A Charitable Strategy for Tax-Efficiency: Qualified Charitable Distributions

If supporting charities meaningful to you is part of your long-term financial plan, creating a strategy around your giving can help you maximize the gifts you give. It can also be tax-efficient across several dimensions of your overall plan.

A qualified charitable distribution (QCD) is a distribution from your IRA account that you are eligible for beginning at age 70 ½. But because it goes directly to the charity of your choice, it doesn’t count as taxable income to you. It can keep your income at a lower level and help you avoid taxes on social security and premium surcharges on Medicare. In addition, the IRS will allow the QCD to count as a required minimum distribution (RMD) from your account.There are rules to follow and limits to be aware of but being thoughtful about including qualified charitable distributions in your financial plan can help you achieve multiple goals.

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Planning for 2022: The IRS Has Increased Several Key Deductions and Exemptions

The spike in inflation we’ve seen this year has impacts beyond having to pay more for goods and services. The IRS uses consumer price inflation (CPI) to determine certain increases to exemptions and deductions for federal tax purposes. These are automatic and calculated from the rise in CPI. That means that the increased inflation this year may actually end up saving you money. While the changes are for 2022 and you won’t be paying the associated taxes until 2023, it’s a good idea to be aware of the new limits.

You may be able to make changes as you go that can help you maximize the benefit. For example, the amounts for Flexible Spending Accounts (FSAs) and the commuter benefit increased, so you may want to have more taken out of your paycheck. This saves you money by paying with pre-tax dollars.

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GMB Ep #123: Tax Efficient Crypto Gifting With Pat Duffy

 

The world of cryptocurrency is innovative and ever-expanding. In today’s episode of Grow Money Business, we are joined by Pat Duffy, a cofounder of The Giving Block. The Giving Block is a platform that enables non-profit organizations to receive cryptocurrency donations. Throughout the episode, Pat and Grant dive deep into the tax benefits related to crypto donations, and discuss how The Giving Block is changing the future of charitable giving.

 

 

Show Notes

[03:14] The Giving Block – We start the conversation with a brief look at what The Giving Block does and how it helps donors and non-profit organizations.

[07:10] The Process – Pat walks us through the process of what happens when someone interested in crypto gifting signs up with The Giving Block.

[10:00] Donor Advised Funds – Pat explains the process of donating via a Donor Advised Fund.

[16:33] Why Crypto? – Pat shares his take on some of the reasons why non-profit organizations may want to take crypto donations.

[19:05] Barriers – Pat discusses some of the challenges non-profit organizations face when starting to accept crypto donations.

[27:30] Getting Traction – Pat shares with us what it was like at the beginning of his service and what it took to get enough traction for the service.

[31:30] Business Model – Pat shares with us how the business model of the Giving Block works and some of the areas the platform will be expanding into in the near future.

[36:52] Managing Growth – Pat dives into their strategy of managing their growth.

[42:54] Shift4 – The Giving Block was recently acquired by the payment processing solutions company, Shift4. Pat shares what opportunities and possibilities this acquisition will open up.

[49:10] Tips for Donating – Pat shares some advice for those who own crypto assets and want to make a crypto donation.

 

Resources

More Money More Problems? Complex Compensation Requires a Different Kind of Advisor

The benefit of becoming a high earner is apparent: more money. You can go beyond creating financial security for yourself and your family and start making choices that may have been out of reach. Not having to worry about covering the basics can also provide you with a measure of peace of mind. It can help you operate from a mindset of abundance, and not scarcity, which can free you to actualize your financial and personal goals.

But before you get to that state of satori, you need to get all the money you’ve earned into your financial plan in a reasonably efficient way, while minimizing the taxes you’ll pay across your lifetime, and creating a diversified financial plan.

And if that’s not complicated enough, being a high earner very often means your compensation is unpredictable, lumpy, or you’re no longer a W2 wage earner. Whether you have deferred compensation, restricted stock, stock options, an annual bonus, or you own your own business, high income levels can equate to situations in which you have very complex compensation.

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The Federal Reserve vs. Inflation: Round One

Wednesday’s long-anticipated announcement by the Federal Reserve that the key Fed funds rate would increase by 25 basis points and the accompanying statement by Chairman Powell had the immediate impact of reassuring the markets. St. Patrick’s Day may not have brought pots of gold, but after thirteen no-good, very bad weeks for the S&P 500, we’ll take a push back into positive territory.

Will it last? Given the invasion of Ukraine, the impact of sanctions, the downstream effect on supply chains and food supply, and the geopolitical uncertainty unleashed by Russia’s aggression, the Fed’s job in fighting domestic inflation is much harder now.

We walk through the Fed’s move and Powell’s language, the impact of the rate increase, and what investors can do to prepare their portfolios and budgets.

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Retirement is About Income … and Taxes

You’ve figured out your budget, your retirement nest egg is substantial, and you’re ready to make the transition to living on income from savings instead of income from work. But have you thought through the tax implications? It’s very common for tax planning to be overlooked, under the assumption that you’ll be in a lower tax bracket and Social Security payments aren’t fully taxed. In fact, a recent study found that 57% of Americans rarely consider the taxes they will pay/are paying in retirement.1 This can be an expensive mistake, and it has implications for other retirement benefits.

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GMB Ep #120: A CFO’s Perspective on Managing Cash, M&A, ESOPs, & the Changing Business Environment

 

Have you ever heard the saying that revenue is vanity, profit is sanity, and cash is reality? Today’s guest, Robert E. Bendetti, is the CFO at Life Cycle Engineering. He holds a master’s degree in accounting and financial management and an MBA specializing in small business management and entrepreneurship, as well as being a certified public accountant. Throughout the episode, we cover several key concepts that help business owners grow their businesses and adapt to ever changing markets.

 

 

Show Notes

[03:21] Background – Robert shares his background and the company’s operations.

[05:20] Cash Flow Management – Robert emphasizes the importance of cash flow management and gives his perspective as a CFO on appropriate cash management for small enterprises.

[08:48] Cash Conversion Cycle – Robert discusses approaches to optimize the cash conversion cycle, emphasizing the importance of timely invoicing, collection challenges, and the smoothness of the payment process.

[11:50] Tips – Robert shares an approach for reducing turnaround time and illustrates a simple mechanism to increase collection rates.

[20:29] Profitability – Robert points out how to convert cash to profit, describing what balance sheet and income statement items need to be monitored.

[23:25] Paying Yourself vs. Reinvesting – Robert outlines how to decide whether to invest additional funds to boost profitability and future growth or pay yourself.

[31:41] Transition – Robert addresses what individuals approaching retirement or transition should consider 18 months before leaving a firm.

[40:25] Employee Stock Ownership Plan – Robert dives deep into ESOP and related topics.

[51:31] Global CFO Council – As President and Founder of Global CFO Council, Robert mentions what he hopes to accomplish through the organization.

 

Resources

GMB Ep #112: Deferring Taxes Using 1031 Exchanges & Delaware Statutory Trusts with Jamie & Patrick Furlong

 

1031 Exchanges and Delaware statutory trusts are both nifty instruments for financial planning. In today’s episode, we explore more about the deferring taxes using 1031 Exchanges and Delaware statutory trusts with Jamie & Patrick Furlong. Jamie & Patrick specialize in 1031 Exchanges with DST’s and other securitized real estate investments. They exclusively serve clients seeking to acquire replacement properties in a 1031 exchange, navigate the complexities and time restrictions in the ever-changing 1031 environment through their company, Legacy Investment Real Estate.

 

 

Show Notes

[04:05] Story of Jamie & Patrick – Patrick shares their origin story, what they do, and how they do it.

[11:32] Delaware Statutory Trust – Jamie and Patrick explain Delaware statutory trust in detail, sharing compressive real-life examples.

[19:37] Importance of DST – Jamie talks about the significance of Delaware statutory trust and why someone should invest a property into a Delaware statutory trust in the first place.

[33:15] Holding Period – Non-traded real estate investment trusts can bring you a vast misfortune. Jamie discusses the holding time you should consider when contemplating real estate investment trusts.

[37:46] Role of the Manager – Patrick talks about the manager’s role in Delaware statutory trusts.

[46:49] 1031 Exchange Tax Code – Jamie and Patrick talk about the predictable changes in the 1031 Exchange tax code.

 

Information provided today is for educational purposes only, does not constitute as individual investment advice, and should not be relied upon as tax or legal advice.

Please consult the appropriate professional regarding your individual circumstance.

DST 1031 properties are only available to accredited investors (typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years; or have an active Series 7, Series 82, or Series 65. Individuals holding a Series 66 do not fall under this definition) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney.

There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal.

Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Legacy Investment Real Estate is independent of CIS.

 

Resources

Connect with Jamie and Patrick:

Website: legacyire.com/

Jamie

LinkedIn: linkedin.com/in/jamie-furlong-927b9658/

Email: [email protected]

 Patrick

LinkedIn: linkedin.com/in/farmranch1031exchangennn/

Email: [email protected]

GMB Ep #99: Maximizing Workplace Benefits With FSAs and HSAs

 

The open enrollment period for Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA) is approaching. During the enrollment period, employees can enroll in or amend their contributions for the future year for FSAs and HSAs, which they can use to pay for their healthcare-related expenses. We dedicated today’s episode to taking a deep dive into several vital facts related to FSA, Dependent care FSA, HSA, and the numerous ways to maximize your workplace benefits under each of them. 

 

 

Show Notes

[04:37] Flexible Spending Account (FSA) – Grant explains what FSA means, how it works, and who can contribute.  

[07:55] Plan the Health Expenses – Why it is essential to forecast the health expenses to pay them on a tax-deferred basis through FSA versus paying out of pocket. 

[09:18] Spend the Fund at Pharmacy – Beneficial features of FSAs, such as the ability to spend the funds at a pharmacy, and why having this option is significant. 

[10:10] Dependent Care FSA – Grant explains the purpose of a Dependent Care FSA, its benefits, and several facts to keep in mind if you are considering using one. 

[15:30] HSA – How to contribute to and HSA and the fantastic tax benefits and investment opportunities that come along with it 

[19:12] Eligibility for HSA – Grant explains the eligibility requirements for HSAs, including having a High-Deductible Health Plan (HDHP). 

[26:00] Connection to the employer – Grant discusses the connection between your HSA and your employer, and why employees can take their balance with them when they’re switching employers. 

 

Resources

What Is a Flexible Spending Account (FSA)?
investopedia.com/terms/f/flexiblespendingaccount.asp 

 

What Is a Health Savings Account (HSA)?
investopedia.com/terms/h/hsa.asp