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ChampionX Retirees: Don't Make These 6 Common Tax Return Mistakes

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Healthcare Provider Update: ChampionX offers comprehensive health benefits including medical, dental, vision, and prescription coverage. Employees can access HSAs, FSAs, and wellness resources for diabetes, fertility, and parenting support. The company also provides a 401(k) with matching, paid parental leave, tuition reimbursement, and flexible work arrangements 10. Healthcare costs in the United States are projected to continue rising through 2026, with insurers proposing significant premium increases for Affordable Care Act (ACA) plans. A recent analysis found that ACA insurers are seeking a median premium increase of 15% for 2026, marking the largest hike since 2018. This surge is attributed to factors such as the anticipated expiration of enhanced premium tax credits, rising medical costsincluding expensive medications and increased hospital staysand a shift in the risk pool towards higher-cost enrollees. Without the renewal of enhanced subsidies, out-of-pocket premiums for ACA marketplace enrollees could increase by more than 75% on average. Click here to learn more

When it comes to financial planning, especially for ChampionX employees who are nearing or through retirement, tax management is essential to ensuring a comfortable and financially stable future. Due to the intricacy of tax regulations, ChampionX retirees and their advisors may fail to recognize chances for tax savings or, on the other hand, may make mistakes that result in an increased tax liability. This post explores six common errors seen on retirees' tax returns and provides advice on how to potentially avoid them and make the most out of your tax plan.


Myths Regarding Deductions

It's common to misunderstand the choice between choosing the standard deduction versus itemizing deductions. Due to changes in tax legislation after 2018, ChampionX retirees like the hypothetical John and Linda may not benefit from itemizing deductions even though they have a mortgage. This is a common circumstance. It is important to determine if the total of all possible itemized deductions—medical costs that are greater than 7.5% of AGI, mortgage interest, local and state taxes, and charitable contributions—exceeds the standard deduction limit, which for couples over 65 in 2023 was over $30,000.

Distributions from Qualified Charities: An Unused Possibility

Qualified Charitable Distributions (QCDs) are a useful tactic for ChampionX retirees who want to give to charity in an effective manner. This is especially true for people who no longer itemize deductions. But eligibility starts at seventy-five, and one common mistake is to declare these distributions incorrectly on tax returns. Accurate Form 1040 documentation is necessary to guarantee that these contributions are acknowledged and optimized for taxation.


Unexpected Tax Obligations

Many ChampionX retirees with inefficient investment portfolios or phantom gains have unanticipated tax problems. For example, even in years when the market is down, capital gains distributed by mutual funds might result in large tax bills. Investing in individual stocks or Exchange-Traded Funds (ETFs) in taxable accounts can provide investors with greater control over their tax obligations and the flexibility to choose when to realize gains.

Ignoring Cost Basis in Stock Transactions

Unnecessary tax burdens may result from selling equities without knowing the cost basis or failing to report it. Investments that were purchased before to the 2011 mandate requiring custodians to monitor this data often do not have a documented cost basis, which could result in the entire selling value being subject to gain taxation. Tax ramifications can be reduced by determining and correctly disclosing the cost basis or by taking these assets into account when making charitable contributions.

Medicare Premiums Tied to Income

The income-based premiums for Medicare Parts B and D are based on the income recorded two years prior to the current year. By submitting an SSA-44 form, ChampionX retirees who are going through a major change in income—such as going into retirement—may be eligible for modified premiums. Unnecessary increases in Medicare premiums can be potentially avoided with awareness and proactive management of income levels.

Making Use of Tax Valleys

This 'tax valley,' where lower income levels offer potential for tax savings, is the period of time between retirement and required withdrawals from retirement plans. Tax advantages that are not accessible during higher income periods can be obtained by strategies like Roth conversions, taking distributions, or realizing capital gains during these years.

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In conclusion, even though handling tax planning and compliance may seem overwhelming, by being proactive and aware of typical pitfalls, one may greatly improve their financial future. ChampionX retirees have many options to reduce their tax obligations and safeguard their financial resources for the future. These options include fine-tuning deduction strategies, maximizing charitable contributions, managing investment portfolios with an eye toward tax implications, accurately reporting all transactions, and strategically managing income to influence Medicare premiums and tax rates.

The effect of a retiree's place of residence on their tax obligations is one tactic that is frequently disregarded. Significant tax benefits are available to retirees in some jurisdictions, such as no state income tax, Social Security income exemptions, and advantageous treatment for pension and retirement account withdrawals. Relocating to a state with low taxes may save you a lot of money on taxes. Assessing state tax laws should be a crucial step in retirees' tax planning process as they make financial plans for the future. This is particularly important to take into account because it can impact estate planning techniques as well as retirement income in general. According to AARP's February 2023 report, 'States with the Best Tax Breaks for Retirees,'

Managing your retirement tax returns is like sailing a ship across the ocean. To safeguard their financial security, retirees must navigate the intricate waters of tax laws and regulations, much as an experienced sailor must be aware of shifting winds, currents, and potential hazards. Errors such as misjudging the impact of investment decisions on taxes, mishandling stock sales, maximizing charitable distributions, underestimating the influence of income on Medicare premiums, and not taking advantage of lower tax years are comparable to missing the good times, hitting undiscovered obstacles, or deciding on an ineffective path. To ensure a prosperous voyage during the retirement years, every action on this journey demands foresight, planning, and a grasp of the surrounding environment to maximize benefits and potentially avoid dangers.

Not Individualized tax advice. Discuss your situation with a qualified tax professional.

What type of retirement savings plan does ChampionX offer to its employees?

ChampionX offers a 401(k) retirement savings plan to its employees.

Does ChampionX provide matching contributions to the 401(k) plan?

Yes, ChampionX provides matching contributions to the 401(k) plan to help employees save for retirement.

What is the eligibility requirement for ChampionX employees to participate in the 401(k) plan?

Most ChampionX employees are eligible to participate in the 401(k) plan after completing a specified period of employment.

Can ChampionX employees choose how much to contribute to their 401(k) plan?

Yes, ChampionX employees can choose to contribute a percentage of their salary to their 401(k) plan, within IRS limits.

Are there investment options available in the ChampionX 401(k) plan?

Yes, ChampionX offers a variety of investment options within the 401(k) plan for employees to choose from.

How often can ChampionX employees change their 401(k) contribution amounts?

ChampionX employees can change their 401(k) contribution amounts at designated times throughout the year.

Is there a vesting schedule for ChampionX’s matching contributions?

Yes, ChampionX has a vesting schedule for matching contributions, which determines when employees fully own those contributions.

Can ChampionX employees take loans against their 401(k) savings?

Yes, ChampionX allows employees to take loans against their 401(k) savings under certain conditions.

What happens to the 401(k) plan if a ChampionX employee leaves the company?

If a ChampionX employee leaves the company, they have several options for their 401(k) savings, including rolling it over to another plan or withdrawing the funds.

Does ChampionX offer financial education resources for employees regarding their 401(k) plan?

Yes, ChampionX offers financial education resources to help employees understand and manage their 401(k) plan effectively.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
In 2024, ChampionX announced a significant restructuring plan, resulting in a reduction of approximately 10% of its workforce. This decision includes consolidating operations and closing several regional offices.
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For more information you can reach the plan administrator for ChampionX at 777 Post Oak Blvd., Suite 600 Houston, TX 77056; or by calling them at 1-281-600-6000.

*Please see disclaimer for more information

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