Top Tax Mistakes to Avoid with Steven Jarvis, #207

Retire With Ryan

What are some of the biggest tax mistakes you should be avoiding when you file taxes? CPA Steven Jarvis has worked on thousands of tax returns. He focuses on helping people who have a long-term focus. He wants to make sure his clients only pay every dollar they owe and nothing more. It’s not about getting a big tax return. It’s about looking at the long-term picture and being proactive. We dig in and dissect the top tax mistakes you need to avoid in this conversation.

You will want to hear this episode if you are interested in...

• [3:02] Making proactive choices to impact your taxes
• [4:47] Learning about the foreign tax credit
• [6:43] Rollovers from 401Ks to IRAs
• [11:01] Equity compensation and severance pay
• [13:07] Managing advanced charitable giving strategies
• [21:10] What you need to know about HSAs
• [26:32] Pay what you owe—and nothing more

Rollovers from 401Ks to IRAs

You’ll likely roll over a 401K to an IRA only once or twice in your life. In theory, it should be simple—as long as the rollover is treated as a non-taxable event. It needs to be reported on a 1099-R form, which can be confusing. Tax-adjacent events go on your tax returns but you should not be taxed on them.

If you’re working with a tax professional, you need to communicate that you’re doing a rollover. Before the tax return is filed, make sure you look it over to see if your income changed. If it has—and it shouldn't have—a rollover being improperly filed may be the culprit.

Managing advanced charitable giving strategies

A qualified charitable distribution (QCD) allows you to make a charitable contribution directly from an IRA to a charity. If you donate $1,000, you may save $200–$300 in taxes. If it’s a charity that you care about, great. But if you’re not charitably inclined, spending $1,000 to save $300 doesn’t make sense.

But there are some other tax benefits. A QCD comes out of your income before your adjusted gross income is calculated. Why does that matter? Your adjusted gross income is part of the calculation to determine how much you pay for Medicare. Reporting this correctly is key.

Most custodians don’t report how much money went to a charity because the IRS hasn’t created a way for them to do it. That’s why you (or your financial planner) must provide this information when your taxes are filed. I will send a breakdown of QCDs, distributions, etc. to my clients so they can report it properly.

What you need to know about HSAs

Steven sees people penalized for over-contributing to HSAs because the form (8889) is confusing and people fill it out incorrectly. That’s the #1 thing you have to watch out for with these.

One of the advantages of an HSA is that it can grow tax-free. If you can pay medical expenses from another source while funding the HSA, you’ll also get a tax deduction. If you don’t need the money for qualified medical expenses down the road, you’ll just have to pay taxes on the money (which you can remove at age 65 without any penalties).

If you keep track of your HSA-eligible expenses as you go, and have sufficient documentation, you can also request reimbursement for things that happened in the past.

What other issues does Steven find himself correcting frequently? Learn other tax mistakes to avoid in this episode.

Resources Mentioned

• Retirement Readiness Review
• Subscribe to the Retire with Ryan YouTube Channel
• Retirement Tax Services Podcast
• Steven’s book, “Don’t Get Killed on Taxes”
• Connect with Steven on LinkedIn
• Retirement Tax Services

Connect With Morrissey Wealth Management

www.MorrisseyWealthManagement.com/contact

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