Four year-end tax strategies to consider

Four year-end tax strategies to consider

It’s hard to believe we’re fast approaching the end of 2019, but it’s true. Here are four things to consider as you weigh potential tax moves between now and the end of the year. 1. Be smart about your charitable giving If you’re already inclined to donate to charity, then consider donating appreciated securities rather than cash to your favorite charity or to a donor advised fund. Donors who can afford to put away more than $100,000 may want to consider starting a charitable lead trust (CLT). Charitable lead trusts are designed to provide income payments to at least one qualified charitable organization for a period measured by a fixed term of years, the lives of one or more individuals, or a combination of the two; after that, trust assets are paid to either the grantor or to one or more noncharitable beneficiaries named in the trust instrument. 2. Maximize retirement savings Deductible contributions to a traditional IRA and pre-tax contributions to an employer-sponsored retirement plan such as a 401(k) can reduce your taxable income. If you haven’t already contributed the maximum amount allowed, consider doing so by year-end. If you’re a business owner, consider opening a traditional 401(k) profit

Read More »

How to avoid this common IRA rollover mistake

The once-per-year limit on IRA-to-IRA rollovers is a terrible trap for unwary taxpayers. It’s easy to fall into, but also easy to avoid. Here is the rule: If you receive a distribution from an IRA, you cannot roll that distribution over into any IRA if the distribution is received by you less than 12 months after another IRA distribution you received that you rolled over into an IRA. That’s according to Internal Revenue Code Section 408(d)(3)(B). Meant to prevent IRA owners from “kiting” their IRA distributions (keeping money perpetually outside the IRA by a series of rollovers), the rule traps mostly innocent bystanders. For example, Investor A inherits an IRA from her deceased spouse. She cannot roll over a distribution from that inherited IRA if within the past 12 months she received a distribution from her own IRA account that she rolled over tax-free into an IRA. She’ll have to wait to take the distribution from the inherited IRA until after the 12 months have passed. Or, more tragically, Individual B who is losing mental capacity takes distributions from his IRAs without being aware of the financial effects. A guardian is appointed for him and tries to roll the money

Read More »

Three RMD to-do’s before the end of the year

The end of the year is full of deadlines for your financial matters. Here are three of the most important to-do items when it comes to taking your required minimum distribution (RMD) from a retirement account. If you’re at least 70 years old and have a retirement account, you should read over this list and make sure you’ve met RMD requirements to avoid a tax penalty. 1. Make sure that 2018 required minimum distributions (RMDs) for all IRA account owners who reached age 70½ prior to 2018 are paid out. IRA owners generally use the IRS’s Uniform Lifetime Table to find the life expectancy factor to calculate their required minimum distributions. There is an exception for people whose spouses are more than 10 years younger and were their sole primary beneficiary for the entire year. Those individuals will use the Joint Life Expectancy Table. There is a 50% penalty that applies when RMDs are missed, so be sure you don’t miss this deadline. 2. Verify that all 2018 minimum distributions for deceased IRA owners, if not taken by the IRA owner when alive, are paid out to the beneficiaries by year end. The year-of-death RMD is calculated as though the account owner lived for the entire year. It is often overlooked, particularly when IRA

Read More »

Three strategies to reduce your RMDs

Nothing lasts forever, not even the tax deferral on your IRA. When you turn 70½, the government will require that you withdraw money from your IRA; those withdrawals are known as required minimum distributions, or RMDs. But what if you don’t need the money? What if you want to avoid a tax hit? Here are three strategies to help reduce your RMDs. Be charitable. If you’re 70½ and planning on giving money to charity anyway, consider making a qualified charitable distribution (QCD) from your IRA. You can transfer up to $100,000 annually from your IRA to a charity free to tax. The QCD will satisfy your RMD without increasing your taxable income. Be careful though — make sure your QCD is done properly. Go Roth. If reducing RMDs is a top concern for you, you may want to consider converting some or all of your IRA into a Roth. This is because you aren’t required to take RMDs from your Roth IRA during your lifetime. While you will pay taxes on your conversion, you can exchange the one-time tax hit for a lifetime of never having to worry about RMDs and their tax consequences. Note: your beneficiaries will need to

Read More »

Four year-end tax strategies to consider

It’s hard to believe we’re fast approaching the end of 2015, but it’s time to start thinking about the 2015 tax season. Here are four simple yet effective tax minimization strategies to consider before the end of the year: 1.     Harvest capital losses. While the recent market volatility has been frustrating, it does provide opportunities to realize capital losses. With high-income taxpayers facing federal income taxes of up to 23.8% on long-term capital gains, harvesting losses can be an effective way to increase after-tax returns. Before the end of the year, offset gains in your portfolio by selling securities with losses. Be careful to avoid the “wash-sale” rule, which doesn’t allow you to claim losses when you buy replacement securities either before or after you sell substantially identical securities. 2.     Contribute appreciated securities to charities. Donating appreciated securities (held for at least a year) to charity can be a great way to minimize your taxes. You will receive a deduction for the fair market value of the security on your taxes. You’ll avoid paying capital gains tax on that security and the value of your contribution will be enhanced because the charity (as a tax-exempt organization) will also avoid paying

Read More »

Azzad Asset Management

You are about to leave the Azzad website and enter a third-party website. We are not responsible for and cannot guarantee the accuracy of any information on a third-party website.

You will be redirected to

Click the link above to continue or CANCEL