Top Tips for Choosing a Tax Preparer

As the tax filing season moves into high gear, the Internal Revenue Service (IRS) reminded taxpayers that a qualified tax preparer can help avoid identity theft, and financial harm. While most tax preparers are qualified and can be trusted, some individuals engage in fraud and identity theft, taking advantage of taxpayers.

Over half of Americans use a professional tax preparer. The IRS provides a Directory of Federal Tax Return Preparers with credentials and select qualifications on IRS.gov. Here are some key tips that will help you select a qualified and reputable tax preparer.

  1. Tax Preparer Qualifications — All paid tax preparers must have a preparer tax identification number (PTIN). You should expect them to include the PTIN on your tax return. Many also have professional organizational membership or specific education. They should disclose their qualifications to you.
  2. Tax Preparer History — Some preparers may have a history with the Better Business Bureau (BBB). This record would show any disciplinary action. There may be a record of action by a state board of accountancy for a certified public accountant (CPA) or by a state bar association for attorneys. The IRS Office of Enrollment keeps records on the enrolled agents who prepare taxes.
  3. Fees for Service — Reputable tax preparers will generally charge a fee based on their hourly rate or a fixed amount. You should be careful to avoid any tax preparer who charges a fee that is a percentage of your tax refund. The refund also should be deposited directly into your checking account and not into the checking account of the tax preparer.
  4. Electronic Filing — If a paid preparer files more than 10 returns, he or she is required to file electronically. The only exception is if you are required to file a paper return. The IRS has processed over 1 billion individual tax returns that have been filed electronically. Most taxpayers are far better off with an electronic tax return. This will reduce the time before you receive a tax refund.
  5. Contact Information — Your tax preparer should provide all of their information, including an office address, email address and phone number. If there is any problem with your return, you may need to consult with your tax preparer about your response to the IRS.
  6. Records and Receipts — You should expect your tax preparer to ask for all your records and receipts. He or she will need to verify your income, expenses, deductions and other data. Do not file a return with a tax preparer who completes the return before receiving your records and receipts.

The IRS also cautions taxpayers to be careful of "red flags." If any of these red flags are present, you should consider finding a different tax preparer.

  1. Blank Return — You should avoid any tax preparer who asks you to sign a blank return. Your return should be fully complete before you sign it.
  2. No Taxpayer Review — If your preparer asks you to sign the return without an opportunity to review it, that is a major problem. Taxpayers are legally responsible for the accuracy of income tax returns; you need to read through the return and see that your personal information has been included. If you have questions, the tax preparer should be willing to provide basic explanations about the return.
  3. No PTIN on Return – All paid preparers are required by law to include the PTIN on the return. While the preparer signs the return, you are responsible for its accuracy. They should also provide you with a copy of your tax return.

If you are involved with a tax preparer who has one or more of these red flags, you can report the tax preparer to the IRS. Use IRS Form 14157, Complaint: Tax Return Preparer on IRS.gov.

 

Published February 7, 2025

Safe Driving Tips

My parent is starting to experience memory issues but wishes to continue to drive. When is it time for someone to stop driving?

Driving performance should be the determining factor of when to stop driving. With that being said, as your parent’s driving skills deteriorate over time, they might not recognize they may have a problem. For this reason, it is essential to work closely with your parent’s doctor to monitor their driving and help them stop when it is no longer safe for them to drive. Here are some tips that can help.

Watch for Warning Signs

The best way to keep tabs on your parent’s driving abilities is to take frequent rides with them and watch out for warning signs. Warning signs of unsafe driving include the following:

  • Do they have trouble remembering routes to familiar places?
  • Do they drive at inappropriate speeds, tailgate, drift between lanes or fail to observe traffic signs?
  • Do they react slowly or make poor driving decisions?
  • Have they had any recent fender benders or tickets?
  • Have you noticed any dents or scrapes on their vehicle?

If you need assistance with assessing your parent’s driving abilities, consider hiring a driver rehabilitation specialist. These licensed professionals are qualified and trained to evaluate a driver’s physical, perceptual and cognitive abilities to see if they can drive safely. You can find a specialist in your area by visiting Myaota.aota.org/driver_search or Aded.net.

Transition Tips

If you believe it is still safe for your parent to drive, recommend some simple adjustments to ensure their safety. These can include driving only during daylight hours, sticking to familiar routes, as well as avoiding busy roads and bad weather. You may also encourage your parent to sign a “driving contract” that designates someone to inform them when it is no longer safe to drive. Go to Alz.org/driving and click on “Download.” Once the PDF file is downloaded to your computer, you can print it out to have your parent sign it.

You may also want to consider getting a GPS tracking device to help monitor your parent’s driving. These devices allow you to track their location and let you set up zones and speed limits. You will receive alerts to your smartphone if they exit a designated area, drive too fast or brake harshly.

Time to Quit

When your parent can no longer drive safely, it will be important to have a conversation with them. It is best to start having these conversations before they need to quit driving so your parent can prepare themselves. You also should have a plan for alternative transportation (including a list of family, friends and local transportation options) that will help them get around once they stop driving.

Refuses to Quit

If your parent refuses to stop driving, you have several options. First, suggest a visit to their doctor for a medical evaluation, and prescribe that they stop driving. Older people will sometimes listen to their doctor more readily than to their family members.

You should also consider contacting your local Department of Motor Vehicles (DMV) for help. Some states automatically revoke a license when a person is diagnosed with Alzheimer’s or dementia, while many others require retaking a driving test. 

If these attempts fail, consider selling your parent’s car or moving it to another location where your parent will not have access to the vehicle. In addition, it is important to ensure your parent cannot access any other vehicles so be mindful of where car keys are left when family members, friends or medical staff visit your parent.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published February 7, 2025

Top Tax Tips for Easy Filing

On January 30, 2025, the Internal Revenue Service (IRS) published six top tips to make filing a 2024 tax return easier. The IRS explained these tips are also available on IRS.gov on the “Let us Help you” webpage. Taxpayers are encouraged to use these helpful suggestions to make filing easy this year.

1. Gather Important Tax Paperwork — Taxpayers should have a list of common items needed for filing tax returns. These include Social Security numbers (SSNs) for the individuals on the tax return, your bank account and routing numbers, tax forms such as a W-2s, 1099s, 1098s and digital asset sale records. You should keep IRS Form 1095-A, Health Insurance Marketplace Statement as well as any letters sent to you by the IRS.

2. Report All Income — Taxpayers are reminded that all income from any category is taxable. This could include income from goods that you created and sold online, investment income, part-time income, self-employment or business income and funds received for services through mobile apps.

3. Avoid Paper Returns — The best and safest way to file is with an electronic return or tax software. The software checks your math and guides you through each section of the return. After you have completed your data entry, a powerful benefit of tax preparation software is that it conducts hundreds of checks on your entries to ensure you have a correct return. If you file a paper tax return, your refund may be significantly delayed and the potential for filing errors increases dramatically.

4. IRS Free Resources — There are multiple resources to assist taxpayers. The IRS Free File program offers commercial software at no cost to individuals with income in 2024 of $84,000 or less. There are 25 states that participate this year in the Direct File program on IRS.gov. The web-based service is free for individuals with simple tax returns and guides you through the filing process with a series of questions and enables you to use your state’s tools to complete your state tax return. If your income is over $84,000, you can use the IRS Free File Fillable Forms. Most taxpayers with incomes of $67,000 or less, with a disability or limited English capabilities, or those age 60 and over, can benefit from the Volunteer Income Tax Assistance (VITA) or the Tax Counseling for the Elderly (TCE) programs. Military members may use the MilTax program.

5. Tax Filing Options — There are multiple methods for tax filing. Last year, over 54% of taxpayers used the services of a tax return preparer. The IRS maintains the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications on IRS.gov. Many individuals will use commercial software, the IRS Free File system or the IRS Direct File system. Only a small percentage of individuals are expected to prepare their own taxes without outside assistance.

6. Online Resources — Taxpayers can use multiple resources on IRS.gov. The most popular resources are the Interactive Tax Assistant and the “Let us Help you” webpage.

How Long to Keep Financial Records

Is there a rule of thumb on how long someone should keep their financial documents? I have filing cabinets filled with receipts, bank statements and tax returns that I would like to toss.

As we get older and our financial lives become more complicated, it can be challenging to know how long to keep financial records and paperwork and when it is safe to dispose of them. Some documents will need to be kept for your lifetime while others can be discarded after just one month. Here is a checklist that can help you determine what to save and what you can throw away.

Keep One Month

  • ATM receipts and bank deposit slips can be thrown out as soon as you match them up with your monthly bank statement.
  • Sales receipts can be tossed after you get your bank or credit card statement. However, keep these longer if you plan to return the item or need proof of purchase for a warranty.
  • Credit card statements can be discarded once you review your statement unless there are tax-related expenses on them.
  • Utility bills should be saved until the following month’s bill arrives showing that your prior payment was received. If you track utility usage over time, keep your bills for one to two years. If you claim a home office deduction, keep these bills for three years.

To avoid identity theft, be sure to shred anything you throw away that contains your personal or financial information.

Keep One Year

  • Paycheck stubs until you receive your Form W-2 in January to check its accuracy.
  • Bank statements (savings and checking account) to confirm your Form 1099s.
  • Brokerage, 401(k), IRA and other investment statements until you get your annual summary (keep longer for tax purposes if they show a gain or loss).
  • Receipts for health care bills in case you qualify for a medical deduction.

Keep Three to Seven Years

  • Keep supporting documents for your taxes, including W-2s, 1099s, and receipts or canceled checks that substantiate deductions. The IRS has a period of three years to conduct an audit after you file a tax return. However, that period may be extended to six years if the IRS suspects you substantially underreported income. Keep documentation for seven years if you claim a loss from worthless securities or a bad debt deduction. If a tax return was not filed or a fraudulent return was submitted, the IRS has an indefinite period to pursue collection.

Keep Indefinitely

  • Tax returns with proof of filing and payment. You do not have to keep them forever, but many people do since they provide a record of their financial history.
  • IRS forms that you filed when making nondeductible contributions to a traditional IRA or a Roth conversion.
  • Retirement and brokerage account annual statements.
  • Defined-benefit pension plan documents.
  • Savings bonds until redeemed.
  • Loan documents until the loan is paid off.
  • Vehicle titles and registration information if you still own the car, boat, truck or other vehicle.
  • Insurance policies.
  • Warranties or receipts for big-ticket purchases to support any warranty and insurance claims.

In addition to the above list, personal and family records like birth certificates, marriage license, divorce papers, Social Security cards, military discharge papers and estate planning documents including powers of attorney, wills, trusts and advanced directives. Store these important documents in a fireproof safe or in a safe deposit box.

Digitize Your Documents

To reduce your paper clutter, consider digitizing your documents by scanning them and converting them into PDF files so you can store them on your computer and back them up on a cloud storage service. You can also reduce your future paper load by switching to electronic statements and records whenever possible.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published January 31, 2025

Home Energy Credits Available in 2025

 

The Internal Revenue Service (IRS) published an updated frequently asked questions (FAQs) fact sheet on energy-efficient home improvement credits. The two credits available are the Energy Efficient Home Improvement Credit and the Residential Clean Energy Property Credit.

The Energy Efficient Home Improvement Credit encourages homeowners to make qualified energy efficient improvements. Qualified improvements include exterior doors, exterior windows and skylights, and insulation or air sealing materials. Exterior doors can qualify for a credit of $250 per door up to a total of $500 when more than one is installed. New windows and skylights qualify for 30% of costs up to $600. Insulation or air sealing materials are qualified for a credit of 30% of costs up to $1,200.

The total credit is generally limited to $1,200 for a tax year, with some items qualifying for an additional $2,000 credit. The $1,200 could also include a home energy audit with a value of up to $150.

The additional $2,000 credit is for electric or natural gas heat pump water heaters, heat pumps or biomass stoves or boilers. If a taxpayer qualifies for both the $1,200 credit and the $2,000 credit, the total Energy Efficient Home Improvement Credit could reach $3,200.

There are specific requirements for most of the credit items. Doors and skylights must meet Energy Star most efficient certification requirements. For the $2,000 credit, electric or natural gas heat pump water heaters, heat pumps or other such items must meet the highest efficiency level established by the Consortium for Energy Efficiency (CEE).

The taxpayer must install the energy efficient property in a home that is the taxpayer’s principal residence in the United States. The installation may also be claimed for improvements made if the owner is a tenant-stockholder in a cooperative housing corporation or a condominium where the taxpayer holds a proportionate share as specified by the management association. The Energy Efficient Home Improvement Credit is not refundable and may not be carried forward.

A new requirement in 2025 is that the items must be produced by a qualified manufacturer and there must be a product identification number (PIN). The PIN is provided by the manufacturer and must be included on the tax return. The PIN is a 17-character number assigned by the qualified manufacturer.

Taxpayers should keep records "sufficient to establish the amount of the credit on their tax returns."

The Residential Clean Energy Property Credit is a 30% credit for the installation of qualifying energy efficient property, with no lifetime credit limit. This may include solar panels, solar water heaters, qualified fuel cells, small wind energy units, geothermal heat pumps or battery storage.

U.S. homeowners that install these various energy production and storage items will qualify for a 30% credit. The geothermal heat pump must qualify under the Energy Star program. A qualified battery storage property must have a capacity of 3 kilowatt-hours or greater.

The Residential Clean Energy Property Credit may reduce the taxpayer’s tax liability and may be carried forward to future years. It is a non-refundable personal tax credit. The taxpayer may use IRS Form 5695, Residential Energy Credits to claim the credit for 2025.

Editor's Note: It is expected that there will be a comprehensive tax bill in 2025. Some of these energy credits may be modified or changed after January 1, 2026. Many homeowners will decide to take advantage of the Energy Efficient Home Improvement Credit or the Residential Clean Energy Property Credit in 2025.

Assisting a Parent with Excessive Clutter

 

My parent has always saved a large number of items. Since my other parent passed away, the clutter has become overwhelming. Do you have suggestions on how I can help?

Unfortunately, hoarding disorder or clutter addiction is a problem that has become increasingly common in the U.S. It impacts approximately 6% of individuals age 65 or older. The disorders can vary from moderate clutter to severe hoarding classified as a mental health concern, like obsessive-compulsive disorder (OCD). Here is what you should know along with some tips and resources that can help your parent.

Why People Hoard

The reason most people hoard is because they have an extreme sentimental attachment to their possessions or they believe they might need their items at a later date. Hoarding can also be a sign that an older person is depressed, anxious or showing early symptoms of dementia.

Common problems for individuals who live in excessive clutter are tripping, falling and injuring themselves, as well as having difficulty keeping track of bills and medications. They may also encounter environmental hazards like mold, mildew, dust and the presence of insects and rodents.

What to Do

The Institute for Challenging Disorganization (ICD) offers a free resource known as the “Clutter to Hoarding Scale,” an assessment tool to help you gauge your parent’s situation. You can download it by visiting ChallengingDisorganization.org, navigating to the “Resources & Tools” tab and then clicking on the “Clutter-Hoarding Scale”.

 There are several things you can do if you find that your parent exhibits a moderate cluttering problem. Begin by having a conversation with them, expressing your concern for their health and safety and offering your assistance to help them declutter. If they accept, most professional organizers recommend decluttering in small steps. Take one room at a time or even a portion of a room at a time. This will help prevent your parent from feeling overwhelmed.

Before you start, designate three piles or boxes for your parent’s belongings – one pile is for items they want to keep and put away, another is for items they want to donate and the last pile is the throwaway pile. You and your parent will need to determine which pile to place things in as you work. If there is a struggle with multiple sentimental items that are not being used, suggest keeping only one item for memory’s sake and give away the rest to family members who will use them. You will also need to help your parent set up a system for organizing the items kept and new possessions. 

Find Help

If you need help with decluttering and organizing, consider hiring a professional organizer who can come to your parent’s home to help you prioritize, organize and remove the clutter. The National Association of Productivity and Organizing Professionals (NAPO.net) and the ICD (ChallengingDisorganization.org) both offer directories on their websites to help you locate a professional in your area.

If your parent’s excessive clutter significantly impacts their daily functioning, or is causing financial difficulties, health problems or other issues, you will need to seek professional help. Therapy or antidepressants may help with issues such as anxiety, depression and other feelings that may underline hoarding tendencies. Be sure to have your parent consult their primary physician to determine if these options are appropriate for them.

To locate assistance in your area, search online for companies that provide free education, counseling and referral services for older adults and their families managing excessive clutter. Use keywords like “organizational management” to locate organizations near you. For help with extensive cleanup needs, consider searching online for specialized cleanup local companies that primarily focus on hoarding and clutter clean up.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published January 24, 2025

Salem Community Schools Employees Give Back

 

Not everyone can do everything, but everyone can do something and those somethings add up. In this case, the somethings are a couple of dollars out of each paycheck for Salem Community Schools employees that choose to give to the Salem Community Schools Giving Tree Fund.  

Crystal Mikels and Emily Johnson’s STEAM classes for Kindergarten through Fifth Grade will be purchasing beginner robots to offer a screenless approach to enhance coding skills and creativity.  By sticking to the basic ides of programming, the new robots help keep young kids interested, engaged, and challenged without confusing them or making them feel overwhelmed.

Salem Middle School Language Arts classrooms and the STEAM room will see a new addition to their space with the addition of an Open Air Literature Lounge.  The outdoor area will provide a relaxing and inviting space to read and well as facilitate book discussions.  The project is designed to encourage students to read, discuss literature, and collaborate about projects related to the books.

Chris Catlin’s 8th grade Agriculture classes will be hitting the road to the farm to provide students with hands-on learning about farming, sustainable agriculture, food supply, and real-life experience on a farm while showcasing the importance of agriculture in everyone’s daily life. 

Students in Logan Cockerham’s 5th grade Special Education class will get a boost to their reading library with various levels of literature that they can utilize for classroom as well as fun reading to increase their love of reading.  The work inspired by literacy expert Kelly Gallagher is designed to ensure that students have immediate and ongoing access to books that resonate with them.

Washington County Community Foundation is a nonprofit public charity established in 1993 to serve donors, award grants, and provide leadership to improve Washington County forever

End

Does Medicare Cover Mental Health Services?

What types of mental health services does Medicare cover? I struggle with anxiety and depression, and my primary care provider recommended that I see a therapist or psychiatrist.

Medicare provides coverage for both outpatient and inpatient mental health care services and programs to help beneficiaries with anxiety, depression and other mental health needs. Here is what you should know.

Outpatient Coverage

If you are enrolled in original Medicare, your Part B coverage will pay 80% of the costs for mental health services after you have met the annual Part B deductible of $257. The covered services include counseling and mental health care provided outside a hospital. This includes visits to a doctor’s or therapist’s office, hospital outpatient departments or community health centers. These services can also be received via telehealth providers. The remaining 20% of costs will be the beneficiary’s responsibility or may be covered by a Medicare Supplemental (Medigap) Policy.

Medicare also gives the expanded option of getting treatment through a variety of health professionals such as psychiatrists, psychologists, clinical nurse specialists, clinical social workers, nurse practitioners, physician assistants, marriage and family therapists and mental health counselors. To be eligible for this coverage, you must choose a participating provider that accepts Medicare assignment, which means they accept Medicare’s approved amount as full payment for a service.

If you choose a nonparticipating provider who accepts Medicare but does not agree to Medicare’s payment schedule, you may be responsible for up to 35% of costs. Additionally, if you choose a provider that has opted out of Medicare, you will be responsible for the entire cost.

To locate a mental health care professional in your area that accepts Medicare, go to Medicare.gov/care-compare, click on “Doctors & clinicians” and type in your location, followed by “clinical psychologist” or “psychiatry” in the Name or Keyword box. You can also get this information by calling Medicare at 800-633-4227.

Inpatient Coverage

If you need mental health services provided in a general or psychiatric hospital, original Medicare Part A covers these services after you have met your Part A deductible of $1,676. Your doctor will determine which type of hospital setting you will need. If you receive care in a psychiatric hospital, Medicare covers up to 190 days of inpatient care for your lifetime. If you have reached your 190-day limit but need additional care, Medicare may cover additional inpatient care at a general hospital.

Additional Coverage

In addition to outpatient and inpatient mental health services, Medicare will pay for one depression screening per year which can be done in a primary care doctor’s office or clinic. If you have a Medicare prescription drug plan, most medications used to treat mental health conditions are covered too.

Medicare Advantage Coverage

If you get your Medicare benefits through a private Medicare Advantage plan, the plan will provide the same coverage as original Medicare but may impose different rules and will likely require you to see an in-network provider. You should contact your plan directly for details.

For more information, call Medicare at 800-633-4227 and request a copy of publication #10184 Medicare & Your Mental Health Benefits, or read it online at Medicare.gov.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published January 17, 2025

The Potential Dangers of Excessive Earwax

Can excessive earwax cause serious health problems? What can you tell me about this?

Excessive amounts of earwax can cause health problems including hearing loss or ringing in the ear. This can exacerbate other issues since hearing loss has been linked to cognitive decline and an increased risk of depression. Earwax buildup can also cause individuals to experience vertigo, which increases the risk of falls.

Earwax is a substance called cerumen that binds with dirt, dust and debris that is normally produced by the body to cleanse and protect the ears. For most individuals, the self-cleaning process is sufficient. But in others, including more than 30% of elderly and disabled individuals, earwax accumulates to the extent that it entirely blocks or impacts the ear canal.

The most affected are the elderly, with higher risks associated with individuals living in nursing homes or assisted living centers. Those who use hearing-aids are considered at highest at risk because the devices can push wax down into the canal.

Earwax Removal

Usually, earwax moves up and out on its own so the best way to control it is to leave it alone. However, that advice can sometimes backfire for those who accumulate excessive amounts of earwax.

The symptoms of an earwax problem can include an earache, a feeling of fullness in the ear, hearing loss, tinnitus, dizziness, an ear infection, ear itchiness or a cough due to pressure from the blockage stimulating a nerve in the ear. If you experience any of these symptoms, consult with your doctor about using a softening agent to help the wax leave the ear or to remove it more easily.

If you prefer a milder approach, talk with your doctor about using baby oil or mineral oil. Using an eyedropper, place a drop or two into your ear, tilt your head so the ear is pointing up toward the ceiling and stay in that position for a minute or two to let the fluid flow down to the buildup. Once that is done, tilt your head in the opposite direction to let the fluid and wax drain.

Alternatively, try an over-the-counter earwax removal solution or kit, which are sold in most pharmacies. Most solution contain a form of peroxide, and some kits include a bulb syringe that you squeeze to flush your ear with warm water, if needed.

You may need to repeat this wax-softening and irrigation procedure several times before getting rid of the excess earwax. If the symptoms do not improve after a few treatments, you should see your healthcare provider or an ear, nose and throat (ENT) doctor to have the wax removed. Earwax removal is one of the most common ENT procedures performed. They have a variety of tools that can remove hard, stubborn earwax.

It might be tempting to poke a cotton swab, bobby pin, pencil or finger into your ear to get the gunk out, but it is best to refrain. While doing so could remove some of the wax, it may also push the wax deeper into the ear canal and increase the risk of injuring your eardrum and making the problem worse.

Savvy Living is written by Jim Miller, a regular contributor to the NBC Today Show and author of “The Savvy Senior” book. Any links in this article are offered as a service and there is no endorsement of any product. These articles are offered as a helpful and informative service to our friends and may not always reflect this organization’s official position on some topics. Jim invites you to send your senior questions to: Savvy Living, P.O. Box 5443, Norman, OK 73070.

 

Published January 10, 2025

Charitable Planning in 2025

A new year provides an excellent opportunity to consider plans for charitable gifts in 2025. These gifts could include an IRA charitable rollover, a gift of cash or a gift of appreciated property.

1. IRA Charitable Rollover — The IRS refers to the IRA charitable rollover as a qualified charitable distribution (QCD). An individual over age 70½ is permitted to make a direct transfer from his or her IRA custodian to a qualified charity. The transfer is not included in taxable income. If the IRA owner is over age 73, the distribution may fulfill part or all of the IRA owner’s required minimum distribution (RMD).

Since many individuals have invested their IRAs in stocks, bonds or other securities, it may be necessary for the IRA custodian to exchange the IRA stock or bond account for a money market fund prior to the distribution. Most IRA custodians require a QCD to be paid from a money market account or similar fund. With equities markets at high levels, some individuals may choose to transfer funds from equities to a money market fund early in the year to prepare for their IRA charitable rollover. Talk with your IRA custodian to determine the next steps to make a QCD.

There are some limits for the IRA charitable rollover. The IRA owner must be at least age 70½ and the maximum transfer in 2025 is $108,000. The transfer must be to a qualified exempt charity and may be for a designated purpose or a field of interest fund. Transfers to donor advised funds or supporting organizations are not permitted. In addition, transfers may not be for a charity dinner or other event that involves a partial benefit to the donor. The entire QCD must be for a qualified charitable purpose.

2. Gifts of Cash — In 2025, individuals who itemize deductions may deduct charitable gifts of cash up to 60% of their contribution base, which is usually their adjusted gross income (AGI). While the 60% limit is substantial, some generous individuals give more and may carry forward the excess gift amounts and deduct them over the following five years. Some donors “bunch” their charitable gifts, meaning they itemize one year with the larger gifts and take the standard deduction the next year.

3. Gifts of Stock or Land — With substantial increases in value for both equities and real property, many donors find that a gift of appreciated property is attractive. A gift of appreciated stock or land provides two benefits for the donor. First, the donor may receive a charitable income tax deduction for the fair market value of the stock or land. Second, because the charity is tax-exempt, the donor can bypass tax on the capital gain. If a donor purchased stock eight years ago for $10 per share and it is now worth $50 per share, the donor would pay capital gains tax on $40 if he or she sold the stock. However, by giving the stock to charity, the donor may receive a charitable income tax deduction for the $50 in value and bypass the tax on the $40 of potential gain. Since the donor is receiving both the deduction and capital gain bypass benefits, this type of gift is permitted up to 30% of the donor’s AGI. Once again, if the gift value is over this limit, it may be carried forward for five years. For example, Mary has adjusted gross income of $100,000 this year and makes a gift of appreciated stock with fair market value of $40,000. She can deduct $30,000 this year and carry forward the remaining $10,000 charitable income tax deduction to the next year.

Editor’s Note: The first month of a year is a good time to make plans. In January, donors may wish to consider their options for charitable gifts in 2025.

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