Categorized | Resources

New Tax Law Strategies

By Yvonne Marsh, CFP®, CPA

Updating financial and tax strategies are always important, but with the implementation of the Tax Cuts and Jobs Act in 2018, it is essential. The biggest change for all taxpayers is the increased standard deduction to $12,000 for singles and $24,000 for joint filers. The additional $1,250 for ages over 65 remained.

Consider grouping your itemizable expenses into one year so that every other year there are enough expenses to itemize.  For example:

Medical Expenses Itemization

If possible, have medical procedures concentrated into one tax year.  For 2017 and 2018, the threshold for itemizing medical expenses was reduced to 7.5% of Adjusted Gross Income.  In 2019, it returns to 10% of AGI.

Property Taxes

Pay two years of assessed property taxes in one calendar year.  The deduction for all taxes paid – state and local property and income taxes – is now limited to $10,000.

Charitable Giving

» Concentrate your charitable giving into alternating years.

» Establish a donor-advised fund. It is an easy process to set up your own charitable fund with as little as $5,000. Donate to it every other year to group your itemized deduction and have the fund disburse its charitable gifts evenly every year. You can make gifts of as little as $250.

» Qualified Charitable Distributions (QCDs) become imperative for those over 70½ taking Required Distributions (RMDs).  Direct your IRA custodian to disburse some portion of your RMD directly to your charity/church to exclude that amount as taxable income.

The new law also changed the “kiddie tax” rates so that investment income earned by minors will be taxed at Trust tax rates – a whopping 37% tax once investment income reaches $12,500.  You may think this doesn’t matter to you, but think again. I often see IRA beneficiary forms set up incorrectly so that a minor could ultimately inherit an IRA.  And, you guessed it – it’s considered investment income that is subject to these new rates.  Now is the time to review all of your pre-tax account beneficiary forms.

If your current advisor isn’t talking with you about these important changes, talk with us instead.  Call, email, or visit our website to schedule a complimentary meeting today.

Marsh Wealth Management, LLC 

1341 Branton Blvd, Suite 105
Knoxville, TN 37922
865.622.2162
admin@marshpros.com

Financial Planning & Investment Advisory Services are offered through Marsh Wealth Management, LLC (“MWM”), an independent investment advisor registered with the state of Tennessee.  Yvonne Marsh is an Investment Advisor Representative of MWM in the state of Tennessee.  Marsh Professional Group, LLC is a TN registered public accounting firm and a separate legal entity from MWM. For a detailed discussion of MWM and their investment advisory fees, see the firm’s Form ADV on file with the SEC at www.adviserinfo.sec.gov.

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