Tax Assumptions

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.

You can find the Tax Assumptions within each client plan by clicking the Gear Icon > Settings > Tax Assumptions tab:

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

The Taxes section is where you enter an ordinary income tax rate adjustment, and specify tax assumptions like portfolio turnover, qualified dividends, long term capital gains:

Additional Tax Assumptions

Qualified dividends
  • Use this field to enter the percentage of dividends assumed to be tax-qualified.

Long term capital gain
  • This field indicates the percentage of capital gains that are assumed to be long-term capital gains.

Portfolio turnover
  • 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.

Misc itemized deductible
  • Enter a percentage of AGI to be treated as a misc itemized deductible when applicable.

Carryover Values from Previous Years

The Carryover values from previous years section is where you can enter capital loss carryover, charitable giving carryover, and AMT credit carryforward:
Capital loss carryover
  • 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.

Charitable giving carryover- cash
  • 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'.

Charitable giving carryover- appreciated assets
  • 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'.

The charitable giving carryover amount entered in the Tax Assumptions area will be used after the current year's charitable giving, entered into the Profile > Goals > Gift > Charitable Giving goal card.
AMT credit carryforward
  • 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

Within the Other area, there will be an additional option to specify the household's MAGI from the prior two years:

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:

Contact Us

For additional assistance within RightCapital please contact our Support team.

Educational Webinars

RightCapital is committed to enabling your success. Each week, we cover essential planning modules and product updates.

RightCapital in Action

Check out our YouTube channel where we highlight Advisor Success Stories and share more Tips & Tricks!