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CHARITABLE GIVING IN THE WAKE OF TAX REFORM – PART 3

If you missed either of the first two parts of this three part series on tax-efficient giving strategies, check them out here:  Part 1  Part 2 As mentioned in the first two parts of this series, recent tax reform is significantly reducing the number of people who will recognize a tax benefit when making charitable contributions in 2018 and beyond.  This is because many people will find that the now-higher standard deduction will be greater than the sum of their now-limited itemized deductions.  If this sounds like you, keep reading to learn how a donor advised fund may help you recognize a tax benefit when giving to your favorite charity. A donor advised fund account is a simple, tax-smart investment solution for charitable giving.  Despite its name, it’s not something that only those featured on “Lifestyles of the Rich and Famous” have access to.  This is a tool that middle class America...

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Charitable Giving in the Wake of Tax Reform – Part 2

If you missed the first installment of my three-part series on efficient giving strategies, you can read it here:  Part 1.  Once you are up-to-speed, keep reading here to learn about an absolute home run of a giving strategy for those who have an IRA and are at least 70 ½ years old. As mentioned in Part 1 of this series, recent tax reform is going to significantly reduce the number of people that itemize their tax deductions.  This means that many people who donate money to qualified charities will no longer be able to recognize the tax benefit of their gift.  If you fall into this camp, have an IRA, and are at least age 70.5, then you should consider the advantages of a Qualified Charitable Distribution (QCD). A QCD is achieved when you distribute money from your IRA or inherited IRA to a public charity.  The donor must be at least...

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Charitable Giving in the Wake of Tax Reform – Part 1

The Tax Cuts and Jobs Act (TCJA) passed in December 2017 is the largest overhaul to tax law in over 30 years.  Tax experts and the IRS are still sorting out all of its implications and how to apply the new law, but it is clear the TCJA will have a significant impact on taxation of both individuals and businesses. Due to the effective doubling of the standard deduction and the elimination of many popular itemized deductions, The TCJA has reduced tax incentives for making charitable donations for many people.  Over my next few blogs I am going to explain the basics of three strategies that we are using much more often when discussing charitable gifting with our clients here at Level Financial Advisors.  These strategies all have unique benefits over simply gifting cash. Gifting of Long Term Appreciated Property One of the first tax-saving strategies we consider when we find out a...

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Who Does Your Financial Advisor Work for?

While driving around the city I live in, I often see a particular license plate frame from a local car dealership that boasts the tagline “We worked it out!”  Every time I see those words on the rear of a vehicle, I find myself wondering if that is the best way to market yourself.  The tagline implies that there is conflict when dealing with that car dealership; which is not something I would want to advertise if I was in the business of selling cars. Maybe I should give that dealership more credit, because, let’s be honest, we all expect at least some conflict during the car buying process.  This is primarily because we understand that the car salesperson has one overarching goal, to maximize their profit, not yours. Similarly, many financial consumers mistakenly think their advisor is working for them, when in reality they are very much working for themselves.  Financial...

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Tax Cuts Present 401k Savers Rare Opportunity

The vast majority of American taxpayers are about to experience a rare event; their paychecks are most likely getting larger in 2018, even if their salaries haven’t changed.  This is because the Tax Cuts and Job Act (TCJA) passed in December comes with a slew of once-every-few-decades tax law changes, including lower tax rates for most individuals.  The IRS, every accountant in America, and employers, are scrambling to adjust to the new tax law. One adjustment that has to be made and must be in place for all employers by February 15th is utilizing new withholding tables for paychecks.  These tables dictate how much tax your employers or payroll providers must hold back from each paycheck you receive.  Because tax rates under the TCJA are lower, most individuals will experience lower amounts of tax withheld from their paychecks.  This means that you should expect your take home pay to increase when...

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4 Crucial Financial Tips for Recent College Graduates

So you graduated from college and you are off to your first job.  Congratulations on making it this far!  I’d tell you things are about to get real, but you know things are already “real” and you’ve proven you can handle it.  What is about to happen is your next major life change.  Here are four tips that are crucial to set you up for financial success moving forward. BUDGET – If this sounds like a dirty word to you, then it is time to get comfortable with a cuss word that your grandmother will actually approve of.  The most basic budget simply tracks your take-home pay against your monthly cash outflows.  Where it tends to get a little tricky is converting cash-flows into monthly amounts, so that you end up comparing apples-to-apples.  For weekly expenses like groceries, multiply the expense by 4.3 to get the monthly amount.  Also, if you...

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ONE SMART OPTION FOR DONATING MONEY PAST AGE 70.5

If you or your spouse are at least age 70-and-a-half, have an IRA, and donate money to charity, then you should consider the advantages of a qualified charitable distribution (QCD).  A QCD lowers your adjusted gross income (AGI), which in turn may: lower the amount of your Social Security benefit subject to tax reduce your Medicare premiums keep your itemized deductions from being phased out lower the threshold for deducting medical expenses and miscellaneous itemized deductions What is a QCD, you ask? A QCD occurs when an IRA owner has money distributed from their IRA directly to a public charity.  This is different from having money go from your IRA, into your own pocket, and then gifting it to a charity, in which case you would deduct the amount on Schedule A and potentially lose the benefits listed earlier.  Some other rules of a QCD are: Must be at least age 70.5 on the day the...

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Icarus and Hubris: A Key Lesson from the Election

Regardless what side of the political spectrum you fall on, most can agree that the way the markets moved before, during, and after the night of the Presidential election didn’t quite add up.  I am frequently reminding my clients that the markets do not like uncertainty or surprises; a Donald Trump win threatened to offer plenty of both. The days leading up to the election seemed to tell us the markets preferred a Hillary Clinton win.  They fell 9 days in a row as the FBI investigation into Clinton’s email server was reopened and her polling numbers dropped.  Then, on Monday November 7, the Dow rallied almost 400 points when the FBI once again cleared her in their investigation.  This is a logical market reaction given that Clinton represented the status quo -- that is, she represented certainty for the markets. The markets began to plummet the night of the election as...

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Sleep On It – How To Save Your Retirement With A Spare Bedroom

Are you coming up short on saving for retirement, or worse yet, coming up short on paying for a retirement you are already in?  If you answered “yes” to that question and you have an unused bedroom, you may be sitting on, or rather, sleeping on the answer. Airbnb is a peer-to-peer online marketplace that allows residential property owners to rent out a room, or their entire home, to individuals looking for short-term lodging.  Think of it as a way to make money off your home like it’s an unofficial hotel.   Airbnb.com says they have 2 million+ listings in over 191 countries, so this is a serious business. Let’s say your CERTIFIED FINANCIAL PLANNER™ professional is telling you that you need to save another $500 a month to get on track for the retirement you want.  You’ve scrutinized your budget and there is just no way to come up with that money. ...

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The Power of the Mortgage Refinance

The Federal Reserve once again decided on September 21 to hold off on raising interest rates.  That may not help the paltry interest you are receiving on your savings account or bank certificate of deposit, but it is something that can still make – or rather save you some money. Interest rates on home mortgages remain near all-time lows.  Bankrate.com lists the rate on a 30 year, fixed-rate mortgage refinance at 3.35% and the rate on a 15 year, fixed-rate mortgage refinance at 2.63% as of 9/29/16.  No one can forecast whether rates will go up or down, but it is highly unlikely they will go much lower.  That means now is a good time to consider refinancing. Consider someone who bought a $200,000 home 10 years ago with 20% down and took out a traditional 30 year mortgage for the remaining $160,000.  If the interest rate on the mortgage was 5.25%,...

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