What Is Tax Planning? Tax planning refers to financial planning aimed at reducing tax liabilities and optimally utilizing tax exemptions, rebates, and tax benefits to the full extent allowed by law. Tax-efficient investing requires the review of one’s financial situation from a tax perspective. The objective is to ensure that […]
Taxes
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What Is Unearned Income? Unearned income is also referred to as passive or deferred income. It is income from investments and other sources unrelated to direct employment or owning a business. For example, earned income comes from working a regular job providing a product or service and receiving compensation in […]
What Is a Section 83(b) Election? A Section 83(b) election is a request that the IRS recognizes income and levy income taxes on acquired company shares at the time they are granted rather than later when they are vested. The 83(b) election is a provision of the Internal Revenue Code […]
What Is Backup Withholding Tax? Backup withholding tax is an IRS requirement used to collect taxes on certain types of income payments that are not subject to regular tax withholding. Investors should know that backup withholding is a tax that is levied on investment income. The withholding is at an […]
What Is an Intentionally Defective Grantor Trust (IDGT)? An intentionally defective grantor (IDGT) trust is an estate-planning strategy used to freeze an individual’s assets for estate tax purposes but not for income tax purposes. The intentionally defective grantor trust is set up as a standard grantor trust, but with a […]
NUA – What Is Net Unrealized Appreciation? NUA or net unrealized appreciation is the rise in the value of an employee retirement plan when a lump-sum distribution is made into a taxable account. Instead of being taxed as regular income, the difference in value is taxed at long-term capital gains […]