Twenty Twenty, Gann, Boca discussed on Wealth Done Differently - Retirement
They are a nice way to put money. Aside for down the road may might be next year down the road or further down the road but you do get those tax deductions in the year. That you make the contribution again another one that people can miss. Is that required minimum distribution if you hit that magic age of seventy and a half half and over you WanNa make sure you get that out of your IRA or you get penalized fifty percent of what you should have taken. That's painful Out It's painful. And then you get taxed on that as just as a really unwieldy ball that is pretty ugly you're required minimum distribution is amount it's going to be based on the account value in your IRA at the end of the year December. Thirty first of last year and and it's considered ordinary income on your tax return. So you you you have to start taking it and a a way to get around this us is if you want to keep it off your tax return you could just give it away to a qualified charitable organization. These are SS amazing way to give it directly to if you're now taking standard deductions and we'll drill down on that a little bit later but you can keep that IRA distribution in half of your first page of your your tax return if you give it away to charitable organization of your choice. No and that's really being organized on how. Oh you're giving your money and I know there's a lot of strategies and I'm sure he'll touch on a little bit later or else I'm tree could also dedicate an entire podcast too but that there's so many different ways to do that and make it worth your while. Make it worth charities while I mean. They're going to be thrilled to give to the end of the year. Exactly which is the perfect segue. Thank you for Chunky returnable donations. Here we go. You know you may have heard this before but I know many times the the more we hear it the more it may sink Gann you know. This was the first year that we really experienced the opportunity to discern whether a standard deduction was better or an itemized. Taking that itemized deduction on your return in two thousand eighteen the standard deductions went up. Twelve thousand awesome per individual. And if you're over the age of sixty five you got an extra thirteen hundred Boca people. This means they're now taking the standard deduction instead of itemized. But you really WanNa look at you. Know take a look at your two thousand eighteen return and determine you know there may be some MM techniques and this is one of them we look at Chungking and dumping when I called Chunky Chonkin Lump Dump Chunk and dump your IRA. I'm I'm sorry. Your charitable contributions so for example. If there's a couple over the age of sixty five and they've got eight thousand in in state and local property taxes let's say they've got a couple grand and deductible medical expenses and six thousand in mortgage interest and they've given away eight thousand and charitable contributions so far of their itemized deductions would be about twenty four thousand thousand dollars If this were your end today they'd be better off taking the standard deduction because there are over the age of sixty five and standard deduction is going GonNa be twenty six thousand six hundred however because they're closed they could look at contributing more this year her into a donor advised fund or to an organization of their choice. And kind of earmark. It this is our giving for twenty twenty. But we're GONNA GONNA do a bigger amount in twenty nineteen to get that to take advantage of our itemized deduction this year and then next next year. Use The standard deduction so it's really worth talking to your financial adviser your your accountant and looking at what your Giving strategy is to determine if this is going to be a benefit for your for you. I think that the example that I've heard before and I've actually please spoken with a few people is if you're giving to charity or organisation on a monthly basis than looking to add all that up and church is a wonderful Example of that most people will tie give offering on a monthly basis. If at the end of the year. You can project what you WANNA give for that next year and you're able to give it in one lump sum at at the end of two thousand nineteen four twenty twenty. You're not the church is getting the money earlier which is good your getting a better deduction for twenty nineteen and and then twenty twenty. You don't have to worry about that monthly tie than offering that you would normally do you've already given it and you can feel free to give above and beyond if you want to or to other organizations. I mean there's all sorts of ways to do it. It's not I want to make it clear that you're not saying give an extra ten thousand dollars above what you would normally. It's just rearranging the timeline. time-line right and you can also use. That's the beauty of donor advised. Funds Donor advised fund is a five. Oh One C.. Three in in and of itself so you could technically give ten thousand dollars to a donor advised fund and then you as the donor designated ignite the beneficiaries that would get a monthly contribution in twenty twenty. You're just getting the tax deduction in twenty nineteen but you can enact SWALEC still give it away on a monthly basis in twenty twenty. That's that's perfect. That's beautiful yeah. They're beautiful tools. I Love Them. Okay all right now so it's a good time to revisit that mortgage interest rates have been falling again this fall and if if you have been putting it off the idea of refinancing now is is a good time to take a look at it. I think there's a lot of things to consider with this. especially if you're moving into that fall season of life one is how close are you to having it paid off. Is it really. You know reasonable to go in and refinance. So how Long Long D. N. -ticipant being in your home. What type of mortgage do you have right now? What type of closing costs would you be incurring? There's a lot of moving parts with this. This is special as you're moving into the fall season of life however I do see a lot of people that are are needing to look at their homes as a tool world. They're gonNA need to access the equity in one way shape or form at some point in their retirement season absolutely and from my understanding standing. If you depending on how many years you have left if you're able to refinance maybe you have ten or fifteen years left and you have the extra income per month if you refinance and say I. I wanted to be a five year loan. If there is such thing which I would assume there would be. That is so much more towards your principle than that would give you more of a deduction to meet that minimum requirement. Correct right you definitely want to look at you. Crunch the numbers than plan out you may be able to just pay more towards your current mortgage and have it paid off in five years and still accomplish the same thing without getting hit with with closing costs so you need to weigh a variety city of of elements in this to determine you know if this is a a wise decision or not with any of these especially some of these. We're going to be getting into into next with the harvesting gains and losses. You really want to discern these are in the best interest of your your financial life here economic live all of the pieces that you're looking at right now looking at our current economic season and what your cash flow needs are both now in down the road in a gay and all of these moving parts. I making a whole lot of suggestions to please talk to your professional advisors to make sure which of these fits is good for you absolutely let..