[Rachel]

Looking for suggestions on how to learn about taxes.
Hello! About 8 months ago, I found FI and have completed the early steps (money moved away from Edward Jones, tracking expenses, FI calculators, etc). I think my next step is to learn more about taxes.

Where/who do you recommend for tax related information (YouTube, podcasts, books).

I am starting from zero (I’m literally looking at my 2023 tax return that was prepared by my CPA and I don’t know how to read it and especially all of the added schedules and forms).

It seems like there are a lot of FI “tricks” related to taxes (tax brackets, deductions, tax loss/gain harvesting, when to covert IRAs to Roth, etc) and I want to be better equipped to make decisions as I work toward retirement and in retirement.

Thank you!

[Tristan]

Hooray for moving out of Edward jones! (Former Edward jones advisor and knows that you can do the same amount of work as they expect advisors to do and save the fee).

[Megan]

I’d start
With the irs site and search on your forms.

They give basic blurb. Then move on from there

[Ron]

I believe the best way to learn about taxes is to do a return, even if you don’t file with it.

For example the best way for me to learn about how social security would be taxed, before I started collecting it, was to complete a return, enter, “yes, I have social security income” in the amount I was expecting, then see the bottom line results.

That’s just an example. Selling a house, start entering a free return, say yes, I’m selling a house, try to enter realistic numbers (including other stuff you’d typically have on a return to see how it all fits together).

Try multiple free programs and compare the results. You’ll learn a lot.

Now if you have a business could be another story. You can try to replicate the last return that your CPA filed, add a roth conversion and see what the impact is.

Just the approach I use to model what I’m planning to do in advance of the tax year.

I’ve been filing for 40 years, so of course I have a base of knowledge, and have encountered a lot of situations.

But the best way for me to prepare for the current and upcoming tax years is to fill out a return.

I already have a draft 2025 tax year (the one I’ll file in 2026) completed since late last year.

It told me how much in Roth conversions was safe to do early in the year (around 2/3 of the total Roth conversions I expect to do this year).

I’ve done tax loss and gains harvesting as well and I enter prospective taxable side brokerage sales into my return so I understand the impact.

They’ll all take you through a questionnaire and then at the end you can print out all the forms that will look as complicated as your CPA provided, but you actually didn’t need to know all the details of each form. You just had to answer the questions correctly.

There’ll be online help in each section. FreeTaxUSA is good.

Note, I think you can do this even if you don’t qualify for a free return.

The program will just tell you that you will be charged if you file, but you should still be able to use it and get the benefit of the help, seeing the forms produced, etc.

[Lori]

Some basic things to google that I wish I had understood earlier in life.

1. Our taxes are progressive – make sure you understand what that means.

2. Different types of income are taxed differently. Google and study income tax rates vs capital gains rates. Keep up with how these change from year to year.

3. Understand tax deferrals (traditional 401k) l, taking standard deductions vs itemized, tax deductions and tax credits as these all flow though differently.

Also understand current and future tax implications of Roths.

4. When you are young, pay the taxes and put it into a Roth as you’re likely in lower earning years. This is my personal opinion.

5. To bridge an early retirement, one option is a brokerage account where you can take gains tax free if played correctly. Go curry cracker has a great post about this.

6. Part of the strategy to not pay taxes is to not realize the gains. So not sell the property, not sell the stock, etc.

but those assets can be borrowed against to give cash without realizing the gains and paying taxes. This is common in the Uber rich.

I am not suggesting everyone participate in it, just to be aware it exists.

Frankly, read propublica. You’ll learn tons about how the rich shelter themselves from taxes and therefore the tax code.

Tax free wealth is also informative.

[Author]

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