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

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Healthcare Provider Update: Healthcare Provider for NOV The healthcare provider for NOV Inc. (formerly known as National Oilwell Varco) is typically determined by their employee health insurance plans, which can include various major insurance carriers. These providers may vary depending on the location and specific plans offered through NOV's benefits packages. Common offerings may include large insurers such as UnitedHealthcare, Aetna, or Blue Cross Blue Shield, among others. Healthcare Cost Increases in 2026 As the healthcare landscape evolves, significant premium hikes for Affordable Care Act (ACA) marketplace plans are anticipated in 2026, with some states projecting increases exceeding 60%. The primary drivers of these surges include rising medical costs, the potential expiration of enhanced federal premium subsidies, and substantial rate increases from major insurers. The Kaiser Family Foundation warns that without congressional intervention, approximately 22 million enrollees could experience a staggering rise in out-of-pocket costs, with a potential increase of over 75% in their premiums. This combination of factors signals a challenging financial environment for healthcare consumers as they navigate impending cost fluctuations. Click here to learn more

When it comes to financial planning, especially for NOV 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, NOV 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, NOV 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 NOV 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 NOV 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, NOV 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. NOV 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 is the purpose of NOV's 401(k) Savings Plan?

The purpose of NOV's 401(k) Savings Plan is to help employees save for retirement by allowing them to contribute a portion of their salary on a pre-tax or after-tax basis.

How can employees enroll in NOV's 401(k) Savings Plan?

Employees can enroll in NOV's 401(k) Savings Plan by accessing the company's benefits portal and following the enrollment instructions provided.

Does NOV offer a company match for contributions to the 401(k) Savings Plan?

Yes, NOV offers a company match for contributions to the 401(k) Savings Plan, which helps employees maximize their retirement savings.

What types of investment options are available in NOV's 401(k) Savings Plan?

NOV's 401(k) Savings Plan provides a variety of investment options, including mutual funds, target-date funds, and other investment vehicles tailored to different risk tolerances.

Can employees change their contribution percentage to NOV's 401(k) Savings Plan at any time?

Yes, employees can change their contribution percentage to NOV's 401(k) Savings Plan at any time through the benefits portal, subject to certain limitations.

Is there a vesting schedule for the company match in NOV's 401(k) Savings Plan?

Yes, there is a vesting schedule for the company match in NOV's 401(k) Savings Plan, which determines when employees fully own the matched funds based on their years of service.

What is the minimum age requirement to participate in NOV's 401(k) Savings Plan?

The minimum age requirement to participate in NOV's 401(k) Savings Plan is typically 21 years old, although employees can start contributing once they meet this age requirement.

Are there any fees associated with NOV's 401(k) Savings Plan?

Yes, there may be fees associated with NOV's 401(k) Savings Plan, including administrative fees and investment management fees, which are disclosed in the plan documents.

How often can employees change their investment allocations in NOV's 401(k) Savings Plan?

Employees can change their investment allocations in NOV's 401(k) Savings Plan at any time, although there may be restrictions on frequent trading.

What happens to an employee's 401(k) account if they leave NOV?

If an employee leaves NOV, they have several options for their 401(k) account, including rolling it over to another retirement account, cashing it out, or leaving it in the NOV plan if eligible.

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