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Saturday, 6 March 2021

LBS - Hill & Hill Taxes

Credit: WDEF CBS Chattanooga, TN
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LBS - Hill & Hill Taxes
LBS - Hill & Hill Taxes

Morgan Hill with Hill & Hill Financial explains how the Secure Act may affect your taxes this year.

Https://www.hillandhillfinancial.com/

[Music] welcome to local business spotlight everyone i'm troy thompson joining me today is morgan hill from hilton hill financial and today we're talking all about your taxes when it comes to 2020.

Welcome to the show good to see you okay you ready for to be put on the spot absolutely okay well the secure act passed back in january of 2020.

Okay how does that affect people preparing their taxes for this year you know one of the things that i found interesting is a lot of folks didn't even know that it happened well what is that to be doing well the secure act stands for uh setting every community up for retirement enhancement right um well there are a couple of big things that happen for folks to really be aware of the first is the changing of the required minimum distribution age so it used to be when you turned seven and a half this magical number from the irs you had to begin taking distributions out of your iras your 401ks those retirement accounts well that's now changed to 72.

So one of the things that we talk about with a lot of folks is making sure that if they're in that transition they don't miss the mark if you miss the mark there's sometimes penalties that can be assessed for not getting the dates and times and amounts correct so that's one of the first things with the secure act that people really should be on the lookout for okay so you're saying it used to be 65 well it actually used to be 70 and a half was when you had to start taking distributions they moved it to age 72.

Why would they have moved it what's the reason for that do you know why um that along with other questions that i have about how does washington think i'm going to add that one to my list it's an action it's an actual thought that might have just been a tax reason or something like that um no but you're bringing up an excellent point that kind of dovetails with that yeah is when they moved the age from 70.5 to 72 for people taking it they made a big change with people who would receive it as an inheritance right if you're the son of the daughter the niece the nephew not a surviving spouse not perhaps a minor disabled child they now said you have to take all of the money out of this account far faster than previous what i mean by that there used to be a process where if let's say i'm inheriting money from my mother yes i could take my distributions over my remaining lifetime my children could take part of it over part of their remaining lifetime troy was it was decades that you had to take this money and pay tax on the distributions now that's shortened to 10 years wow so the the big move and so one of the things that people want to make note of tax wise is where are they from this age difference but also what's the impact to their children okay i got you all right let's talk a little bit about the required minimum distributions that were not required in 2020 correct all right and how could that affect some folks filing their taxes this year well one of the things that has happened that we've discovered is people sometimes would set things up automatically and there were times where certain companies said well we're not going to have you take your distribution and then others said since we didn't hear from you and it was set up automatically yes it just happened and many times it would be deposited to people's accounts and i've met more than my share of our clients who go i don't even remember getting it right so one of the things you want to make sure is is that when you're filing your taxes that all the forms are in and you double check that you actually received it and don't accidentally overlook that 1099 that you might receive i got you well i'm going to ask you a personal question um charitable donations that i gave last year correct any changes because i know that changes all the time well no big changes in that would affect us because we're under the certain ages but if you're 70 and a half or older one of the things that got a lot of press with the secure act is something called a qualified charitable distribution now what you can do up to a hundred thousand dollars a year is you can donate directly from your ira instead of taking that distribution you can donate directly to the charity of your choice and avoid the income tax due on money you would have received oh okay but doesn't i thought that also happened at any age bracket as well actually no when it comes to your iras donating directly is called a qualified charitable distribution it's been around for a while but it got a lot of press with the secure act people said i don't necessarily need this money and i'm charitably minded i want to give it directly to that institution mr hill great information well fabulous good day thank you so much if you want to find out more information there it all is up on the screen for you hill and hill financial they'll take care of all your future plans back after this short break

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