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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

July/August 2023

Inflation and Your Tax Bill

Adjust inflation concept

Inflation is measured by changes over time in the price of a fixed basket of goods and services that represent the everyday purchases of U.S. households. Each year, the IRS makes adjustments for inflation to certain items used to prepare your income tax return.


These items include income-tax brackets, standard deductions, capital gains income thresholds, the earned income tax credit, and retirement plan and IRA contribution limits, among others. All are adjusted to reflect inflation during the previous year, based on the Chained Consumer Price Index for All Urban Consumers (Chained CPI-U).


But some items that can have an impact on your tax bill are not adjusted for inflation.


Social Security Benefits
Although Social Security benefits generally receive a cost-of-living adjustment each year, the income thresholds at which benefits are taxed have remained the same: $25,000 for single filers and $32,000 for married taxpayers filing jointly. Depending on your income, up to 85% of your benefits could be taxed.


Home Sale Tax Exclusion
The amount of gain on a home sale that can be excluded from tax remains at $250,000 for single filers and $500,000 for married joint filers, despite increases in housing prices. You must have lived in your home for at least two of the last five years before the sale to claim the exclusion and haven’t claimed an exclusion in the previous two years.


Surtax on Investment Income for High Income Individuals
A surcharge of 3.8% on net investment income, such as dividends, interest, and capital gain, applies to single filers with modified AGI over $200,000, and married joint filers with modified AGI over $250,000. In addition, the 0.9% surtax on earned income, including wages and self-employment income, is not inflation adjusted.


Your tax professional can help you make the most of any deductions and credits you may qualify for that can lower your tax bill.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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