Phil DeMuth > Quotes

“Tax-gain harvesting will appeal to another group of people: retirees tapping their taxable accounts for living expenses. Early retirees can realize gains while in lower capital gains brackets today to immunize themselves against realizing gains in a higher bracket tomorrow after Social Security and the required minimum distributions from their IRAs begin.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“This is why we recommended that you keep stocks in taxable accounts and bonds in tax-deferred accounts. We want most of the growth to occur in taxable accounts where it won’t end up getting taxed as ordinary income.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“While real estate sounds like a safer place to invest than the stock market, and one that offers you greater control over your destiny, this is a mirage. Real estate investors seldom account accurately for either their returns or the risks they took to earn them. They need to calculate time-weighted returns on the one side (minus a scrupulous accounting for the value of their time in addition to their other expenses), as well as the risks of using leverage, which is a sword that cuts both ways. If real estate investing were a vastly superior proposition to stock market investing, or vice versa, everyone would have figured this out a long time ago.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“Under President Trump’s Tax Cut and Jobs Act (hereafter, TCJA), high-income investors pay 23.8% tax on their dividends and long-term capital gains. This includes the 20% Federal tax plus the 3.8% Affordable Care Act “Obamacare” Net Investment Income Tax. State taxes are on top of this. In California, state taxes top out at 13.3%, for a total of 36.8%.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“The retirement spending side (“decumulation”) is vastly more complicated. A number of websites give guidance on the so-called safe withdrawal rate that can be wrenched from a portfolio, but the correct order in which to draw down the accounts and the questions of whether, when and how much should be converted to Roth IRAs along the way is highly problematic.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“It pays to live like old money, even if you are not there . . . yet.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“Of all these tax jumps, the most insidious is the $200,000 single/$250,000 Medicare surtax on income (0.9%) and the ACA Obamacare surtax on capital gains and dividends (3.8%). These are not indexed to inflation, because Congress knows Medicare is hopelessly underfunded, so the surtax is designed to ensnare the middle class eventually.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“The ability to withdraw Roth money tax-free lets people fine-tune their income in retirement by dipping into the Roth as needed when they want to stay in a low tax tier. Roth withdrawals do not increase the taxability of your Social Security distributions or Medicare premiums and may help you avoid recognizing capital gains in your taxable account to generate income.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“The other estate-planning angle of a Roth conversion is that the money you pay in taxes doing the conversion during your lifetime is out of your estate. If the estate tax is going to be an issue for you, do a total Roth conversion and pay the taxes now—otherwise your estate will pay taxes on money that will be taxed again when pulled out from an inherited traditional IRA.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“Most importantly, you can get someone expert who works with these plans all day long to look over your shoulder and say, “Yes, but have you thought about this . . . ?”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“Granted, you cannot know your financial future for certain or the crocodile-infested brackets you’ll be swimming in. Nonetheless, you need a plan. If you have a plan, you can always adjust to changing conditions. With no plan, you will be vamping. Don’t be like the radiologist who walks into his CPA’s office at age seventy and says, “OK, I have everything locked in my $6,000,000 IRA, now how do I not pay taxes?”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“High tax rates make dividend stocks expensive for high-earning investors, both now and in retirement.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“Any time you put your financial advisor, accountant, attorney, and insurance broker with a private banker in a room to come up with an atomic-age tax strategy, be careful. Any of them can be dangerous on their own, but all of them together? At the very least, hire someone who speaks plain English to try to talk you out of it. You might be better off just selling your holding, taking off the rubber band to pay the damn taxes, and diversifying from there, rather than trying to put everything into some Rubik’s cube to confound the taxman.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“Advisors used to put stocks in an IRA first, because of the tax-deferred compounding. This turned out to be a mistake. Capital appreciation inside an IRA converts capital gains into ordinary income, which is taxed at even higher rates, effectively transmuting gold into lead.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog

“If you are making withdrawals from your taxable account to fund living expenses, consider a portfolio loan instead. The loan itself not taxed, although you do have to pay interest. As long as the loan rate is less than the rate of return on your investments, and provided that you maintain a very, very prudent loan-to-value ratio, this can work better than selling down your account and paying the taxes along the way.”
― Phil DeMuth, The Overtaxed Investor: Slash Your Tax Bill & Be a Tax Alpha Dog