have an inherited IRA (or multiple inherited IRAs), you need to ensure that you’re meeting your RMD for the year. Look to form 1040, Line 4a and 4b to see whether this has been satisfied and reported.


                Are You Contributing to an HSA?

                While you can deduct HSA contributions, you need to keep contribution caps in mind. For the individual, there is a $3,450 cap ($6,900 family). Additionally, if you contribute to your HSA through payroll, then you will find information about your lower wages on Form 1040, Line 1, as well as on your W-2 and paystubs.


                Have You Made a Contribution to a Non-Deductible IRA?

                If you have ever contributed to a non-deductible IRA, you will need to ensure that the cost basis is properly tracked. Look at Form 8606 to understand how your contribution should be accounted for.


                Have You Taken a Non-Qualified Distributions from:

                An IRA?

                Early, non-qualified IRA distributions are penalized and you’ll see this when you file your taxes. To find a non-qualified early distribution, look at Form 1040, Line 4b. Then consult Form 5329 for penalty calculations and carry over to Schedule 4, Line 59.


                A 529 Plan?

                You will also use Form 5329 to calculate the penalty for an unqualified withdrawal from a 529 Plan, if applicable. Since a 529 Plan has very specific withdrawal requirements, you’ll want to work with a tax professional to understand whether any withdrawals you took were qualified or not.


                Did You Convert a Traditional IRA to a Roth IRA?

                If you converted an amount from a traditional IRA to a Roth IRA, you need to report this amount properly. Consult Form 8606 for more information about reporting the converted amount and that any non-deductible IRA contributions converted are treated as non-taxable.


                Did You Rollover Funds from One Retirement Account to Another?

                You may have moved funds from a 401(k) to an IRA or another account. If so, you want to treat these funds as a rollover and not a distribution, since a distribution may cause penalty and other unforeseen expenses. Form 1040, Line 4a should reflect the amount rolled over and Line 4b should be $0 if no distributions occurred.

                These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the working individual, consult our resources on family and filing issues and reporting your investment income.

                This article is third in a series on Tax Considerations for the Working Individual. Read of the series here:

                1. Tax Considerations for the Working Individual – Family and Filing Issues
                2. Tax Considerations for the Working Individual – Investment Income and Other Issues
                3. Tax Considerations for the Working Individual – Qualified Plan Issues


                This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.

                Tax Considerations for the Working Individual Reviewing 2018 Returns – Investments, Income, and Other Issues

                Investments and income are typically the two biggest players in your tax plan. After all, these are likely to be your primary sources of personal revenue.

                When it comes to planning your tax strategy, you need to consider a variety of factors related to your income and investments, as well as some various issues that are related to these categories. Here are the top considerations to make for income, investments, and other issues.

                This article is second in a series on Tax Considerations for the Working Individual. Read of the series here:

                1. Tax Considerations for the Working Individual – Family and Filing Issues
                2. Tax Considerations for the Working Individual – Investment Income and Other Issues
                3. Tax Considerations for the Working Individual – Qualified Plan Issues


                Investment Income Issues

                Depending on your specific investments, there are a few areas on your 2018 return to check and ensure whether you’re on the right path for your 2019 tax strategy.



                Are your investments earning interest? (Review From 1040, Lines 2a and 2b) Did you receive any dividends? (1040, Lines 3a and 3b) If you answered “yes” to either of these questions, you need to reference Schedule B for more information about which accounts are generating interest and whether dividends earned are qualified or ordinary.


                Income and Investments

                If you’re self-employed and your income is greater than $200,000 ($250,000 married, filing jointly), you may be required to pay and additional Medicare tax at 0.9% (consult Form 8959). For all working individuals, if your income is greater than $200,000 ($250,000 MFJ), and you have high Net Investment Income (see Form 8960), your income may be subject to a Net Investment Income Tax at 3.8%.



                Capital Gains

                Remember, your capital gains and losses also count toward your income and make a difference at tax time. For capital gains distributions, consult Schedule D, Line 13; for losses look at Schedule D, Lines 6 and 14. Verify whether short- or long-term loss carryovers are properly accounted for.


                Income Issues

                While you’re probably already making notes of income changes from 2018 to 2019, here are some specifics to focus on during your review.


                W-2 Employees

                If you’re a W-2 employee, you’ll want to review your W-2 for any HSA and FSA contributions from both your employer and your pre-tax income. Additionally, you need to review your retirement plan contributions and employer matching.


                Stock Options

                If you are part of an employee stock option or have any other type of equity compensation, you will need to consult your 2018 return to see how this impacted your tax strategy during the last year. Look at your W-2 and Schedule D to learn more about how your get a better understanding of your tax responsibility for exercising or selling your option. If you filed an 83(b) election, ensure that you prepare one this year as well.


                Other Issues

                There are, of course, some odds and ends issues that are difficult to classify with other categories. However, when you’re filing your taxes, it’s important to account for all of your financial activities. Here are some additional issues you want to watch out for.


                State-Specific Issues

                You will want to take a look at your state return, in addition to your federal one, to look for specific issues unique to your locale. If you have recently moved or earned income in another state during the calendar year, consult a financial professional to learn about the tax laws that apply to your situation.


                Real Estate

                If you have real estate investments, consult Schedule E to see how to properly claim your rental income.


                Student Loans

                You may be able to claim interest paid from student loans if you paid any this year. Look at Schedule 1, Line 33 to see whether the deduction applies to your situation.

                These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the working individual, consult our resources on family and filing issues.

                This article is second in a series on Tax Considerations for the Working Individual. Read of the series here:

                1. Tax Considerations for the Working Individual – Family and Filing Issues
                2. Tax Considerations for the Working Individual – Investment Income and Other Issues
                3. Tax Considerations for the Working Individual – Qualified Plan Issues


                This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor. 

                Tax Considerations for the Retiree – Investment Income and Other Issues

                Your income situation as a retiree is probably quite a bit different than it was when you were working. There may be multiple streams of income to account for, as well as other unique factors to consider from year to year.

                Investment income is an essential item to cover here, since this is likely to represent a meaningful portion of your retirement income. There may also be some odds and ends that impact your tax strategy in other ways, so we’ll take a look at those too.

                This article is second in a series on Tax Considerations for the Retiree. Read of the series here:

                1. Tax Considerations for the Retiree – Family and Filing Issues
                2. Tax Considerations for the Retiree – Investment Income and Other Issues
                3. Tax Considerations for the Retiree – Qualified Plan Issues


                When it comes to your investment income, here are the issues you want to consider:


                Are You Reporting Investment Interest?

                Investment interest should be reported on Form 1040, Lines 2a and 2b. You will also want to look at Schedule B to get a better idea of which accounts are generating interest and see how you reported them in 2018.


                Did You Receive Dividends?

                Dividends will also be reported on Form 1040, but on Lines 3a and 3b. Again, look at Schedule B to see whether the dividends are ordinary or qualified and how to proceed with reporting this income.


                How Does Your MAGI Impact Your Net Investment Income?

                If you have a MAGI above $200,000 ($250,000 MFJ), and significant investment income, you may be subject to an additional Net Investment Income Tax of 3.8% (Form 8960). Talk to your tax professional to learn more about whether this additional tax will affect your bottom line and to see whether there are strategies you can use to offset this liability.



                Did You Have Capital Gains or Losses?

                Look at Form 1040, Line 6 for reporting capital gains or losses. If you have Capital Gain Distributions, you’ll want to consult Schedule D, Line 13 for more information about reporting. For losses, look to Schedule D, Lines 6 and 14 to calculate your short- and long-term loss carryovers. Ensure that you account for losses carried over from previous tax returns.


                Other Issues

                Additionally, there are some tax issues that fall outside of the broader categories, but still need attention when you’re working on your tax strategy. These other issues include:


                Medical Expenses

                If you had large medical expenses during the year, you may be able to deduct a portion of the expenses from your tax responsibility. Look at Schedule A, Line 1 to understand more about your medical expenses and the deduction limit. You will also want to factor your Medicare Premiums and Long Term Care Premiums into your total medical expense figure.


                State Taxes

                As always, you will need to consider your individual state tax responsibility in addition to your federal taxes. Your state tax return from 2018 should contain information to help you get a better idea of what your state tax liability will be for this year. Your tax professional can help you to determine how state laws impact your tax strategy.


                Real Estate

                If you own rental properties, you may be able to claim deductions. Consult Schedule E for more details on how to claim your rental real estate deductions.

                These are only some of the considerations that you need to make as you review your 2018 tax return and prepare for the upcoming tax season. To learn more about tax considerations for the retiree, see our post on family and filings issues.

                This article is second in a series on Tax Considerations for the Retiree. Read of the series here:

                1. Tax Considerations for the Retiree – Family and Filing Issues
                2. Tax Considerations for the Retiree – Investment Income and Other Issues
                3. Tax Considerations for the Retiree – Qualified Plan Issues


                This information is not intended to be a substitute for specific individualized tax advice.  We suggest that you discuss your specific tax issues with a qualified tax advisor.