Hello, new update! Asset Flow is known as our “everything-AND-the-kitchen-sink” calculator, and it just got another feature!

Todd has added the ability to tax income at capital gains rates, in addition to the regular income tax rates. This is a great tool for clients who might have income coming from a trust, real estate, or other property that is taxed as capital gains.

The update allows for an individual portion of the income to be taxed at this rate so that it won’t impact the tax brackets of other income. The case that inspired this update involved an individual whose whole income came from the trust. So part of that income was tax-free immunities, part was regular taxable income, and the final part was all capital gains. The regular taxable income came from assets that weren’t held long enough and got turned over, and then any capital gains were actually used as income by the client.

In order to ensure that the tax on the income was represented as accurately as possible within Asset Flow, Todd created the extra button and separated the client’s income into three separate entries: one of them without any tax.

How to Utilize the New Feature

When in Asset Flow, go to the section titled, “Earned Inc. and SS.” This is the tab where you can input any income, up to four entries, that your client may have. In addition, any spousal income may be added.

Next to each income entry, there are three tax options that can be checked. Income tax and FICA & Medicare taxes are automatically checked. If you click on “capital gains” however, the income box will toggle off (and vice versa).

In the example below, we’ve inputted three separate sums to illustrate. One income stream is taxed normally, one is taxed as capital gains, and one isn’t taxed at all. On the left-hand side, we’ve selected the “include” button, which combines the selected income in the chart beneath it. (For this example, we’ve also added a spouse’s income.)

In the top left-hand corner, you can then input the client’s tax information. The calculator then does the work of calculating the taxes, offering a more accurate representation for clients with capital gains income.

This is a useful addition for clients who invest in real estate and may need to assess their capital gains taxes on income. You can find additional tutorials in our “Truth Tips” section of the blog, as well as video tutorials.