Broker Check

An Important Tax Tip

| November 30, 2018
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For those of you who are 70 1/2 and older, we want to remind you of the benefit of contributing to your favorite charities directly from your IRA distributions.

Each year, the IRS allows you to contribute up to $100,000 directly to a charity from your IRA.  The tax benefit of doing this allows you to exclude the amount of charitable contributions from your IRA taxable income when calculating your adjusted gross income on page 1 of your federal tax return.  To offset this, you are not allowed to deduct the charitable amount on your itemized deductions.

Most of you will probably not be itemizing your deduction any longer due to the recent income tax law changes, so not being able to deduct the charitable contribution will be irrelevant.

By reducing your reported IRA distribution by the amount of your direct contribution to charity, your adjusted gross income will be lower.  This lower adjusted gross income may reduce the taxability of your social security income, and may reduce your Medicare premium as well. 

Please contact us if you would like to review this in more detail, as well as discussing the procedure to do this.

Also, as a heads up for your year end tax planning, you can expect substantial taxable capital gains distributions from your non-retirement stock mutual funds.  This is due to portfolio managers taking profits prior to the stock market correction. 

Please discuss these issues with your tax advisor before taking any action.

We want to thank you for your business, and the confidence you have placed in us.

Have a happy and health holiday season!

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