As anyone who is not sleeping under a rock knows - new tax legislation was passed at the end of 2017 for 2018 and beyond. While you probably know there were changes in individual and business tax rates - let's focus our attention on the increase in the standard deduction and the potential planning opportunities that flow from that change.
The big increase in the standard deduction - increased to $24,000 for married couples who file jointly means many people will no longer itemize. With this higher standard deduction there are some new opportunities to save money on taxes:
Qualified Charitable Distributions (QCD's): Are you over 70.5 and taking Required Minimum Distributions (RMD's) from your IRA? If so, the IRS allows you to make a charitable contribution directly from your IRA to a charity and avoid having the distribution count as income. This is a great strategy to use if your itemized deductions won't be over 24k. A "QCD" makes your distribution to charity "tax free"!
Bunching Deductions: For those who are likely going to be close to the $24,000 standard deduction when itemizing you should consider doubling up on your charitable contributions one year and then taking a standard deduction the next - maximizing the tax impact of your contributions to charity.
Giving Appreciated Securities to Charity: make charitable contributions from appreciated securities (stocks, mutual funds, etf's) in a taxable account instead of cash. That way you can avoid paying capital gains taxes AND still get your deduction.
Tax-Loss Selling: means selling investments that are losers so that you can take a tax loss or reduce the capital gains you might otherwise be paying. It's a good idea to consult with your tax or investment professional prior to doing this to make sure you understand the wash-sale rules.
Also, don't forget to make IRA or Roth contributions if you qualify. You have until tax day in April to make these contributions so if you forget you can still designate the contribution for 2018 at tax time.