Nutshell tax changes for my clients over 70


RMDs are suspended for 2020! That means that we do not HAVE to take a distribution. You still can, of course, you just aren’t being required to. It’s still a good idea to use up low tax brackets with IRA distributions even if you’re not being forced. I’ll be revisiting this for all my ProsperiTea Planning retainer clients during our regular tax planning meetings.

If you’ve already taken them in 2020 you can roll it back in within 60 days, but be warned that you may only do a rollover once per year. 

RMDs were recently also moved so that, instead of starting when you turn 70.5, now they start when you turn 72. (Unless that’s in 2020, in which case you get to wait an extra year.)

The stimulus checks are going to be issued to senior citizens, too. There are a few wrinkles:

  • If you filed a tax return for 2018 where you made over $100K single or $150K joint but made LESS in 2019, we want to make sure we get the 2019 tax returns filed ASAP.
  • If your bank info changed since your last return was filed then we’re EITHER going to try to rush to get your 2019 filed so they use that OR we’re going to wait for the web portal to be created by the IRS so you can update your bank info there. Let me know if you think this applies to you and I’ll follow up.

If you’re over 70.5 you are back to being able to contribute to a Trad IRA if you have earnings, however, watch out, it screws up your ability to do Qualified Charitable Distributions. Your best bet is still to do Roth contributions in those cases.

Charitable Giving has one old thing to remind you about and another new thing:

Remember that you may give directly to charities from your IRA by requesting that your IRA Custodian send distributions straight to your charities. That’s still available for everyone over 70.5. We call those “Qualified Charitable Distributions” and they come out tax-free. I am big fan so you’ve probably heard me talking about QCDs before.

But now there’s a new thing, Qualified Charitable Contributions. (Yes, they’re *that* confusingly named, sorry!) In 2020 we’re able to deduct charitable contributions on the face of the return, although just $300. I’m super happy about this, though, because it was *ME* that did that! I wrote my congressional representatives, I went to a conference of CPAs in Las Vegas and touted the change, and flogged it on #TaxTwitter. I was asking for a charitable adjustment for up to 10% of gross income – you know, tithing – but this is better than nothing. Opens the door, anyway.

We’ve had the SECURES Act, The CARES Act and there are more in the pipeline. There’s a lot going on, but I’m on it, and I’ll keep you in mind as we go along.

Bonus non-tax-tip: I’ve recently discovered that my vacuum cleaner bags are good additions to cloth face masks, inserted in the folds. I hope you stay safe out there!