5 tips for tax-smart charitable giving in 2018

U.S. tax law has changed since you filed your federal taxes for 2017; the Tax Cuts and Jobs Act takes effect for 2018 tax filings. Since charitable giving is one of the few deductions that wasn’t eliminated or capped, donations to registered nonprofits are one of the best ways to reduce tax payments for taxpayers who itemize. If charitable giving plays a role in your tax filing, here are five things you should keep in mind for tax-smart strategic giving and your 2018 taxes. 1. Start planning now If you plan to claim charitable donations on your 2018 taxes, it’s a good idea to start talking to your financial advisor now so you have time to make informed decisions. If you received a windfall or more taxable income than you expected this year, charitable giving can be especially important to help offset the corresponding increase in taxes. This could apply if, for example, you got a big bonus this year, if you sold a business, or if the assets in your portfolio greatly increased in value in 2018. 2. Evaluate your options for HOW to give You may already know which charities you want to support, but from a

December 10, 2018 No Comments

Understanding capital gains in light of new tax laws

The U.S. stock market this year has given total returns so far of close to 10 percent, which is a good thing for investors. But with the exception of savings in retirement accounts such as 401(k)s and individual retirement accounts (IRAs), Uncle Sam will probably take a cut of your newfound wealth in capital gains tax. An increase in the value of your assets is called capital gains, and how much tax you pay depends on how long you held the investments and how much other income you make. Long-term vs. short-term capital gains taxes Long-term capital gains applies to gains (increased value) on investments or other assets you’ve owned for more than a year. The current capital gains tax rates under the new 2018 tax law are zero, 15 percent, and 20 percent, depending on your income. This chart shows the brackets. 2018 long-term capital gains tax brackets For example, a married couple filing jointly pays no capital gains tax if their total taxable income is less than $77,200. They’ll pay 15 percent on capital gains if their income is between $77,201 and $479,000. For couples above that income level, the rate is 20 percent. In addition, capital gains may

October 5, 2018 No Comments

U.S. fiscal issues loom: How larger deficits can hurt the economy

According to the most recent Congressional Budget Office (CBO) projection, the federal budget deficit for fiscal year 2018 (which ends on September 30) will reach $793 billion, or 3.9% of gross domestic product (GDP). This figure is $230 billion more than the CBO had previously estimated in June 2017, largely because legislation enacted since then has reduced potential revenues and increased anticipated spending. The government runs a deficit when it spends more money over the year than it collects in tax revenue. To cover the difference, the government must borrow money from investors through the sale of Treasury bonds. Annual budget deficits add to the national debt, which already exceeds $21 trillion. As things stand, the budget shortfalls are not projected to end any time soon. In fact, the federal deficit is projected to increase substantially over the next several decades, reaching 9.5% of GDP by 2048. Here’s a closer look at the nation’s current fiscal situation and what it could mean for future economic growth. Lower taxes, higher spending The Tax Cuts and Jobs Act, which took effect in January 2018, included permanent rate reductions for corporations and temporary ones for individuals. The CBO projects that this tax law

September 8, 2018 No Comments