What is carried curiosity? Retirement Daily’s Robert Powell caught up with Jeffrey Levine, CPA and tax professional from Buckingham Strategic Wealth Partners, to reply that query and clarify the advantages.
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Quotes| What Is Carried Interest?
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
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Video Transcript| Jeffrey Levine, CPA and Tax Expert, Buckingham Strategic Wealth
Robert Powell: What is carried curiosity? Well, right here to speak with us about that’s Jeffrey Levine from Buckingham Strategic Wealth. Jeffrey, welcome.
Jeffrey Levine: Good to be with you, Bob.
Robert Powell: So what’s carried curiosity?
Jeffrey Levine: Yeah, it is a actually attention-grabbing manner that sure fund managers will successfully receives a commission. Instead of, to illustrate, taking a wage or one thing like that, they are going to be paid by successfully how properly a fund does. And in the event you maintain on to your curiosity on this, you carry that curiosity lengthy sufficient, the carried curiosity provision or “loophole” within the tax code permits these {dollars}, though they’re for work, they’re for compensation for the work that particular person has carried out. They enable these {dollars} to be taxed at long-term capital features charges.
Now, ordinarily, you and I, once we go to work, and we receives a commission for doing the work that we do, now we have to pay atypical revenue tax charges, that are as excessive as 37% on the federal facet (plus payroll taxes). But as a result of carried curiosity qualifies for long-term capital features charges, that’s taxed at a most of 20%, giving these fund managers a very nice tax break.
Editor’s Note: The content material was reviewed for tax accuracy by a TurboTax CPA professional.
Zach Faulds contributed to the writing of this text and produced the video and/or the graphics related to it.
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