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Taxes: Hiding vs. Frontal Assault

Finishing Well / Hans Scheil
The Cross Radio
October 12, 2019 8:30 am

Taxes: Hiding vs. Frontal Assault

Finishing Well / Hans Scheil

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October 12, 2019 8:30 am

You cannot hide from taxes, they will catch up with you eventually. Some people push it off and decide they don’t want to pay them until later, or even pass them onto their children. If you take taxes head on, ask for advice, and put strategies into action for you individual situation, it can end up saving you money in the long run.  

Hans and Robby start out talking about how low the tax rates currently are. Hans suggests for many of his clients that it is advantageous to pay more tax this year to pay less taxes in the future. A Roth IRA conversion is one way to do this.

Hans has recently acquired a number of CPAs as clients.Hans has helped them do pretty advanced tax planning strategies, even though they are the tax expert. This includes strategies for Medicare tax, or IRMAA, and Social Security tax planning.  

Taxes also come into play with long term care. Hans has a client who is a   CPA and was recently diagnosed with ALS. How is he going to pay for the care he is going to need? Hans goes over the strategy they devised, including the use of   IRAs, life insurance, and tax planning.  

Lastly, Hans and Robby discuss QCDs, and how you can make charitable contributions to your Church tax-free.  

Don’t forget to get your copy of “The Complete Cardinal Guide to Planning for and Living in Retirement” on Amazon or on for free!

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You're listening to the Truth Network and Welcome to finishing well brought to you by Cardinal guy Certified financial planner belonged to Schild, best-selling author and financial planner helping families finish well over 40 years of finishing well will examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Medicare IRA long-term care life insurance and investments and taxes.

Now let's get started. Finishing well welcome to finishing well certified child today show topic ponds, taxes, hiding versus frontal assault, provoking title. I think that the idea was originally as you were describing to me some of the tax things that you been working with here lately. Actually, with some CPAs just don't own me that like in the last two or three weeks. I'm talking about for five CPAs coming in their new client and to me that's chemical. It's like you're the CPAs are coming to us not just to me but to our firm and their putting a lot of value on our tax advice do not necessarily coming to us for tax advice that they end up getting and were enlightening them to some some different things, resistances, noteworthy after thinking about it because as you were describing the things that I heard at couldn't help it. Think about a time I played paintball actually that dangerous heart for the first time and you know I've never played the game and it was obvious that when those paintballs that you it hurts. And so my strategy initially was the high want to hurt and ended but the strange thing was when I acted out of fear and all I did was hide the net result of that was. I would never get a chance to shoot anybody.

I would always get shot and I would know who the shot came from because I was afraid to pop my head out to you to do anything and so over the years. My strategy is graphically changed in that I figured out that if I actually play the game and and figure out what it is that were going after. If I make a frontal assault and and head out that way that actually I'm the guy that used to shoot all the people that are hiding because met, but biblically you might remember that Adam was kind of the father of hiding that you know after they know eight. The broke the one rule that the union was posted yet one rule at a menu managed to not get that one right. But anyway you know it says that he hid from God's presence and it's an interesting thing that the word presence. As you look deep into the Hebrew that it has to do with being able to hear from God, and that has everything to do with wisdom and strategy and and and so as we go into this whole idea of taxes today. You know it's kinda cool to know that you know God is giving you guys some wisdom that you got that you acquired through years of working on these types of things and strategies that are actually rather than operating out of fear. It's operating out of and where we tried to end up to finish well. I'm sure. And so in one of the things is clear we can take advantage of these low tax for absolutely and every year that passes by that you don't take advantage of the low tax rates is an opportunity that may be gone forever remain just within the law in 2025. These tax rates expire in their gonna go back to what they were before they pass the new tax law that's baked into the legislation. Five. Six years that it's as it is now, unless they change it. They could go in and pass something it says okay were and continue for another five years or indefinitely, but count on them. But since it was just one were to look at him were to say that there's a reasonable chance that this is an opportunity to pay tax at these lower rates. That's only can be around for five or six years when we get in 2020, and you let some slip in 2019, we didn't take advantage of this.

It's gone forever. So let us strategies that you described to me had to do with looking at and allow I can make this much and only pay at this level attacks and structuring things to do conversions to Roth IRAs was sure.

So if you have money in a traditional IRA and your gonna pay taxes on that money at some point in most folks are aware and some folks are going to pass that off tiller 70 1/2.

Try to keep it at the minimum stay and required minimum distributions. We talked a lot about that on the show and we do a lot of in our practice and our business is to try to get you what you want in. For most folks that's a low tax bill and so like when I'm proposing here and I'm not doing financial planning on the radio for everybody. Wait till we sit down with you and actually look at your situation but I'm proposing for some people that you actually pay more tax than you otherwise would have to this year so that you can pay less tax and later in a Roth conversion is a perfect way to do that.

So if you've got three or $400,000 or three or 4 million or 30 or 40,000 sitting in an IRA or in a 401(k) and you're in your 60s or 50s, and you know make 60 7080 9000 $20,000 a year. Whatever your salary is between the two of you. If you're married or single limited. It all depends on your situation. You'd be surprised that if you were to take $50,000 out of your IRA and just leave it in there but converted to a Roth IRA. That means you gotta pay the taxes on the money now folks are just kind of immediately opposed like why would I pay taxes now when I can.

Pam later in the answer to that is at these low tax rates, and years significantly under the bracket before they go way up. This is can be a smaller tax bill now and then that Roth IRAs can be tax-free. This is just one small point in today's show is not can be just on Roth conversion. What we really want to talk about is the same things we talk about every seven weeks. When the show comes around his income taxes for retirees in the major issues in one of those is having some money and a raw so you can enjoy tax-free and retirement). Let me talk about his options constantly in the shower and so is on following you right by making a frontal attack on my taxes, so to speak, go ahead and pay these things now in the tax rates are low.

Then later on when I'm really am totally retired and I'm completely dependent on my Social Security. I might not be taking out IRA money that's can increase my income to what has to be taxed as a rock money I could just take it out know is I needed to live without having to pay any taxes without having to pay taxes and without driving some other taxes as a whole bunch of them so I'm not recommending you do this, I'm recommending that you consider, reinvestigate, and then once you get down to the point of doing it that you do it you're very smart that's that's really what we do and that's for the CPAs come in the CPAs that have come to us. They haven't come to us for this, planning they've come to for all we know about Medicare and in the process of Medicare, which is one chapter 1 worry of the seven worries but it's not done in isolation.

You got all kinds of stuff going on so where we've ended up with just about all of these people is doing some pretty advanced tax planning strategy which is right more in their world.

At least they think than they previously thought that it is in mine so I wanted before week before we jump into it mean that the major issues are paying taxes on your Social Security is once you're getting Social Security you gonna have to pay tax on the amount you get.

We want to minimize that and that is a factor on our income tax showing it since were helping them with Medicare surcharges is thing called Irma and that's where we get there button is a lot of don't know a thing about Irma and it's new to them and they were pointing out because are just signing up for Medicare or some of them are already on Medicare with a bird's and is Irma thing is really bothering him and we show how you can do some Irma's really attack not upset my father know and keep he did not like. So maybe for just as lesser after Don went in the world. It sounds like some old lady government has these wonderful skis Meme murmur. I just Irma's a nice name unless you're talking about income I'm trying to come up with the act. It's Medicare I are in a day income related monthly adjustment amount in that nice that just sounds so nice. It's the income related monthly adjustment amount what it is is a surtax for wealthy people or above average income people when they get on Medicare is based upon your adjusted gross income or your mom so it's complicated subject, but is pretty simple when you understand that is if you make a good income in retirement. You can pay a lot more for your Medicare in their some planning things we can do to reduce and that's where I got a lot of the CPAs attention. This is one of the areas then you've got the income taxes associated with death does read and write on my book here will talk about how you complaint cardinal guide to planning for living retirement by certified financial planner Hongqiao, which we always want to tell people that they go to the website. Cardinal and there, then get them of this chapter of the workbook or the book that the seven worries tablets today have speak income tax course you can order the book. There you can actually just email Hans and get it but again you're you're on page you're right on the end.

The front page of the page 7 in the workbook page 219 and am just going through the key questions that we answer in the book talk about long-term care implications of income taxes say what income taxes has do with me laying in a nursing home or assisted living or get home healthcare will get everything to do with it because you gotta pay for. And if you got long-term care insurance that has tax implications if you don't have long-term care insurance and you go to pay for your pocket and then that creates a tax deduction. And you gotta have income to deduct it from. So that's another topic that CPAs is once you can tie one of the subjects that are to be for their own good into taxes.

They're all ears. And so there's you know you need to be smart about that is that is you get older and you age, you might have a big nursing home bill or a big assisted living builder pay and once your pay and that or the insurance companies payment. We can look at the tax implications of all actors to minimize or maximize it, and I are looking and then you know those covers most of the unit two CDs are not in the list here because my published book.

They were permanent yet and you have two CDs are qualified charitable distributions so you can actually ties or pass money on any qualified cheerier charity directly from your IRA and it has wonderful tax we got out of tune on today show, which is taxes frontal assault or hiding a bit more about Moore finishing well. Hans and I would love to take our show on the road to your church and Sunday school Christian or civic group. Here's a chance for you to advance the kingdom through financial resources and leveraging Hans expertise and qualified charitable contributions veterans aid and attendance IRA Social Security and Karen long-term care. Just go to Cardinal and contact Tom to schedule a live recording of finishing well at your church Christian or civic contact Tom to Cardinal that's Cardinal welcome back to finishing well was certified financial planner Hans Schild today show is taxes hiding versus frontal assault, and we talked a little bit about, you know, Adam, and the garden know he was hiding from God's presence, which is interesting Senate standing out of earshot of them and it is interesting to me that God starts calling out to him because he's never been disconnected from Adam and his whole life. It know Adam's always been within earshot of God and all the sudden he finds himself for the first time in a disconnected in the way that he really doesn't know what to do it and he's got lots of shame and and he does know what to do with that so he he's made himself some loincloths in his life as interesting position to be his is trying to hide buddies hiding in plain sight because of the interesting thing to me is in Colossians 3 you know that that Paul gives us an answer to this that that came through Jesus, which is essentially that if you want to hide.

Let me show you were to do it. You know you know where you hide is in your your life is hidden in Christ.

In other words, if you have the blood of Christ. It covers you better than those wineskins. Loincloths right that it covers all the shame and and actually interestingly, unless you ever thought about that but if you're going to your brother who is actually in Christ you can share with them what you are struggling with the things that you may be ashamed of, and in doing so you are bringing it under Christ sure and so is now hidden with your friends can keep that in a good place and pray for you and and all those kind of things well it you know if you're like me in your listening.

There's a lot of my financial stuff that I'm clearly pretty ashamed that it's just like manna. I certainly didn't use wisdom for this and God we know is a bad steward that and and so what a cool thing for me. Honestly when I save it to be able to talk to you on it and share some of the my struggles here and in doing so, you see him, hiding it in Christ because he is your keep. In that where it ought to be you not to judge me and speak as you seem at all but instead you are there to try to innovate, you better make it better give us some wisdom. Plan make some decisions now that are to make your life better. Going forward, and so for this you know of the situation that I want to talk about is one of the CPAs that we were referring to earlier actually came to me a year and 1/2 ago and it was really about her mother. The wife's mother and I don't want to name these people are name where they are but they day you have. She's in assisted living in we needed to pay for that and so she was listen to the show called us got the book read the book we went out there and the husband being a CPA was nice and polite in a lab, but we really never led to any of us helping them in any way other than just giving them some advice here which I never heard from just pretty much forgot about and then I get a call about a week ago two weeks ago from the lady and she tells our people here, I couldn't take the call and it was that he most likely has ALS. Her husband and she is obviously distraught and she's very she's taken a lot of positive action that she wondered if I would take them on as a client and really help her through the financial end of this thing and really plan out and so I just quickly made time in my schedule.

We met one of our satellite offices sat down with them and that that's when I found out it was a CPA. I didn't know that was that a year and half ago but anyhow when I'm going through things is the immediate problem that we need to solve is he's going to need some serious care he's gonna need and she's been a familiar ALS as Lou Gehrig's disease and its quickly debilitating, very quick what is in its around-the-clock care breathing equipment. No trouble transferring and walking and therapy, and you know and I could just see her she's good she's going to be there, but this is gonna run her down. They can both see that they are can see that they know that and I said and because he don't have long-term care insurance. Neither one of when I'm sitting here figuring out now their self-pay. He had a lot of people that are self-pay are going to just be hard to let loose of that money so that there can be slow to call up the outside help stuff that's for your they can get on a Medicare in which you need the most help with this is somebody to sit with him so she can get a break somebody to help him with his breathing equipment will she can rest and shower and sleep in that they're just going to need people to come into the home that are giving custodial care there and get off to help with the skilled care. But there's just a lot of hands-on stuff anyhow they both know that because of the situation with her mother. They don't have insurance. They don't have a huge amount of money but the money that they do have is in an IRA and so you know he certainly being a CPA doesn't want to draw one nickel out of an IRA for anything because he knows he's gonna pay taxes and so the next thing I went to his do you have life insurance and I was just praying all the way down there that hopefully they're going to give me an affirmative answer and the it was affirmative.

He's got $200,000 with a life insurance and so that means when she passes away when he passes away. She's going get $200,000 in cash tax-free. And what was real, striking with a sick he did not know that been a CPA for four years. Practice he did not know that life insurance benefits.

You never really thought about it so it's not like it was some absent piece of information. There's a shocking to me that he he didn't know that. And then I've asked the mother CPAs and work with a lot of them don't know they're working with companies and it's not enough. They're not looking at somebody's individual situation and the land is deceased and the monies, and the lawyers are handling that stuff.

It's just so when I came up with his.

I want to empower both of them to spend the IRA money is necessary for care and I wanted to feel good about it and wanted to be reluctant to do it so we can hire a home healthcare agency and pay for it out of the IRA and then immediately he's thinking now is can be taxes due on that money were going to deplete that IRA. So what she can live on after I'm gone. Said well were gonna replace taxable money with tax-free monies. For starters, is when she gets at life insurance money.

That is, in fact, the way things work out. She's can have tax-free money to pay what you can spend a lot you can get a lot more for tax-free money that he can taxable money and so now just a simple plan that I sketched out for that event. The thing that you brought out that made all kinds of sense to me since they're taking this money that is yet to be taxed in using it for healthcare. There is that's tax-deductible, though it's a way to at least lessen the tax bill off of that I had almost makes a dollar for dollar tax-free.

So if we spent $75,000 a year. That's little over $6000 a month like 1213 1400 a week. That's kind of money it takes to get people to come in and home health aides and you can get a lot of it for that, but that's the kind of money it's gonna take that's all tax-deductible, but we gotta have income to deduct it from and were creating the income taxable income out of the IRA. So were really not can pay tax on that reduction were actually going to be creating a tax deduction there be a little bit of tax. I explained all that to him. He was just impressed and and and so I just I want them to be empowered to spend the money and there is not like you can just do it loosely or whatever they're going consult me over time and were not manage it and go negotiate with the home healthcare agency that do a lot of things that to to to make this work but my sense of the whole thing is is that you can talk next week about long-term care and there's a lot of people that we help the don't have long-term care insurance that are accessing it and so then we gotta figure out a tax efficient way to pay for it and this is one for the all that number stuff that I can spit out is it is a great way.

It's great cover. It's great hiding for me just how profoundly sad I am about for them. Just what he's going to have to go through and with the room and it's just it's it's a very difficult burden of bearing ideas. These are wonderful people and I I think there are handling it much better than I would always pray about that right now.

We thank you for this opportunity to help this couple and we know you're more than aware of the situation were grateful for the chance to pray for them, their family, for those who stand on the sides. I'm looking to you is the is from what I understand are Christians and and and people have questions or to pray that you be glorified in this, but also that they would feel your love and know that you're in it and and that you would prolong his life and and provide the care that they need in order to finish well, whatever that may look like in their situation and we thank you for this show an opportunity to speak into that in Jesus name we pray. Amen. And I just want to mention a couple of other CPAs that he just seems like God sending me a whole list of them real theists of the CPAs that was news to him. He's a Christian he's doing all kinds of stuff with us.

He came to us for Medicare but when I showed him that when he's 70 1/2 how he can give up $200,000 a year to the church and that doesn't ever show up on his taxes. Sure there was completely news to him is really exciting again. It's a frontal strategy, not an F strategy of fear but a strategy of frontal assault. If there are number of pastors stewards the church if they really understood the SKU CD saying they be having me come out and talk to a meeting of their seniors and their people over 70 and half that have some resources because this is just a win-win for everybody. It's a win for the consumer and it's a win for the church. That's a win for continent as clearly and was an opportunity to pay for a lot of ministry that is desperately just like that fat is desperately needed. So thank you Hans lot of fun.

Today you can go to Cardinal today show income taxes right is one of seven worries tab you can get the downloads on these chapters absolutely free. Just remembering output that the Cardinal before guide and and when you go and email Hans if you want to get the book absent in I be happy to send you the book. You can also get on Amazon find our website Cardinal would love to get you this information and we beheld to talk to you as you just turned it on the radio when you like man I missed out I need to hear all this when you can just tell your iPhone series. Let me prepare the finishing well podcasts and in serial do that, or tell Alexis at home.

You know Alexei want to hear the finishing well podcasts is in the podcasts in all this. This information is available on demand and plus all the previous episodes on all the seven worries or iTunes know in then one of the cool things you can do is to subscribe in iTunes and you'll get the show every week so thank you for listening. Thank you Hans thank you. We hope you enjoyed finishing well brought you by Cardinal visit Cardinal for free downloads of the show previous shows on topics such as Social Security, Medicare and IRAs, long-term care and life insurance, investments and taxes as well as constant best-selling book, the complete Cardinal guide to planning for and living in retirement and the workbook once again for dozens of free resources past shows you get Hans book go to Cardinal if you have a question, comment or suggestion for future shows.

Click on the finishing well radio show on the website and send us a word. Once again that's Cardinal Cardinal