Year-End Tax Planning and QCDs

By Modern Wealth Management

November 30, 2018

You’re thinking, “Oh boy taxes!” right?

Well, unfortunately as long as you earn money, have money, and live in the United States, you’re going to pay taxes. There are significant tax planning opportunities around this time of year, every year. The problem is that most people aren’t thinking about taxes right now. They’re thinking about the holidays, their families, shopping, etc. and they’ll worry about gathering their documents for this year, next year. By then it’s too late, and those tax planning opportunities won’t be available anymore.

There are some unique things that you can do this year before December 31, 2018 that might take a little bit of time to do, but less time than doing your holiday shopping. This weekend on America’s Wealth Management Show, Dean and Bud will be talking about capital gains, phantom income, tax loss harvesting, Roth conversions, and QCDs (Qualified Charitable Distributions). Don’t miss it this weekend on 98.1FM KMBZ from 11:00 to Noon!

Qualified Charitable Distributions (QCDs)

We know that you don’t want to be deep in the heart of taxes during the holiday season, but if you do some proactive tax planning maybe you can use some of the savings for holiday gifts! A Qualified Charitable Distribution is a provision in the tax law that basically says if you’re over the age of 70½ you can take your money directly from your IRA and have the custodian send it to a charity. You never take possession of the money, it goes directly to the charity. The benefit of doing so is that it satisfies your Required Minimum Distribution (RMD). It doesn’t have to be the full RMD amount, but it can be any amount up to $100,000.

Where the tax savings comes in is that you don’t have to include the QCD amount in your Adjusted Gross Income (AGI), or your taxable income, like you would have to do with an RMD. The downside is that you do not get a charitable deduction for a QCD, but with the changes in the tax law most people are going to be taking the standard deduction anyway. At worst a QCD is a neutral tax event, but for many there is actual tax savings that come because we’ve reduced that taxable Adjusted Gross Income.

QCDs have been around for several years and people have been benefitting from them, but with the new tax law and the higher standard deduction, the number of people who can benefit from a QCD has dramatically increased.

BFG Tax Service CPAs work directly with our Modern Wealth Management Advisors to determine if tax planning opportunities, like a QCD, are the right move for you and your financial plan. They will sit down with you and discuss your tax planning options and show you how they fit in your plan. If you want to know if you have potential tax savings in your plan, schedule a complimentary consultation below or give us a call at 913-393-1000. We’re happy to help.

Find more information and education on taxes in our Tax Planning Education Center. You can find reports, articles, videos, and more!

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The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Advisor. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.