2020 Changes You Needed to Make Anyway!
by TaxDoctor on July 1, 2020 at 8:38 pm
It’s July but the big fireworks are a victim of COVID-19. Although true, small local and personal fireworks will likely be everywhere as people adapt. That fireworks habit is ingrained in us so the fun will find a way. Another behavior or habit that’s ingrained into people is spending more time on “staycation” vacation plans than time spent fixing next year’s tax problem when now is the time to take your preventative medicine and avoid the pain! In being humans, we all form habits. Some are good, most are bad. We try to develop good ones to replace the bad and often we are successful. However, most successes don’t come without a coach, cheerleader, or some kind of support system. Tax
Charitable Planning for Younger Clients ~ with a Twist.
by TaxDoctor on June 26, 2020 at 3:00 pm
Often people will have one-time “Income Events” and so planning and especially the tax aspects are the motivation. In these cases, you can consider setting up a Charitable Lead Trust (CLT) in order to receive an upfront income tax deduction. A person who has significant and unusual taxable income in a particular year can establish the grantor lead trust and use the charitable income tax deduction to mitigate the impact of taxes in his or her situation. An example might be someone who has received the proceeds from selling a business, or a stock option at work is coming due. A far more common and likely example is someone who has inherited an IRA. These situations will trigger an unusually
Charitable Planning Series: Donor Advised Funds
by TaxDoctor on June 15, 2020 at 7:24 pm
A Donor Advised Fund or “DAF” is defined as “an account at a sponsoring organization, generally a public charity, where an individual can make a charitable gift to enjoy an immediate tax benefit and retain advisory privileges to disburse charitable gifts over time.” But what does that mean in practical terms? You can set up a “DAF” through a financial adviser or directly with some charities, and like giving to a charity itself, simply deduct that gift on Schedule A of your 1040 tax return. However, many people under the new tax code no longer file a Schedule A. Many people give to charities every year, and report those donations to the accountants. However, since the new standard deduction
Charitable Tax Planning and COVID-based Special Tax Rules for 2020 – a Win-Win
by TaxDoctor on June 5, 2020 at 3:00 pm
Charitable planning has always allowed some great tax benefits for clients with tax trapped assets, and the second benefit, the charitable deduction. What’s a tax trapped asset? Why is the charitable deduction the second benefit and not the first? What are the one-time 2020 rules? Well, that’s the point. Most people don’t understand why these trusts are so often the “go to tool” for so many tax planners. They have many often misunderstood benefits and aren’t really primarily about benefitting the charity at all, but the donor in most designs. Over the next few weeks we will discuss the Charitable Planning Toolbox, starting next week with Donor Advised Funds, and will continue to explore more about these great partnerships between
by TaxDoctor on May 29, 2020 at 12:03 pm
The people who have filed and paid too much tax again this year, as they did last year, almost always make themselves a promise that they “will do better from now on.” They will keep better records; maintain a mileage log. They will learn more about work options and increase their 401(k) or 403(b). They will start a hobby job, or purchase a rental property and on and on. Then Summer comes and it all fades into the background as the beach, golf course or woods call to them. Family starts getting together, concerts are abound and all of a sudden it’s Fall. Then work picks up and kids are back to school or off to an out of state
Taxes Are Due In