TMTW #144 – Making Charitable Contributions Directly from Your IRA

Posted on July 10, 2013 by taxblogger

Tax and Money Tip of the Week:
Making Charitable Contributions
Directly from Your IRA
July 10, 2013 | No. 144

I recently spoke with a client who wanted to know whether he could still make a contribution from his IRA directly to his church and not have it be included in his taxable income for 2013. This always seems to be a popular topic of conversation this time of year.
 
He was referring to the Qualified Charitable Distribution (QCD) provision of the tax law that allows a tax-free distribution directly to a charity, up to $100,000, from your IRA if you are 70 ½ or older. This distribution also counts towards your Required Minimum Distribution (RMD).
 
The good news is that the IRS did extend this provision, but only through the end of 2013. Also, just to be clear, the provision is good for transfers to charities from IRAs only! Transfers from other types of retirement accounts (like 401(k)s) are NOT eligible.
 
In addition to the QCD counting towards your RMD, there may be other tax benefits. While the amount of the QCD is not available for you to use as a charitable donation on your tax return, the QCD is also not counted as part of adjusted gross income. This means that the QCD may help to limit phaseouts of tax deductions or credits as well as decrease the amount of your social security that is taxable and the amount of the new 3.8% surtax on investment income.
  
So if you are 70 ½ or older and give significant charitable gifts, you may benefit from this provision. Call us to setup a time to discuss if this would apply to your tax situation.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #143 – Happy 4th of July!

Posted on July 3, 2013 by taxblogger

Tax and Money Tip of the Week:
Happy 4th of July!
July 3, 2013 | No. 143

We would like to take the time to wish everyone a safe and happy 4th of July!

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #142 – New Reports Show Challenging Financial Outlook Continues for Social Security and Medicare

Posted on June 26, 2013 by taxblogger

Tax and Money Tip of the Week:
New Reports Show Challenging Financial Outlook Continues for Social Security and Medicare
June 19, 2013 | No. 142

Here’s an interesting and timely article.

New Reports Show Challenging Financial Outlook Continues for Social Security and Medicare

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #141 – The Risks of Bonds – Part II

Posted on June 12, 2013 by taxblogger

Tax and Money Tip of the Week:
The Risks of Bonds – Part II
June 12, 2013 | No. 141

Last week, we talked about the risk that inflation plays in the bond market. Continuing on that line, I wanted to provide you with a quick example of how rising interest rates due to inflation can have an effect on the value of bonds (and bond funds).

The table below illustrates how future increases in interest rates effects the value of a $100,000 bond purchased today.

    Bond                  Bond Value                    Bond Value
Maturity          with 1/2% rate               with 1% rate
                          increase in 1 year       increase in 1 year

  1 YR                        $99,500                       $99,035

  2 YR                       $99,020                       $98,060

  5 YR                       $97,825                        $95,700

10 YR                      $96,175                       $92,500

15 YR                      $94,900                       $90,150

20 YR                     $93,950                       $88,400

30 YR                    $92,650                        $86,125

With this quick example, you can see how even minor rate increases can erode the value of a bond.

The reason for this is that in a rising interest rate environment, new bonds would pay better yields; therefore when you sell your older bonds, you would lose money as buyers could obtain newer bonds with higher yields.

So, as I said last week, while bonds may appear to be that “safe” investment, remember that even bonds have risks that should be considered.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #140 – The Risks of Bonds – Part I

Posted on June 5, 2013 by taxblogger

Tax and Money Tip of the Week:
The Risks of Bonds – Part I
May 29, 2013 | No. 140

With recent volatility of the stock market, along with the uncertainty of the real estate market since the “crisis”, some investors have been considering a shift to the bond market.
 
However, while bonds (and bond funds) do pay regular interest, bond yields are currently very low. Additionally, bonds come with a risk that is often forgotten about today – inflation risk.
 
Nobody has worried too much about inflation lately. But, between the massive amount of the national debt and the impending “fiscal cliff”, higher inflation is possible.
 
Inflation is bad for bondholders for 2 reasons –
 
–  Low yielding bond payments won’t allow you to keep up with the rate of inflation, meaning the interest earned on your bonds will buy less

–  Inflation causes interest rates to rise, so new bonds would pay better yields; therefore if you sold your older bonds, you would lose money as buyers could obtain newer bonds with higher yields
 
So while bonds may appear to be that “safe” investment, remember that even bonds have risks that should be considered.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #139 – Firm Summer Hours

Posted on May 29, 2013 by taxblogger

Tax and Money Tip of the Week:
May 29, 2013 | No. 139

New Firm Hours: Closing Fridays for Summer 2013

Starting May 31, 2013, our firm will be closed on Fridays through September 15, 2013 since we work Saturdays January to April 15th of each year.
 
Our hours of operation will be from 9:00 am to 5:00 pm, Monday through Thursday of each week.
 
Any items may be dropped through our mail slot in the front door or voicemails may be left for return calls each Monday.

Questions or Comments?

You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW # 138 – Long Term Care Insurance

Posted on May 22, 2013 by taxblogger

Tax and Money Tip of the Week:
Long Term Care Insurance – “The
Bottom Line” | May 22, 2013 | No. 138

A catastrophic injury or debilitating disease that requires you to enter a nursing home can destroy your best-laid financial plans.  You will need to decide whether to take out a long-term care insurance policy that may cover nursing home care, home health care, adult day care, respite care, and residential care.  If you decide to purchase such a policy, you’ll need to choose the best time to do so. 

Typically, unless you have a chronic condition that makes you more likely to require long-term care, there is generally no reason to begin thinking about this issue before age 50.  Usually, there is no reason to purchase such a policy before age 60, but it is less expensive generally in your 50’s.

Questions or Comments? You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW # 137 – Amending for Tax Filing Errors

Posted on May 15, 2013 by taxblogger

Tax and Money Tip of the Week:
Amending for Tax Filing Errors | May 14, 2013 | No. 137

An interesting article from the Wall Street Journal:

Amending for Tax-Filing Errors

Questions or Comments? You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #136 – Insurance Coverage for Small Business

Posted on April 24, 2013 by taxblogger

Tax and Money Tip of the Week:
Insurance Coverage for Small Business
April 24, 2013 | No. 136

An interesting and timely article was in the News & Observer this week:

Insurance Coverage for Small Business

Questions or Comments? You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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TMTW #135 – Thank you Clients!

Posted on April 10, 2013 by taxblogger

Tax and Money Tip of the Week:
Thank You Clients! Another Successful
Tax Season | April 10, 2013 | No. 135

The Week After Tax Season
 
Aaah…..the week after tax season is the best week in a CPA’s life each year!
 
We met a lot of new clients this year because of referrals from existing clients, and readers of our Tax and Money Tip of the Week. Thank you!

Our firm continues solid growth thanks to all of you.
A referral is the best compliment we can ever receive. 
 
Even though our tax season is over, we will continue our Tax and Money Tip of the Week for the rest of the year. We will keep you updated on the constant tax law changes as well as spotlighting specific tax and money making ideas.
 
Again, thank you for making this one of the most successful tax seasons yet.
 
We will be closing Friday April 12th for the tax season and not be re-opening April 23rd.

Questions or Comments? You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.

Mark Vitek, CPA/PFS, CFP®
…until next week.

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