In RightCapital, you are always in control of the underlying assumptions that drive your plan output. You have complete control over the tax assumptions within each and every client plan, providing a platform for world-class, personally tailored advising.
The Tax Assumptions page allows you to:
- Adjust your Tax Law, Portfolio Turnover, and other important tax assumptions
- Enter capital loss carryover and other carryover values from previous years
- Specify prior year's MAGI for more accurate Medicare and student loan calculations
Taxes
Tax Law
Use the drop-down box to select the tax framework used in calculating the client's projections:
- TCJA sunset 2025: reflects all updated provisions related to TCJA, including the sunsetting of most individual income tax provisions in 2025.
- TCJA no sunset: reflects all updated provisions related to TCJA for the entire duration of the plan (ignores the sunset provisions).
- 2017 tax law: reflects all tax provisions prior to the enactment of TCJA, as would be used in clients' 2017 tax calculations.
You can read more about TCJA and its impact on RightCapital in the article linked below:
Ordinary Income Tax Rate Adjustment
This setting allows you to illustrate a higher federal income tax rate in the future. This feature can be helpful for clients who believe that tax rates will rise in the future, beyond the sunset of TCJA. This is not a blanket increase in taxes; rather, it is an increase in the rate for each of the ordinary income tax brackets:
Additional Tax Assumptions
Use this field to enter the percentage of dividends assumed to be tax-qualified.
This field indicates the percentage of capital gains that are assumed to be long-term capital gains.
Use this area to adjust the average annual turnover in taxable accounts. This value represents annual portfolio balancing, and will produce capital gains in the plan.
Enter a percentage of AGI to be treated as a misc itemized deductible when applicable.
Carryover Values from Previous Years
Enter the long term capital loss carryover amount that will impact the client plan. It can be seen adjusting taxes in the Tax module > Tax Estimate > Details > Schedule 1 Line 7.
The charitable giving carryover amount- cash will be capped at 60% of the client's AGI. It can be seen impacting the plan within the Tax module > Tax Estimate > Details > Schedule A, under 'Gifts to Charity'.
The charitable giving carryover amount- appreciated assets will be capped at 30% of the client's AGI. It can be seen impacting the plan within the Tax module > Tax Estimate > Details > Schedule A, under 'Gifts to Charity'.
Enter the AMT credit carryforward amount from prior year's exercise of ISO grants. This can be seen impacting taxes in the Tax module > Tax Estimate > Details > Alternative Minimum Tax form.
Specify Prior Year’s MAGI
After checking the box, you'll be able to enter the household's MAGI values from the two years prior to the start of your cash flow projections. This will allow for more accurate calculations that rely on a MAGI lookback, such as Medicare premiums (two-year lookback) and Student Loan IDR plans (one-year lookback).
Impact of Tax Filing Status
Within joint plans that are set to Married Filing Separately or Non-Married Filing Single within the Profile > Expenses > Taxes and Fees card, certain tax assumptions will be split between the client and the co-client. This allows you to enter separate values for each client:
