Cassidy CPA Expert tax, accounting & advisory services in Hilton Head Tue, 22 Oct 2019 14:54:13 +0000 en-US hourly 1 Cassidy CPA 32 32 Savvy Giving: Tax Strategies for Charitable Contributions Wed, 13 Nov 2019 14:32:49 +0000 The season of giving is upon us! Did you know that approximately 1/3 of all charitable giving occurs in December each year? As you are considering your year-end donations, we wanted to provide you with tax strategies to optimize your tax benefits.

You may be uncertain if there are still tax advantages to charitable giving under the Tax Cuts and Jobs Act (TCJA). The good news is that your donations are still deductible! However, many taxpayers will not claim the charitable deduction because with the increased standard deductions they will not itemize on their tax returns. What should you do if your charitable contributions don’t get you above the standard deduction? We are so glad you asked!

Bunching Donations
Bunching or lumping donations is a tax strategy that involves giving annual donations for multiple years in a single tax year. Under this strategy, you would not give in one year and take the standard deduction, and in the next year, you would give twice your typical annual amount to be able to claim the higher itemized deduction. For example, if you routinely give $15,000 annually, but now that amount together with your other itemized deductions isn’t enough to exceed the standard deduction of $24,000 for married couples filing jointly, you could consider holding your 2019 end of year donation until January 2020 and then making your annual contribution in December 2020 as normal. By doing this you would take the standard deduction of $24,000 in 2019 and then be able to deduct $30,000 for charitable giving in 2020, along with any other itemized deductions. If you decide to implement this tax strategy, just make sure that your charitable giving doesn’t exceed 30% or 50% of your adjusted gross income (AGI), depending on the type of contribution and recipient.

Are you 70 ½ or older? The IRS requires you to take required minimum distributions (RMDs) from your tax-deferred IRAs each year. If you are like many taxpayers, you will want to minimize the impact of RMDs because these distributions can push you into a higher tax bracket or reduce your eligibility for certain tax credits and deductions. Qualified charitable distributions (QCDs) are a great tax strategy to reduce the impact of RMDs and benefit the causes you champion. QCDs are a direct transfer of funds from your IRA to a qualified charity. Up to $100,000 donated through QCDs can be counted towards your RMD for the year, and these amounts are excluded from your taxable income. Amounts donated through QCDs are not deductible on your tax return as charitable contributions, but the QCDs’ tax benefits can make them an important tax planning strategy for qualified taxpayers. For additional QCD requirements, you should speak to your accountant and IRA administrator.

Do you have questions about these strategies or about charitable giving in general? Give our office a call, and we’ll be happy to explore the best strategies for your situation!

Amanda McBride | Cassidy CPA

By Amanda McBride


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Can I Protect My IRA Account After My Death? Fri, 18 Oct 2019 14:28:21 +0000 You have worked hard your whole life to build up a substantial IRA nest egg and want to leave your heirs with a legacy. With a traditional “custodial” IRA, once you (the IRA owner) die, your beneficiaries are free to do whatever they want with your money. They can be responsible and withdraw only the annual required minimum distributions (RMDs) based on their life expectancies, which will “stretch” your IRA into their golden years. Or they can squander your hard-earned savings on frivolous vacations, fast cars, or the blackjack table because, after you die, your custodial IRA becomes their property. Studies have shown that as much as 80% of inherited IRA assets are withdrawn within two years of the IRA owner’s death.

However, there are ways to prevent this from happening. One such way is the “Trusteed” IRA, which is set up during the IRA owner’s life and becomes an irrevocable trust at death. The trust documents will determine how the distributions are issued and can limit those distributions to no more than the annual RMDs. The trust documents may also be customized to allow for additional distributions should a specified need arise. Not only may the trust documents specify the initial beneficiary, but may determine successor beneficiaries as well. So, you can’t stop your widow from marrying that guy you hated in high school, but you can make it impossible for him to get his hands on your money if your widow dies. With a trusteed IRA, a financial institution serves as trustee of the account and actively manages the funds, as opposed to a custodial IRA, whereby the financial institution merely holds the funds for the owner. Because of the active management and administration of the trust by the financial institution, trusteed IRAs can be expensive to maintain and are only recommended for large IRAs.

To summarize, there are two types of IRA’s: the traditional “custodial” account and the less traditional “trusteed” account. The major difference between the two lies in who determines how the funds are distributed. A custodial IRA is distributed based on the whims of the beneficiary while a trusteed IRA is distributed based on trust documents that were designed by the original IRA owner.

Another way to protect your retirement account after you are deceased is by naming a trust as the IRA beneficiary. In this situation, the IRA is still considered a custodial IRA, but an irrevocable trust serves as an intermediary between the IRA account and the underlying beneficiaries (your spouse, children, or significant others). The IRA must still distribute RMDs annually, but those distributions go into that trust which may or may not distribute those funds to the underlying beneficiaries. Here again, the trust documents, which were created according to the original owner’s desires, determine how the funds are dispensed. In order to take advantage of the “stretch” provisions of RMDs, which are based on life expectancy, all of the designated, underlying beneficiaries of the trust must be individuals.

Both the Trusteed IRA and a Trust as an IRA beneficiary can provide significant asset protection for your retirement savings. In addition, both structures can protect the funds from the creditors of the individual beneficiaries. Yes, you can protect your IRA account from the grave.

If you would like to discuss these options, please give us a call.

CassidyCPA | DeVoe

By Cheryl DeVoe, CPA


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Understanding Obamacare & Premium Assistance Fri, 26 Jul 2019 18:23:16 +0000 Have you recently looked into the cost of purchasing a health insurance policy? If you did, were you surprised by all the jargon you had to sift through as you examined your options? You probably asked yourself, “What’s the difference between an HMO and a PPO plan?”, “What’s considered a reasonable deductible?” and most importantly, “Does my current medical provider accept this type of plan?” I’m not in the business of selling insurance, so if you came here looking for answers to these types of questions, I’m not going to be much help. Wait! Before you click that back button, I implore you to keep reading. I have good news for you! I promise what comes next may save you a significant sum of money, and who doesn’t like saving money?

When Congress passed the Affordable Care Act (ACA), aka “Obamacare”, it spurred on the creation of a healthcare marketplace. The marketplace is a one-stop shop for taxpayers who wish to purchase medical insurance plans at a more competitive price than they used to. One way the marketplace makes insurance more “affordable” is through what’s known as a “premium assistance credit”, which is just a fancy way of saying the government will pay for a portion of your monthly health insurance premiums, and you just have to pay the difference.

In order to qualify for a premium assistance credit, you have to tell the marketplace what your estimated modified adjusted gross income (MAGI) will be for the year. I know… another acronym… allow me to simplify this one for you.

Step 1:

Add up your total income from the following sources:

  1. W-2 Income (Salaries & Wages)
  2. Investment Income (Interest, Dividends, Capital Gains)
  3. Business Income (Net Schedule C Income, Net Pass-through Income)
  4. Retirement Income (IRAs, Pensions, Social Security)
  5. Rental Income

Step 2:

Add up your total “adjustments” from the following sources:

  1. Educator Expenses
  2. Health Savings Account Contributions
  3. Health Insurance Expenses (Self-Employed)
  4. IRA Deductions
  5. Student Loan Interest

Step 3:

Take your total income from Step 1 and subtract your total adjustments from Step 2. That, my friends, is how you calculate your MAGI.

Now that you’ve calculated your MAGI, you can move on to the fun part. Saving money!

How many people do you live with? Will they show up as a dependent on your tax return this year? Why, oh, why must there be so many questions? I know… The reason you have to ask yourself this is because it helps dictate the value of how much financial help you’ll get from the government.

Let’s assume that you have three people in your household in 2019, and all three of you will be listed on your tax return. Based on the chart below, that means your 2019 MAGI cannot exceed $83,120 if you wish to receive any help paying for your health insurance premiums.

Image result for premium assistance 2019 chart

What happens if your MAGI exceeds 400% of your household size? Good question! If you received even one dollar of premium assistance during the year, and your MAGI exceeds 400% of your household limit, then you have to pay back every single dollar of assistance you received when you filed your tax return. For some people that could mean owing more than $10,000 when they file their tax return.

One of the worst feelings in this business is having to tell someone they owe that kind of money. On the flipside, one of the best feelings in this business is educating someone on how to avoid this kind of financial catastrophe.

Now that you know what MAGI is, what should you do next? I’m glad you asked. I’d recommend calling Cassidy CPA at (843) 689-2800 in order to talk about your MAGI and any other tax questions you may have.

By Mark Plumlee, CPA


  1. The chart listed above is only applicable for the 2019 calendar year.