2022 Standard Deduction Retirement Planning - YouTube

Okay today's lesson, we're talking about Income  Taxes. And we just finished filing the 2021 Tax  

Return. So I'm sure you all are sick of listening  about this. So we're- but it's the title that's up  

today, and we're going to talk specifically about  the Standard Deduction and the amount that you get  

for 2022. And the reason we're of course talking  about 2022 is because we're in the year right now,  

and we're Planners. We're not history teachers  of calculating what went on last year and the  

year before. We're going to look at that when  new Clients come in to us, but we're Planners,  

and so we've we're going to look at 2022, 2023,  and on into the future. Our predictions get a  

little bit fuzzy when you get five, ten years  out. But in Retirement Planning, we're wanting to  

create a Net Income for you that's safe,  and that is comprised of different sources.  

And it's suitable to you. It's, it's enough to  live the way you want to live in Retirement,  

and a big piece of that is Tax Planning.  So, and actually for a lot of retirees  

what is real important to them is doing Charitable  Contributions. So, and then some people it's not.  

So we, we do a whole fact-finding process of  learning and getting to know all our Clients,  

because they're all different. But when we  get to Tax Planning, this Standard Deduction,  

it may seem like a simple, boring topic  but it's not to us. And when it comes to,  

it's really an awesome thing, that  in the new Tax Code that started  

2018- in the Tax Cuts and Jobs Act (TCJA). They  made these Standard Deductions so you don't have  

to keep track of all this stuff. And it's the same  for everybody. So when you have a married couple  

that are both over 65, you get $28,700. You  just to get to put that on your Tax Return.  

Those are your Deductions and then you don't  have to keep track of the rest of the stuff.  

Now, so why does that matter? Well  I mean if you take- I just took in  

two new Clients, both of them have an excess of  $10,000,000 of Assets. Which is a lot of Assets,  

and actually significantly above there. And  looking over their 2021 Tax Returns that I  

did for both of them, both of them, couples in  their 60s. They took the Standard Deduction,  

and actually I was a little surprised by that,  because I just I said, ‘Now wait a minute. So,  

don't you have a bunch of Deductions, given all  the money you have?’ That.. and they don't. And so  

their homes are paid for, and I  guess that makes sense, that if  

people that are well to do and even  people that aren't so well to do,  

um. And people like you and people who are most  of our audience, are you know, people that are  

just struggling along. Saved a little bit of  money and they got some Social Security checks,  

and they got an IRA, and they want to figure  out how to live from the rest of, uh, of time.  

Many of them don't have a Home Mortgage  either, because they've just planned it  

that way. And they've just paid it off. Now some  of them do. Some of them have Small Mortgages,  

and these, I'm just bringing up these very wealthy  people to prove a point. Is, this is the same for  

the couple who has- which would be more typical.  Is that a couple people who are over 65,  

and they've got like say $50,000 of Social  Security coming in. They got two Checks,  

and then they need a little bit more than that  to live. And they've got an IRA, or a 401K, or  

they've got some money they haven't paid Taxes on  yet. Many people these days don't have a Pension.  

They just got that 401K and perhaps they  pull out $20,000 out of the 401K each year.  

So their income is $70,000, that would be  more typical, they get this amount too,  

okay. And so what's the effect of that?  Well, Social Security is only taxed to  

the extent of your other Income, and your  other income for these people is $20,000.  

And you take the $20,000 plus half their  Social Security to come up with a formula  

of the percentage of the Social Security that gets  added into the number. It's a little complicated,  

but bottom line, is whatever number they come up  with for an Income- or a Taxable Income- they get  

to deduct $28,700 from their Federal Taxes.  And it makes the amount of Tax that they owe  

either nothing or nominal. So that's pretty cool.  And it's like you're getting Credit for having a  

Home Mortgage, for giving a lot of money to  Charity, and for paying a lot of State and  

Local Taxes- when you might not be paying a lot  of State and Local Taxes, or certainly not $28,000  

worth. So I really want to impress upon people  the effect of this. It goes up a little bit every  

year, and if we have Single people- 65 and over-  which many couples, one of them is going to be  

a Single when when the first one passes away. So  we prepare people for this, is we need to take  

advantage of filing as a Couple for however many  years you have that. Because one of you is going  

to live on as a Single taxpayer, but many of the  people that just come to us Clients are Single.  

And this number is about half, but it's  still $14,250 that you just get to put down,  

which was mostly comprised of these three things:  Home Mortgage Interest, Charitable Contributions,  

and State and Local Taxes. Now some of the  Charities for people that understand this,  

have suffered a bit, because people are thinking,  ‘Well I get that. You know, get the Tax Deduction  

without actually giving them the money,  because I'm claiming this Standard Deduction.’  

And that's not very good thinking, and hopefully  the whole country hasn't switched to that, because  

that's not the reason you're giving the money to  the Charity. The reason you're giving the money to  

the Charity is because you support the Cause, and  they need it. The Tax Deduction is just a benefit,  

unless you're giving huge amounts.  Now, and so when we take these  

factors, now I want to talk a little bit  about Medical Expenses. Is, Medical Expenses,  

when it really gets down to the bottom line,  people haven't really been able to deduct those  

for years because there's a threshold. And the  threshold for Medical Expenses is 7½% of your  

Adjusted Gross Income (AGI). So in other words,  if you have Medical Expenses of less than that,  

you don't get to deduct them anyhow. And if  you've got Medical Expenses more than that,  

then they better be a whole lot more than  that, because they're going to have to add  

up along with these other things to more  than that or that. So bottom line is,  

you haven't been and you still don't now get  Deductions for Medical Expenses, and my advice  

for that is just insure your Medical Expense. If  you're on Medicare and a Supplement, or if you've  

purchased a Medicare Advantage Plan– is your out  of pocket is fairly limited on that and just buy  

Insurance for that. And then you won't have  that problem of worrying about a Deduction and  

actually you're getting Credit for it anyhow. Now  if you didn't have this, or you're thinking about,  

‘Well my Deductions are way more than this.’  This is really what caught these people that  

have such a high net worth, is if they did have  a Mortgage, only $750,000 of it would be allowed  

and at a 4%. We're just taking an average of  4% Mortgage Rate. That's $30,000 of Interest  

that you could take a deduct.. So just  if somebody was at the maximum and at 4%,  

sure that might be a few dollars over the Standard  Deduction. But it would take that and then you  

take Charitable Contributions, well that would  be an area that somebody could way surpass this.  

And then State and Local Income Taxes have a  cap of $10,000 now in this new Tax Bill. So  

you can only claim $10,000 of this to apply toward  this, is getting the greater amount. So it just,  

they've simplified the Tax Code. The whole  kind of thing they were talking in 2017,  

is well let's do this on a postcard. Well how's  that working for you? That didn't exactly happen,  

but in this area of claiming Deductions, it has  been made a lot simpler. So what are some of the  

strategies that we talk about with this? Number  one, is pay down your Mortgage. I mean I have a  

lady who I constantly go back to as an example.  She's a client and a very dear friend of mine.  

She came into some pretty significant money from  an Estate and it was real significant for her.  

It was as much as her Net Worth about six  or seven years ago, and she had a $160,000  

mortgage at the time that she's you know  making the payments of $6-7-800 a month-  

whatever they were. And this $400,000 came to  her, and we were deciding what to invest it in.  

And the first place that we did, is we paid off  the Mortgage and that was before this business.  

But she, now, I mean it's like she's getting,  was she's a Single Filer, but she's getting  

Credit for having a Home Mortgage when she's  not. And what I'm going to translate to you all  

is, if you're before 65, or just turned  65, and you're anticipating Retirement-  

I don't want everybody going out and paying off  their Mortgages- but within certain parameters.  

Is if you've got a smallish Mortgage or you've  got the money sitting somewhere on the sidelines,  

it's not in an IRA and you could just pay it off.  Or you know if you're 61 and gonna retire at 66,  

you know, could you make double payments?  So that it's gone by the time you know you  

retire. I mean it's just it's a good strategy,  because you're really not getting a Credit for  

that Interest on your Taxes anymore. Now let's  talk about Contributions. So if you're not 70½,  

and you're watching this video, well thank you  because my audience tends to be the older folks,  

but both of these couples that I was talking  to this week have significant Estates,  

as like I said. And they they have significant  IRAs as well, and what I was explaining to them,  

is we're going to start doing Charitable  Contributions once they reach 70½  

through their IRA. And that's through what is  called a QCD. A Qualified Charitable Distribution.  

And so if you haven't heard about  these before, you heard it here first.  

So we do these all the time with our Clients that  are 70½ and older, and you can give up to $100,000  

in any given year through a QCD. And the the gift  never shows up on your Tax Return, and it counts  

as a Required Minimum Distribution, an RMD in your  IRA. Now they've raised the age for RMDs to 72,  

but they didn't raise the age for QCDs when they  did that. So they're still 70½, so that doesn't  

mean you got to give the whole $100,000. My only  point is if you're in your 60s now, and you're  

coming into me, and we're doing Planning out the  next several years, or Tens and Twenties of years,  

you know. And we're we're going through that,  we're planning out Taxes, we're planning out  

Streams of Income- Social Security, all of that.  We're calculating your Tax Bill you know, and then  

you get this thing called RMDs. We can plan for  that and even before the RMDs, we can contribute  

to your favorite charity, yeah. A lot of churches,  I've gone in and met with the elders, and there's  

a lot of older people in the church sitting on  IRA money. And then they give a contribution  

to the church, but they're just doing it out of  After Tax Money and not really getting the Credit  

here. So the IRA is a wonderful tool for the  Charitable Contributions. It just takes it into  

a different world. Now you know as I mentioned  earlier with Medical Expenses, just insure them,  

yeah. A little bit of a joke down here this,  ‘Stop Sending your Account in the Shoe Box.’  

The same lady that I told you about paying off  her Mortgage, she, I have an accountant- a CPA  

who helps a number of my older Clients with-  do their Tax Return. And I have them deal,  

they deal with him through me. And so I get from  her, it's not really a shoe box anymore, but it  

kind of feels like it is. It's a one of  those big brown, and it's just stuff full of  

every receipt that ever possibly ever  was could have been Tax Deductible.  

And she's got them all in there, and I've told  her several times, I’ve quit telling her, I just  

take them. And you know, I don't send them all to  him, I just pull out of there what we really need,  

scan them and send to him. And then I just leave  him all the stuff that's irrelevant in those  

things and then he does her Tax Return. And then  I give them all back to her when she gets all that  

done or mail them to her or something. But, just  the point is, I got a little bit of this at home  

that my wife is still just keeping track  of stuff that is no longer Deductible.  

And there's just something about that receipt and  I just take it from her and I put it in a drawer  

say, ‘Thanks honey.’ You know and we, um, so save  yourself some energy. You really don't need to be  

doing that if you're going to be just claiming  this. So I'm Hans Scheil. I got to tell you  

something funny. I had a guy tell me this week,  very complementary of the videos, but he said,  

‘Would you introduce yourself? I mean I just I had  to watch the whole thing to find out who you are.’  

And I thought, well okay, I didn't say anything  right away, but I at the end I told him that I've  

gone to speeches for years. And I've given  speeches for years. And it's just the first  

two minutes of the speech, is the guy that runs  the meeting, or the lady that runs the meeting,  

talking about my accolades or the speakers.  And just going through the name and  

all the Degrees, and all the big important jobs,  and all the things that I did for humanity.  

And then after that then I go up there, or the  speaker goes up there, and now giving a speech-  

I go through the same stuff again. I'm just  talking about myself, and it takes the person five  

minutes to even get into their speech. So I just  decided when I'm making these training videos,  

I'm just going to skip all the stuff about me. I'm  very easy to find: Hans Scheil. Or you go to this  

web page ‘Cardinalguide.com.’ And, or you just  took Hans Scheil and you put it in Google.  

And I mean there's just pages, I'm, I'm  a real easy guy to find for those of you  

that are interested in all that stuff.  And I thank you very much for listening.