12/6: End of Year Tax Planning

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Episode Transcript

Speaker 1 (00:00):
Hello, and welcome to Money Talks with Terry Sandbold and
Blake Sandbold and gentlemen, you're bringing up something that a
lot of us don't want to think about until next year.

Speaker 2 (00:10):
Today, Oh we are, but it's something that needs to
be talked about. It's called end of year tax planning,
at least from our side of the table, right, that's right,
So lots to go through as we head into the
final stretch of the year. This is one of the
most important times to take a close look at your
tech situation. And I know it's a holiday season, so
we'll make this cheery in bright today.

Speaker 1 (00:32):
Good luck with that, okay.

Speaker 2 (00:36):
So we're walking through the key moves to consider before
December thirty. First, okay, hopefully a lot of you have
already done some of these things that there might be
a few things to think about, especially ahead of the
One Big Beautiful Bill changes taken effect in twenty twenty six.
So why twenty twenty five matters, of course, is it's

(00:57):
it's the final full year before several major tax law
changes take effect under the One Big Beautiful Bill, which
is obbb we'll say that, okay, B Yeah, So twenty
twenty five is what we would call a transition year,
and that's where many provisions from the tax cuts and
the job backs remain in effect, but new charitable and

(01:20):
deduction rules start. Those rules start in twenty twenty six,
so we're going to go through some of those things today,
and then many listeners may have one last year to
capture high value deductions before twenty twenty six caps and
when floors begin, so to speak. So there's a lot
of different things to consider, and the goal of year
end planning is just that managing timing of income will

(01:44):
go through these pieces, managing time of timing of deductions,
potentially lower lifetime taxes, not just this year's tax bill.
So there's a lot of things to come into play.
If you want to jump into the RMDS little.

Speaker 3 (02:00):
Bit, yeah, well, you know, I'll just add with that,
I think it is really important to look at the
lifetime taxes. And you know that's where when we run
a lot of our financial plans for clients. You know,
we can simulate things like Wroth conversions, charitable giving and
everything like that, and you know, if you look at
a Roth conversion, there's definitely a case where during the
current year you're going to pay more in taxes, you know,

(02:23):
by whatever you can convert on that is taxable income
during the current year, and if you didn't do anything
naturally there wouldn't be any under that. But you know
what it's really important is you can essentially look and
say what does this do for my lifetime portfolio value
and simulated five, ten, fifteen years to show relative growth
or relative additions from that by being more tax efficient

(02:44):
down the road. And you know, that's really the key
that we try to look for there is kind of
tax smoothing over time and being efficient with you know,
filling up different tax brackets. You know, there may be
a case to fill up a lower tax bracket when
you don't have a lot of income, you know, especially
ahead of your R and D s, which we'll get
into next down the road.

Speaker 2 (03:04):
Yeah. So, I mean one of the things on our
retirement income cash flow analysis, and we talk about this
quite often, but it's a very important piece is we
can map out does a Roth conversion make sense for
you in the long run or not, you know, or
what impact does it have on the bottom line for
you and for your legacy and your estate. So we

(03:24):
were doing this with a lot of people right now.
Like Blake was mentioning, say a person retires in they're
sixty five and they don't need as much income as
they were making. They were successful in their career, so
they have a lower need per month than they did before.
But then the conversions come in and can fill in
that tax bracket, a lower tax bracket. May make sense

(03:47):
to do some of that shifting before they do get
to seventy three, because then they'll have the required minimum
distribution and it's roughly about a four percent required distribution
that you have to take out you have a million
dollars in there. Let's say you had two million dollars
in your IRN money and you had to take out
eighty thousand dollars that you don't need but you still

(04:08):
have to pay tax on. It might push you into
another tax bracket. Oh yeah, and then it can mess
up a lot of other things as well.

Speaker 3 (04:14):
Yeah. Well, and you know that's a key thing is
you know, higher taxes on that, you may pay more
for medicare and different things like that. So there's ancillary
causes and effects. So it's just important to be aware
of that before you do anything.

Speaker 2 (04:28):
It can be a problem, but it can be a
nice problem. I mean that for people, I mean they
have a higher incomes a type of scenario. But that's
when we really get into the tax strategies on your
investments and your distributions and your overall planning process. So
very very important to understand the rules and REGs and
all of that when you're considering your retirement income design,

(04:49):
and by making the right choices, you can make a
big difference for your future, for yourself and for your estate.
What do you spend, what is going to be inherited?
Kind of mapping out all the different pots of money
you do have very very key, and we can't overemphasize
working with a financial planning group like ours to do
a full fledged retirement income cash flow analysis, because we're

(05:12):
going to look at taxes. We're going to look at
what pieces to use first, distribution wise, capital gains ordiner
income tax ross are tax free, and they can be
tax free to your beneficiaries as well if it's a
qualified distribution, of course, But looking at all of that
is very very important. And I always tell people when

(05:33):
you get to retirement, are you really ready to create
your lifetime income beyond age sixty five? For the rest
of your life. You're in charge of your income at
that point, and you want somebody that's going to be
able to help you with that throughout your whole lifetime.
Because most people may want to be gung ho looking

(05:54):
at it the first five years of retirement, But are
you going to want to do the design? Are you
going to want to have to put all those pieces
together when you're in your eighties or in your nineties,
You might not be able to. So you really should
have a team that can help you along the way
as well. And I think that's that's why we're here,
and that's what we do.

Speaker 3 (06:12):
That's what we do.

Speaker 2 (06:14):
So the one thing again, most individuals must take their
what's called the required minimum distributions at age seventy three,
and that is going to be projected out to seventy five.

Speaker 3 (06:27):
In twenty thirty three, twenty thirty.

Speaker 2 (06:28):
Three, so meaning you won't have to start taking until then.
So it's important to understand how the rules can change.
It's kind of like the game of chess. If you
don't know the rules, it's hard to win the game.
So I use that example or expression quite often, but
that's really what it's about. So The deadline for rmds
required minimum distributions is December thirty first, and we're just

(06:51):
a little bit of waste from that. Keep in mind,
if you're looking at that and you do not take
that out, there is a twenty five percent penalty plus
the tax on that dollar amount. It used to be
a fifty percent penalty, and then they got I guess
they would say lenient, and only they sopped it up.
They softened it up just to twenty five percent penalty, which.

Speaker 1 (07:14):
Is still fills draconian. But how they ever thought that
was reasonable is.

Speaker 2 (07:19):
They wanted you to make that mistake once probably, or
maybe they wanted you to make that mistake a lot of
times they have. But it's very, very very costly, and
if you don't understand how it works, it's it's just
a percentage of your pot. It's not the whole ira.
And we've talked about this Kelly before. We had a
caller in many years ago and he thought you had
to take it all out. He remembered the required distribution,

(07:44):
but he forgot the m the minimum requirement that he
took it all out, took it all out, called us
on the show live many many many months after he
did that, didn't understand that he did not have to
do that, so it caused him an enormous amount of
unnecessary tax at that time. So missing an rm D

(08:07):
like I mentioned can trigger that penalty. We don't want
you to ever deal with that. It's very very key.
And also if the rm D is corrected within two years,
the penalty can be reduced down to ten percent. That's
something that's is that new, That's that's nice in there.

Speaker 1 (08:25):
That's nice.

Speaker 2 (08:26):
Yeah, So key checks, have you fully satisfied your twenty
twenty five arm ds. What we do with our clients
is we we track them all, so to speak, and
we kind of tease them. When they're seventy three or older,
we can track them down and catch them. So we
want to make sure that they're taking those dollars out.
And keep in mind, when you have that calculated, the

(08:47):
R and D is calculated from twelve thirty one of
the year before, so the dollar amount is going to
stay the same all year. Okay, so it's really looking
at what is the strategy for that. If you don't
need the mone need you wanted to compound more and
then still take out the dollar amount, do you need
it for monthly income, you could do a monthly distribution
to satisfy they require an ex distution. There's many different

(09:11):
ways you can look at that, so very important to
understand that. Make it a part of your retirement plan.
If you don't need the money, we'll journal it into
a non qualified account or an after tax account, keep
it invested. But you do have the tax bill to
do that as well.

Speaker 3 (09:26):
Yeah, that's right. And you know, big thing is as
well as looking between accounts, you know how you can
look to pool things together. So if you have multiple
irays you know, traditional iras, rollover iras, et cetera, you
can pull those, you know, if you just wanted to
pull it from one account, but you do need to
tally up each account. On the other hand, if you
had an IRA and a four to one K, those

(09:47):
need to be taken independently, so you can't pull those
into one. So there's there's kind of you know, special
important nuances with that inherited IRA as well. That's a
different type of bucket its own rules, So know the
rules before we make it.

Speaker 1 (10:01):
Well, absolutely so a really huge takeaway before we just
take a break here on money talks would probably be.
If any of this seems confusing, get it sorted by
somebody who actually knows the rules so you don't hit
one of those penalties. And Blake, we do have a
Money talxmailer which is.

Speaker 3 (10:17):
Yeah, our most recent Money Talks or our most recent
newsletter for our clients, so goes through some planning tips
that Terry has, our market update and thoughts on that
and much more so. If you'd like your copy, give
us a call at nine to five to two five
four four two eight three seven or go online to
Sandbold FG dot com.

Speaker 1 (10:38):
You're listening to Money Talks with Terry Sandbold and Blake
Sandbold and we're talking about you're in tax planning tips, Blake,
and there's a lot of stuff to know.

Speaker 3 (10:48):
There's a lot to know rm ds, you know, tax
loss harvesting. We'll talk about a lot more today. But
next one we have on our list is QCDS or
qualified charitable distribution. This can be a great strategy for
people if you you know, most importantly, you have to
be charitably inclined and say that this is important to me,

(11:08):
I want to look to give to nonprofit end you
need to be seventy and a half or older. So
it's kind of interesting. It used to just be when
you reach rm D age requirementium distribution age that you
could start this, But as the arm D age got
pushed back, they kept the QCD age at seventy and
a half. So even though your arm D is start

(11:30):
at seventy three now, it's still seventy and a half
when you're eligible and able to do this. So what
you can do on this is you can give up
to one hundred and eight thousand dollars a year can
be sent directly from your IRA to a qualified charitable organization.
The benefit if you do that none of that is
recognized as ordinary income. So it's just a flat out

(11:52):
great gift, you know, it's the it's essentially making your
least efficient dollars work harder for you.

Speaker 1 (11:59):
You know.

Speaker 3 (11:59):
The there's kind of an old nuance out there where
the you know, essentially the worst dollar that you can
give to a nonprofit would be an after tax dollar,
you know, right from your checking savings account. You know,
if you have appreciated stock or IRA dollars and you're
old enough and meet kind of those qualifying things, that
can be great way to give it to them. Because
the charitable organization they don't have to pay tax on

(12:20):
that either. So when they sell out of those securities
from an IRA distribution, they don't have to pay tax,
so you know, it doesn't hurt them in any way
to send those dollars there, which I think is really important.
The nice thing is too, when you are RMD age,
the qualified charitable distribution counts towards your rm D, So

(12:42):
you know, if you had a one hundred thousand dollars
RMD and you wanted to give one hundred thousand dollars away,
you could do that and not have to pay any
tax on an rm D. So it's pretty pretty remarkable there.
So general, you know, you look at it. Benefits can
lower your adjustable growth income, help you potentially avoid higher
tax brackets, reduce Medicare IRMA charges. You know, that's essentially

(13:03):
the premium excess premium that you have to pay for
Medicare if you're at higher income tax brackets, and preserving
itemized deduction flexibility.

Speaker 1 (13:14):
You know.

Speaker 3 (13:15):
Key thing again to to remember on it though, is
it does need to go directly from the IRA to
the charitable organization nonprofit if you take receipt of it
it is ordinary and come to you. You know, you
may get a benefit by making the contribution after the fact,
but it's most efficient to go directly there.

Speaker 2 (13:31):
So that check cannot be made payable to you. It
has been made payable to like a church or whatever
the organization would be. Yep, you can't that direct doesn't
mean just you're delivering it directly to them. That's right,
it's hard. It's a tough argument to work that way.
It doesn't work that way.

Speaker 3 (13:47):
Yeah, and uh, you know they can come from iras
and inherited iras or inactive separate simpoles. They can't come
from a four to one K plan. So there's certain
types of accounts that you can do it, certain time
types of accounts that they can't do it. But again,
you know, if you are charitably in clients and interested
looking at something, we're getting down there on time for

(14:10):
the year. But it still can get implemented and it
can be a great benefit to you and a great
benefit to a nonprofit.

Speaker 2 (14:17):
Nice. So you have many things to think about, and
if you're not sure about how that may or may
not work for you, give us a call. We'll walk
through your specific situation and explain the details, and then
decide if it makes sense for you. I think that's
the key. Don't try to do it and then try
to figure out how it works. Know how it works first,
and we can help you implement all of that as well.

(14:41):
Next next topic a little bit is the Roth conversion side,
of course, and converting part of a traditional IRA to
a ROTH means paying taxes now in exchange for tax
free withdrawals later on, and for people expecting to higher
tax rates in the future, either personally or due to
scheduled law changes in twenty twenty six, small conversions today

(15:01):
can make sense. So we look at everybody's individual situation,
and again what we're trying to look at is keeping
you within certain tax brackets. It's not necessarily a specific
dollar amount for everybody. It's very personalized how you do this.
There are no limits on conversions to rothiray, but there
are contributioned limits on two roths itself. So too large

(15:25):
of a conversion could push you into a higher tax bracket,
could increase Medicare premiums, could reduce tax credits or deductions.
So we want to look at how it's built, When
it's built, when to utilize it along the way and
in regards to if it's during your employment or after
your employment, we have we're doing a lot of these

(15:48):
right now for people that are say between sixty five
and seventy three, like I mentioned earlier, because that might
be a window of opportunity before they get to their
RMD required distribute that we can level out some of
these things and take advantage of the lower tax brackets
for some of their dollars before they get to seventy
three years old, and we map that out in the

(16:11):
Retirement income cash Flow analysis and actually show your projection
of how that works. Show you a projection of your
your net worth all the way out seventy eighty ninety
one hundred, showing you how that how that looks compares
side by side at the same rate of return on
your investments. We can adjust the rate of return. We'll

(16:31):
usually do it pretty conservatively five or six percent, and
show you how it looks. We just did one of
these the other day and they said, can you show
us what it looks like at eight percent? And it's like,
because you're doing you're doing much better than eight percent.
And he says, so we're sitting in the appointment, myself
and one of our advisors, David Cooper, and we're he

(16:54):
plugged that right in and within a minute, less than
a minute, he showed what that would look like and like,
oh Wowice. And what was interesting The difference between five
and eight percent for this one couple was six and
a half million dollars. WHOA. So they're looking at it
and it's like, we don't want to leave that much
money to somebody else. It's like, well, what if you

(17:16):
do better than eight percent? So we need to really
look at this estate planning in detail, and let's look
at what let's strategize. They have kids, they have grandkids,
and then we have a much more in depth discussion
on all of that. But it's important to see that
in advance and understand that you can make a difference
for you, you're the next generation, grandkids, charities, everything can

(17:38):
be done in that type of situation, but planning ahead
makes a big difference. Yeah.

Speaker 3 (17:43):
I think that's the key part of it. And you know,
like Tarry is saying, looking beyond just yourself and say,
you know, what areur long term goals? And that's where
it really starts. With that initial conversation of saying what's
what is important to you and building the financial picture
around them.

Speaker 2 (17:58):
Yeah, so it's really critical to take a look at
all of that. You know, the Roth conversions must be
completed by December thirty first, so it's based on calendar year,
different than contributions, which still can be made for twenty
twenty five until April fifteenth of twenty twenty six. So
the contributions can go up to April fifteenth, but conversions

(18:21):
are calendar year only. You cannot undo a WROTH conversion.
Once you do it, it is done, so recharacterization for
this is no longer allowed. That was something that could
there was limitations to it, but it could have been
done in the past. They are no longer letting you
do that, so something to keep in mind. And there

(18:44):
are what are called backdoor roths and roth irays can
be a great way to save for retirement since they
can provide tax free growth and tax free withdrawals, but
there are strict income caps on contributions and they may
restrict higher income earners from contributing to the accounts directly.
So if you're considering a backdoor Roth conversion, it's highly

(19:05):
recommended that you work with a tax advisor or a
wealth manager like us before you take any actions. And
it's not for everybody, and it's very important how you
strategize and do that. We don't want you to do
it half right. That means you did it half wrong.
Simple way to explain it, So very very important. And

(19:25):
then other things there's health savings accounts. If available, you
can put an up to forty three hundred dollars for
individuals fifty three hundred of age fifty five or older
and eight thousand, five hundred and fifty dollars for families.
There is a ketchup of nine thousand up to nine thousand,
five hundred and fifty if age fifty five or older.
So there's limitations there. We can help you look at

(19:48):
that as well well.

Speaker 1 (19:49):
And Terry, we've got a great Money Talks mailer of
the week before we break for some news here what
is it?

Speaker 2 (19:54):
Yep, we have our newsletter for December if you would
like your copy. It talks about a bit about trends, markets,
what we're expecting. If you'd like your copy of our
Samdville Financial Group newsletter, give us a call at nine
five two five four four two eight three seven that's nine, five, two, five, four, four, two, eight,
three seven.

Speaker 1 (20:18):
Welcome back to Money Talks with Terry Sandbold and Blake
Saandbold and today we are talking about year end tax
planning tips Blake, which probably try to figure it out
before the calendar ends so you can make adjustments. Right.

Speaker 3 (20:31):
Yeah, I mean we're getting down there on time. So yeah,
time time is now to act on a lot of
these things are going through and uh, you know, again
as we've talked today, a lot of these are really
big important things. So these these are the right things
to get advice and ask questions on. But before you
do it, so don't don't just guess, don't just think

(20:51):
it may apply to you, you know, actually get specialized
advice and input on that. You know, last segment, we
were talking a little bit about HSA's at the tail
end of it, and you know, we just want to
add a little bit further on that. You know, I
think hsa is really are probably one of the most
underutilized vehicles out there. And you know, you think about it.

(21:12):
If you're eligible, meaning that you have to be part
of a high deductible health insurance plan, you know, if
it's a copay you're not eligible for it, and you
don't have to have an HSA that's attached to your
work plan. You know, I think a lot of people say, well,
I don't have an HSA at work, so I can't
do it. No, if you're part of a high deductible plan,

(21:32):
you can set up individually as well too. And what's
great about it is if you think about contributing to
an HSA, it's all tax deductible going in, so you
get that, and it's tax deductible at any income. So
for for high network people that have lost a lot
of deductions, that's kind of interesting. Second benefits is you

(21:53):
can actually invest the dollars in there if you want to,
so you can have that going stocks, mutual funds, ETFs
except and that growth on it ends up being tax
free if you use it for qualified medical expenses. So
it's really like at triple tax savings, which is really rare. So,
you know, for a lot of people, I do think
it is you know, important to look at that, and

(22:15):
you know, even if you don't end up investing it
and just say well I need to pay for my
medical expenses right away, on that it's a great way
to filter it out, filter through it, reimburse yourself. You know,
a lot of hsas can have credit cards attached where
you can or debit card type attached where you can
you know, swipe it when we're going to the convenience

(22:36):
store whatever it is to get a prescription. But it's
pretty broad based as well what you can use it for,
so definitely something for a lot of people to consider
looking at. So next part that we had is the
gifting and wealth transfer. So this is going to be
you know, this is a really big deal as we

(22:56):
look to next year. So currently annual gift exclusion amounts
for twenty twenty five nineteen thousand dollars per individual. If
you're a married couple, you could essentially multiply up at
two and give thirty eight thousand to anyone. You know,
if your kids are married as well, you can multiply
that again and kind of add that out. Those numbers

(23:19):
are staying in effect for twenty twenty six as well,
so there's not going to be an additional adjustment upwards
on that. But you think about that for you know,
if you've got multiple kids, grandchildren, et cetera. You know,
I know someone who has twelve grandchildren.

Speaker 2 (23:37):
He's on the microphone right now as we sede well,
Blake's contributing three of the three the twelve three.

Speaker 3 (23:45):
To the twelve YEP. But essentially you can do it to
an unlimited number of people. So for for a high
net worth people looking to you know, reduce their overall
state size and give money away. It's pretty impactful with
how much you can can do on that. And you
know's what's important to note is if you if you
stay within that threshold, there's no reporting that you have

(24:07):
to do on it. That's kind of what they say
is you know, you're you're kind of free and clear
to do what you want as long as you stay
under that level. When you go above that, so say
you wanted to give thirty thousand dollars to one individual,
an individual to an individual, you do have to file
what's called a gift tax return. Now what's important on
that is everybody here as well. That means I got

(24:29):
to pay tax on that today, not you know, likely
not in most cases. What you do on that is
it essentially creates a log book that reduces your overall
lifetime gift tax exemption. So it just kind of starts
reducing that and currently that's fifteen million dollars or will
be fifteen million dollars in twenty twenty six. I think

(24:52):
this year it's like thirteen point nine to nine million.
So it just starts to reduce that factor the mo
or that you go over that, So doesn't mean necessarily
that immediate taxes due just reduces your lifetime credit.

Speaker 1 (25:07):
But but stay on it because you don't want to
surprise yourself later.

Speaker 3 (25:11):
Yeah right, I mean, especially for people that are very
high network high dollars, you do need to keep track
of that, and you're you're going to want to you know,
it's uh, the estate tax if you do go above
that is very high number. So you want to make
sure that you're you're right and have the proper records.
So key thing as well. You know, the gifts do

(25:31):
not reduce taxable income, so it's not like a charitable contribution.
You know, you don't reduce it, but it does reduce
you know, the overall estate size, which can be important
for people. You know, if you've got a married couple
as an example, that next year will being north of
thirty million dollars in assets. You know, a mont an
excess of that you know are are going to be

(25:52):
subject to a state taxes, so this this is a
good way to reduce that. You know, you can give stock,
you can give cash, et cetera. Under that, and you know,
we see some where they may say, well, I've got
some really highly appreciated stock. Maybe I'm in a high
tax bracket. My child, grandchild who I want to give

(26:13):
this to is not. Well, you can give that to
them and maybe they can sell it in a lower
tax bracket because your your basis follows through on that,
which is interesting. The caveat the flip side of that
is you do not want to give stock that is
at a loss because that loss goes away. So it essentially,

(26:35):
you know, steps down your your cost basis to that.
So you know, if you had something at a loss,
you'd be much more better off to sell it and
then give the cash afterwards.

Speaker 1 (26:44):
Leave it to you guys to find a way to
take a losing stock and make it a benefit to something. Yeah,
that's an interesting concept.

Speaker 3 (26:53):
Yeah, you know most people wouldn't look at that, but
you know the reality is, you know, having a stock
at a lot, you know, a relatively overall portfolio can
actually be an assets in a certain way.

Speaker 1 (27:04):
So most people would just say that would be a
huge bummer. But you're finding a way to maximize it.

Speaker 3 (27:12):
Well, it's maximize it or make it not hurt as bad. Yes,
there you go.

Speaker 2 (27:17):
It reminds me of a first deployment I had with
so many years ago, and he came in and he says,
I I have I have a lot of losses. I
have four hundred thousand dollars of losses through another investment GROUPWUCH.
And he says, how do you deal with losses like that?
I says, what are you talking about? What are losses?

(27:40):
And I just teased him a little bit and he's
looking at me. I said, well, we'd have to look
at The goal would be to work on the other
side of it. Let's get some gains. And then it
kind of leads into what we're going to talk about next,
is kind of the tax loss harvesting. It's called so
you know, if you're selling investments in taxable accounts at
a lotus and you have a loss, you can offset

(28:03):
capital gains. It's kind of a plus and a minus
is how that looks. So if you are dealing with
that in any way, it's very important to look at
it year by year as you get closer to the
end of the year. If you have not done that
during the year, something that can help you minimize your
tax bill, would you say, Blake.

Speaker 3 (28:21):
Yeah, I think for a lot of people that can
be a great thing to look at for your after
tax accounts. And you know, there's in general, the market's
been quite good to us this year, and it's been
good to a lot of people this year. But if
there are you know, some of the losers hanging out there,
that can be a great way to try to look
to offset something. And you know, the important thing too

(28:43):
to remember on that is, you know, if you have
a net loss, you can carry those losses forward, so
you can, you know, use up to three thousand dollars
to offset ordinary income amounts, and excess of that you
have to use for future capital losses. But you can
carry those forward. So you know, I think for a
lot of people they like just saying well, I had

(29:04):
something at a loss. I don't want to think about
that again, right, don't forget that number. You know it
can help you in the future.

Speaker 2 (29:10):
That's amazing, I mean, so, I mean, there can be
in some cases you could you could literally sell that
and have the loss against the gain. And sometimes you'll
have a timeline where you can go back and buy back.

Speaker 3 (29:24):
Yeah, thirty days.

Speaker 2 (29:25):
Thirty days, So you could go back and say, say
you had a very aggressive technology fund or something and
it did extremely well one year, extremely poor the next year,
you could sell the if you could sell the down,
wait thirty days, buy back still low and be able
to realize the loss against the future gains. So there's
a lot of things you can look at there that

(29:46):
a lot of people don't think about. I guess it
is the bottom line of that.

Speaker 1 (29:49):
Ye. That doesn't come across my mind as I'm eating
my weaedies in the middle.

Speaker 2 (29:53):
Definitely, And it's not what everybody would look at first
thing in the morning.

Speaker 1 (29:57):
Probably not. Let's do this. Let's take our last break,
this hour of Money Talks, and we'll be back in
just a moment. It's Money Talks with Terry Sambold and
Blake Sampled, and we're talking about tax items that we
need to be thinking about as we wind up twenty
twenty five.

Speaker 3 (30:15):
Blake, Yeah, there's a lot to think about, lots to
go through. I mean, we've gone through R and d S,
charitable giving, tax loss, Harvesy and HSA's there's there's a
lot to do. There's lots of.

Speaker 2 (30:29):
No test at the end of the show, thank god,
especially when you're driving down the road. Let's do it.

Speaker 3 (30:34):
Yeah, right, But you know, I think one of the
next things that we had is, you know, some effects
and impacts from the One Big Beautiful Bill on charitable giving.
So there are going to be this is probably one
of the larger spots where there are going to be
differences going forward. So you know, a lot of the
One Big Beautiful Bill really extended, you know, for for

(30:55):
individuals at least some of the laws that were effect
and you know, there's a very large concern that the
estate tax would change and revert. I mean, if nothing
was done, it was going to revert back to prior
limits which were dramatically lower. So for high networth, high
state people, they were very happy to see that that

(31:16):
was extended and number increased a little bit next year
with some cost of living changes. Current tax brackets really
materially remain the same as well. You know, there was
concern would we see an additional higher tax bracket in
there or not. Those materially have all stayed where they're at.
The standard deduction will increase again next year, so that

(31:39):
is nice. I mean it it just makes it simpler
I think for a lot of people. But importantly for
charitable giving, there are some changes for charitable giving caps
and floors. So this will start in twenty twenty six.
The charitable deduction value is capped at a thirty five
percent benefit, so there's that's something new on there. You know,

(32:02):
there's more of a limitation on how much you can
write off on that, and there's a new floor of
a half percent of adjusted gross income for individuals. So
they're kind of complex things to figure out and focus
on for that, especially as there's probably a lot of
people driving listening to this. But just I think the

(32:24):
key thing is, you know, charitable giving is easier this
year than it will be in twenty twenty six from
a deductibility standpoint relative to your overall income. So that's
one thing. You know, a lot of nonprofits are discussing
that and saying, you know, trying to figure out is
that going to change people's net giving or not. We'll
see on that. You know, I still like to think

(32:46):
that a lot of people are giving because they want
to give not solely for the benefit, and that's kind
of an ancillary effect, but it is something that we
can help look at and can help simulate in a
number of different softwares that we have. And again we
always say that's all in conjunction with talking with your CPA,
talking with your tax prepare understanding the implications, but those

(33:09):
you know, especially with the background that I have and
charitable giving our key conversations that we will be having
with a lot of our clients that are high giving individuals.

Speaker 2 (33:18):
That's cool, and I know we're doing this at the
very end of the year, but that does not mean
in twenty twenty six you have to wait till the
end of twenty twenty six to do your planning like
we're talking about today, true story, So very important to
take a good look at this. There's many things you
can do in regards to the planning process. As you know,
it's a complex world out there. There are new rules

(33:40):
and changes and updates and different things taking place. So
if you are working with the CPA or financial advisor group,
I think it's very very important to utilize them properly
and make sure that you are looking at all of
the ways to do these things. Do it after you
have the information from the advisor group or the CPA,

(34:01):
and then act upon it. Don't act upon it first
and then call and say was that okay to do
it that way? And sometimes people do that and they
just hope they did it right and they will find out.

Speaker 3 (34:14):
Well, and you know, there's a difference in the answer
between was that an okay way to do it or
was this the best way to do it right?

Speaker 2 (34:21):
That's true.

Speaker 1 (34:22):
This is not an arena in which that adage you know,
it's better to ask forgiveness than permission. Definitely not when
it comes to this doesn't work in this field. The
i RS is definitely no forgiving there.

Speaker 2 (34:33):
There may be a good way, there may be a
better way, and there may be the best way to
do that.

Speaker 3 (34:37):
That's right.

Speaker 2 (34:38):
Absolutely, So are you working with the financial advisor Group?
Are you working with the CPA firm? Very very important
to take a look at all of that. And in
regards to the planning process, you know, planning today can
help you more of what you've earned tomorrow. You know,
it's it's really taking a look at the big picture.
And we can't overemphasize this says, is the world gets

(35:01):
more complex. Are you up for the challenge all by
yourself or do you want to have a team that
can help you along the way. And we've helped people
no matter what age, across the board, no matter where
you may live across the United States, we have clients
all across the US. Originated right here in Minnesota. If
we started in nineteen eighty six with a mission to

(35:24):
help as many people as we can get to their
next financial level. So part of the getting to the
next financial level is protecting what you've made throughout retirement
and throughout your estate planning process as well. And making
the most of your financial future is also another way
to phrase it, because you can make a huge difference
by planning accordingly.

Speaker 3 (35:46):
Yeah, I think that really is the big takeaway. You know,
by being proactive, by getting the early advice on things,
you know, that's only going to put you in a
better spot. And you know that's true at all ages
and stages, no matter where we're at. It's I think
the biggest action is to get started now. And you know,

(36:06):
if it's been a while since you've looked at the plan,
got updated thoughts and figures around it, rules, regulations have changed,
the market has changed immensely. It's the perfect time to
commit to yourself to get an updated thought.

Speaker 1 (36:21):
You know, and this stuff is too important. I really
don't want to fire up Google or chat GPT for
comparisons on what the rules are between this year and next.
I think I'd rather have a human who probably knows
about it.

Speaker 3 (36:33):
Yeah. Well, and you know, it was interesting. I was
at an event down in Nebraska where speaking with a
couple other advisors, and we were talking about some of
the rules regulations around charitable giving strategies. And we looked
on chat GPT and ask chat GPT what are the
rules for qcds. It gave the wrong answer. Oh, it

(36:53):
gave the wrong number on it. And you know, it's
one hundred and eight thousand dollars. I know that because
the IRS has said that, and we've looked at that,
and you know, it initially came back and said one
hundred thousand, said, and we responded back to and said, no,
that's that's not what it is currently anymore. What is
the current rule? It responded back and said one hundred
five thousand dollars.

Speaker 1 (37:13):
So he was throwing stuff up against the wall Okay,
it does that.

Speaker 3 (37:18):
Wow, And you know we responded back to and said, no,
the current rule is one hundred eight thousand dollars and
it's like, oh. It responded back again and said, oh,
you're right, it is that now. And it's like, yeah,
I know I'm right. But you know, that's where I
think AI is an incredible tool. We use it immensely
in our office. It will keep getting better. But you know,
at the end of the day, this is your livelihood

(37:40):
and you want to make.

Speaker 2 (37:41):
Your own liability when it comes down to it, right,
exactly do you chase that one down and then try
to get reimbsed for a wrong air wrong information?

Speaker 1 (37:48):
There right sitting across the table from an IRS agent
going but chat GPT said, I don't know if that's
going to really fly.

Speaker 3 (37:54):
I don't know if that'll hold up.

Speaker 2 (37:56):
What's their phone number? Let's call Yeah, yeah, yeah, no,
It's it's real important to look at that. But yeah,
it's very important to take control of your financial future.
There's many things we can help with help people with
and how as Blake and I always say, not everybody
wants to deal with this. Seven days a week, twenty
four hours a day, we do, but you know, it's

(38:17):
it's just because that's that's how the world has worked
for us and we and there's a lot of things
we don't do. I mean, we go to specialists and
professionals for other types of things as well. So we're
Blake and I are not going to be the mechanics
to take care of our vehicles right.

Speaker 3 (38:33):
Now, never will. We both love cars, but I would
not get in that car afterwards.

Speaker 2 (38:37):
So for a pilot, I'm not going to pilot a
plane because I don't know. It'd be a nice travel,
nice way to take off, but I don't know how
i'd land. I'd be up there running out of gas.
I don't know how to do the rest of it.
But anyway, you know, people need to have other people

(38:58):
help each other. That's what it's all.

Speaker 1 (38:59):
About, absolutely, And so a great way to get started
with you guys is to call for the Money Talks
Mail over the Week, Blake, that's a good intro to
the team.

Speaker 3 (39:06):
Yeah, yeah, it's a great way to get to know
us a little bit better. So our most recent Money
Talks Mail over the Week is our newsletter and commentary
that we put out to our clients. Goes through some
planning tips from Terry my most recent recent market updates,
love it and hearing from a couple other individuals on
our team as well, so it's something we again do
that at least every month for our clients. You know,

(39:29):
from certain times it's been known the last couple of
years marketep been choppy. We've sent out additional commentary so
if you'd like our most recent copy though, give us
a call nine five two five four four two A
three seven or go online at sandvildfg dot com