The Bogleheads website is an invaluable resources for investing and financial education. Bogleheads® is a registered trademark of the John C. Bogle Center for Financial Literacy, a non-profit 501(c) that supports Bogleheads initiatives worldwide. Below is a link to their “getting started” page, but note that they have extensive set of resources including forums, podcasts, videos, etc.

https://www.bogleheads.org/wiki/Getting_started

A good forum post that explains the Bogleheads approach to investing is:

https://www.bogleheads.org/forum/viewtopic.php?t=6211

While Bogleheads is perhaps best known for their investment approach, their website includes resources on everything from estate planning to insurance.

Signing up for an IRS Online account has many advantages:

• Easy and secure way to make online payments.

• Provides confirmation that returns have been properly filed and processed.

• Allows you to pull transcripts of what income was reported to the IRS (typically available near the end of May for the prior year).

• Provides a record of quarterly estimate payments.

Read more and sign-up here: https://www.irs.gov/payments/your-online-account

Note: For joint returns the payment should be made under the SSN of the taxpayer listed first on the 1040. Otherwise the IRS may not properly credit the payment against the return balance.

The Backdoor Roth IRA

If your income exceeds the AGI Limit for making Roth contributions, backdoor Roths are a legal loophole to make a Roth contribution with a couple extra steps.

Here is an explanation of how to do a backdoor Roth and, just as important, a list of common pitfalls to avoid:

https://www.whitecoatinvestor.com/backdoor-roth-ira-tutorial/

https://www.whitecoatinvestor.com/17-ways-to-screw-up-a-backdoor-roth-ira/

It probably takes most people at least a couple hours to do a backdoor Roth the first time (some of the steps are a little tricky). It may be well worth a phone call to your brokerage firm to help you through the steps.

The Mega Backdoor Roth 401K

A mega backdoor Roth allows you to contribute roughly ~$30K more than you could normally to a 401K. This can bring the annual contribution totals to over $60K.

Unfortunately, I would guess that only about 20% or less of 401K plans allow mega backdoor Roths. Here is a list of companies that purportedly do allow Mega Backdoor Roths:

https://www.levels.fyi/benefits/Mega-Backdoor-Roth-IRA/

Here is an explanation of how mega backdoor Roths work:

https://thecollegeinvestor.com/17561/understanding-the-mega-backdoor-roth-ira/

The time it takes to do a mega backdoor Roth varies greatly depending on the plan. While there is certainly extra work, it is a way to put a lot of money in to a retirement account that can grow tax free for those interested in supercharging retirement savings.

Crypto tax software

If you are trading cryptocurrency or other crypto-assets, we generally recommend that you obtain cryptotax software in order to properly report the income.

While we do not recommend a specific software, some options include Koinly, ZenLedger, and Cointracker.

The software can easily pay for itself with the time-savings and more accurate reports provided (and lower fees for the tax preparer).

Purchases with cryptocurrency (CAUTION)

Note that under current tax law, any time an individual makes a purchase using cryptocurrency, the cryptocurrency is deemed to have been sold and the amount of capital gain must be reported on the individual’s income tax return.

Given the tax complexity, I generally recommend against making purchases using cryptocurrency unless you are familiar and comfortable with the reporting requirements.

Cryptocurrency transactions subject to tax

In addition to purchases using cryptocurrency, other transactions that may be subject to tax include: selling cryptocurrency, airdrops, hard forks, mining or staking activities, etc.

For more info, see: https://www.irs.gov/businesses/small-businesses-self-employed/digital-assets

Gift taxes are commonly misunderstood due to their complexity and rarity. The good news is that under current law, only a very small percentage of wealthy individuals are in a situation where they may need to pay gift taxes one day.

Joe’s basic advice:

• Understand both the annual and lifetime exclusions discussed below.

• If you would like to give more than the annual exclusion, I strongly recommend consulting with a qualified advisor beforehand. Even if there is no tax due on the gift, it is important to make sure that reporting requirements are met and exclusions are maximized.

The Annual Exclusion

Each year, individuals have an annual exclusion they can use for gifts. Gifts up to the annual exclusion amount:

• Do not use your lifetime exclusion (discussed below)

• Are not taxable

• Do not require a gift return to be filed.

Using the annual exclusion is the easiest way to gift.

In 2023, the annual exclusion is $17,000 per recipient for each individual giver

• Note: Married individuals each have separate annual exclusions and so couples can gift $34,000 combined

Examples of Gifts using the 2023 Annual Exclusion:

• A single grandparent can gift $17,000 to each of their 10 grandchildren (and as many people as they want).

• A married couple can gift $34,000 to each of their children.

• A married couple can gift $34,000 each to their daughter and son-in-law ($68,000 total).

Lifetime Exclusion

In addition to the annual exclusion, individuals have a lifetime exclusion for gifts:

• The lifetime exclusion is $12,920,000 per individual giver for 2023

• Any time the lifetime exclusion is used (e.g. there is a gift that exceeds the annual exclusion), a gift tax return is required to be filed.

• Unlike the annual exclusion, the lifetime exclusion is not per recipient. Each individual giver has only one lifetime exclusion to use for all recipients.

• Once the lifetime exclusion is fully used up, the giver will have to begin paying taxes on gifts in excess of the annual exclusion.

• Under current law, the lifetime exclusion would decrease to roughly ~$7 million in 2026 once a temporary increase expires.

Examples of Gifts Using the 2023 Lifetime Exclusion

• A mother gifts her son $100,000 in 2023. Her remaining lifetime exclusion is reduced by $83,000 (the gift amount less the annual exclusion). Assuming no gifts reduced the lifetime exclusion in prior years, she would have a lifetime exclusion remaining of $12,837,000 as of 2023. She would need to file a gift tax return to report the gift, however, no tax would be due.

• An individual gifts each of his 5 friends $17,000 in 2023. He also gifts $40,000 to his nephew. His lifetime exclusion remaining is reduced by $23,000. He is required to file a gift return, however, assuming he has not used up his lifetime exclusion there will be no tax due.

Other Notes

• In addition to the exclusions above, there are exclusions for tuition and medical expenses paid directly.

• Spouses generally have an unlimited exclusion for gifts made to each other. However, if one spouse is not a U.S. citizen, there are special rules, making estate and gift planning especially important.

• Qualified charitable gifts are not subject to gift taxes

If most of your income comes from W-2’s, the tax calculator below generally works well. This can be helpful for setting budgets, adjusting retirement account contributions, checking if your withholding is appropriate, etc. Of course, this calculator can only provide a rough estimate of tax liability.

Note that if you click “advanced” the calculator allows you to customize for contributions to retirement accounts and itemized deductions. Be sure to select the right filing status.

https://smartasset.com/taxes/federal-tax-calculator

California directory of state and local tax incentives:

https://driveclean.ca.gov/search-incentives

Federal tax credit by vehicle and determining eligibility:

https://fueleconomy.gov/feg/tax2023.shtml