Freelance Finance Fix

Do you think you make too much money to contribute to a Roth IRA or that you've out-earned your eligibility for a tax-free growth? You might be surprised to learn you can still take advantage of a Roth account regardless of your income.

In this episode, Alex outlines who is eligible for Roth conversions and makes suggestions for when and how to do Roth IRA conversions.

In this episode, you'll also hear:

• Roth contribution vs. Roth conversion

• Tax implications of Roth conversions

• Multi-year strategy and goals for Roth conversion

Must-listen moments:

[00:01:33] The first thing you need to know about Roth conversions is that anyone and everyone who has a traditional IRA or traditional qualified retirement plan, like a 401k, 403B, or 457 plan, is eligible.

[00:06:26] It can be really helpful to look at past tax years and see what tax brackets you were in and see if you can notice any patterns or trends. Do note that even if you don't expect to be in a higher tax bracket in the future, a Roth conversion can still make a ton of sense for you.

[00:08:18] There are a ton of reasons for Roth conversions…but you need to be crystal clear on your reasons for doing one in any calendar year as there can be some goals which a Roth conversion does not help.

For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com

You're also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/

Did you know an old 401K might hold the key to funding your new business or, at the very least, could save you thousands in taxes? For big tech employees or those with employer stocks that have performed tremendously well, it's worth researching how net unrealized appreciation, or NUA, might impact your financial plans.

In this episode, Alex reveals what Net Unrealized Appreciation is, its unique advantages, and who might benefit from this little-known tax strategy the most.

In this episode, you'll also hear:

• 2 advantages of using the Net Unrealized Appreciation tax treatment

• 3 major components of Net Unrealized Appreciation

• Option for potential tax savings or funds for entrepreneurial ventures

Must-listen moments:

[00:02:14] If you have a million dollars in your 401K and a large gain in your employer stock, this strategy could potentially save you a hundred thousand dollars in tax.

[00:04:47] NUA [net unrealized appreciation] is all about separating out the growth component from the original purchase price.

[00:07:54] You are by no means forced to sell the stock once it's been transferred to a taxable brokerage account. Once it's inside of that taxable brokerage account, you could sell some of it, none of it, all of it, part of it, it's yours. You can do whatever you want with it.

For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com

You're also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/

No one likes leaving money on the table, especially when it's thousands of dollars. Unfortunately, you could be at risk of doing just that if you're unintentionally holding bonds inside a Roth account.

In this episode, we highlight the differences between Roth accounts, bonds, and why it's necessary to make sure your investments are where you need them to be.

In this episode, you'll also hear:

• Why we love the long term, tax-free growth Roths offer

• Benefits of holding bonds and other conservative investments

• Understanding risk tolerance and asset location optimization

Must-listen moments:

[00:02:02] Most individuals pay a ton of attention to what investments are inside of their accounts. However, while you may be the unique exception, most individuals are not paying attention to which account to put those investments inside of.

[00:07:09] Some of you may not be aware that some of the funds you hold inside of the account may have a significant holding of bonds or more conservative investments or money market funds held within them.

[00:09:22] We want to make sure the right investments are inside of the right accounts.

For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com

You're also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/

April 18th is rapidly approaching so now is the time to review your 1099s and financial accounts to make filing your taxes as easy as possible.

In this episode, Alex covers 7 things you need to know about filing your taxes as a freelancer or solopreneur to avoid costly surprises and penalties.

In this episode, you'll also hear:

• Why it's better to review everything vs. rush to file your taxes

• Double-checking for commonly missed deductions

• How increasing interest rates impact your tax filing

Must-listen moments:

[00:05:12] You may want to take a minute and review all the different sources of where you're getting your income and potentially streamline those down.

[00:08:07] Make sure to proactively bring attention to any major life changes you've had with your tax preparer so that they can best help you.

[00:10:37] The key fact to know here is that while you get no real bonus for overpaying your taxes when they're due, with interest rates having gone up, if you underpay them, the interest you owe in penalty will likely be substantially higher than what you've seen previously.

For more detail on financial topics curated just for freelancers, visit www.freelancefinancefix.com

You're also invited to connect with me on LinkedIn at https://www.linkedin.com/in/alexmlynch/

Every year brings the opportunity to take advantage of the annual gift tax exemption to non-charities when filing taxes, but many don't understand the gift tax limit or its benefits.

In this episode, Alex explains the annual gifting limit, how to increase your 2023 gifting limit from $17,000 to potentially $68,000, and why it's important to plan your gifts.

In this episode, you'll also hear:

• Defining what the IRS considers a gift
• Common misunderstandings about the annual gift tax exemption
• Suggestions for creating a gifting plan and what forms are required for gifts

Must-listen moments:

[00:02:08] The IRS considers a gift to be where there is an exchange of cash or property or something of value with someone else where you do not receive at least equal value back in return.

[00:02:41] In 2023, currently you can gift up to $17,000 per recipient per calendar year to another person as part of your annual exemption…there are several ways to go above this $17,000 limit where you don't have to report or tell the IRS.

[00:07:15] By doing some planning, you can spread out your gifts over a multi-year period and stay under the gifting limits, avoiding some unnecessary paperwork and complexity and annual tracking of reporting. Planning also helps you be clear about your expectations and intentions as part of the gift.

Visit www.freelancefinancefix.com for more money tips for freelancers.

Follow Alex at https://www.linkedin.com/in/alexmlynch/

As mentioned in Part 1, health expenses and rising health insurance costs can quickly derail even the best laid financial plans. An HSA account is a solid planning tool to help freelancers mitigate risk and navigate unexpected expenses.

In this episode, Alex discusses the final 5 attributes of an HSA account and why it's beneficial to have this dedicated financial bucket available.

In this episode, you'll also hear:

• Selecting an HSA custodian and planning for future retirement
• Short term vs. long term HSA investing strategies
• Keeping receipts for future reimbursements and HSA tax filing process

Must-listen moments:

[00:02:51] Health expenses and health insurance are one of the hardest things to plan for with early retirement. Having a dedicated bucket set aside helps put you ahead of the financial planning game.

[00:05:56] Make sure your investment allocation inside of your HSA account matches your personal goals for this account. So, take a minute to determine if you are going to use this account for short term expense needs for medical, or if this is a longer-term tax-free growth account.

[00:08:53] The real pro tip here is to keep your medical receipts, even the ones you don't use for reimbursement. Keep this on file in your files outside of the HSA custodian as you may be eligible in the future for reimbursement on them.

Visit www.freelancefinancefix.com for more money tips for freelancers.

Follow Alex at https://www.linkedin.com/in/alexmlynch/

Health savings accounts, known as an HSA, are growing in popularity and for good reason. Health insurance plans seem to get more expensive every year while offering less coverage.

In this episode, Alex sheds light on 6 key attributes of an HSA account and why it's a powerful planning tool that freelancers should evaluate and consider utilizing in their financial strategy.

In this episode, you'll also hear:

• Triple tax benefits of using an HSA account
• Understanding HSA eligibility requirements and contribution limits
• How HSA funds never expire, gap year benefits, and what counts as a medical expense

Must-listen moments:

[00:02:17] First, you get a deduction on your taxes for money going in. Secondly, money left inside of the accounts grows continually tax free. Third, one day when you use them for medical expenses, when withdrawn, you won't owe any taxes on the withdrawal.

[00:05:23] Furthermore, what is awesome about HSA accounts is there is no income limit to be eligible to contribute. You can make as much as you want in any calendar year and still get the tax deduction for contributing to an HSA account.

[00:08:53] You need to know that the medical expense uses are far broader than you may think. It is more than just your standard hospital bill or health insurance expenses or premiums.

Visit www.freelancefinancefix.com for more info

Follow Alex at https://www.linkedin.com/in/alexmlynch/

Having an emergency fund is non-negotiable for freelancers. Even with the most meticulous tax planning and retirement strategies in place, unpredictable expenses can occur at any time.

In this episode, Alex dives into the most overlooked benefit of having a Roth retirement account and three things freelancers should know about using Roth accounts.

In this episode, you'll also hear:

• Common misconceptions about Roth IRA withdrawals
• Understanding which documents to keep for tax purposes
• How a Roth account provides income flexibility year over year

Must-listen moments:

[00:00:50] The world and your business can be unpredictable. As such, sooner or later, you will need to pull some money out of one of your accounts.

[00:02:30] For the amount you initially contributed to the account, you can pull these funds out at any time without being subject to penalty or tax on the withdrawal.

[00:05:25] As a freelancer…this is an incredibly valuable planning tool. As a freelancer, you can selectively choose which accounts you want to pull funds from and how much tax you want to pay that year based on which account you pull from.

Snag all our free, helpful personal finance content, curated just for freelancers at www.freelancefinancefix.com

Follow Alex at https://www.linkedin.com/in/alexmlynch/

Did you know 401K plans are not limited to employees working for large companies? If you're a freelancer serious about planning for your retirement, optimizing your tax strategy, and have extra cash available, opening a solo 401k might be your next move.

In this episode, Alex shares what freelancers need to know about solo 401Ks and why you should talk with a financial advisor about getting one started.

In this episode, you'll also hear:

• Benefits of a solo 401K for freelancers
• 2 key components to understand about solo 401Ks
• Advice for calculating employer contribution

Must-listen moments:

[00:00:59] They are called a solo 401K because you don't have any other employees who would join the plan with you, making it much easier to open and fulfill all the necessary rules and regulations.

[00:03:05] We set aside money in our retirement plans to maintain our lifestyle in perpetuity and not use our fun casino money-type investments inside of this account.

[00:07:26] You need to go and look at your cash flow, figure out how much after maxing out your personal IRA or Roth account you could put into a solo 401k, and talk to your financial or tax advisor about getting one started.

For more financial fixes for freelancers, visit www.freelancefinancefix.com

Follow Alex at https://www.linkedin.com/in/alexmlynch/

Would you switch banks for an extra 30K?

Yeah, me too.

This all begins with a simple question: Are you getting a good rate of return for the money in your savings account?

Chances are your bank isn't working hard enough to keep your business, and you're missing out on money that requires little effort to earn.

In this episode, Alex breaks down why it's time to check how much your current savings account is paying you and 3 critical areas to pay attention to when making a banking change.

In this episode, you'll also hear:

• Defining what an online bank offers vs. brick-and-mortar banks
• 3 things to consider when changing where you park your savings
• Massively increasing your interest for only 5 minutes of work per year

Must-listen moments:

[00:01:46] With interest rates increasing, the time is now to review your savings account and how much your hard-earned mattress money is making you.

[00:03:57] When looking at an online bank or really any financial decision that has uncertainty, we must look at the risk involved. This risk can be entirely mitigated by what we call FDIC insurance.

[00:05:24] Avoid companies that are flashy and will drop the rate after a promo period. It's not worth hopping around, and do not inadvertently lock up your money with anything that has early withdrawal penalties without doing some extensive analysis.

Visit www.FreelanceFinanceFix.com for more insight and to download all our free stuff!

Follow Alex at https://www.linkedin.com/in/alexmlynch/