February 28, 2025 • 46 mins
Join Mark Rothstein, aka Mr. Money, as he breaks down the potential financial implications of the Trump administration, exploring tax changes, cryptocurrency regulations, inheritance planning, and powerful retirement savings strategies like HSAs.
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Unknown (00:00):
The Information and opinions presented are for
(00:01):
general information only and arenot intended to provide specific
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contact your investmentprofessional, attorney,
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reflect those of event taxInvestment Services LLC, its
affiliates, officers ordirectors. Mark Rothstein, aka
Mr. Money, is the owner ofTristar financial LLC and
Tristar Income Tax Services LLC.Mr. Money is a marketing name
(00:23):
only, and is not intended foranything other than a marketing
name for entertainment purposes,securities and advisory services
offered through event taxInvestment Services LLC, a
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Mark Rothstein (00:39):
This is Mr. Money, and Mr. Money's in the
house here at K, I d o talkradio, and it's another session
with me. Mark Rothstein,enrolled agent to deal with the
IRS for you, for my clients, Iam also a Certified Financial
Planner, so it means I amcertified in the world of
(01:01):
financial planning, which meansI cover many areas for my
clients, whether it be withestate planning, wills and
trusts, whether it has to dowith just insurances that you
may need, long term careinsurance, health insurance,
life insurance, whether it be inthe world of Income taxes,
whether it's in the world ofinvestments, I got a I wear a
(01:23):
lot of hats, and on the radio, Iwear the Mr. Tax man and all Mr.
Money financial man, if you'vegot items, you'd like to talk
about 58054365805436, sometimesgetting second opinion from an
expert is a good idea, and my 40plus years, I think, makes me an
(01:45):
expert, being that I've got1000s and 1000s of clients that
I take care of over all theseyears, and happy to help you.
Maybe you've got question onyou're a parent that is still
financially supporting adultchildren way. Maybe you're in a
position where you're helpingyour parents, you're helping
(02:07):
your children, and you're in themiddle called the sandwich
generation. Maybe that could beyou, if you'd like to dial in.
We could talk about that at5805436, maybe you've got some
of those five top financialregrets you took on too much
debt. You'd like to talk aboutMr. Money. I want to get rid of
(02:27):
these high credit cards thatI've got interest rate and debt.
Maybe you simply haven't savedenough for retirement. Whatever
it may be, Mr. Money is ready totalk about it could even be Mr.
Money. I don't want to wait tillage 70 to collect social
security. What's the rulesaround collecting it sooner? And
am I the position to take itsooner? Or do I wait and take
(02:51):
Social Security at age 70, whenI'll get the highest number? If
I take it at age 62 I'll get asmallest number. Or maybe I
should take it somewhere inbetween. And isn't there taxes I
might end up owing on SocialSecurity, a whole lot of
questions around that we cantalk about at 5805436, and
(03:14):
again, Mr. Money is here andhappy to talk to you about it. I
thought I would start today'sshow with your money in the new
Trump administration. In otherwords, things that we should be
looking at now that we're in theTrump administration. It is the
year 2025, Trump is the boss. Hedoes have a Republican Senate,
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Republican Congress, sohopefully that means he can get
through some of his legislation,most of his legislation, but
we'll see each person votes whatthey believe to be best,
hopefully in Washington. Andagain, I thought I would talk
about what are some of those keythings Mr. Money watches, and
(03:59):
I'll be reporting each week. Butsame things for you as you read
the paper you talk to friends.What are those key items these
days? Again? First one I wouldput on the list is to watch
about income taxes. Of course,you knew I'd say that I am Mr.
Tax man every week on this show.But again, what do you think
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about taxes. There was the lawthat he put into place which
reduced taxes in a big way backin 2017 Those were his tax cuts
that he got through Congress, inthe Senate, and he is vowed he's
going to extend those 2017 taxcuts. They're supposed to expire
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at the end of the year, thisyear being 2025, and he said, I
want to renew them. And by theway, from a tax man of the last
40 plus years, these are goodtax rates. This tax laws are
good for us, the individual, us,the corporation, paying income
taxes. So. Again, renewing themeasures that are there would be
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a whole lot of good for us.Keeping the top tax rate at 37%
that's a good thing. Mr. Money,37% still seems high. I agree
with you. But comparative to allthe years, back to the early
1900s you will see that 1900what was it? 1918 it all began.
Rates during World War Two gotup to 90 plus percent income
(05:26):
taxes. Can you imagine that?Wow. And so again, under this
current system, the current taxlaws, it's pretty favorable when
you look over all the years. Theother thing that's very
favorable there is inside thetax laws, as affluent families
can continue to pass onsignificant wealth to their
(05:47):
heirs. It's upwards of 14million per spouse. 14 and 14 is
28 million without paying deathtaxes or a state taxes to the
IRS to the federal government.You can move that to your
children or whoever you'd liketo that's pretty powerful. If
the tax laws do not get changedand they expire at the end of
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2025 it drops down to 6 millionfrom the current number. So 14
millions a whole lot better than6 million. So again, that's one
of the issues to look on fortaxes. Will they keep that
estate number high so I canavoid estate taxes or death
taxes when I pass on some of myassets to the kids, or whoever
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you choose to they're alsodebating something called the
salt state and local taxdeduction. Mister Money in
English, in English, what thesalt is on the tax returns, pre
2017
you could deduct on your taxreturn part of itemized
deductions. You could deduct allyour state and local income
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taxes that were taken out ofyour check. So my Idaho State
withholding, I could put on mytax return and deduct it. I
could put on my real estateproperty taxes and deduct it.
And it was pretty great. So ifyou were in a high tax state and
or you made a lot of money andhad a lot of state income tax
withheld, or paid a highproperty tax, you could take
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that as a nice deduction on yourreturn. And with the 2017 law
change, they limited it to10,000 so you can only deduct up
to 10,000 of state income taxout of your paycheck or your
real estate tax. Only, Trump hastalked about raising that so you
can deduct more if, in fact, youdid have more state income tax
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withheld and real estateproperty tax you paid. So again,
that's something we're lookingat with the tax law. There's
debates over whether the childtax credit used to be $2,000 you
could get for all your childrenunder age 17. Again, they're
looking to see if that willcontinue or not. Trump's talked
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about eliminating any income taxon tips you receive. And again,
wouldn't that be great if I'mgetting tips and I don't have to
report it, that would befabulous. Again, some income
without taxation on it soundsreal good. Of course, the
worriers worry that thereforeI'm going to change your w2
wages to be taxes, so I'm goingto give you more money is taxed,
(08:21):
not as wage, and therefore youcan avoid taxation. So I'm sure
there'll be rules around it. IfTrump gets that tax change, he's
also said he wants to not incometax you on Social Security
benefits. And again, we'll seeif that one goes into case,
something for us to keepwatching. Of course, I'll be
relaying the law on it as itcomes out. But again, something
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good there. I want to pay lessincome tax, keep more of my
money so I can survive, so I canretire, so I can build up my
assets. And again, I'd like topay less in Social Security tax.
And many people don't realizethat Social Security, the amount
you receive does go on yourfederal tax return, it may be
taxable, not on the state, buton the Fed. So again, if he
(09:08):
makes it so I do not have toreport Social Security received
on my federal tax return. That'sanother good thing. Also. He
doesn't want to tax overtimemoney. So if you're working
overtime, getting some overtimemoney, not tax you on overtime.
Again, lot of us do overtime.Mr. Money is six days a week
working. If I got paid as a w2only, I'd certainly be getting
(09:32):
some overtime pay with all thehours I put in. But again, we'll
look and see what happens withthat one. He also said he'd like
to make car loan interestdeductible. Doesn't get a lot of
press on the air when I'mwatching my TV or listening to
the radio, but certainly, a lotof us have car loans, and a lot
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of us have interest on carloans. Yes, that used to be
deductible interest on a carloan, it's no longer. The case
right now? Well, certainlythat'd be a nice deduction if it
was brought back and I can startto deduct that on my federal tax
return. Schedule A itemizeddeduction, sir, I'd like that.
(10:13):
He's also looking to lower taxeson US citizens living abroad.
That'd be kind of neat, and hewould push for more tax credit
for family caregivers. In fact,I see a lot of that recently.
There's a lot of familycaregiving going on. And yes,
many states will pay yourcaregiver. You got to sign up
and qualify. But if you'retaking care of your mother, you
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can get some wages, not a bignumber, maybe five grand to 10
grand, or maybe as little as twogrand to five grand to 10 grand,
that you can receive a wage fromthe state because you're caring
for an aged person, and you canget paid for that. So they're
looking to get more tax creditsfor family caregivers. So again,
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to pay for these tax cuts, isthe big question that goes on
with that is, how you going topay for it? Mr. Money. So again,
they've got to look for howthey're going to pay for it.
Some of the things thegovernment right now is looking
at, again with Trump, isrepealing or restricting the
green energy credits, includingthose credits for buying
electronic vehicles or addingsolar panels to your home again,
(11:23):
taking those credits, those taxbenefits, away because he's
giving new benefits, might evenbe taking away some of the other
energy efficiency homeimprovements. It's unlikely
Congress will do all this. Idon't think they will get every
one of these done, but that'ssomething we're watching now.
That's why I brought it up yourmoney in the new Trump
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administration. Couple things towatch. One of them is obviously
income taxes for us to watch.Another one for us to watch is
called crypto currency. Yes,that other kind of currency, not
the dollar, currency that youput in the bank and the bank and
watch it and see it, and look atyour balance and see where all
your money is going out of yourbank account. This is different
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in the crypto world. And whatdid Trump say? He wants the US
to be the crypto capital of theplanet. Expectations that he
will change policy to do thishave spurred a big boom in
Bitcoin. If you've seen theprice of Bitcoin these days, it
certainly went up a whole lotfrom last year through this
year. And yes, it'll fluctuate,but boy, if he likes crypto, and
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he is going to deregulate someof the regulations on it give
him more freedom inside of thecryptocurrency investment market
may be very, very good among thepossibility legislation from
comm list Congress establishinghow crypto exchanges will be
regulated. The formation of acrypto advisory council may be
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coming friendlier treatment fromfederal agencies such as the SEC
Securities Exchange Commission,there could also be clarity on
whether regulators should treatdigital currencies as a
commodity or securities. Me, thetax man, know if it's considered
a commodity goes one way taxtreated and if it's a security,
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it's treated differently. I'm atax return. So that's going to
matter his welcoming stancetoward crypto is a departure
from Biden's administration. TheBiden administration was kind of
hostile, is the word they usearound it. So we need to look
and see what's there. Anotherissue is obviously the tariffs.
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And again, I've heard thethreats, but I really wonder how
much of the terrorists will gointo place. I wonder. Mr. Money
here wonders, is it justpositioning, negotiating from to
work on the tariff? Do I believethere'll be some tariffs? I do.
We need to watch it. What willit be with Mexico? What will it
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be with Canada, two countriesthat very much Trump is not
happy with for letting illegalimmigrants through the borders
rather than secure theirborders. And very well Canada
may, in fact, secure theirborders and say, Don't tariff
me. Or Mexico may say that, butplease, know, a whole lot of
goods come through that borderfrom Canada that Americans use,
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and a whole lot of imports comein from Mexico that we use. I
understand Trump wants Americamade so less imports of certain
items means Americans will makeit, produce it and sell it in
America and around the world.Nonetheless, the tariffs are
something it's kind of a threat,but it doesn't have to be a
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threat. It can simply be used asnegotiating tool, which I
believe the Trump administrationwill be doing do I think it
necessarily will beinflationary. Again, that's one
of the things we're going towatch if all of a sudden I can't
bring in. Things from China orChina, let's say, as a 50%
tariff. Obviously the goods aregoing to be higher price because
(15:06):
they have to pay 50% tariff feesto get in. The price of those
items will therefore be more andtherefore, if I buy them, it's
costing me a whole lot of moremoney. So that's inflationary.
It's costing me more. Or ifAmericans are making it right
here and selling it, it may bemore costly to have it made here
than in China. Again, thoughtsof inflation are there, again,
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Americans paying a higher price,which is inflationary. Again,
very, very big issue for us towatch and follow. Mr. Money. Of
course, we'll be doing that, theother one get some air play
sometimes and not AirPlayanother time. Is the deficit, 35
plus trillion deficit over 1trillion plus in fees to handle
(15:55):
the interest payments this year.That's a whole lot of money,
over a trillion. I didn't sayover b billion. I said over T
for trillion dollars to securethe debt. So I understand
bringing down interest rateswill help eventually with our
debt, because some of the debtwas issued at higher rates, and
some of the debt will come due,and if we need new debt, the new
(16:19):
debt gets issued at the currentrate, which is a high number,
5.25%
is the interest rate number. Andso again, we look to see on that
debt that can be very, veryharmful to the economy with so
much money going toward that.And so again, Trump would say,
or his administration would say,but Mr. Money, one of the things
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were offsetting it with cuttingback. We got out of the Paris
Accords. We're getting out ofsome of the green items that we
were doing in the past. Thatwill save us some money, the
tariffs will bring in money tobring down some of our debt,
etc. So we have to wait and seewhat all these numbers are going
to equate to to see, is this allgood or not all good? One other
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thing again doesn't get muchpress is mortgages. It's been
over 15 years since the federalgovernment took control of two
companies crucial to themortgage market. Optimism is
growing that the new Trumpadministration will complete the
naughty task. That's the wordthey use here in the article
naughty task of returning FannieMae and Freddie Mac. Now, if you
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realize Fannie Mae and FreddieMac don't make mortgages, they
buy them and then they guaranteepayment on about 40% of them,
which they then sell toinvestors as bonds. Saying
another way, if it stops beinggovernment backed Fannie and
Freddie, as far as makingmortgage loans, and it becomes
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independent, owned byindependent people, companies
will that raise the mortgageinterest rates or not. And
again, housing is a major, majorpart of the US economy, and so
as a result, we need to knowwhat's going on there. Trump, I
believes, is a real estate man,and I believe he wants to get
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real estate market flowingagain, again, another reason he
wants interest rates lower. Sothese are just some of the
issues that Mr. Money isfollowing, and I'll continue to
follow with you each week whenwe come back, it's income tax
session, and we're going to talkabout this, see if you can
answer this in the break.Seniors, you might not want to
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sell that highly appreciatedhome of yours again, seniors,
you might not, might not want tosell your highly appreciated
real estate, your home. Mr.Money is going to answer why
that question when we come back,this is Mr. Money. Let
Unknown (18:55):
me tell you how it will
be. There's one for 19 for me,because I'm the tax
Mark Rothstein (19:16):
man. Mr. Money is here at k, i, d, O Talk Radio
studios, and Mr. Money is goingto talk about why you might not
want to sell that highlyappreciated home of yours. In
recent years, we all know it,the residential real estate
market has gone up up up allover the world, especially here
(19:38):
in Idaho, up up up. We got lotsof Washington people coming
here. We got Portland peoplecoming here, with the fires in
Los Angeles, my guess is we'llhave a lot of Los Angelenos
coming here, and again, peoplewanting to buy, buy. Buy. Tends
to increase the price of realestate, the values. Going up. We
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already know they've been goingup, but I think it's going to
continue to go up. It seems thatway, especially here. So that
means there are more seniorswith highly appreciated homes
than ever before, and that'strue. If you're facing this
situation, you might rightfullybe concerned about potential tax
on a sale again, if you boughtyour home for 200,000 and you
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sell it for a million, there'san income tax man waiting at
your door to collect incometaxes on it. What's the basic
rules? Let me mention that ifyou sell a highly appreciated
principal residence, keyword,principal residence, where
you've been living and you'vebeen living there the last two
years. You may have been livingthere 40 years, but at least the
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last two years out of five isthe law, your profit could
potentially exceed the home salegain exclusion. What's the home
gain exclusion? What that is, isthe IRS automatically says, If
you sell your personal home andyou are married, any gain up to
500 grand is excluded. You haveto pay an income taxes. If
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you're single, you can excludeup to $250,000 of any gain you
got. So in my example, youbought it for 200,000 and that's
your cost, and you went and soldit for a million. Sounds to me
like you've got 800,000 profit.If you're married, you get rid
of 500,000 so there's still300,000 extra gain, and so you
(21:29):
got to pay what's called capitalgains tax on it. So you that's
why I brought it up. Seniors,you might not want to sell that
highly appreciated home. So Iwant to talk about other things
you can do, because, by golly,I'd hate that you bought it for
200 you sell it for a million.I'm happy you made the big
profit, but I'd certainly notwant to pay capital gains. Under
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the current rules, the maximumlong term capital gain rate is
20% by the way that you wouldend up owing to the government.
Can you adjust that number alittle bit Sure? Selling
expenses on your home, you getto reduce the gain by that if
you made improvements to yourhouse, that goes in the equation
to help you also. And by theway, if you live in a state with
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no personal income tax, you'llonly have to worry about the
federal side. However, moststates that assess personal
income tax do tax you on capitalgains. Will tax you on your gain
on the state side, also, excuseme, one other item I should
mention, this one no one knowsabout except tax people. It
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seems it's called the n, i, i t,net investment income tax. So
some home sellers, when you havea big profit and you got to
report it on your tax return,that could push you up to a
much, much higher tax bracketwhere, all of a sudden, this and
I it shows up called netinvestment income tax. If you're
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single, the thresholds are200,000 you get way up above
that 200 you're gonna startpaying this and I it tax, if
you're married, starts hitting a250,000 so you gotta also be
where, not only the income taxand the capital gains tax, they
got an extra one called an IITTax. And again, that's 3.8% so
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again, some home sellers alsomay be exposed to this 3.8% net
investment income tax also, andalso. Oh, but Mr. Money, mine's
a rental property. Is thatdifferent? I'd certainly like to
sell my rental property and takea 500 exclusion of that gain if
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I'm married or 250 if I'msingle, answer, no, this is only
applies to your personal house,and you need to have lived there
in your personal house two ofthe last five years. So the day
you sell it, look back fiveyears, make sure at least two of
them are personal. But when it'sa rental property, then all of a
sudden, there is no 250exclusion. There's no 500
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exclusion. And if you've beentaking a deduction for that
rental property all these years,something called depreciation,
people have been taking, youhave to recapture that
depreciation on your tax returnyou've been taking all these
years at a 25% tax bracket. Sowho not so good? Mr. Money, give
(24:26):
me the solution. Please. I hearthe problem. What's the
solution? So instead of sellingyour highly appreciated home,
you could choose to hold on tothe home to avoid this painful
tax hit. That's right, if you'reable to keep your home until you
die for federal tax purposes,and as it turns out, Idaho tax
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purposes, the tax basis of yourpersonal residence is stepped up
to fair market value. So again,if you bought your place for 200
grand on the day you die, it'sworth 1,000,002 So when your
children, or whoever you name,inherit it, they inherit it for
what it's worth when you died,that would be a million. So they
(25:08):
inherit it for a million. Theygo and sell it thereafter for a
million. There is no capitalgain. There is no tax gain,
nothing in there, by the way,when I say on the day you died,
we value it. You can also valueit called the alternative date,
which is six months later. Soagain, when you pass away and
it's in your name, you leave itto someone. They get a stepped
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up basis. They inherit it forwhat it's worth. In my example,
a million. They go ahead andsell it for a million. There is
no gain, by the way. Theyinherit it for a million, they
sell it three months later for900,000 they actually get a
minus 100,000 on their taxreturn. Woo, woo, sounds pretty
good. If they inherit it for amillion, they sell it three
(25:53):
months later for 1.1 million.They have to pay tax on that
100,000 increase because theyinherited it at a million. They
sold it for 1.1 that 100,000would be a taxable gain. Again,
you can reduce it by sellingfees. So again, take a look at
that. If you own your home withyour spouse, the tax basis of
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the portion you own will bestepped up when you die. If
you're in a community property,state, like we are, California
is also there's nine of them inthe country. By the way, the tax
basis of the entire residence isgenerally stepped up to fair
market value when the firstspouse dies, not just half,
because only one of the twopeople passed away. So only my
(26:37):
half would increase, because I'mthe one who died. Nope.
Community Property, state, oneof the two spouses passes away.
It goes up to the full million.It just steps up to fair market
value, and the remaining spousenow has something worth a
million, so they could go aheadand now sell it and pay no
income tax, no capital gains taxon it. Mr. Money, you didn't
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talk about a vacation home. Youtalked about a rental. You
talked about my personal homewith the exclusion. What about
my vacation home? Mr. Money,what about that one? If you sell
a highly appreciated home,that's not your principal
residence, so Mr. Money, I'mselling my mobile home, my motor
home, my vacation home, mytimeshare home, you get no gain
(27:22):
exclusion on that one either. Sothe entire profit, if there is
one, will be taxed as capitalgain. Remember, if there's no
gain, if you bought it for 200and sold it for 100
you do not get a step up oranything else. Again, it was
something personal you sold andso no, there is no stepped up
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basis for it. If you made a gainon your vacation home, you will
pay tax on that. But again, as Imentioned earlier, one answer
might be, you hold on to ahighly appreciated vacation home
until the day you die, yourheirs would then receive a
stepped up basis on the homenotice the heirs your
(28:06):
beneficiary's name is not on thereal estate. It's in your name.
They then inherit it. Can't beput in their name before you
die. It has to stay in yourname. They inherit it. The
stepped up basis will equal theproperties fair market value. So
again, same thing with avacation home, it's in your
name. You pass away. Theinheritors inherited at stepped
(28:29):
up basis, and they can then sellit and hopefully not pay any
taxes. Mr. Money forgot aboutstocks. What about stocks? Same
thing, if you own a portfolio ofnice stocks in there, not
retirement, regular brokerageaccount, investment account, and
you bought those stocks for $200and those stocks are now worth
(28:49):
1000 same answer. It's in yourname. When you pass away, it
steps up basis. So yourbeneficiaries inherit the stock,
and they inherit it at 1000 theycan then go sell it for 1000 and
pay no taxes on the game becauseof the stepped up basis. So
again, passing away, you getthat stepped up valuation that
(29:12):
someone inherits it. But ifyou're going to sell your house,
remember, 500,000 you canexclude, if you're married,
250,000 you can exclude ifyou're single. So what does tax
planning say? Mr. Money, I justcan't afford my house. Mr.
Money, I know you want me tokeep it. I know you want me to
(29:35):
die in my house and then give itto my beneficiaries. They get a
stepped up basis. So it's wortha million. When I die, they'll
sell it for a million, and theypay no taxes. But what about me?
I'm in my million dollar home,but I can't afford it anymore.
One of the things you couldconsider doing is something
called a reverse mortgage on afuture show. I'll talk much more
(29:58):
about it, but I'm bringing itup. To say it is possible for
you to stay in your home thatyou feel you can't afford by
doing something called a reversemortgage, where you do get to
stay in your home, but you don'thave to make any more mortgage
payments. And the reversemortgage company, the bank, will
give you a chunk of money foryou to live off of, for you to
(30:19):
spend again, there's costsassociated, there's pros and
cons of that which Mr. Moneywill do on a future show. But
again, something to consider, tostay in your home so you can
stay in it pass away and someoneinherits it. One other thing Mr.
Money, I sold my home. I took my500,000 exclusion, or my 250,000
(30:40):
exclusion is single. Mr. Money,I want to do it again. I bought
another home. Mr. Money boughtit for cash. This time, Mr.
Money and I made money on mysecond home. Can I sell my
second home and have another 500exclusion if I'm married on a
profit? Can I have another 250exclusion on my next home?
Answer, yes, as long as you'rein the new home for at least two
(31:04):
years and then sell it that 500exclusion on any gain is there
for you to use married and 250if you're single. Hoping this
has helped us with that when wecome back, there's another
client called me this week, Mr.Money. I got an inheritance
coming What do I need to know?Thought I would answer that
(31:25):
question next. What do you dowhen you've got an inheritance
of a major dollars coming atyou? I got the answer when we
come back. This is Mr. Money.Welcome
Unknown (31:36):
back to the Mr. Money show on K I do talk radio, 1075,
FM and 588,
Mark Rothstein (31:50):
Mr. Money's here at K I do studios, and I went to
the break saying, what do you dowhen you inherit money? You
smile. You say great. Wonder ifI got to pay income tax on it. I
wonder if I get it all and I cando whatever I want with it, that
there's no strings attached, butmany times there's just no
(32:10):
instruction ever given toanyone. So receiving an
inheritance from a loved one'sgreat honor, wonderful to get,
depending on what you receiveand the inheritance, if it's a
big amount, has the potential tochange your entire life. I want
to change your entire life in agood way with what I'm going to
talk about, because here's anexample of Jill, who had
(32:32):
complete freedom that hergrandmother left her a million
dollars, and all she did wasinvited her friends, and they
all partied, had a good time.She did pay off her credit card
debt, then it went up again, andthen it went down when she paid
it off. Next thing you know, shewoke up in less than a year, and
that million dollars was gone.So for the sake of simplicity,
(32:57):
to let you know, Jill'sgrandmother, in this case, chose
not to put the money in a trust.Chose not to put any
restrictions around it. Shesimply gave it to her naive
college granddaughter with thefreedom to spend as you want, no
oversight. And therefore, thecollege student did just that,
(33:17):
whereas her grandmother couldhave put it into a trust to
lever. And the trust could havesaid a lot of things, like, when
you get the money, you get athird of it. At age 25 you get a
third of it. At age 30, you geta third of it. At age 40, she
could have put restrictions.You're buying a house, I will
match it. So if you put moneydown, I'll take some of the
(33:38):
trust money and match you. Thereare so many things you could do
inside of that I'll pay forhigher education from the trust
inheritance. But many times it'sprobably a smart idea to think
about when you're leaving moneyto someone. Do you protect it in
some way? Or what I would say,protect it from the grave, you
passed away, you know, maybepossibly leave some instructions
(34:03):
when you do it, of course,before you die, Mr. Money's got
a few things to say about that.Make sure you have a durable
power of attorney for healthcare. So for yourself, you want
to name someone that hasauthority to make health care
decisions for you, especially ifyour health is such you can't
make decisions yourself. Makesure you've got a durable power
(34:24):
of attorney for health care, bythe way. Also make sure you have
a durable power of attorney forfinancial matters. Maybe you're
just not competent at the momentto make financial decisions with
your investments, with yourrental property, with your
estate planning, with yourretirement accounts, could be so
(34:44):
many things we're accountablefor. Make sure you have a
durable power of attorney forfinancial matters where you name
someone who steps in to do it,and on the form you get to say
you're able to step in andhandle my real estate, or handle
my investments, or handle my.Fill in the blank. Again, very
smart thing to have. You canhave something called a patient
(35:05):
advocate. This person has theauthority to make all medical
decisions on your behalf. Andagain, it's like a durable power
of attorney for health care. Butagain, speak to the person, let
them know your wishes, if infact, you would like all action
that can be taken to bring youaround to a good life. Needs to
(35:27):
say that versus I'll have noquality of life, pull my plug.
Let me go. Leave instructionsthe deeds to all your
properties. If you own realestate, make sure we know where
the pink slip is or the DEETslip is so we know, make sure
you've got your will or trustsomewhere that people know where
it is findable, where youactually name who your executor
(35:50):
to execute your wishes when youpass away. Executive tricks, if
it's a lady, and again, thatwill says who's the
beneficiaries, where the moneygoes to so a Will or Trust is
also essential, by the way, atrust also protects assets. So
may be important, again,protects assets from
(36:11):
beneficiaries, creditors. Soyou're leaving it to a
granddaughter, and she's got alot of creditors after her.
Again, this would protect it ifyou used a trust in that sense.
But I like a trust. It keepsliquidity when you pass away, so
there's access to money, savesyou money because you don't go
through the legal system calledprobate, that's got to be done,
(36:31):
leaves all your business veryprivate, and again, it's there
to protect you. Again, I'vealready done shows on the trust,
so again, you can go to Mr.Money answers.com and listen for
some of those shows with all thematerial. But again, if you're
the inheritor, I inherited themoney. Number one, meet with a
(36:51):
financial advisor. Yeah, meetwith someone like a Mr. Money,
or Mrs. Money. By the way, thereis a Mrs. Money in the world.
I've done seminars with Mrs.Money. So Mrs. And Mr. Money did
seminars and again, meet withthat financial advisor.
Receiving an inheritance can beoverwhelming, especially at a
(37:12):
time that you're grieving over aloved one. Yes, hire the
financial advisor before youmake purchases or investments
with your inherent get thatinput to yourself. Yes, can you
talk to friends and people?Sure, get some input, but by all
means, a financial advisor whois committed to you that has one
(37:33):
objective take care of you,whereas talking to friends and
others, they may not be allabout you, and maybe you don't
want it all just sitting in abank account indefinitely, which
a lot of people do when theyfirst get it, and maybe that's
the right thing for you. Butagain, a financial professional
is not a bad idea to bring intoyour life. Another thing
(37:55):
identify your financial goals.It's one of your financial
advice. Gonna ask you, what areyour goals? Do you need to pay
off some debt right now? Are youinterested in purchasing a home
at some point? Do you want tobuild an emergency savings
account? Do you want to put acollege account together for
your children again? These areall the things I ask when I'm
(38:16):
with clients. Once you identifytheir financial goals, start
making a plan to achieve them. Ieven bring up buying a business.
If you're looking for somethingto bring income to you, you're
looking for a future foryourself, why not go to the
franchise show and at thefranchise show at the convention
center, maybe Baskin and Robbinsis there and you'd like to own a
(38:37):
franchise of Baskin and Robbinsor Ace Hardware or Subway
sandwiches or fill in the blank,they got hundreds of companies
there that already know how torun the business, and you would
therefore say, I'd like to learnhow to run a business. Is a
franchise available in fill inthe blank in your city that
could be a possibility, again,with an inheritance. Make sure
(38:59):
you create a budget. Is the nextthing on my list. Now that
you've got some newfound wealth,may be tempting to take that
dream vacation, buy a new car,give it to your radio producer
that sits with me every week.Could be a whole lot of things
you want to do, but again, yougot to be intentional about how
you're saving and spending themoney. It could be gone in a
(39:21):
blink or a snap. So again, whatis it that you want to do?
Create that budget? Considersetting aside some money to
spend now, some money you'regoing to spend later, and some
money you may never spend. Keepsome of it liquid. Invest some
into an investment vehicle thatyou can access in the future,
(39:43):
maybe a CD that comes due in ayear. Again, the rest of the
money put into long terminvestments. Talk to a financial
person. Talk to people have beensuccessful. Talk to people that
have done investments that haveworked out in a good way, and
again, get the input. Before youjust spend it, unless you've got
a big money IQ, probably goodidea to get some input. Mr.
(40:07):
Money, I listen to you everyweek. Does that make me smart
enough? Makes you smarter thanmost everyone else? But the
answer is, I would still bringin a personal financial planner
for yourself, maybe ideally, acertified financial planner like
myself and possibly a tax personwho's also a financial person.
Remember, taxes and investmentsfinancial go together. So good.
(40:31):
Last thing I would leave youwith is invest in your future.
Figure out what are those bestways to maximize your
inheritance for the future. Imentioned it a moment ago. Plan
some money now later, and neverput some away for the future.
But again, you'll need to dependon what's going on in your life.
(40:52):
If you've inherited a retirementaccount, there's some income
taxes that may be paid on that.Since most people that inherit
money, that's retirement moneyyou inherit. Have to take it out
over the next 10 years. There'sexclusions to that, that some
people aren't forced to take itout. So there's a tax
ramification to all of this,which is why I brought that up.
(41:14):
Very important for you to lookinto when we come back. Mr.
Money is going to talk aboutanother key item. It's actually
my favorite thing, if I haveone, it's called how HSAs pay
off retirement health savingsaccount. Why they're great. I
mean, great to have inretirement. All when we come
back, this is Mr. Money.
Unknown (41:40):
Welcome back to the Mr. Money show on K I do talk radio,
1075 FM and 580 am
Mark Rothstein (41:47):
Mr. Money, welcome back. I want to talk
about HSA Health SavingsAccount. Yes, it is my favorite.
What are they? If you've got ahigh deductible health plan, HSA
accounts could play a crucialrole for you. Why? Because when
you put money into an HSA healthsavings account, you get a minus
(42:11):
on your tax return. So it's pretax, then it's untaxed. As it
gets larger and larger, yousimply pay no taxes. It grows,
and then when you pull it out.It comes out for free. So I got
a minus up front. It grows forfree. It comes out for free.
When it comes out for free, allI got to do is use it for
qualified medical expenses.Pretty great. What have I done?
(42:33):
I put money in HSA. Not used itevery year because I am making
money and I can afford to pay mydoctor bills. But I've now had
my HSA get bigger, bigger,bigger, bigger. So when I
retire, I got a big chunk ofmoney put away that I can pull
out. And one other good thingis, when you are age 65 or
older, you can pull money out ofan HSA, and it does not have to
(42:58):
be used for medical. Usually,you pull it out. Gotta use it
for medical and if you don't,it's 20% penalty. But nope. Once
you reach age 65 you can pull itout for anything you want, and
that's pretty neat thing to do.And by the way, you can pull it
out for medical bills from 10years ago, if you just keep the
receipts. I pulled out medicalbecause I incurred it 10 years
(43:18):
ago, nine years ago, eight yearsago, and I'm pulling it out and
pulling the money into my pocketright now. So the other really
great thing, when you pull moneyout of an HSA doesn't go into
tax return. So my tax bracketsays I need five grand more, and
I was going to pull five grandextra out of my retirement
account that I got to pay taxon. I'll pull out that extra
(43:39):
five grand that I need from myHSA because it doesn't show up
on my tax return. So I likehaving a bucket of money that I
can pull out that doesn't go onmy tax return, so I can stay in
that lower tax bracket, and I'vegot access to the money whenever
I want it. The average 65 yearold who retired last year, 24
(44:03):
could spend upwards of 165,000on health care during their
retirement. That's according toFidelity Investments. So if I
kind of know my health carespending over my lifetime, for
the next 20 plus years, whateverit may be, it could be upwards
of 165,000 I certainly am gladthat I got a nice, big HSA that
(44:24):
I can do it from. So again, Mr.Money loves it, and again, you
need to do it in those earlieryears. You can't add to an HSA
once you're retired at 65 you'vegot to do it pre age 65 pre
starting Medicare. Once youstart that Medicare, can't do it
(44:45):
anymore. So please, know, Mr.Money wants you to enroll in
that, get that HSA at work, orget that HSA outside of work,
because it is absolutely ideal.Again, remember. Number. Keep
all your receipts every year,whether you ask for your HSA to
pay you for that or not, yourHSA amount is 4300 if you're
(45:10):
doing it for single self family,if it's for a whole family of
people, you can put in 8550 peryear and deduct it. So again,
key items put in 4300, deductedif you're single, 8550, deducted
if you're a family. And it isjust a great thing to do,
leaving you with that happynote, this is Mr. Money. We'll
(45:32):
see you next week. TheInformation and opinions
presented
Unknown (45:35):
are for general information only and are not
intended to provide specificadvice or recommendations for
any individual. You shouldcontact your investment
professional, attorney, accountor tax advisor regarding your
individual situation, theopinions of the presenter do not
necessarily reflect those ofevent. Tax Investment Services
LLC, its affiliates, officers ordirectors. Mark Rothstein, aka
Mr. Money, is the owner of tristar financial LLC and Tristar
(45:55):
Income Tax Services LLC. Mr.Money is a marketing name only
and is not intended for anythingother than a marketing name for
entertainment purposes,securities and advisory services
offered through avantexInvestment Services LLC, a
registered investment advisormember SIPC, tri star financial
LLC, tri star Income TaxServices LLC and avantex
Investment Services LLC areunaffiliated entities.
The Information and opinions presented are for
(00:01):
general information only and arenot intended to provide specific
advice or recommendations forany individual you should
contact your investmentprofessional, attorney,
accountant or tax advisorregarding your individual
situation. The opinions of thepresenter do not necessarily
reflect those of event taxInvestment Services LLC, its
affiliates, officers ordirectors. Mark Rothstein, aka
Mr. Money, is the owner ofTristar financial LLC and
Tristar Income Tax Services LLC.Mr. Money is a marketing name
(00:23):
only, and is not intended foranything other than a marketing
name for entertainment purposes,securities and advisory services
offered through event taxInvestment Services LLC, a
registered investment advisormember SIPC, Tristar financial
LLC, Tristar Income Tax ServicesLLC and event tax Investment
Services LLC are unaffiliatedentities.
Mark Rothstein (00:39):
This is Mr. Money, and Mr. Money's in the
house here at K, I d o talkradio, and it's another session
with me. Mark Rothstein,enrolled agent to deal with the
IRS for you, for my clients, Iam also a Certified Financial
Planner, so it means I amcertified in the world of
(01:01):
financial planning, which meansI cover many areas for my
clients, whether it be withestate planning, wills and
trusts, whether it has to dowith just insurances that you
may need, long term careinsurance, health insurance,
life insurance, whether it be inthe world of Income taxes,
whether it's in the world ofinvestments, I got a I wear a
(01:23):
lot of hats, and on the radio, Iwear the Mr. Tax man and all Mr.
Money financial man, if you'vegot items, you'd like to talk
about 58054365805436, sometimesgetting second opinion from an
expert is a good idea, and my 40plus years, I think, makes me an
(01:45):
expert, being that I've got1000s and 1000s of clients that
I take care of over all theseyears, and happy to help you.
Maybe you've got question onyou're a parent that is still
financially supporting adultchildren way. Maybe you're in a
position where you're helpingyour parents, you're helping
(02:07):
your children, and you're in themiddle called the sandwich
generation. Maybe that could beyou, if you'd like to dial in.
We could talk about that at5805436, maybe you've got some
of those five top financialregrets you took on too much
debt. You'd like to talk aboutMr. Money. I want to get rid of
(02:27):
these high credit cards thatI've got interest rate and debt.
Maybe you simply haven't savedenough for retirement. Whatever
it may be, Mr. Money is ready totalk about it could even be Mr.
Money. I don't want to wait tillage 70 to collect social
security. What's the rulesaround collecting it sooner? And
am I the position to take itsooner? Or do I wait and take
(02:51):
Social Security at age 70, whenI'll get the highest number? If
I take it at age 62 I'll get asmallest number. Or maybe I
should take it somewhere inbetween. And isn't there taxes I
might end up owing on SocialSecurity, a whole lot of
questions around that we cantalk about at 5805436, and
(03:14):
again, Mr. Money is here andhappy to talk to you about it. I
thought I would start today'sshow with your money in the new
Trump administration. In otherwords, things that we should be
looking at now that we're in theTrump administration. It is the
year 2025, Trump is the boss. Hedoes have a Republican Senate,
(03:38):
Republican Congress, sohopefully that means he can get
through some of his legislation,most of his legislation, but
we'll see each person votes whatthey believe to be best,
hopefully in Washington. Andagain, I thought I would talk
about what are some of those keythings Mr. Money watches, and
(03:59):
I'll be reporting each week. Butsame things for you as you read
the paper you talk to friends.What are those key items these
days? Again? First one I wouldput on the list is to watch
about income taxes. Of course,you knew I'd say that I am Mr.
Tax man every week on this show.But again, what do you think
(04:20):
about taxes. There was the lawthat he put into place which
reduced taxes in a big way backin 2017 Those were his tax cuts
that he got through Congress, inthe Senate, and he is vowed he's
going to extend those 2017 taxcuts. They're supposed to expire
(04:41):
at the end of the year, thisyear being 2025, and he said, I
want to renew them. And by theway, from a tax man of the last
40 plus years, these are goodtax rates. This tax laws are
good for us, the individual, us,the corporation, paying income
taxes. So. Again, renewing themeasures that are there would be
(05:02):
a whole lot of good for us.Keeping the top tax rate at 37%
that's a good thing. Mr. Money,37% still seems high. I agree
with you. But comparative to allthe years, back to the early
1900s you will see that 1900what was it? 1918 it all began.
Rates during World War Two gotup to 90 plus percent income
(05:26):
taxes. Can you imagine that?Wow. And so again, under this
current system, the current taxlaws, it's pretty favorable when
you look over all the years. Theother thing that's very
favorable there is inside thetax laws, as affluent families
can continue to pass onsignificant wealth to their
(05:47):
heirs. It's upwards of 14million per spouse. 14 and 14 is
28 million without paying deathtaxes or a state taxes to the
IRS to the federal government.You can move that to your
children or whoever you'd liketo that's pretty powerful. If
the tax laws do not get changedand they expire at the end of
(06:11):
2025 it drops down to 6 millionfrom the current number. So 14
millions a whole lot better than6 million. So again, that's one
of the issues to look on fortaxes. Will they keep that
estate number high so I canavoid estate taxes or death
taxes when I pass on some of myassets to the kids, or whoever
(06:35):
you choose to they're alsodebating something called the
salt state and local taxdeduction. Mister Money in
English, in English, what thesalt is on the tax returns, pre
2017
you could deduct on your taxreturn part of itemized
deductions. You could deduct allyour state and local income
(06:56):
taxes that were taken out ofyour check. So my Idaho State
withholding, I could put on mytax return and deduct it. I
could put on my real estateproperty taxes and deduct it.
And it was pretty great. So ifyou were in a high tax state and
or you made a lot of money andhad a lot of state income tax
withheld, or paid a highproperty tax, you could take
(07:16):
that as a nice deduction on yourreturn. And with the 2017 law
change, they limited it to10,000 so you can only deduct up
to 10,000 of state income taxout of your paycheck or your
real estate tax. Only, Trump hastalked about raising that so you
can deduct more if, in fact, youdid have more state income tax
(07:39):
withheld and real estateproperty tax you paid. So again,
that's something we're lookingat with the tax law. There's
debates over whether the childtax credit used to be $2,000 you
could get for all your childrenunder age 17. Again, they're
looking to see if that willcontinue or not. Trump's talked
(07:59):
about eliminating any income taxon tips you receive. And again,
wouldn't that be great if I'mgetting tips and I don't have to
report it, that would befabulous. Again, some income
without taxation on it soundsreal good. Of course, the
worriers worry that thereforeI'm going to change your w2
wages to be taxes, so I'm goingto give you more money is taxed,
(08:21):
not as wage, and therefore youcan avoid taxation. So I'm sure
there'll be rules around it. IfTrump gets that tax change, he's
also said he wants to not incometax you on Social Security
benefits. And again, we'll seeif that one goes into case,
something for us to keepwatching. Of course, I'll be
relaying the law on it as itcomes out. But again, something
(08:44):
good there. I want to pay lessincome tax, keep more of my
money so I can survive, so I canretire, so I can build up my
assets. And again, I'd like topay less in Social Security tax.
And many people don't realizethat Social Security, the amount
you receive does go on yourfederal tax return, it may be
taxable, not on the state, buton the Fed. So again, if he
(09:08):
makes it so I do not have toreport Social Security received
on my federal tax return. That'sanother good thing. Also. He
doesn't want to tax overtimemoney. So if you're working
overtime, getting some overtimemoney, not tax you on overtime.
Again, lot of us do overtime.Mr. Money is six days a week
working. If I got paid as a w2only, I'd certainly be getting
(09:32):
some overtime pay with all thehours I put in. But again, we'll
look and see what happens withthat one. He also said he'd like
to make car loan interestdeductible. Doesn't get a lot of
press on the air when I'mwatching my TV or listening to
the radio, but certainly, a lotof us have car loans, and a lot
(09:53):
of us have interest on carloans. Yes, that used to be
deductible interest on a carloan, it's no longer. The case
right now? Well, certainlythat'd be a nice deduction if it
was brought back and I can startto deduct that on my federal tax
return. Schedule A itemizeddeduction, sir, I'd like that.
(10:13):
He's also looking to lower taxeson US citizens living abroad.
That'd be kind of neat, and hewould push for more tax credit
for family caregivers. In fact,I see a lot of that recently.
There's a lot of familycaregiving going on. And yes,
many states will pay yourcaregiver. You got to sign up
and qualify. But if you'retaking care of your mother, you
(10:37):
can get some wages, not a bignumber, maybe five grand to 10
grand, or maybe as little as twogrand to five grand to 10 grand,
that you can receive a wage fromthe state because you're caring
for an aged person, and you canget paid for that. So they're
looking to get more tax creditsfor family caregivers. So again,
(10:59):
to pay for these tax cuts, isthe big question that goes on
with that is, how you going topay for it? Mr. Money. So again,
they've got to look for howthey're going to pay for it.
Some of the things thegovernment right now is looking
at, again with Trump, isrepealing or restricting the
green energy credits, includingthose credits for buying
electronic vehicles or addingsolar panels to your home again,
(11:23):
taking those credits, those taxbenefits, away because he's
giving new benefits, might evenbe taking away some of the other
energy efficiency homeimprovements. It's unlikely
Congress will do all this. Idon't think they will get every
one of these done, but that'ssomething we're watching now.
That's why I brought it up yourmoney in the new Trump
(11:45):
administration. Couple things towatch. One of them is obviously
income taxes for us to watch.Another one for us to watch is
called crypto currency. Yes,that other kind of currency, not
the dollar, currency that youput in the bank and the bank and
watch it and see it, and look atyour balance and see where all
your money is going out of yourbank account. This is different
(12:09):
in the crypto world. And whatdid Trump say? He wants the US
to be the crypto capital of theplanet. Expectations that he
will change policy to do thishave spurred a big boom in
Bitcoin. If you've seen theprice of Bitcoin these days, it
certainly went up a whole lotfrom last year through this
year. And yes, it'll fluctuate,but boy, if he likes crypto, and
(12:34):
he is going to deregulate someof the regulations on it give
him more freedom inside of thecryptocurrency investment market
may be very, very good among thepossibility legislation from
comm list Congress establishinghow crypto exchanges will be
regulated. The formation of acrypto advisory council may be
(12:55):
coming friendlier treatment fromfederal agencies such as the SEC
Securities Exchange Commission,there could also be clarity on
whether regulators should treatdigital currencies as a
commodity or securities. Me, thetax man, know if it's considered
a commodity goes one way taxtreated and if it's a security,
(13:16):
it's treated differently. I'm atax return. So that's going to
matter his welcoming stancetoward crypto is a departure
from Biden's administration. TheBiden administration was kind of
hostile, is the word they usearound it. So we need to look
and see what's there. Anotherissue is obviously the tariffs.
(13:37):
And again, I've heard thethreats, but I really wonder how
much of the terrorists will gointo place. I wonder. Mr. Money
here wonders, is it justpositioning, negotiating from to
work on the tariff? Do I believethere'll be some tariffs? I do.
We need to watch it. What willit be with Mexico? What will it
(14:00):
be with Canada, two countriesthat very much Trump is not
happy with for letting illegalimmigrants through the borders
rather than secure theirborders. And very well Canada
may, in fact, secure theirborders and say, Don't tariff
me. Or Mexico may say that, butplease, know, a whole lot of
goods come through that borderfrom Canada that Americans use,
(14:23):
and a whole lot of imports comein from Mexico that we use. I
understand Trump wants Americamade so less imports of certain
items means Americans will makeit, produce it and sell it in
America and around the world.Nonetheless, the tariffs are
something it's kind of a threat,but it doesn't have to be a
(14:45):
threat. It can simply be used asnegotiating tool, which I
believe the Trump administrationwill be doing do I think it
necessarily will beinflationary. Again, that's one
of the things we're going towatch if all of a sudden I can't
bring in. Things from China orChina, let's say, as a 50%
tariff. Obviously the goods aregoing to be higher price because
(15:06):
they have to pay 50% tariff feesto get in. The price of those
items will therefore be more andtherefore, if I buy them, it's
costing me a whole lot of moremoney. So that's inflationary.
It's costing me more. Or ifAmericans are making it right
here and selling it, it may bemore costly to have it made here
than in China. Again, thoughtsof inflation are there, again,
(15:31):
Americans paying a higher price,which is inflationary. Again,
very, very big issue for us towatch and follow. Mr. Money. Of
course, we'll be doing that, theother one get some air play
sometimes and not AirPlayanother time. Is the deficit, 35
plus trillion deficit over 1trillion plus in fees to handle
(15:55):
the interest payments this year.That's a whole lot of money,
over a trillion. I didn't sayover b billion. I said over T
for trillion dollars to securethe debt. So I understand
bringing down interest rateswill help eventually with our
debt, because some of the debtwas issued at higher rates, and
some of the debt will come due,and if we need new debt, the new
(16:19):
debt gets issued at the currentrate, which is a high number,
5.25%
is the interest rate number. Andso again, we look to see on that
debt that can be very, veryharmful to the economy with so
much money going toward that.And so again, Trump would say,
or his administration would say,but Mr. Money, one of the things
(16:40):
were offsetting it with cuttingback. We got out of the Paris
Accords. We're getting out ofsome of the green items that we
were doing in the past. Thatwill save us some money, the
tariffs will bring in money tobring down some of our debt,
etc. So we have to wait and seewhat all these numbers are going
to equate to to see, is this allgood or not all good? One other
(17:04):
thing again doesn't get muchpress is mortgages. It's been
over 15 years since the federalgovernment took control of two
companies crucial to themortgage market. Optimism is
growing that the new Trumpadministration will complete the
naughty task. That's the wordthey use here in the article
naughty task of returning FannieMae and Freddie Mac. Now, if you
(17:27):
realize Fannie Mae and FreddieMac don't make mortgages, they
buy them and then they guaranteepayment on about 40% of them,
which they then sell toinvestors as bonds. Saying
another way, if it stops beinggovernment backed Fannie and
Freddie, as far as makingmortgage loans, and it becomes
(17:49):
independent, owned byindependent people, companies
will that raise the mortgageinterest rates or not. And
again, housing is a major, majorpart of the US economy, and so
as a result, we need to knowwhat's going on there. Trump, I
believes, is a real estate man,and I believe he wants to get
(18:12):
real estate market flowingagain, again, another reason he
wants interest rates lower. Sothese are just some of the
issues that Mr. Money isfollowing, and I'll continue to
follow with you each week whenwe come back, it's income tax
session, and we're going to talkabout this, see if you can
answer this in the break.Seniors, you might not want to
(18:36):
sell that highly appreciatedhome of yours again, seniors,
you might not, might not want tosell your highly appreciated
real estate, your home. Mr.Money is going to answer why
that question when we come back,this is Mr. Money. Let
Unknown (18:55):
me tell you how it will
be. There's one for 19 for me,because I'm the tax
Mark Rothstein (19:16):
man. Mr. Money is here at k, i, d, O Talk Radio
studios, and Mr. Money is goingto talk about why you might not
want to sell that highlyappreciated home of yours. In
recent years, we all know it,the residential real estate
market has gone up up up allover the world, especially here
(19:38):
in Idaho, up up up. We got lotsof Washington people coming
here. We got Portland peoplecoming here, with the fires in
Los Angeles, my guess is we'llhave a lot of Los Angelenos
coming here, and again, peoplewanting to buy, buy. Buy. Tends
to increase the price of realestate, the values. Going up. We
(20:01):
already know they've been goingup, but I think it's going to
continue to go up. It seems thatway, especially here. So that
means there are more seniorswith highly appreciated homes
than ever before, and that'strue. If you're facing this
situation, you might rightfullybe concerned about potential tax
on a sale again, if you boughtyour home for 200,000 and you
(20:22):
sell it for a million, there'san income tax man waiting at
your door to collect incometaxes on it. What's the basic
rules? Let me mention that ifyou sell a highly appreciated
principal residence, keyword,principal residence, where
you've been living and you'vebeen living there the last two
years. You may have been livingthere 40 years, but at least the
(20:43):
last two years out of five isthe law, your profit could
potentially exceed the home salegain exclusion. What's the home
gain exclusion? What that is, isthe IRS automatically says, If
you sell your personal home andyou are married, any gain up to
500 grand is excluded. You haveto pay an income taxes. If
(21:07):
you're single, you can excludeup to $250,000 of any gain you
got. So in my example, youbought it for 200,000 and that's
your cost, and you went and soldit for a million. Sounds to me
like you've got 800,000 profit.If you're married, you get rid
of 500,000 so there's still300,000 extra gain, and so you
(21:29):
got to pay what's called capitalgains tax on it. So you that's
why I brought it up. Seniors,you might not want to sell that
highly appreciated home. So Iwant to talk about other things
you can do, because, by golly,I'd hate that you bought it for
200 you sell it for a million.I'm happy you made the big
profit, but I'd certainly notwant to pay capital gains. Under
(21:54):
the current rules, the maximumlong term capital gain rate is
20% by the way that you wouldend up owing to the government.
Can you adjust that number alittle bit Sure? Selling
expenses on your home, you getto reduce the gain by that if
you made improvements to yourhouse, that goes in the equation
to help you also. And by theway, if you live in a state with
(22:15):
no personal income tax, you'llonly have to worry about the
federal side. However, moststates that assess personal
income tax do tax you on capitalgains. Will tax you on your gain
on the state side, also, excuseme, one other item I should
mention, this one no one knowsabout except tax people. It
(22:36):
seems it's called the n, i, i t,net investment income tax. So
some home sellers, when you havea big profit and you got to
report it on your tax return,that could push you up to a
much, much higher tax bracketwhere, all of a sudden, this and
I it shows up called netinvestment income tax. If you're
(22:58):
single, the thresholds are200,000 you get way up above
that 200 you're gonna startpaying this and I it tax, if
you're married, starts hitting a250,000 so you gotta also be
where, not only the income taxand the capital gains tax, they
got an extra one called an IITTax. And again, that's 3.8% so
(23:21):
again, some home sellers alsomay be exposed to this 3.8% net
investment income tax also, andalso. Oh, but Mr. Money, mine's
a rental property. Is thatdifferent? I'd certainly like to
sell my rental property and takea 500 exclusion of that gain if
(23:41):
I'm married or 250 if I'msingle, answer, no, this is only
applies to your personal house,and you need to have lived there
in your personal house two ofthe last five years. So the day
you sell it, look back fiveyears, make sure at least two of
them are personal. But when it'sa rental property, then all of a
sudden, there is no 250exclusion. There's no 500
(24:05):
exclusion. And if you've beentaking a deduction for that
rental property all these years,something called depreciation,
people have been taking, youhave to recapture that
depreciation on your tax returnyou've been taking all these
years at a 25% tax bracket. Sowho not so good? Mr. Money, give
(24:26):
me the solution. Please. I hearthe problem. What's the
solution? So instead of sellingyour highly appreciated home,
you could choose to hold on tothe home to avoid this painful
tax hit. That's right, if you'reable to keep your home until you
die for federal tax purposes,and as it turns out, Idaho tax
(24:46):
purposes, the tax basis of yourpersonal residence is stepped up
to fair market value. So again,if you bought your place for 200
grand on the day you die, it'sworth 1,000,002 So when your
children, or whoever you name,inherit it, they inherit it for
what it's worth when you died,that would be a million. So they
(25:08):
inherit it for a million. Theygo and sell it thereafter for a
million. There is no capitalgain. There is no tax gain,
nothing in there, by the way,when I say on the day you died,
we value it. You can also valueit called the alternative date,
which is six months later. Soagain, when you pass away and
it's in your name, you leave itto someone. They get a stepped
(25:31):
up basis. They inherit it forwhat it's worth. In my example,
a million. They go ahead andsell it for a million. There is
no gain, by the way. Theyinherit it for a million, they
sell it three months later for900,000 they actually get a
minus 100,000 on their taxreturn. Woo, woo, sounds pretty
good. If they inherit it for amillion, they sell it three
(25:53):
months later for 1.1 million.They have to pay tax on that
100,000 increase because theyinherited it at a million. They
sold it for 1.1 that 100,000would be a taxable gain. Again,
you can reduce it by sellingfees. So again, take a look at
that. If you own your home withyour spouse, the tax basis of
(26:14):
the portion you own will bestepped up when you die. If
you're in a community property,state, like we are, California
is also there's nine of them inthe country. By the way, the tax
basis of the entire residence isgenerally stepped up to fair
market value when the firstspouse dies, not just half,
because only one of the twopeople passed away. So only my
(26:37):
half would increase, because I'mthe one who died. Nope.
Community Property, state, oneof the two spouses passes away.
It goes up to the full million.It just steps up to fair market
value, and the remaining spousenow has something worth a
million, so they could go aheadand now sell it and pay no
income tax, no capital gains taxon it. Mr. Money, you didn't
(26:59):
talk about a vacation home. Youtalked about a rental. You
talked about my personal homewith the exclusion. What about
my vacation home? Mr. Money,what about that one? If you sell
a highly appreciated home,that's not your principal
residence, so Mr. Money, I'mselling my mobile home, my motor
home, my vacation home, mytimeshare home, you get no gain
(27:22):
exclusion on that one either. Sothe entire profit, if there is
one, will be taxed as capitalgain. Remember, if there's no
gain, if you bought it for 200and sold it for 100
you do not get a step up oranything else. Again, it was
something personal you sold andso no, there is no stepped up
(27:44):
basis for it. If you made a gainon your vacation home, you will
pay tax on that. But again, as Imentioned earlier, one answer
might be, you hold on to ahighly appreciated vacation home
until the day you die, yourheirs would then receive a
stepped up basis on the homenotice the heirs your
(28:06):
beneficiary's name is not on thereal estate. It's in your name.
They then inherit it. Can't beput in their name before you
die. It has to stay in yourname. They inherit it. The
stepped up basis will equal theproperties fair market value. So
again, same thing with avacation home, it's in your
name. You pass away. Theinheritors inherited at stepped
(28:29):
up basis, and they can then sellit and hopefully not pay any
taxes. Mr. Money forgot aboutstocks. What about stocks? Same
thing, if you own a portfolio ofnice stocks in there, not
retirement, regular brokerageaccount, investment account, and
you bought those stocks for $200and those stocks are now worth
(28:49):
1000 same answer. It's in yourname. When you pass away, it
steps up basis. So yourbeneficiaries inherit the stock,
and they inherit it at 1000 theycan then go sell it for 1000 and
pay no taxes on the game becauseof the stepped up basis. So
again, passing away, you getthat stepped up valuation that
(29:12):
someone inherits it. But ifyou're going to sell your house,
remember, 500,000 you canexclude, if you're married,
250,000 you can exclude ifyou're single. So what does tax
planning say? Mr. Money, I justcan't afford my house. Mr.
Money, I know you want me tokeep it. I know you want me to
(29:35):
die in my house and then give itto my beneficiaries. They get a
stepped up basis. So it's wortha million. When I die, they'll
sell it for a million, and theypay no taxes. But what about me?
I'm in my million dollar home,but I can't afford it anymore.
One of the things you couldconsider doing is something
called a reverse mortgage on afuture show. I'll talk much more
(29:58):
about it, but I'm bringing itup. To say it is possible for
you to stay in your home thatyou feel you can't afford by
doing something called a reversemortgage, where you do get to
stay in your home, but you don'thave to make any more mortgage
payments. And the reversemortgage company, the bank, will
give you a chunk of money foryou to live off of, for you to
(30:19):
spend again, there's costsassociated, there's pros and
cons of that which Mr. Moneywill do on a future show. But
again, something to consider, tostay in your home so you can
stay in it pass away and someoneinherits it. One other thing Mr.
Money, I sold my home. I took my500,000 exclusion, or my 250,000
(30:40):
exclusion is single. Mr. Money,I want to do it again. I bought
another home. Mr. Money boughtit for cash. This time, Mr.
Money and I made money on mysecond home. Can I sell my
second home and have another 500exclusion if I'm married on a
profit? Can I have another 250exclusion on my next home?
Answer, yes, as long as you'rein the new home for at least two
(31:04):
years and then sell it that 500exclusion on any gain is there
for you to use married and 250if you're single. Hoping this
has helped us with that when wecome back, there's another
client called me this week, Mr.Money. I got an inheritance
coming What do I need to know?Thought I would answer that
(31:25):
question next. What do you dowhen you've got an inheritance
of a major dollars coming atyou? I got the answer when we
come back. This is Mr. Money.Welcome
Unknown (31:36):
back to the Mr. Money show on K I do talk radio, 1075,
FM and 588,
Mark Rothstein (31:50):
Mr. Money's here at K I do studios, and I went to
the break saying, what do you dowhen you inherit money? You
smile. You say great. Wonder ifI got to pay income tax on it. I
wonder if I get it all and I cando whatever I want with it, that
there's no strings attached, butmany times there's just no
(32:10):
instruction ever given toanyone. So receiving an
inheritance from a loved one'sgreat honor, wonderful to get,
depending on what you receiveand the inheritance, if it's a
big amount, has the potential tochange your entire life. I want
to change your entire life in agood way with what I'm going to
talk about, because here's anexample of Jill, who had
(32:32):
complete freedom that hergrandmother left her a million
dollars, and all she did wasinvited her friends, and they
all partied, had a good time.She did pay off her credit card
debt, then it went up again, andthen it went down when she paid
it off. Next thing you know, shewoke up in less than a year, and
that million dollars was gone.So for the sake of simplicity,
(32:57):
to let you know, Jill'sgrandmother, in this case, chose
not to put the money in a trust.Chose not to put any
restrictions around it. Shesimply gave it to her naive
college granddaughter with thefreedom to spend as you want, no
oversight. And therefore, thecollege student did just that,
(33:17):
whereas her grandmother couldhave put it into a trust to
lever. And the trust could havesaid a lot of things, like, when
you get the money, you get athird of it. At age 25 you get a
third of it. At age 30, you geta third of it. At age 40, she
could have put restrictions.You're buying a house, I will
match it. So if you put moneydown, I'll take some of the
(33:38):
trust money and match you. Thereare so many things you could do
inside of that I'll pay forhigher education from the trust
inheritance. But many times it'sprobably a smart idea to think
about when you're leaving moneyto someone. Do you protect it in
some way? Or what I would say,protect it from the grave, you
passed away, you know, maybepossibly leave some instructions
(34:03):
when you do it, of course,before you die, Mr. Money's got
a few things to say about that.Make sure you have a durable
power of attorney for healthcare. So for yourself, you want
to name someone that hasauthority to make health care
decisions for you, especially ifyour health is such you can't
make decisions yourself. Makesure you've got a durable power
(34:24):
of attorney for health care, bythe way. Also make sure you have
a durable power of attorney forfinancial matters. Maybe you're
just not competent at the momentto make financial decisions with
your investments, with yourrental property, with your
estate planning, with yourretirement accounts, could be so
(34:44):
many things we're accountablefor. Make sure you have a
durable power of attorney forfinancial matters where you name
someone who steps in to do it,and on the form you get to say
you're able to step in andhandle my real estate, or handle
my investments, or handle my.Fill in the blank. Again, very
smart thing to have. You canhave something called a patient
(35:05):
advocate. This person has theauthority to make all medical
decisions on your behalf. Andagain, it's like a durable power
of attorney for health care. Butagain, speak to the person, let
them know your wishes, if infact, you would like all action
that can be taken to bring youaround to a good life. Needs to
(35:27):
say that versus I'll have noquality of life, pull my plug.
Let me go. Leave instructionsthe deeds to all your
properties. If you own realestate, make sure we know where
the pink slip is or the DEETslip is so we know, make sure
you've got your will or trustsomewhere that people know where
it is findable, where youactually name who your executor
(35:50):
to execute your wishes when youpass away. Executive tricks, if
it's a lady, and again, thatwill says who's the
beneficiaries, where the moneygoes to so a Will or Trust is
also essential, by the way, atrust also protects assets. So
may be important, again,protects assets from
(36:11):
beneficiaries, creditors. Soyou're leaving it to a
granddaughter, and she's got alot of creditors after her.
Again, this would protect it ifyou used a trust in that sense.
But I like a trust. It keepsliquidity when you pass away, so
there's access to money, savesyou money because you don't go
through the legal system calledprobate, that's got to be done,
(36:31):
leaves all your business veryprivate, and again, it's there
to protect you. Again, I'vealready done shows on the trust,
so again, you can go to Mr.Money answers.com and listen for
some of those shows with all thematerial. But again, if you're
the inheritor, I inherited themoney. Number one, meet with a
(36:51):
financial advisor. Yeah, meetwith someone like a Mr. Money,
or Mrs. Money. By the way, thereis a Mrs. Money in the world.
I've done seminars with Mrs.Money. So Mrs. And Mr. Money did
seminars and again, meet withthat financial advisor.
Receiving an inheritance can beoverwhelming, especially at a
(37:12):
time that you're grieving over aloved one. Yes, hire the
financial advisor before youmake purchases or investments
with your inherent get thatinput to yourself. Yes, can you
talk to friends and people?Sure, get some input, but by all
means, a financial advisor whois committed to you that has one
(37:33):
objective take care of you,whereas talking to friends and
others, they may not be allabout you, and maybe you don't
want it all just sitting in abank account indefinitely, which
a lot of people do when theyfirst get it, and maybe that's
the right thing for you. Butagain, a financial professional
is not a bad idea to bring intoyour life. Another thing
(37:55):
identify your financial goals.It's one of your financial
advice. Gonna ask you, what areyour goals? Do you need to pay
off some debt right now? Are youinterested in purchasing a home
at some point? Do you want tobuild an emergency savings
account? Do you want to put acollege account together for
your children again? These areall the things I ask when I'm
(38:16):
with clients. Once you identifytheir financial goals, start
making a plan to achieve them. Ieven bring up buying a business.
If you're looking for somethingto bring income to you, you're
looking for a future foryourself, why not go to the
franchise show and at thefranchise show at the convention
center, maybe Baskin and Robbinsis there and you'd like to own a
(38:37):
franchise of Baskin and Robbinsor Ace Hardware or Subway
sandwiches or fill in the blank,they got hundreds of companies
there that already know how torun the business, and you would
therefore say, I'd like to learnhow to run a business. Is a
franchise available in fill inthe blank in your city that
could be a possibility, again,with an inheritance. Make sure
(38:59):
you create a budget. Is the nextthing on my list. Now that
you've got some newfound wealth,may be tempting to take that
dream vacation, buy a new car,give it to your radio producer
that sits with me every week.Could be a whole lot of things
you want to do, but again, yougot to be intentional about how
you're saving and spending themoney. It could be gone in a
(39:21):
blink or a snap. So again, whatis it that you want to do?
Create that budget? Considersetting aside some money to
spend now, some money you'regoing to spend later, and some
money you may never spend. Keepsome of it liquid. Invest some
into an investment vehicle thatyou can access in the future,
(39:43):
maybe a CD that comes due in ayear. Again, the rest of the
money put into long terminvestments. Talk to a financial
person. Talk to people have beensuccessful. Talk to people that
have done investments that haveworked out in a good way, and
again, get the input. Before youjust spend it, unless you've got
a big money IQ, probably goodidea to get some input. Mr.
(40:07):
Money, I listen to you everyweek. Does that make me smart
enough? Makes you smarter thanmost everyone else? But the
answer is, I would still bringin a personal financial planner
for yourself, maybe ideally, acertified financial planner like
myself and possibly a tax personwho's also a financial person.
Remember, taxes and investmentsfinancial go together. So good.
(40:31):
Last thing I would leave youwith is invest in your future.
Figure out what are those bestways to maximize your
inheritance for the future. Imentioned it a moment ago. Plan
some money now later, and neverput some away for the future.
But again, you'll need to dependon what's going on in your life.
(40:52):
If you've inherited a retirementaccount, there's some income
taxes that may be paid on that.Since most people that inherit
money, that's retirement moneyyou inherit. Have to take it out
over the next 10 years. There'sexclusions to that, that some
people aren't forced to take itout. So there's a tax
ramification to all of this,which is why I brought that up.
(41:14):
Very important for you to lookinto when we come back. Mr.
Money is going to talk aboutanother key item. It's actually
my favorite thing, if I haveone, it's called how HSAs pay
off retirement health savingsaccount. Why they're great. I
mean, great to have inretirement. All when we come
back, this is Mr. Money.
Unknown (41:40):
Welcome back to the Mr. Money show on K I do talk radio,
1075 FM and 580 am
Mark Rothstein (41:47):
Mr. Money, welcome back. I want to talk
about HSA Health SavingsAccount. Yes, it is my favorite.
What are they? If you've got ahigh deductible health plan, HSA
accounts could play a crucialrole for you. Why? Because when
you put money into an HSA healthsavings account, you get a minus
(42:11):
on your tax return. So it's pretax, then it's untaxed. As it
gets larger and larger, yousimply pay no taxes. It grows,
and then when you pull it out.It comes out for free. So I got
a minus up front. It grows forfree. It comes out for free.
When it comes out for free, allI got to do is use it for
qualified medical expenses.Pretty great. What have I done?
(42:33):
I put money in HSA. Not used itevery year because I am making
money and I can afford to pay mydoctor bills. But I've now had
my HSA get bigger, bigger,bigger, bigger. So when I
retire, I got a big chunk ofmoney put away that I can pull
out. And one other good thingis, when you are age 65 or
older, you can pull money out ofan HSA, and it does not have to
(42:58):
be used for medical. Usually,you pull it out. Gotta use it
for medical and if you don't,it's 20% penalty. But nope. Once
you reach age 65 you can pull itout for anything you want, and
that's pretty neat thing to do.And by the way, you can pull it
out for medical bills from 10years ago, if you just keep the
receipts. I pulled out medicalbecause I incurred it 10 years
(43:18):
ago, nine years ago, eight yearsago, and I'm pulling it out and
pulling the money into my pocketright now. So the other really
great thing, when you pull moneyout of an HSA doesn't go into
tax return. So my tax bracketsays I need five grand more, and
I was going to pull five grandextra out of my retirement
account that I got to pay taxon. I'll pull out that extra
(43:39):
five grand that I need from myHSA because it doesn't show up
on my tax return. So I likehaving a bucket of money that I
can pull out that doesn't go onmy tax return, so I can stay in
that lower tax bracket, and I'vegot access to the money whenever
I want it. The average 65 yearold who retired last year, 24
(44:03):
could spend upwards of 165,000on health care during their
retirement. That's according toFidelity Investments. So if I
kind of know my health carespending over my lifetime, for
the next 20 plus years, whateverit may be, it could be upwards
of 165,000 I certainly am gladthat I got a nice, big HSA that
(44:24):
I can do it from. So again, Mr.Money loves it, and again, you
need to do it in those earlieryears. You can't add to an HSA
once you're retired at 65 you'vegot to do it pre age 65 pre
starting Medicare. Once youstart that Medicare, can't do it
(44:45):
anymore. So please, know, Mr.Money wants you to enroll in
that, get that HSA at work, orget that HSA outside of work,
because it is absolutely ideal.Again, remember. Number. Keep
all your receipts every year,whether you ask for your HSA to
pay you for that or not, yourHSA amount is 4300 if you're
(45:10):
doing it for single self family,if it's for a whole family of
people, you can put in 8550 peryear and deduct it. So again,
key items put in 4300, deductedif you're single, 8550, deducted
if you're a family. And it isjust a great thing to do,
leaving you with that happynote, this is Mr. Money. We'll
(45:32):
see you next week. TheInformation and opinions
presented
Unknown (45:35):
are for general information only and are not
intended to provide specificadvice or recommendations for
any individual. You shouldcontact your investment
professional, attorney, accountor tax advisor regarding your
individual situation, theopinions of the presenter do not
necessarily reflect those ofevent. Tax Investment Services
LLC, its affiliates, officers ordirectors. Mark Rothstein, aka
Mr. Money, is the owner of tristar financial LLC and Tristar
(45:55):
Income Tax Services LLC. Mr.Money is a marketing name only
and is not intended for anythingother than a marketing name for
entertainment purposes,securities and advisory services
offered through avantexInvestment Services LLC, a
registered investment advisormember SIPC, tri star financial
LLC, tri star Income TaxServices LLC and avantex
Investment Services LLC areunaffiliated entities.
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Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.