The Common Tax Trap Hiding in Your Bank Accounts | Ep. 39

Описание: Why did my tax bill go up… even though little changed at work?

As interest rates have gone up, a lot of people started earning more on cash sitting at the bank. And at tax time, that surprise can show up in a real way. In this episode, Michael, CFP®, EA walks through one of the most common and overlooked reasons people owe more than expected: ordinary income taxes on savings, CDs, and money markets.

Using a simple whiteboard example, Michael breaks down how bank interest is taxed, why it feels sneaky, and how planning strategies may change as you move closer to retirement. This is about understanding where taxes are coming from and deciding where your money might work more efficiently for you.

𝐓𝐨𝐩𝐢𝐜𝐬 𝐢𝐧𝐜𝐥𝐮𝐝𝐞:
💭 How interest from high yield savings and CDs are taxed and at what rate
💭 How higher rates can create hidden tax bills even when spending stays the same
💭 The difference between marginal and effective tax brackets
💭 Why too much cash may quietly become one hefty tax bill for you
💭 Using retirement accounts that can help shield from recurring taxes
💭 When an emergency fund might live outside the bank checking or savings
💭 Asset location vs asset allocation and why where you hold assets matter
💭 Tradeoffs between cash, bonds, municipal bonds, and equities
💭 How tax efficiency may shift depending on age, income, and time horizon
💭 Why owing taxes is not always bad news and what it may actually signal

If you have money sitting at the bank and have ever wondered why April feels a little more painful than expected, this episode is designed to help connect the dots. No scare tactics. Just clarity, context, and planning ideas to consider as rates and life change.

Chapters:
00:00 Intro Compliance
00:13 Surprise Tax Bills?
01:34 Taxes on Cash/HYSA
03:11 Leaving Large Sums at the Bank
05:26 Tax Bill Comes from a CD?
07:41 Emer. Fund in a Retirement Account?!
08:14 Can I Protect Taxes on My Emer. Funds Somehow?
12:13 Trying to Use Large Work Plan Limits in Our Favor
16:54 What if I'm Not 55-60? What Could I Do?
18:33 Does the Gov't Incentivise You to Invest?
21:23 Municipal Bonds for Taxes
23:42 Strategies After 2022 Int. Rate Hikes

𝐖𝐡𝐲 𝐰𝐞'𝐫𝐞 𝐡𝐞𝐫𝐞?
We’re here to make retirement planning feel less intimidating by helping people think through their strategies and plans through clear relatable financial topics!

Disclosures:
Harborfront Financial Group is a Registered Investment Advisor registered with the Securities and Exchange Commission (SEC). Registration as an investment adviser does not imply a certain level of skill or training, and the content of this communication has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
The information contained in this material is intended to provide general information about Harborfront Financial Group and its services. It is not intended to offer investment advice. Investment advice will only be given after a client engages our services by executing the appropriate investment services agreement. Information regarding investment products and services are provided solely to read about our investment philosophy and our strategies. You should not rely on any information provided on our web site in making investment decisions.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Harborfront Financial Group, a Registered Investment Advisor. Harborfront Financial Group and Custer Financial Advisors are separate entities from LPL Financial.
This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return used do not reflect the deduction of fees and charges inherent to investing. All investing involves risk including loss of principal. No strategy assures success or protects against loss.