As 2018 comes to a close, we are actively discussing the following year end planning items with our clients. Year-end tax planning must take into account each taxpayer’s unique situation and goals. Please consult with your tax adviser to devise a tax-saving plan that most effectively meets your needs and takes into account the latest tax rules.
Required Minimum Distributions (RMDs)
For those over 70 ½, you are required to take a required minimum distribution from your retirement account. If you are a client of Callan Capital, we are processing your distribution and it will be complete in early November. If you would like to take your distribution before November, please let us know.
Donating to charity can be a fantastic tax-savings strategy since you are in control of when and how much you give. Consider a charitable IRA rollover, which allows clients over 70 ½ to donate up to $100,000 per year to a charity directly from their IRA and avoid paying taxes on the distribution. The charity benefits from the donation and the individual satisfies their RMD.
Clients who would like to donate to charity and expect to be in a lower tax bracket next year may want to consider contributing future charitable gifts through a Donor Advised Fund (DAF). A DAF is a philanthropic vehicle established for donors who want to make a charitable contribution and receive an immediate tax benefit. A donor contributes to the fund as frequently as they want and then grants to their charity of choice when they are ready.
Gifting to Non-Charitable Entities
The IRS allows each person to give $15,000 to each non-charitable beneficiary such as non-spouse family members every year. This annual limit does not accrue into future years if it’s not utilized. In addition to the annual exclusion, individuals can give up to $11.18 million (married couples can give $22.36 million) over a lifetime before owing gift taxes. For gifts to 529 plans, the IRS allows 5 years of annual gifting to be accelerated for a total of $75,000 upfront ($150,000 for a married couple).
Disclaimer: Callan Capital does not provide individual tax or legal advice, nor does it provide financing services. Clients should review planned financial transactions and wealth transfer strategies with their own tax and legal advisors. For more information, please refer to our most recent Form ADV Part 2A which may be found at www.adviserinfo.sec.gov.
The tax information provided in this document is for general informational purposes only—it is not meant to be used, and cannot be used, by individuals to avoid federal, state or local tax penalties. Taxation varies depending on an individual’s circumstances, tax status and transaction type; the general information provided in this guide does not cover every situation—for complete information on your personal tax situation, you should always consult with a qualified tax advisor.