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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.

The Internal Revenue Service (IRS) reminds taxpayers that the 2025 filing season is rapidly approaching. The IRS is attempting to provide improved taxpayer services. One of the primary ways for taxpayers to benefit is to sign up for an IRS Online Account.

There is an IRS Get Ready page on IRS.gov. It has many practical tips and resources for taxpayers.

IRS Online Account — You may create an Online Account and enjoy multiple benefits. With the Online Account, you can review your most recent tax return and adjusted gross income. You can obtain an Identity Protection PIN or sign a power of attorney for your tax preparer. The Online Account allows you to select your language preference and to receive up to 200 various IRS electronic notices. You can review and cancel payments and set up a payment plan.
Identity Protection Personal Identification Number (IP PIN) — An IP PIN is a six–digit number that protects you from having your identity stolen and prevents the filing of a federal tax return. This increases your personal and financial information safety. A new feature is that the IRS will accept a return with an already claimed dependent if you have a valid IP PIN. This will allow the IRS to accelerate the issuance of your tax refund.
Quarterly Estimated Payments — Some taxpayers have non-wage income and must make estimated payments. There is a Tax Withholding Estimator on IRS.gov that may help you calculate the amount of your estimated payment. The last quarterly estimated payment for 2024 is due on January 15, 2025.
1099-K Reporting — If you received over $5,000 in payments for goods or services through an online marketplace, you can anticipate receiving IRS Form 1099-K in January 2025. While income from part-time work, side jobs or sale of goods and services is taxable, taxpayers who exceed the $5,000 limit may receive Form 1099-K. The IRS reminds taxpayers that they are taxable on all income even if they did not receive this form.
Digital Asset Taxes — Many taxpayers own or trade Bitcoin or other digital assets. The income from virtual currencies, cryptocurrencies, stablecoins or non–fungible tokens (NFTs) must be reported. Taxpayers should keep records about the purchase, sale or exchange of digital assets. The 2024 federal tax return will ask taxpayers to answer “Yes” or “No” whether they have received a payment for services, sold, exchanged or otherwise disposed of a digital asset. If the taxpayer checks the "Yes" box, he or she must report all income related to the digital transaction.

The IRS often takes less than 21 days after it receives your tax return to issue a refund. An exception exists for returns that claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC). Returns claiming the EITC or ACTC are blocked from refunds until the middle of February.

You should gather your tax information and have a good record-keeping system. Your records generally are collected by the end of January. They could include Forms W-2, Forms 1099, Form 1099-K from third-party payment vendors, Form 1099-NEC for nonemployee compensation, Form 1099-MISC for miscellaneous income and Form 1099-INT for interest income.

Filing electronically and selecting direct deposit is both fast and safe. An estimated 70% of taxpayers will be qualified to use the complementary filing system that is called IRS Free File. All taxpayers can use the IRS Free File Fillable Forms. The IRS has added another 12 states where taxpayers with fairly simple tax returns can use the Direct File program. Older adults and military members also may benefit from the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs.

Published December 27, 2024

I have heard that people with heart problems need to be extra cautious during the winter because heart attacks are much more common during that time. What can you tell me about this?

Winter is not only cold and flu season, but also the peak time for heart attacks. Individuals with pre-existing heart conditions or those with a history of heart attacks are particularly susceptible. Here is what you should know along with some tips to help you protect yourself.

In the U.S., the risk of experiencing a heart attack during the winter months is double than what it is during the summertime. The increase is influenced by a number of factors, and they are not all linked to cold weather. Even people who live in warm climates have an increased risk. Here are the areas you need to pay extra attention to this winter.

Cold temperatures: When a person gets cold, the body responds by constricting the blood vessels to help the body maintain heat. This causes blood pressure to rise and makes the heart work harder. Cold temperatures can also increase levels of certain proteins that can thicken the blood and increase the risk for blood clots. To stay warm this winter, bundle up in layers, including gloves and a hat, and use a scarf over your mouth and nose to warm up the air before you breathe in.

Snow shoveling: Studies have shown that heart attack rates jump dramatically in the first few days after a major snowstorm, usually as a result of snow shoveling. Shoveling snow is a very strenuous activity that raises blood pressure and stresses the heart. Combine those factors with cold temperatures and the risks for heart attack surges. If your sidewalk or driveway needs shoveling this winter, hire a professional or someone from the neighborhood to do it for you. Snow blowers are also a great alternative. However, if you must shovel, push rather than lift the snow as much as possible, stay warm and take frequent breaks.

New Year’s resolutions: Every January 1, millions of people join gyms or start exercise programs as part of their New Year’s resolution to get in shape, and many overexert themselves too soon. If you are starting a new exercise program this winter, take the time to talk to your doctor about what types and how much exercise may be appropriate for you.

Winter weight gain: During the holiday season and winter months, it is common to indulge in food and drinks, which can put extra strain on the heart, especially for someone with a heart condition. Keep a watchful eye on your diet this winter and moderate any intake of high-fat foods and alcohol.

Shorter days: Less daylight in the winter months can cause many people to develop “seasonal affective disorder” (SAD), a wintertime depression that can stress the heart. Studies have also looked at heart attack patients and found they usually have lower levels of vitamin D (which comes from sunlight) than people with healthy hearts. To boost your vitamin D this winter, talk to your healthcare practitioner to see if taking a supplement that contains between 1,000 and 2,000 international units (IU) per day is right for you.

Flu season: Studies show that people who get flu shots have a lower heart attack risk. It is known that the inflammatory reaction set off by a flu infection can increase blood clotting which can lead to heart attacks in vulnerable people. Talk to your healthcare provider about getting a flu shot, a COVID-19 booster or vaccines for RSV and pneumococcal pneumonia to help protect your health this winter.

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 December 27, 2024

You have completed a will and perhaps a revocable living trust. Your durable power of attorney for healthcare and a living will are in place. All of your records are safely in place and carefully organized.

So you now are finished with your estate planning. Or are you? Will there be changes in your circumstances or your family that should lead to a review of your plan? Could some events cause you to need to revise or update the plan?

Yes, there are a number of reasons to consider revising or updating your plan. These include any of the following reasons:

1. New Children, Grandchildren or Other Heirs

Your estate plan almost certainly makes provision for children and other heirs who are living when you pass away. If you have a specific transfer to one child, a new child may receive a smaller than intended inheritance.

For example, John Smith had a $1 million estate and left a $400,000 residence to child A. He then divided the balance of the estate with 1/6 of the balance to child A and 5/6 to child B. If a third child is born, depending upon state law, the child might receive nothing or perhaps would benefit from a portion of the residue. In either case, the uncertainty could lead to estate litigation or to family strife.

If you have a sizeable estate and there are large specific bequests, the arrival of a new heir is a good time to review your plan. One option is to transfer assets to the heirs "then living" when you pass away.

If the estate is $1 million, in some states a child C who is born later would receive 1/3 of the estate. This could dramatically change the benefit for child B and leave her with a reduced inheritance. In addition, child C could be a minor or a very young adult and not be capable of managing his or her property. For several reasons, the arrival of a new heir makes a review of your plan very important.

2. Move to a Different State

If you are married and move to a different state, there may be a change in the laws that affect ownership. Some states are called "common law" property states and some are "community property." If you move from one state to another and change in either direction, it may be important to clarify the ownership of your property as separate property or joint property.

For individuals with moderate to larger estates, there could be significant estate or inheritance taxes. Several states have inheritance taxes that will apply at lower levels than the federal exemption per person. Depending on who among your relatives receives your property, a new state may have a substantial tax.

Finally, many states have specific rules on durable powers of attorney for healthcare, living wills or advance directives. If you acquire permanent legal residence in the state, your doctors will expect that your medical planning documents reflect their state law.

3. Sale or Purchase of a Major Asset

You may have a major real estate asset or a business that is to be transferred to one of your heirs. If that property is sold or substantially increases in value, your entire plan could change. For example, if a property greatly increases in value and there is a large estate tax that is paid out of the residue of your estate, the beneficiary of that specific property could receive a much larger inheritance than you intend. Those children or other heirs who are receiving the residue could find their inheritance greatly reduced by estate tax paid on the asset transferred to the first child.

Alternatively, if the first asset is sold, a child may receive a smaller than intended inheritance. Therefore, a significant sale or purchase is a good time for an estate planning review.

4. Reaching Age 73

The four types of estate property are generally cash and cash equivalents, stocks, real estate and qualified plans. Over the years, your qualified retirement plan may become a large portion of your estate. Your IRA, 401(k) or other qualified plan will require distributions to start on April 1 of the year after you reach age 73.

If you pass away before the entire plan is paid out to you during your retirement years, the balance is transferred to your designated beneficiary. Because retirement plans have grown substantially over the past decade, it's very important to review your beneficiary designations. Many individuals pass away and the plan value is transferred to beneficiaries who have been selected 10, 15, and even 25 years earlier. There could be many reasons why you would want to update that beneficiary designation and age 73 is a logical time to do so.

5. Your Selected Beneficiary is Deceased

In many families there are unmarried brothers or sisters. It is quite common for these individuals to receive an inheritance and to remember the surviving brothers and sisters in their plans. However, even if there are two or three unmarried brothers or sisters, one will inevitably be the survivor and hold most of the assets. If you are remembering a sibling in your plan, there is a substantial possibility he or she will pass away before you do. In that case, it is useful to revise the plan and select a new recipient of that share of your estate.

6. Divorce or Remarriage

Estate plans for single persons are quite different from those of married couples. A single person who transfers assets to a former spouse will not qualify for the unlimited marital deduction. While property settlements are typically handled during the dissolution of marriage proceedings, there are many cases where individuals forget to change beneficiary designations on retirement plans and insurance policies. If an individual later remarries and is survived by their new spouse, there is a high likelihood of litigation between the ex-spouse and the new spouse if the individual forgot to update his or her beneficiary designations. Therefore, this person’s plan and beneficiary designations should always be reviewed in the event of a divorce or remarriage.

7. Substantial Change in Value

If someone’s estate increases or decreases significantly in value, there can be major impact on beneficiaries. For example, Mary has three children, Anne, Bob and Charlie. She leaves a home valued at $300,000 to Anne, a large ranch on desert land valued at $400,000 to Bob and the liquid assets to Charlie, who has the greatest financial need. While Mary is in a nursing home and no longer able to change her will, a utility builds windmills on most of the desert ranchland and pays large annual lease payments. The value of the desert ranch dramatically increases. When Mary passes away, Bob receives the ranch, not worth $400,000 but $8 million. Bob receives an inheritance far greater than Anne or Charlie.

8. Adding a Major Property to a Living Trust

If you have a substantial estate, you may hold your real estate in a living trust. If you invest in real estate or acquire a major new property and transfer that to the living trust, it will be useful to review the plan. In some circumstances, there may be different beneficiaries for the living trust than for your qualified plans and life insurance. The addition of a high value asset to the living trust could increase the benefits for children receiving shares from the trust in comparison to the rest of your heirs.

9. Selected Executor or Trustee Not Available

With a will or a revocable living trust, you may also select a successor executor or trustee. While this usually will handle the situation in which the primary executor or trustee predeceases you, it still is useful to review your plan if one of the designated individuals passes away. You can easily select a new primary executor or trustee with an appropriate backup person.

10. Passage of Time

Estate plans are affected by changes in your asset value, by changes in your family, and potentially by changes in federal or state law. Therefore, it is useful every three to five years for you to sit down with your attorney and review your plan. Given all the potential areas that can change, it is quite likely that you may wish to modify some portion of the plan.