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Wrought Insights - Twosday 2-22-22

Taxes News

What caught my attention over the past weeks in the world of finance covering everything from financial planning and investments to global events

In This Edition of Wrought Insights: The Secret to Happiness at Work, The Huge Tax Bills That Came Out of Nowhere, Tax To-Do List, and Happy Twosday!

The Secret to Happiness at Work

We all spend a lot of time at work. Having a job that actually brings happiness can be a boon for overall life satisfaction. But it turns out that finding happiness at work goes beyond picking the right career, or getting paid a hefty salary, and into more qualitative measures of job satisfaction.

It’s beyond compensation. If you graphed happiness vs. monetary compensation you get a shape that looks something like a squashed rainbow. As you make more money you get happier but only up to a point. There comes a time when that extra dollar isn’t contributing to your happiness and at some level excess wealth can actually be deleterious to your wellbeing.

Beyond pay, job satisfaction also depends on a sense of accomplishment, recognition for a job well done, and work-life balance. Just last night I was speaking with an attorney who by many measures is in the middle of successful career. But he is missing one of those three pillars to his work (recognition) and you can see the impact on overall level of satisfaction and happiness with his work and life.

Perhaps the secret to happiness at work is that your job just needs to be rewarding. Read more by Arthur Brooks from The Atlantic.

The Huge Tax Bills That Came Out of Nowhere at Vanguard

For clients of Wrought Advisors, asset location is an important ingredient to the success of their financial plan. Asset location is the idea that you should hold different types of investments in different types of accounts due to tax characteristics.

Each year tax year, mutual funds have to distribute the realized capital gains inside the fund to investors. Investors then to pay capital gains taxes on those realized gains. This may not seem unfair on the surface, but an investor who has owned a mutual fund starting one day before that tax distribution takes place is equally on the hook to pay those taxes as an investor who has owned a mutual fund for ten years. This especially stings when the mutual fund lost value over the course of a year yet a tax bill is due!

From time to time there is a big shock of a capital gains distribution from a mutual fund. This is one of the reasons why most of our clients hold mutual funds in tax-deferred accounts such as an IRA or Roth IRA and tend to hold more exchange traded funds (ETFs) in their taxable accounts which don’t generally experience this issue. Unfortunately some investors have to learn this lesson the hard way. Read more from Jason Zweig of the Wall Street Journal.

Your 2022 Tax Filing Season To-Do List

The tax season is officially here. If you haven't already, now is the time to get prepared. Whether you meet with a tax professional or prepare your taxes yourself, proper planning helps the processes go more smoothly and may reduce the risk of costly errors. Check out the tips below and prepare to tackle this tax season with confidence.

Happy Twosday 2-22-22!

The fact that today is 2-22-22 is pretty neat. Add on that today is also a Tuesday and it becomes awesome. This was first brought to my attention by my 2nd grader who happens to be my 2nd born (two more 2s!). Celebrate the little things in life. Happy Twosday everyone!

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