Buckle up for tax season 2026! There are shape-shifting rules, secret withdrawal traps, and charity magic tricks, and all of them could be either a smooch or a smack! Check out these tips to keep your hard-earned money from vanishing into the tax black hole.
Here are Five Fast Facts on protecting your income from taxes this year:
- 🎁 Gift Of The MAGI - A key tax code term is Modified Adjusted Gross Income (MAGI), which basically tells the government how much to tax you. Fun fact: there are over a dozen different versions of it, and the version you use determines the tax breaks you get (or don't).
- 💨 Withdraw Tax Free - You can pull money out of your Roth IRA tax- and penalty-free if you're at least 59½ and the account's been open at least 5 years. But you have to follow exactly the right process, or you get slapped with a big 10% penalty!
- 💥 Get Charitable - If you're 70½ or older, you can do distributions straight from your traditional IRA to a charity - up to $108,000 in 2025 (probably similar for 2026) - and it doesn't count as taxable income. If you're at least 73, it also counts toward your Required Minimum Distributions (RMDs). It's the ultimate "tax-efficient" gift hack! But again, make sure you follow the steps correctly...or pay up!
- 🎲 Rollover Roulette - If you roll money from a Roth 401(k) into a Roth IRA, the IRS treats the withdrawals differently depending on when you did it and how old the account is. Yeah, it's needlessly complicated (thank you, Congress), but it’s what we’ve got.
- 🤓 High Risk, High Reward - These tips can lead to big "hidden tax increases" or surprise penalties if you don't do them right, but if you nail it, you get some big benefits! Find your favorite tax nerd professional to make sure you get it right.
🔥Bottom line: As we head into the new year, don't waste your time with resolutions about hitting the gym (you know you won't do it); instead, follow these tips to get some real financial perks to protect your income in 2026. You've got this, future millionaires!
Got any other tax tips for 2026?
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