|by Ken Weingarten, AdviceIQ|
First, the president received a large tax refund this year. The Obamas' overall tax liability last year was slightly more than
He got back those estimated taxes and then some. I think the estimated tax payments were protective payments to ensure that his income as an author created no tax penalty. With a bit more planning during the year, though, the president might see that he clearly overpaid his taxes and so provided the U.S. government with an interest-free loan.
Second, the president's salary is apparently based on reported wages of
All federal employees qualify for the Thrift Savings Plan, a 401(k)-type of retirement account for them. The president had a chance to defer
Third, Obama realized more than
Did he consider a Solo 401(k) to shelter even more of this income and get a larger tax deduction? He can shelter an additional
The president also saw
One recommendation: The president can use tax-free municipal bonds in the non-retirement portion of his portfolio instead of U.S. Treasury bonds. This reduces his taxable interest from the Treasuries' obligations.
(Again, do certain limitations restrict him from owning municipals? Or does he recall that his own program pushes for a 28% exemption cap on munis for the wealthiest investors?)
Obama does appear to own equities through a Vanguard 500 Index fund (VFINX) in a retirement account from previous employment. From an asset location standpoint, it's better that he owns tax-efficient equity funds, such as an index fund in a non-retirement account, and uses the retirement account for assets that are less tax-efficient (the taxable bonds he owns in his non-retirement account work).
The president does not seem diversified in his asset allocation. Owning just the Standard & Poor's 500 and a few U.S. Treasury obligations leaves out quite a bit. What about small-capitalization stocks, international equities or real estate investment trusts?
Next, Obama reported home mortgage interest of more than
My first thought: Why doesn't he refinance this mortgage? Last year, 30-year mortgage rates were below 4%. Even with a jumbo loan, he can beat 5.625%. Also, with Treasury rates below 3% for 10-year bonds, can he simply cash in some bonds and pay off the mortgage?
Yes, he gets a nice deduction for paying that interest; he also pays tax on his bonds' interest. Assuming the mortgage is at least
Finally, we see that, yes, the president paid Obamacare taxes. His return doesn't note if he complained about it.