Summer Planning: Vacations, Beach Time…and Taxes?

June, the first official month of summer. For many people, summer is a time for vacations, fishing, and spending time at the beach. Consider adding to that list everyone’s least favorite topic – income tax planning. I know you are thinking, “I just filed my tax return, why do I need to start thinking about my taxes now?” But, a few simple moves now could save you financial and mental stress when tax time rolls back around.

 Start with the Basics

Are you one of those that celebrates a tax refund every year in April? Or were you hit with an unexpected tax bill that stressed you out? Either scenario suggests it’s time to review your paycheck withholdings. If you received a refund of over $1,000, you essentially gave the government an interest-free loan all year. This is your money. Too little withheld and you might face penalties on top of what you owe.

Consider adjusting your W-4 with your HR department to either increase or decrease your federal withholding.

 The Self-Employed Advantage

If you’re self-employed or have significant investment income, quarterly estimated payments can help you avoid year-end surprises and penalties. Review your income projections now and adjust payments accordingly.

Work with a CERTIFIED FINANCIAL PLANNER® professional to determine eligibility for retirement plans exclusively for the self-employed. Planning options for your retirement may enable you to save on taxes for the current year.

Don’t Leave Money on the Table

Summer is perfect for maximizing workplace benefits.

If your employer matches 401(k) contributions, make sure you are contributing the maximum allowable to get the full match from your employer.

Are you enrolled in a high-deductible health plan? If so, you can contribute to a Health Savings Account (HSA) for triple tax benefits: current tax-deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.

Leftover money in your flexible spending account? Do not forget to use it before you lose it and consider adjusting next year’s contribution based on this year’s actual spending.

Timing Is Everything

Strategic timing can significantly impact your tax bill. Planning a large charitable donation? Consider bunching multiple years’ worth into 2025 to exceed the standard deduction threshold. Have medical procedures you’ve been postponing? Grouping them into one tax year, with other eligible itemized deductions such as charitable, might push you over the deduction limit.

Don’t Wait Until December

The biggest mistake people make is waiting until the last minute. By December, many tax-saving opportunities have expired, and you’re left with limited options, not to mention holiday stress.

Tax planning isn’t just for the wealthy—these strategies can work to help save hundreds or thousands of dollars. The key is starting now, while you still have time to make meaningful changes.

 

Published in the Victoria Advocate

Chris Laughhunn, CPA, CFP® is a Tax & Accounting Principal for Keller & Associates CPAs, PLLC and an Associate Advisor for Keller Wealth Advisors.  

A Quick Guide to Summer Supplemental Income

Summer is the season of sunshine, long weekends and finding creative ways to earn a little extra cash. Whether you’re walking dogs, hosting guests through Airbnb, selling crafts at the farmers market, or picking up a few rideshare shifts, that added income can be a great boost. But it’s important to remember that even small-scale freelance or seasonal work can have tax implications. With a little planning now, you can hold onto more of your hard-earned dollars.

What Counts as Taxable Supplemental Income?

Even if you’re making money outside of a traditional W-2 job, it’s likely considered taxable income. This includes app-based work like deliveries or tutoring, lawn care, craft sales, or even renting out your spare room at home. If you’re regularly offering services or accepting payments with the intention to earn a profit, the IRS generally sees it as a business, not just a hobby.

Do I Really Need to Report It?

Short answer: yes. Even if you only made a few hundred dollars, you’re required to report self-employment income over $400. Platforms like Airbnb or Etsy may send you a 1099 form, but you’re still responsible for reporting income even if you don’t receive one.

Cash payments? Still taxable. Just because it wasn’t reported to you doesn’t mean it isn’t reportable by you.

What Can I Deduct?

The good news is you may be able to deduct “ordinary and necessary” expenses related to your work. Here are a few examples:

  • For drivers: mileage, tolls, and insurance
  • For Airbnb hosts: cleaning fees, linens, supplies, a portion of utilities or insurance
  • For craft sellers: materials, vendor fees, packaging, and shipping supplies
  • For freelancers: advertising, software, a portion of phone and internet bills

Just be sure to keep good records. Save receipts, log mileage, and track everything consistently.

Don’t Forget About Self-Employment Tax

When you are earning income independently, you are responsible for both the employer and employee portions of Social Security and Medicare, about 15.3%, in addition to regular income tax. If you make a significant amount from your supplemental income, consider setting aside a portion of your earnings or making quarterly estimated payments to stay ahead and avoid surprise penalties later. Upcoming 2025 estimated payment deadlines include June 16th, September 15th, and January 15th.

Planning Tips

It might feel like “just a little extra cash,” but side income can add up quickly. To stay organized:

  • Open a separate bank account just for your supplemental income and related expenses. It simplifies recordkeeping and makes tax prep much easier.
  • Use a basic spreadsheet or link your account to simple bookkeeping software. A few minutes each week can save hours later.
  • Talk with a CPA to help clarify questions about deductions, estimated payments, or whether your growing income could benefit from a different business structure.

Earning extra income this summer can be a great way to meet financial goals, build a safety net, or even fund your next vacation. Just don’t let tax time catch you off guard. A little effort now like keeping good records, understanding what’s deductible, and setting aside money for taxes can go a long way in making next spring’s filing season a breeze.

Have questions about your unique situation? A quick conversation with a CPA can help you feel confident, informed, and ready to make the most of your summer earnings.

Megan Williams, CPA is a Senior Staff Accountant for Keller & Associates CPAs, PLLC.

Published in the Victoria Advocate.

Spring into Generosity – Charitable Giving & Gifting in 2025

The days grow longer and gardens blossom, as the season of spring brings a sense of rejuvenation, and for many, a time of generosity. Whether it is supporting a local non-profit that is dear to your heart or financially helping loved ones, spring is an excellent time to revisit tax planning strategies aimed at charitable giving and estate planning.

A charitable donation not only allows you to support a cause you are passionate about, but it can also offer tax benefits. For tax year 2025, cash donations to qualified organizations are tax deductible up to 60% of your adjusted gross income (AGI); however, there is an important limitation to note, you can only deduct your charitable donations if you itemize your tax deductions, opposed to taking the standard deduction on your tax return. For most taxpayers, the standard deduction offers a greater tax benefit than itemizing, as the standard deduction in tax year 2025 is $15,000 for single filers and $30,000 for those filing as married filing jointly. If you are planning on making large charitable donations, consult with your CPA to determine if itemizing is financially advantageous.

Philanthropic individuals aged 70½ or older are eligible to make a Qualified Charitable Distribution (QCD) from their IRA. QCDs are a tax efficient way to donate to organizations directly from an IRA account, as the distribution can fulfill some or all your annual Required Minimum Distribution (RMD). Typically, distributions from an IRA are considered taxable income, but when you make a QCD, the distribution is excluded from your income, reducing your tax liability. QCDs allow for a charitable deduction and a lower tax bill, even if you do not itemize.

Spring provides an opportune time to review your gifting plans with your CPA. In 2025, the IRS allows individuals to gift up to $19,000 to a single recipient without incurring the need to file a gift tax return to report it to the IRS. For married couples, they can opt to “split” their gifts and combine their annual exclusion and gift up to $38,000 to a single recipient. Gifting under the annual exclusion allows taxpayers to gradually reduce the size of their estate and potential estate tax in time, while supporting loved ones during their important milestones like education or home buying.

Plant the seeds now and consider consulting your trusted tax advisor to review your charitable goals and gifting strategies for the upcoming tax year. With a little patience and preparedness, your generosity can be prosperous and blossom into a legacy for generations to come!

Carlee Gibbs, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

Published in the Victoria Advocate.

Get Ahead of Tax Season: Smart Steps to Take Now

The holidays have ended, and you have likely packed the decorations back into storage for another year. However, it is not too early to start thinking about tax season. A well-organized approach to tax preparation can save you time, money, and stress. Here are some key steps to take to help facilitate a smooth tax filing.

First, create a dedicated folder for your tax documents. This can either be in physical or digital form. Employers must send W-2 forms by January 31st, and 1099 forms for items such as investment income, retirement distributions, and contract work will arrive soon after. Having a designated place for these documents as they arrive prevents time wasted searching for them later.

Review last year’s tax return now. It serves as an excellent checklist of what to expect this year and reminds you of deductions or credits you might qualify for again. If you utilize the services of a paid tax preparer, request they send you an organizer showing all the items that were included in your prior year return. While not all inclusive, this will serve as a good starting point.

It is not too late to fund your retirement, potentially. You still have time to make IRA contributions for 2024 until April 15, 2025. This applies for traditional and Roth IRAs for those eligible to contribute. For 2024, you can contribute up to $7,000 ($8,000 if you are 50 or older) to traditional and Roth IRAs combined.

Gather documentation for major life changes. Did you buy or sell a home? Change jobs? Welcome a new child? Get married or divorced? These events can significantly impact your tax situation and may require additional documentation.

For business owners and gig workers, now is the time to organize those receipts and review business expenses. Consider using accounting software to categorize expenses if you have not already. At minimum, consider inputting these items into an Excel spreadsheet. Remember to gather documentation for home office expenses if you qualify for that deduction.

Monitor your mail and email carefully in January. Missing tax documents can delay filing and potentially lead to errors. Many documents are now delivered electronically, so check your spam folder regularly and ensure financial institutions have your current email address and mailing address.

Deliver your tax documents to your preparer as soon as possible. Tax filing windows and deadlines continue to grow shorter and shorter even though tax filing continues to increase in complexity. Allowing your tax professional to have the maximum amount of time will help to ensure a timely and correct filing.

Taking these steps now can help you avoid the stress of last-minute tax preparation. Whether you plan to file yourself or work with a professional, being organized and prepared will make the process smoother and potentially help you identify additional tax-saving opportunities.

 

Published in the Victoria Advocate. 

Kyle W. Noack, CPA/CFP® is the Chief Executive Officer for Keller & Associates CPAs, PLLC and Keller Wealth Advisors.

Tis the Season for Tax Savings

With the holidays right around the corner and the year winding down, it’s easy to get caught up in holiday shopping, get-togethers, and last-minute plans. Many taxpayers also find themselves scrambling to take advantage of last-minute tax saving opportunities before the new year. The good news is that there are still several strategies you can implement to reduce your tax burden and kick off the new year with a little extra holiday cheer.

Maximize Retirement Contributions

One of the easiest and most effective ways to reduce your taxable income and help build a stronger financial future is by contributing to retirement accounts. Pre-tax contributions made to 401(k) and 403(b) plans made before year-end are deducted from your taxable income, which in turn will offset some of your tax bill. For 2024, the contribution limit is $23,000 (or $30,500 if you’re 50 or older).

Additionally, consider making contributions to an Individual Retirement Account (IRA); the limit for this type of account in 2024 is $7,000, or $8,000 if you’re over 50. The type of IRA you choose depends on your financial situation – either a Traditional IRA or Roth IRA. Contributions to Traditional IRAs can reduce your taxable income (subject to income limitations) and defer the income tax to when you withdraw the money for retirement. Roth IRA contributions do not offer an immediate deduction on your return but allow you to make income tax-free withdrawals in retirement.

Tax-Loss Harvesting

If you’ve sold investments throughout the year and realized gains, now may be a great time to offset those gains by selling losing investments in your taxable accounts. This strategy, called tax-loss harvesting, allows you to use losses to reduce your taxable income.

For example, if you have $5,000 in gains and $3,000 in losses, you can offset the $3,000 loss, and only pay taxes on $2,000 of net gains. If your losses exceed your gains, you can deduct up to $3,000 of the remaining loss from your ordinary income. Just be mindful of the wash-sale rule, which prevents you from claiming a loss if you buy the same or substantially identical security 30 days before or after the sale.

Contribute to a Health Savings Account (HSA)

If you’re enrolled in a High Deductible Health Plan (HDHP), a Health Savings Account (HSA) is a powerful tool to reduce your taxable income. HSA contributions are tax-deductible, the funds grow tax-free, and withdrawals for qualifying medical expenses are also tax-free. In other words, an HSA offers a triple tax benefit, making it one of the best last-minute tax strategies.

In 2024, you can contribute up to $4,150 for individual coverage and $8,300 for family coverage. If you’re 55 or older, you can contribute an additional $1,000 as a catch-up contribution.

Charitable Giving

Giving to charity not only helps those in need but can also provide a significant tax break. If you itemize your deductions, charitable contributions made before year-end can reduce your taxable income. You can donate cash, goods, or even appreciated securities. Donating stocks or mutual funds that have increased in value can help you avoid capital gains taxes on those gains.

If you are 70½ or older, you may also want to consider making a Qualified Charitable Distribution (QCD) from your IRA. This allows you to donate up to $105,000 directly from your IRA to a charity without having to pay income tax on the distribution. Not only does this give you a charitable deduction, but it also counts toward your required minimum distribution (RMD).

These are just a handful of potential deductions you still have time to make use of before the end of the year. To make sure you’re taking full advantage of every opportunity, consider reaching out to your Certified Public Accountant, who can help you uncover the best strategies tailored to your unique financial situation. Wishing you very happy holidays and a prosperous New Year!

Megan Williams, CPA is a Senior Staff Accountant for Keller & Associates CPAs, PLLC.

Published in the Victoria Advocate. 

Election Year – What to Expect

October has always been one of my favorite months in the calendar year. The air begins to feel more crisp, football season is in full swing, and things can (sometimes) begin to slow down as you approach the holiday season and the year’s end. However, every four years October takes on added significance as the United States Presidential Election approaches. With an upcoming election, there is always a concern of what is to unfold and how to prepare for it.

Tax Policy Implications

Though there will be no incumbent this year, we can defer to ideologies of parties and proposals of tax policy for the current presidential candidates/parties. Some of these policies relate to increasing or decreasing rates for individuals, changes in tax rates of corporations, increases of certain credits and deductions, and many other areas involving tax. The Democrats have proposed raising the top marginal tax rate from 37% to 39.6%, while the Republicans have proposed keeping rates as they are and have been since the Tax Cuts and Jobs Act was enacted in 2018. Currently, the corporate tax rate sits at 21%. The Republican party is proposing lowering this rate to 20%, or even 15% for certain companies. The Democrats are proposing an increase in the corporate tax rate to 28%.  The Democratic party is proposing an increase in the child tax credit. The Republicans are proposing an increase in the deductibility of state and local taxes for those that itemize deductions. These are only a handful of proposed items between the two parties. It is important to familiarize yourself with potential changes in tax policy and how it may affect you and your financial picture. The Tax Foundation website has a good analogy of the different platforms each candidate is proposing in its page “Tracking 2024 Presidential Tax Plans”.

Market Performance

Historical trends involving political headlines have shown markets to have short-lived rallies and dips as investors handle anticipation of what is to come. However, elections have shown little long-term effect on market performance, and do not favor one party or the other. The Standard and Poor’s 500, commonly known as the S&P 500, measures the performance of 500 of the largest companies on U.S. stock exchanges. Since 1928 there have been 24 election years. Per Bloomberg’s annual percentage change of the S&P 500 index, in those election years the index has shown an average price return of 7.49%, and a return of 7.63% in the year following the election.

What To Do

With all the political media we are accustomed to seeing, it can be easy to get excited or anxious depending on your preferences, as to what will happen next. One thing that will never change is that having a plan when it comes to your financial life is a must. If you believe that you or your business may be affected by any potential change in tax policy, do not be afraid to ask questions or contact your Certified Public Accountant and/or CERTIFIED FINANCIAL PLANNER® for professional advice or planning. When it comes to your investments, creating a plan with sights on the long-term can most often weather any situation.

 

Published in the Victoria Advocate

Hayden Schilling, CPA is a staff accountant for Keller & Associates CPAs, PLLC.

 

Business Owners Guide to Corporate Transparency Act

As a business owner, you are no stranger to juggling multiple responsibilities. From managing daily operations to navigating complex regulations and staying on top of finances, the list of tasks seems endless. Just when you think you have a handle on everything, a new hurdle appears on the horizon in the form of the Corporate Transparency Act (CTA), which introduces new reporting requirements that you will need to add to your already full plate. I’m here to break down and briefly explain this new obligation to help you understand what actions you may need to take to stay compliant.

What is the Corporate Transparency Act?

The Corporate Transparency Act is part of a broader effort to detect, prevent and punish terrorism, money laundering and other misconduct through business entities. It requires certain businesses to report information about their “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.

Who Must Report?

The reporting requirements apply to most corporations, limited liability companies (LLCs), and other entities created by filing documents with a secretary of state or similar office. However, there are some exceptions, including:

  • Publicly traded companies
  • Companies with more than 20 full-time employees and five million in gross receipts
  • Tax-exempt organizations
  • Certain financial services companies already subject to federal regulation
What Information Needs to be Reported?

Companies must report specific information about their beneficial owners – individuals who directly or indirectly exercise substantial control over the company or own or control at least 25% of the company’s ownership interests. The required information includes:

  • Full legal name
  • Date of birth
  • Current residential or business address
  • Unique identifying number from an acceptable identification document (such as a driver’s license or passport)
Ongoing Reporting Requirements

It’s important to note that compliance with the CTA is not a one-time task. After filing the initial report, businesses must update their information within 30 days of any changes to the previously reported details. This can include complex changes in beneficial ownership, such as when shares are transferred or when a new individual takes on a role that qualifies them as a beneficial owner or even simplistic updates such as renewal of a driver’s license or change of address.

When and How to Report?

The reporting requirements took effect on January 1, 2024. Existing companies have until January 1, 2025, to file their initial reports. New companies formed after January 1, 2024, have 30 days from formation to file. Reports are submitted electronically through FinCEN’s secure filing system.

Penalties for Non-Compliance

Failure to comply with these reporting requirements can result in civil penalties of up to $500 per day and criminal penalties including fines up to $10,000 and imprisonment for up to two years.

Importance and Impact to You as a Business Owner

Staying informed and compliant with the CTA helps you avoid fines, penalties and possible imprisonment.

I recommend that all business owners review these requirements carefully and determine if they apply to your operation. If you’re unsure about your obligations or need assistance with compliance, consult with a qualified professional such as your CPA or attorney.

Published in the Victoria Advocate.

Chris Laughhunn, CPA, CFP® is a Tax & Accounting Principal for Keller & Associates CPAs, PLLC and an Associate Advisor for Keller Wealth Advisors.  

Remote Work Tax Implications

As someone who began remote work during the pandemic and is now the first remote employee for Keller & Associates, I’ve witnessed firsthand the transformation of the traditional work environment. While this shift offers flexibility and convenience for employees and employers alike, it also brings forth various tax implications that both individuals and businesses must navigate carefully.

Payroll Taxes

Businesses employing remote workers must review and adjust their payroll and tax withholding practices to comply with varying state regulations. Accurate withholding is crucial to avoid penalties and administrative burdens. Since payroll taxes must be based on the employee’s work location rather than the company’s primary location, employers must ensure compliance with tax requirements in each state or country where their employees work. Implementing advanced payroll systems that can handle these complexities and accurately manage tax calculations and withholdings for each employee’s work location is essential for effective remote work management.

Federal and State Income Tax Withholding

State income tax withholding is another consideration when employees work remotely across state lines. Employers must ensure they are withholding the correct amount of state income tax based on the employee’s remote work location. Typically, the state where the employee physically works determines the withholding requirements. For those working in multiple states, filing tax returns in each state may be necessary, and withholding may need to be adjusted according to the proportion of work performed in each state. Additionally, employees and employers should be aware of any reciprocal tax agreements between states; these agreements allow employees to pay income taxes only in their state of residence, even if they work in another state.

State and Local Tax Nexus

One of the most significant tax considerations for businesses transitioning to remote work is the concept of tax nexus. Nexus refers to the connection between a business and a state that obligates the business to collect and remit taxes. When employees work remotely from different states, the business may establish a nexus in those states, potentially subjecting it to additional state and local taxes. It’s important for businesses to assess where their remote employees are located and understand the tax laws in those jurisdictions.

Navigating the Future

As remote work continues to evolve, so too does the tax landscape, introducing new challenges in tax compliance while offering unprecedented flexibility. Both remote employees and employers offering remote positions should consult a Certified Public Accountant (CPA) specializing in multi-state taxation to gain insights into compliance requirements, optimize tax planning strategies, and ensure adherence to applicable state and federal tax laws. In addition to tax considerations, it’s crucial to address other aspects of remote work, such as employment laws, data security, and productivity management, etc. Staying proactive and informed about changing regulations will help navigate remote work taxation effectively and optimize financial outcomes in the digital age.

Megan Williams, CPA is a Senior Staff Accountant for Keller & Associates CPAs, PLLC.

Published in the Victoria Advocate

Maximizing Health Savings Strategies

Are you taking advantage of triple tax benefits? If you are enrolled in a qualifying high-deductible health plan (HDHP), not claimed as a dependent on someone else’s tax return, and not covered by another non-high-deductible health insurance plan, you may be eligible to contribute to a Health Savings Account, or HSA. HSAs are known for their “triple tax benefits” with pre-tax contributions, tax-deferred growth, and tax-free withdrawals for qualifying medical expenses. Both short-term savings and long-term growth can be achieved by smart HSA strategies.

Contributions

Contrary to other types of medical savings accounts, HSA contributions do not have a “use it or lose it” rule; savings stay with you year-to-year, even when you change jobs or become ineligible to contribute. In 2024, a covered individual can contribute $4,150 to their HSA, while covered families can contribute up to $8,300. If you are 55 or older, an additional $1,000 catch-up contribution is available per individual. Have you started a new job and/or obtained HSA eligibility mid-year? As long as you are eligible by December 1st of the year and plan to keep eligibility through the following year, you qualify for a full year’s contribution. Maybe you have a child under age 26 who is still on your insurance, but files their own tax return. A non-dependent child covered under a qualifying family HDHP can contribute up to a separate family limit of $8,300 to their own HSA. Talk about savings! Most often contributions come from payroll deductions, but cash contributions can also be added up to the tax-filing deadline. Be sure you take advantage of an HSA employer match if available, as this is “free money” to you.

Distributions

To receive the advantageous tax benefits, HSA funds must be withdrawn for qualified medical expenses. Common expenses include hospital visits, medical deductibles or copays, drug prescriptions, prescription eyeglasses, or dental work. The list is quite exhaustive, also including common over-the-counter medicines, certain long-term care insurance premiums, and some travel expenses for necessary medical treatment. Funds can be used for the benefit of the HSA owner, spouse, or dependent. Qualified expenses may be paid directly from the HSA. Alternatively, with proper receipts and records, the HSA can reimburse you for any expense incurred after the account was established.

Non-qualified expenses paid from an HSA incur tax and a penalty. Once the owner reaches age 65, taxes apply but the penalty is waived.

Strategies

For minimal, but favorable, tax benefits, contributions are kept in cash and used for medical expenses throughout the year. This strategy treats the HSA like a tax-advantaged bank account. To boost tax-free growth for retirement health expenses, the HSA could alternatively act like an IRA. The maximum contribution is added each year, and funds are invested in the market to grow until retirement. Many people may find a happy medium, where a few years’ medical savings can be set aside in cash and the remainder invested for growth potential. Health care is one of the largest expenses retirees must plan for; keeping this long-term perspective will allow you to reap benefits down the road.

Knowing the rules and deciding the best strategy for your cash flow are both crucial to maximizing your savings through an HSA. Work with a CERTIFIED FINANCIAL PLANNER™ professional to see how you could be taking advantage of triple tax benefits.

Published in the Victoria Advocate. 

Sarah D. Nix is a CFP® professional and Associate Advisor with Keller Wealth Advisors.

Better Than To Receive

The Victoria Bach Festival recently concluded its 49th season, marking another year of exceptional music. As the current President of this enduring organization, I am filled with pride as we prepare for our 50th season next year—a milestone that coincides with my 10th year on the board. Contributing to a cause greater than oneself is a profoundly rewarding experience, and I am grateful to be part of a firm that encourages community volunteering. Through my time volunteering, I have never ceased to be amazed by how generous the people of Victoria can be. While it is noble to give without the expectation of anything in return, your charitable acts may have an even greater impact when done tax-efficiently. Here are some strategies to consider for your next charitable contribution:

Donate Appreciated Stock

They say giving is better than receiving, especially when you can give away a tax bill at the same time! If you have an appreciated security, you can donate the investment directly to a charity. By doing this, you can effectively wipe out the imbedded capital gains tax bill that would have been owed upon the sale. The charity benefits from the full value of the donation, and you may still be eligible for a deduction if you itemize.

Give your RMD

Required Minimum Distributions (RMDs) from IRAs have been a moving target with recent legislative changes. The SECURE Act of 2020 and SECURE Act 2.0 have shifted the beginning RMD age, but the age for Qualified Charitable Distributions (QCDs) from IRAs remains at 70½. A QCD allows individuals to donate directly from their IRA to a charity without incurring tax on the distribution. This is a fantastic way to support a cause and reduce your taxes, provided the funds go directly to the charity and you are 70½ or older (not just reaching 70½ sometime in the year) at the time of the transaction.

Leave your bequest from your IRA

Instead of leaving a charitable bequest in your will, designate a charity as a beneficiary of your IRA. While your heirs would owe taxes on IRA distributions, charities do not. This simple update can reduce potential tax liabilities for your heirs.

Bunching Donations

The Tax Cuts and Jobs Act (TCJA) doubled the standard deduction, which now stands at $14,600 for single filers and $29,200 for married couples filing jointly in 2024. This change made fewer people able to itemize deductions. One effective strategy is to “bunch” donations, making two years’ worth of contributions in one year to surpass the itemization threshold. For instance, donate in January and December of the same year. This strategy may push you over the threshold to itemize every other year, and still receive the standard deduction in the years you are not itemizing.

The Joy of Giving

Beyond the tax benefits, the act of giving has been shown to enrich the giver’s life with joy, improved health, and a stronger sense of purpose. While these strategies may enhance the impact of your donations, the true reward lies in the act of giving itself. For personalized advice, consult a CERTIFIED FINANCIAL PLANNER™ professional who can help you plan efficient and impactful giving.

 

Published in the Victoria Advocate. 

David Faskas CFA, CFP® is the Chief Investment Officer, Chief Financial Planning Officer, and a managing member of Keller Wealth Advisors.

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