The Cash Flow Clock: For Retirees - Book - Page 62
The Cash Flow Clock
Tax Planning Tools
Once we know what our tax liability will be in the
future (and why), we can make educated decisions on
the best ways to reduce it. There are myriad tools
that can be utilized to reduce taxes for ourselves and
our estate. For the sake of brevity, let’s consider two
of the most common.
Qualified Charitable Distributions
One of the best ways to avoid taxes is to give away
our money. This, of course, defeats the purpose of
having money to begin with and is not worth the tax
benefits. However, if we are charitably minded, there
are tax efficient options that certainly can be
worthwhile.
For most of our lives, donations to charity must be
made with non-qualified assets. Most use checking
or savings accounts to donate. Donating nonqualified assets with unrealized gains (stocks, bonds,
mutual funds, etc.) can be more tax efficient because
the tax we would have had to pay on the growth gets
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