Qualified Charitable Deduction
Due to the Tax Cuts and Jobs Act of 2017 increasing the standard deduction for individuals to $12,000 and 24,000 for married filing joint many taxpayers will not be itemizing going forward. If you are over the age of 70 ½ and required to take out required minimum distributions from a traditional IRA an option you have is qualified charitable deduction. This is a direct transfer of funds from your IRA custodian to a qualified charity. The distribution counts towards satisfying your required minimum distribution for the year plus the distribution will not be taxable to you.
Hiring Your Child
If you own a business or a rental that is not in an S corporation or corporation, a nice deduction you can get is hiring your child that is under the age of 18. The payments are not subject to social security or Medicare taxes plus they will reduce the taxable income in your business. The wage to your child needs to be reasonable based on the work they are providing. The wage will also allow your child to have earned income and be able to contribute into a Roth IRA during that year.
As always, consult with your tax professional at Ketel Thorstenson about these or other tax matters because each situation is different. Don’t navigate the difficult and ever changing tax codes and legislation on your own. Ketel Thorstenson CPAs and tax professionals receive advanced training and continuing education all year long to keep our service on the forefront of the tax industry. Call us today for guidance on tax planning, tax return preparation, and/or Tax Reform (the Tax Cuts and Jobs Act) affects or questions.