Joe Anderson, Warren Buffett, Joel Anderson discussed on Your Money, Your Wealth

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Now, here's Joe Anderson and big Al pine. Is once again, my name's Joel Anderson. Five. Alan. Appreciate you hanging out. We got a lot of things on the docket today. Some good some bad in some probably in between what's the bad Steph? No, most of it. Gene chat qui. Oh, okay. Well, that's good. So we famous and then we have a few things of ours. That are in between most of us there. Is that time of year album? Well, it's getting there. Anyway. Towards year end. And that's people think about the holidays. They start thinking about gosh. Maybe I got some charities organizations. I'd like to give to and sometimes Joe, it's it's like I wanna give and but I also want to get a little tax break. There's probably some strategies that I may or may not know. Yeah. I think most people don't understand the strategies they just cut a check. Correct. And which is great. But we want to get into here for the first part of the show is just to dive in a few different strategies that you might not have heard of or just explain how to go about implementing some of them, right? Because if you look you about seventy two percent of charitable donations are by individual. Yeah. So the majority and the total for two thousand sixteen was about three hundred ninety billion. So that's a that's a big number with a b yes, seventy two percent of three hundred ninety billion. Yeah. Vigils? They're like you and me are listening Warren Buffett and Bill Gates, those people. Well, they give to their foundations. And that's fifteen percent of the charity comes from foundations got it. Yeah. I played in a charity golf tournament last week with Warren Buffett, no. The field. But you know, that was fun. Yeah. You give back a little bit. Yeah. You a couple of bucks. Yeah. So so first things first what should people do the thinking about giving? Well, I think the first thing I is to figure out what what your own goals are what your needs are. And I say that because a lot of our listeners are either working or they're retired or they're close to retirement, and it's like, I do know some people tied. So that's like, okay. Ten percent of my income. I gotta give that regardless which is great for the rest of us though. We tend to kind of take a look at what am I making? What do I need in terms of saving for retirement or in retirement what I need for my cash flow expenses. And then what's over? And do I want to save that for the kids or do? I want to give some of that to charity. So I think it usually starts with yourself Joe. And and your overall goals, I would agree with that even as selfish that might be. I think it's important. Well, it'd be great if we gave everything, but then we'd. Right. So you can take care of yourself and your family. I guess is the point irregardless. I know there's some people who disagree with that statement. They wanna tie then. That's cool. If that's if that's you then that's great. But for the rest of us. It's like all right. Let's make sure that our needs are. I think that's we see the hundreds or thousands of people. Yeah. And a lot of people wanna give but they don't wanna give. Now, they would rather give later when they know that. All right. I'm on. I'm on my last breath. Yes. Now, I I feel comfortable sending the check because my family's taking care of. We're not going to be a burden on anyone, blah, blah, blah. And I understand that way of thinking. However, if you just sorta kinda use hindsight, if you could have been giving throughout your life, not only would you've been more, but she would got a tax deduction to boot instead of waiting till the end of your life right in. So some of the things that you could do to figure that out is, you know, if you wanna get on the old computer spreadsheet in a sense. Well, here's my expenses. Here's my income. Here's what my projection is or retirement plan projection and a lot of times when people see that it'd be like, you know, what you're you're close. It's dicey. You cannot make any mistakes whatsoever share in. So then they're like, well, you know, what probably tidy might pull back a little bit. Yeah. Exactly. And in some cases, it's like I still wanna give to charity you in retirement. But maybe let's think about this. Do you really have enough to cover your own needs first? And then other times we see just the opposite. They have so much extra. And it's like, and they don't want to spend a penny of and kissing might neither then the truth is you could take a look at even expensive long-term care and figure out five or ten years without a lot of folks have lots of money in addition to that, and they still want to wait till they pass. And so for those folks, it's like, well, maybe there should be a plan giving strategy to give while you live, Natalie, joy it and also get a tax benefit. Yeah. But I think the tax code changed some living it did. Because and the reason why is because there's a higher standard deduction. So for married couple. It's twenty four thousand dollars, and if you're over sixty five it's actually greater than that. It's closer to twenty-six little bit over twenty six thousand dollars for a couple now for single. It's twelve thousand dollars is your standard deduction against a little bit more. If you're over sixty five, but a lot of folks now with the with the limitation on state taxes property taxes being ten thousand dollars. That's the maximum. You think about that? So your taxes or ten thousand dollars deduction, regardless of what they are. If you paid off your mortgage, and you're married you'd have to give fourteen thousand dollars away to charity just to equal the standard deduction. So a lot of folks aren't going to deduct their charity anymore result that I think a lot of times people enjoyed that. Yeah. Yeah. Gave two thousand dollars. All right. Make sure they tell the techs repair. I give two thousand or even two hundred. Yeah. Yeah in so now, it's like well here. I really don't you know, the CKC, and why don't really need that information anymore because you're not going to be able to write it up. Yeah. And so now, you're thinking, yeah. I still want to give the charity and typically people write a check in some cases, they go through their grudge and giveaway close to goodwill. But, but I'd say why would they go to the garage to find clothes because they're people are pack rats. They have closed closure. Chris they might need. I understand that. We don't do that. But my parents my parents have three four storage. That I don't think they've seen it about thirty years. I have no idea what's in there. And they're now in their eighties. They don't have the energy. I guess. I'm going to be looking at some point. Yes. And we're going to be giving a lot of close. At that point. But some of the things that individuals can do is now bunch. You know, we we talked about bunching before and it was mostly medical expenses. You know, if you want to get that hip replaced and some teeth removed all jam it up in one year. Right. You know, get both knees both hips and do a lot of dental work. Yeah. One year, then you'll be able to write some of this stuff. I well, that's right again. I'll go to real simple example, your taxes are ten thousand dollars, and you give ten thousand dollars away to charity. So that's twenty thousand dollars total you're married. You don't have enough to to itemize because the standard deduction is twenty four. So instead of that maybe you give twenty thousand one year and nothing the next year. So now twenty thousand intensely have thirty thousand dollars of itemized deductions the next year use the standard deduction of twenty four thousand you end up in a better spot. But the problem with that is when you give to charities twenty grand next. They want twenty-five twenty-five already gave you devil last year that they've made I've understand. So here's here's how you get around. Now, I'll give you a little practical idea is if you're if you're tend to give towards year end why not do one trench in January and went Trach in December within the same calendar year. So it seems like two different years to the charity. Oh, yes. That's the way rather then besides giving cash cow public appreciated asset. Well, that's actually the better way to give. Because like, let's say you bought a stock. You by Qualcomm stock for thousand bucks announce for ten thousand dollars you could sell that stock and pay the capital gains tax, and then you'd probably net. Let's call it. Seventy five hundred whatever the number is. And then you could donate that to charity or you could just give them the ten thousand dollar stock and get a ten thousand dollar deduction, and you don't pay the capital gains tax a lot of people don't know they can give away their appreciated assets. We're talking about assets outside a retirement account. So if you've got an IRA, this doesn't work bet it's assets that are in your trust account, you brokerage account that are outside of retirement. But if you do retirement accounts, and there's the QC de correct? So if you you have to be over seventy and a half to do this. So you can give partial a part of your RND charity up to one hundred thousand bucks. Yeah. That's that's relative. Knew it was it was one of those things that came right? I think it was two thousand thirteen for the first time, but it was part of the extenders Bill, which means that expired every year, and then it was they believed two thousand fifteen or sixteen where it became permanent. Meaning that anyone can do it. So you have to be seventy and a half k which means you have required. Minimum distributions. And then you can give those required. Minimum distributions directly to charity. If you want it to the benefit there is they don't show up his income on your return. And if you're not going to itemize your deductions anyway, you end up in a better spot. And if let's say you required minimum distribution is ten thousand dollars. You could still give up to one hundred thousand dollars. If you wanted to for some reason. And if you're married your spouse can do the same thing. Sure. Will you could give as much as you want? CD's only up to one hundred is up to one hundred seventy and a half. And it counts for you required. Minimum distribution. So if you had a two hundred thousand dollars required distribution that means you have a ton of money in retirement accounts for you. Yeah. Excellent. Then you might want to look at larger strategies such as maybe a donor advised fund. Yeah. In the case of a donor advised fund. Now what you're doing is. These are these are you set up an account. It's it's a special kind of account typically at a brokerage firm. It's called a donor advised fund you put money into that account the year that you put the money into the account. It becomes a tax deduction to you. But now you've got this account. It's kind of like your own little foundation. Yeah. Except this. It's an accountant so relief. Coats, like a little kitty cat. So anyway, what what what it's all about? Is you get to decide how to dole out the money in the accounted the charities of your choice at any point that you want to. So it's very effective when you have a year where there's a lot of income or or your bunching again. That's true too. You're looking at all, right. I'm going to put twenty grand instead of going January, December you're going to just put twenty thousand dollars in the donor advised fund, and then just allowed to your favorite charity out of ten thousand dollars one year ten thousand the next you still get the twenty thousand dollars one you put it in the.

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