Two Ways to Save Big on Taxes in 2013
If you enjoy making an impact through charitable giving, would like to reduce your taxes, and have IRA assets and/or investments in a taxable brokerage account, here are a few tax strategies you need to know about before we wrap up 2013.
Qualified Charitable Distributions
Did you know that if you’re over age 70 ½, you can choose to give up to $100,000 from your IRA account directly to charity, up until December 31st, 2013? You won’t receive a tax deduction for the gift, but you will enjoy a benefit that is much better than a tax deduction. The gift will satisfy a portion, if not all, of your Required Minimum Distribution for the year. It will also be excluded from your taxable income, which in addition to lowering your tax liability, may also allow you to have a lesser percentage of your Social Security subject to income tax, as well as possibly help to keep your Medicare Part B premiums lower.
Donating Appreciated Securities (stocks, mutual funds, ETF’s) to Charity
If you have securities in a taxable brokerage account that have appreciated in value, you may save a significant amount in taxes by donating some of your shares. When you donate the appreciated securities to charity, not only do you receive a tax deduction for the fair-market value of the gift, but you also avoid all of the capital gains tax that you would have been subject to had you sold the securities. Keep in mind that you must itemize your deductions in order for this strategy to positively effect your tax situation.
Ultimately, it’s always cheaper to pay the taxes than it is to give, so tax reduction shouldn’t be your sole motivation for charitable giving. However, if you have a generous heart and you have organizations in mind that you’d like to positively impact with gifts of financial resources, the two strategies explained above will allow you to see a greater portion of your dollars used for good according to your wishes, as opposed to being spent in a way you have no control over by our Federal government.< Back to Updates