audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Right - we also will probably use part of the RMD to gift directly from the IRAs to qualified charities.
This is one reason I make sure my husband takes care of himself. I don't want to be in 25% bracket.A lot of suddenly widow or widower filers could find themselves bumped from the 15% to 25% bracket simply because they would go from filing "Married Filing Jointly" to filing "Single".
That could happen at any age.
This is one reason I make sure my husband takes care of himself. I don't want to be in 25% bracket.
Trust me, I won't get married again either so I understand the sentiment. Why ruin a good memory of a good marriage.I can agree with the sentiment but, on the other hand I have no intention to get married to solve that problem!
A lot of suddenly widow or widower filers could find themselves bumped from the 15% to 25% bracket simply because they would go from filing "Married Filing Jointly" to filing "Single".
That could happen at any age.
It just seemed that the fact that I would never be below 25% (and thus always paying taxes on 85% of any SS) put me in a place where it was best to maximize the SS payments and pay the taxes. I don't think I screwed this up and am loosing out on a bunch of money, but if you disagree, please let me know.
I do have one strategy for getting around this. I plan to give my RMDs to charity in the form of QCDs for quite a few years when I turn 70 1/2.
Not to cramp your style, but those are limited to $100K/yr/person.I do have one strategy for getting around this. I plan to give my RMDs to charity in the form of QCDs for quite a few years when I turn 70 1/2.
Quote:
Originally Posted by Hermit View Post
I do have one strategy for getting around this. I plan to give my RMDs to charity in the form of QCDs for quite a few years when I turn 70 1/2.
Not to cramp your style, but those are limited to $100K/yr/person.
We're in a similar situation. Our ordinary income is well within the 15% tax bracket, but our cap gains income is high, stretching well beyond it. Which actually pushes us into AMT territory, which means any additional ordinary income gets taxed at 26%.It just seemed that the fact that I would never be below 25% (and thus always paying taxes on 85% of any SS) put me in a place where it was best to maximize the SS payments and pay the taxes. I don't think I screwed this up and am loosing out on a bunch of money, but if you disagree, please let me know.
I do have one strategy for getting around this. I plan to give my RMDs to charity in the form of QCDs for quite a few years when I turn 70 1/2.
Not to cramp your style, but those are limited to $100K/yr/person.
This is one reason I make sure my husband takes care of himself. I don't want to be in 25% bracket.
I do have one strategy for getting around this. I plan to give my RMDs to charity in the form of QCDs for quite a few years when I turn 70 1/2.
https://www.kitces.com/blog/qualifi...om-ira-to-satisfy-rmd-rules-and-requirements/To qualify for QCD treatment, the rules also stipulate that the distribution must go to a public charity (as described in IRC Section 170(b)(1)(A)), and thus cannot go to a private foundation, nor (as specified in the tax code) may a QCD go to a charitable supporting organization or a donor-advised fund, either.
In addition, the charitable distribution from the IRA must be one that otherwise would have been eligible for a full charitable deduction under IRC Section 170 (even though QCDs are not eligible for a deduction, as discussed below). This “must have been eligible for a full deduction” rule ensures that the IRA donor does not receive any kickbacks or other “quid pro quo” benefits for the donation (which would limit the donor’s deduction to only the net amount contributed and fail the “full deduction” QCD requirement). This requirement also prevents any “split-interest charitable trust” (e.g., a charitable remainder trust or a charitable lead trust) from being an eligible QCD beneficiary.
Excellent point, thanks! For those who did not know what a QCD was and how it effects your taxes, let me be specific, after all the entire purpose of starting this thread was to point out to widows and others how to avoid the 46.25% tax bracket.
If you took a $1,000 MRD while barely in the 25% bracket, that $1,000 would make $850 additional dollars of your Social Security taxable income. You would then pay 25% or the $1,850 of additional AGI which is $462.50. Even if you then contributed the $1,000 to a charity, your income would still have been increased by the $850 of taxable Social Security and you would still pay an additional $212.50 in taxes.
You can avoid all taxes if you have your broker do a direct transfer of your MRD to a qualified charity. Your MRD would then be reported, by your broker, as a QCD, Qualified Charitable Distribution, it was never part of your AGI, so it never made any additional SSB taxable.
Again, thanks for pointing that out.