Eric Zizich:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thank you. I appreciate it.
Eric Zizich:
Definitely. Glad to have you here. So as 2019 winds down, I understand that you have a favorite topic that you like to breach.
David Nelson:
I love discussing this. We’re going to talk today as far as a way to rearrange one’s finances to redirect money from the IRS to charities that you care about. So it’s going to be a great segment. We chat about it in big picture before but, but today we’re going to drill down a little bit more, share some ideas, very specific things that individuals can do to again help improve their situation financially.
Eric Zizich:
So could you share that idea that viewers can easily implement into their lives?
David Nelson:
Yeah. The easiest to implement, and this is going to apply, and we’ve got a slide here and that’s going to kind of walk us through a few of the highlights. So for those of you that are under age of 70 and a half, this won’t apply. But if you’re above the age of 70 and a half, this is a wonderful tool that you want to take advantage of.
David Nelson:
The concept is pretty simple. It’s for individuals that currently today give money away to charity and they’re taking it out of their pocket. In other words, their checkbook and writing a check. There’s a better method and a better way as far as to do this, and it’s called a qualified charitable distribution. So if I’m 70 and a half and above, I have to take distributions as far as from my IRA. Which we have on here, it’s only applicable to IRAs. So I have to take out roughly 4% per year. Well, the better way to do that versus writing a check is going to be to have it come from your IRA distribution.
David Nelson:
The checks made payable to the charity. It’s not payable to you. It goes directly to them. And there’s some wonderful tax benefits as far as to … Because of the method and the process that you go through as far as to give this away.
Eric Zizich:
And David, when you use a gift with this technique, what are the benefits of that?
David Nelson:
The benefits are plentiful. Probably number one, it doesn’t show up on your income statement. In other words, as far as when you file your tax return, that income that comes from the qualified distribution doesn’t show up in your tax return. So that’s number one. Number two, and this is probably a little bit more subtle for individuals. But depending on your income will dictate as far as how much of your social security is subject to tax. So the lower your taxable income, the better.
David Nelson:
Also, Medicare is also an issue. Medicare premiums are dictated as far as by your taxable income. Subsequently, this is a winner too. This keeps it off your 1099 as far as the … In other words, your tax return ultimately subsequently feeding into some of these other areas, which is a terrific help for individuals as far as trying to give money away to charity and not wanting to pay more taxes than they absolutely have to.
Eric Zizich:
Really important for us to know as the year wraps up, David.
David Nelson:
Absolutely.
Eric Zizich:
Thanks so much for joining us.
David Nelson:
Thank you. I appreciate it.
Eric Zizich:
And if you missed any of our discussion, we’ll make it available. That’s on ourquadcities.com.