Plan Now to Avoid Stealth Taxes this Year

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[The result is a select group of high-quality blue-chip stocks.]( [CLICK HERE...]( Fellow Investor, [Bob Carlson]Retirees and near-retirees need to worry more about Stealth Taxes than regular income taxes. Stealth Taxes include the amount of Social Security benefits added to gross income, the Medicare premium surtax (also known as IRMAA), the 3.8% net investment income tax and more. Some Stealth Taxes are directed specifically at retirees, such as the tax on Social Security benefits and the Medicare premium surtax. Others just happen to catch more retirees than other taxpayers. I call them Stealth Taxes because they increase income taxes without Congress enacting a tax rate increase. Instead, gross income is increased or an additional amount is added to regular income taxes. The key to the Stealth Taxes is adjusted gross income (AGI), because that is the starting point for computing most of the Stealth Taxes. AGI is on line 11 of the current 1040. Most of the Stealth Taxes require that some tax breaks be added to AGI to compute what is called modified AGI or MAGI. For most people, computing MAGI involves only adding any tax-exempt interest to AGI. Some people might have to add other items, such as tax-exempt foreign-earned income, and some of the Stealth Taxes have small differences in their computation of MAGI. But for most people, MAGI is the same as their AGI or is AGI plus tax-exempt interest. Most Stealth Taxes are computed using that year’s MAGI. But the Medicare premium surtax is determined using MAGI from two years earlier. Before putting away your 2023 income tax return, make a note of your AGI and see if it triggers any of the Stealth Taxes or if you are in a high Stealth Tax bracket (especially for the Medicare premium surtax). Then, consider actions you can take the rest of this year to reduce your 2024 AGI. The first step is to add all the income this year that is mandatory or over which you have no control. This income includes taxable Social Security benefits, any pension, required minimum distributions from IRAs and other retirement accounts, annuity payouts, interest and dividends from taxable account holdings and perhaps other sources. The total is a good estimate of your base or minimum AGI for 2024. The second step is to determine how close your base AGI is to triggering the Stealth Taxes or to the beginning or ending of a Stealth Tax bracket. For example, the Medicare premium surtax has six brackets. The monthly surtax in 2024 varies from $66 to $362, depending on the bracket you’re in. [URGENT WARNING: Millions of Retirements Are At Risk]( [image]( Congress is spurring on the most dangerous retirement threat of the last 50 years. One of America’s top retirement researchers reveals the deadly truth behind this government move… Plus the ONLY way to fully protect your wealth in the coming months. [Click Here for the Full Story.]( [CLICK HERE...]( The third step is to estimate the money you are likely to spend this year and determine the amount by which the spending exceeds your base AGI. The fourth step is to decide the sources of the cash for the additional spending by considering the effect of the sources on your income taxes and your Stealth Taxes. When you’re close to triggering a Stealth Tax or being pushed into the next higher bracket, consider taking the cash from tax-free sources, such as distributions from Roth IRAs or health savings accounts. Or you might want to sell investments in taxable accounts that will generate tax losses or small capital gains. When additional taxable income won’t trigger or increase the Stealth Taxes, you might want to take the cash from taxable sources, such as distributions from traditional IRAs or 401(k) s. That reduces the future income from those taxable sources and saves tax-free and low-tax sources for years when you might need them to avoid Stealth Taxes. Finally, you want to consider how to avoid the Stealth Taxes in the future. The best strategies involve taking money out of traditional retirement accounts and paying the taxes today to reduce future ordinary income. To a better retirement, [Bob Carlson] Bob Carlson Editor, Retirement Watch Weekly Editor’s Note: There is a way retirees can collect thousands of dollars per month for the rest of their lives -- tax-free. Plus, this tax-free income source is 100% legal and approved by the IRS. And here’s the kicker: even if they don’t have enough money put away yet for retirement... even if they’re over age 60... they can still get thousands of dollars a month from this opportunity. [Click here to find out more.]( SPONSORED [Stock Watchlist Now Available [Live]]( [image]( If you want to trade smarter (not harder) and be prepared for this week's markets, then you're not going to want to miss out on this. We'll show you soon - LIVE - what [stocks & commodities may be about to explode]( in the next few days and how we can help you conquer volatility by avoiding losses. You need to be ready for any market changes, and nothing is more rewarding to us than knowing we helped you avoid potential losses. [Get in the room now]( [CLICK HERE...]( Want More Retirement Advice? Check out my website, [RetirementWatch.com](, where you’ll find hundreds of free articles covering every aspect of retirement planning. Popular Posts: [What Heirs Should Know About IRAs]( [Surprising Tax Havens]( [How to Make Unlimited Tax-Free Gifts]( [How to Avoid Inherited IRA Disasters]( New to the Retirement Watch Community: SeniorResource.com What does the word “trust” bring to mind for you? 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