Over 70? FYI: great options for lowest taxes for years to come :-)

How much longer will you enjoy the tax benefits from the 2017 Tax Cuts and Jobs Act (TCJA) and the 2019 SECURE Act? It’s anyone’s guess, and it’s critical to squeeze out as much upside as possible before the new Biden administration raises taxes for high-net-worth taxpayers as planned. Without careful planning, the current tax laws might work against you. These time-sensitive tax tactics help you avoid creeping into a higher tax bracket — and could result in your lowest taxes for years to come.

One powerful way to lock in today’s lower effective rate is to convert some of the money in your IRA to a Roth IRA this year. Under the old, higher tax brackets, a married couple filing jointly with an income of $250,000 paid an effective federal tax rate of 23.09%. That dropped to 16.9% under the 2017 tax changes. (Read HERE AND HERE)

Taxpayers 70½ and older are still eligible to make a Qualified Charitable Distribution (QCD) up to $100,000 which can be donated with no tax consequences. (Read HERE)

You’ll shrink your Traditional IRA just as the Roth conversion does but without the income tax. Lastly, many taxpayers lost the ability to itemize deductions. Rather than granting your usual annual amount, make a larger contribution that covers several years. Prepay taxes and medical expenses in 2021 like long-term care premiums, some home modifications, and some Medicare plans (Read HERE) and 2022 property taxes.


J. Shawn McGuire, CFP®
[email protected]
Securities offered through American Portfolios Financial Services, Inc., Member FINRA/SIPC. Advisory services offered through American Portfolios Advisory, an SEC registered Investment Advisor. Live Oak Wealth Management is not affiliated with APFS or APA and is independently owned.