5-Min Tax Briefing
If you’re 70 ½ or older and have a traditional IRA, you may want to consider making a Qualified Charitable Distribution (QCD) before the end of the year. A QCD allows you to give money directly from your IRA to a qualified charity without counting it as taxable income. For 2024, you can donate up to $105,000 this way, and if you’re married, your spouse can also give $105,000 from their own IRA for a combined total of $210,000. If you’re 73 or older, a QCD can also count toward your Required Minimum Distribution (RMD) for the year, which helps you avoid additional taxes. To qualify, the funds must be sent directly from your IRA trustee to the charity. Roth IRA owners typically don’t benefit from QCDs since Roth withdrawals are already tax-free, so donating from personal funds and claiming a deduction is often a better option. The QCD limit will increase to $108,000 in 2025, so planning can maximize your benefits. If you’d like assistance or more details, contact us to ensure you take full advantage of this tax-saving opportunity.
5-Min Tax Briefing
September 2024
We want to inform you about an important update from the IRS regarding a new retirement savings benefit called Saver’s Match. As part of the SECURE 2.0 Act 2022, the Treasury will start offering Saver’s Match contributions in 2027 to help low- to moderate-income individuals boost their retirement savings. Here’s how it works: if you contribute up to $2,000 each year to a 401(k) or IRA, you may qualify to receive a matching contribution of up to $1,000 from the Treasury. This differs from the current Saver’s Credit, which will be phased out and replaced by the Saver’s Match. The IRS is currently seeking feedback on several aspects of the program to ensure it achieves its goal of helping individuals prepare for retirement. If you have any questions or would like to learn more about how this may impact your retirement planning, feel free to contact us.
5-Min Tax Briefing
March 2018
Item for Thursday, March 1, 2018
IRS Releases Updated Form W-4 and Withholding Calculator: The IRS has released an updated version of Form W-4 (Employee’s Withholding Allowance Certificate) and its online withholding calculator. These tools allow taxpayers to check their 2018 tax withholding following passage of the Tax Cuts and Jobs Act (TCJA). The IRS is encouraging taxpayers to perform a quick “paycheck checkup” to make sure sufficient tax is being withheld from their paychecks. This is particularly important for (1) two-income families; (2) people with two or more jobs at the same time or who only work for part of the year; (3) people with children who claim credits (such as the child tax credit); (4) people who itemized deductions in 2017; and (5) people with high incomes and more complex tax returns. The IRS anticipates making further withholding changes for 2019 and will work with businesses and the tax and payroll communities to implement these changes. The revised withholding calculator can be accessed at www.irs.gov/individuals/irs-withholding-calculator . News Release IR 2018-36 .
5-Min Tax Briefing
March 2018
Item for Friday, February 23, 2018
IRS Clarifies Deductibility of Home Equity Loan Interest: For tax years 2018–2025, the Tax Cuts and Jobs Act (TCJA) eliminated the deduction for interest on home equity debt and limited the mortgage interest deduction to qualified residence debt of up to $750,000 ($375,000 for married taxpayers filing separately). In a recent News Release, the IRS advised taxpayers that interest paid on home equity loans and lines of credit is still deductible if the funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan. For example, interest on a home equity loan used to build an addition to an existing home is generally deductible (subject to the new dollar limit on qualified residence debt). However, interest on a home equity loan used to pay personal living expenses, such as credit card debt, is not deductible. Also, interest on a home equity loan on a taxpayer’s main home to purchase a vacation home is not deductible. News Release IR 2018-32.