(303) 499-7445 info@tandemcpas.com

Year-end Reminders

Charity & RMD

  1. Charitable Contributions for Non-Itemizers—These are no longer deductible on the federal return but continue to be deductible on the Colorado return for taxpayers who take the standard deduction (if over $500).  Always keep letters of acknowledgement for any individual donations of $250 or more for substantiation purposes.
  1. Charitable Contributions of Stock — If you are making charitable contributions and own stocks, bonds, or mutual funds (not in a retirement account), donating the stock directly instead of donating cash gives you a larger tax savings because you can avoid tax on the capital gains and get a deduction for the full fair market value of the stock.  To reap a tax benefit, the stock needs to be worth more at the time of donation than when you purchased it, and you need to have owned it longer than one year. Contact your brokerage firm for details on how to transfer some of your stock to your favorite charity and allow extra time for processing. Note that the donation must be to a public charity.
  1. Charitable Contributions for Taxpayers Over 70 ½
  • Starting six months after your 70th birthday, you may make a qualified charitable contribution (QCD) of up to $100k ($100k each for married filing jointly) directly from your IRA or 401(k).
  • A QCD reduces your income, which may lower how much of your Social Security is taxed, reduce your Medicare premiums, or increase your total deductions.
  • Starting in 2023, donors can make a direct one-time gift of $50k to a split interest equity, such as a charitable remainder trust or charitable gift annuity.
  • Staring in 2024, annual QCD limits will be indexed for inflation.
  • These contributions can make up part or all of your RMD (see point 4 below).
  • Execution is important, so if you would like to pursue this method of giving, please contact us for more details or discuss it with your financial advisor.
  1. Required Minimum Distributions – If are at least 73 or have an inherited IRA or 401(k), remember to take your required minimum distributions by the end of the year.
  • If you were born in 1950 or earlier, you have an RMD requirement if you have a 401(k), 403(b), or IRA account. The brokerage house holding the account will calculate the minimum amount for you.
  • If you were born in 1951, you are not required to take an RMD in 2023. The ages for taking an RMD has been raised to 73.
  • If you are still working, you may be able to delay taking an RMD from the 401(k)/403(b) plan of your current employer. This exception is not available if you own at least 5% of the business.
  • If you have an IRA inherited in 2020 or later, the IRS is waiving the requirement to take an RMD for 2023.

(303) 499-7445

info@tandemcpas.com

287 Century Circle, Suite 200, Louisville, CO 80027

Tandem CPAs LLC  (Colorado firm license #FRM.5000548).

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