Preparing for Year-End

Danielle Bonilla |

As the Election season is coming to an end and the holiday season is quickly approaching, our team is focused on the year-end and how we can partner with you to minimize stress and your “to-do” list.  (Please note, this information is intended to be general in nature and should not be taken as individual tax advice. We suggest that you reach out to a qualified tax advisor to discuss your specific tax situation.)

Charitable giving can be an excellent tool for reducing your tax liability. If you have appreciated assets in a taxable investment account, you might consider gifting the shares directly rather than giving cash.  By doing this, you avoid the capital gains tax on the asset and the charity can convert the shares to cash with no tax consequence.  If you are over age 70 ½, you can also make a charitable contribution directly from your IRA account (a Qualified Charitable Distribution.)  In years when you have a Required Minimum Distribution (RMD) from your IRA, the QCD would count towards your RMD amount and would avoid the income tax that would otherwise be due on the required distribution.

If you are in a low tax bracket this year or expect that your tax bracket will be higher in the future, you may consider converting some of your IRA dollars to a Roth IRA before year end. You would pay the taxes on the conversion this year, but no taxes would ever be owed again on the dollars in the Roth IRA.  And the Roth IRA does not have a Required Minimum Distribution requirement beginning at age 72. If you want to process a Roth conversion for the 2020 tax-year, requests must be submitted for processing no later than December 11, 2020.

If you would like more details on charitable donations or the Roth conversion process, please reach out to our office for assistance. We are always happy to hear from you and appreciate the opportunity to serve you.