If you’re planning for retirement, you may need to save more than you initially thought. According to a recent study, the savings expectations for a comfortable retirement increased from 2020 by 10 % to $1.04 million in 2021. Retirees will need a more significant nest egg to cover their expenses, healthcare costs, and other financial needs throughout their retirement years. While this may seem daunting, saving early and making a plan that works for your financial situation is essential. Doing so can help ensure you have the necessary resources to enjoy a comfortable and fulfilling retirement. 

Donating your retirement plan or HSA (Health Savings Account) can be a great way to support important causes while enjoying some tax benefits. Donating retirement plan assets can help you reduce your taxable income and lower your tax bill. This is because contributions to qualified charitable organizations are tax-deductible. Additionally, donating your retirement plan assets can help you fulfill your philanthropic goals and leave a legacy by supporting charitable causes you care about. Similarly, donating your HSA can provide tax benefits while supporting your favorite charity. You can use your HSA to pay for qualified medical expenses tax-free. If you present your HSA funds to a qualified charitable organization, you can also claim a tax deduction for the donation. Donating your retirement plan or HSA can be a win-win situation that benefits you and the charitable organizations you support.

How Can I Donate My Retirement Plan or HSA? 

There are a few ways to donate your retirement plan or Health Savings Account (HSA) to a charitable organization: 

1. Designate a beneficiary: You can designate a charity as a beneficiary of your retirement plan or HSA. This means that upon your passing, the funds will be distributed to the charity. 
2. Make a qualified charitable distribution (QCD): If you are 70 1/2 years or older, you can make a tax-free charitable donation of up to $100,000 per year from your IRA to a qualified charity. The QCD counts towards your required minimum distribution (RMD) and can help lower your taxable income. 
3. Donate unused HSA funds: If you have new funds in your HSA, you can donate them to a qualified charitable organization. However, it’s important to note that you cannot claim a tax deduction for this type of donation. 

It’s essential to consult with a financial advisor or tax professional before donating your retirement plan or HSA to ensure you understand the potential tax implications and rules governing these types of donations. Better Accounting can help you donate your retirement plan, HSA, or other assets to a charitable organization in a tax-efficient manner. Their team of accounting professionals will ensure you donate these assets in a way that protects and benefits your overall financial strategy. 

Where Can I Learn More About Donating My Retirement Plan? 

 Additionally, Better Accounting can assist with setting up a charitable foundation or donor-advised fund to manage your charitable giving over time. This can allow you to make donations to multiple charities while receiving maximum tax benefits. Better Accounting can also provide ongoing support to ensure your donations are properly recorded and reported on your tax returns. This can help ensure that you follow IRS regulations and maximize your tax benefits. 

By working with Better Accounting, you can ensure that your charitable giving is managed in a way that is both financially beneficial for you and aligned with your philanthropic goals. 

The Basics of Crypto

Cryptocurrency, or crypto, is a digital or virtual currency that uses cryptography for security. It operates independently of a central bank and is stored and transferred using a decentralized blockchain ledger system. The most well-known cryptocurrency is Bitcoin, but thousands of cryptocurrencies are circulating. A taxable transaction is any transaction that results in a taxable event for the parties involved. The basic idea behind Cryptocurrency is to create a decentralized, secure, and transparent digital currency that no one government or financial institution controls. Cryptocurrencies use blockchain technology, a decentralized ledger that records all transactions securely and transparently. The first ten cryptocurrencies with the highest market cap comprise about 88% of the total cryptocurrency market value.

Is Crypto Really Here to Stay?

The history of cryptocurrency can be traced back to the early 1990s when computer scientists attempted to create a secure and decentralized digital currency. However, with the creation of Bitcoin in 2009, Cryptocurrency gained mainstream attention. Bitcoin’s popularity increased, and it was soon followed by other Cryptocurrencies such as Ethereum, Litecoin, and Ripple.
Today, cryptocurrency is used for various purposes, including as a store of value, a medium of exchange, and a means of investment. However, it is still a relatively new and rapidly evolving technology, and many challenges and risks are associated with it, including security, volatility, and regulatory uncertainty. Nevertheless, cryptocurrency has captured the imagination of many people worldwide and continues to be a subject of intense interest and debate.

Taxable Transactions Using Crypto

In Cryptocurrency, taxable transactions include:

1. Buying or selling cryptocurrency.
2. Exchanging one type of cryptocurrency for another.
3. Using cryptocurrency to purchase goods or services.
4. Receiving cryptocurrency as payment for goods or services.

Depending on the country and the specific circumstances of the transaction, taxes may need to be paid on the profits or gains resulting from these transactions. It is vital for cryptocurrency users to be aware of the tax laws in their jurisdiction and to keep accurate records of all their cryptocurrency transactions. For example, if an individual purchases Bitcoin for $10,000 and sells it for $12,000, they have realized a capital gain of $2,000, which may be subject to capital gains tax.

Better Accounting helps individuals and businesses better understand cryptocurrency and taxable transactions by providing a clear and accurate record of all cryptocurrency transactions. This includes keeping track of the purchase price of each cryptocurrency asset, the date of acquisition, and the sale price and date of sale. By maintaining good accounting records, individuals and businesses can determine their capital gains or losses on cryptocurrency investments, which are used to calculate the taxes owed on taxable transactions. Accurate accounting also ensures compliance with tax laws and regulations, reducing the risk of penalties or fines.

In addition, Better Accounting helps individuals and businesses understand the impact of cryptocurrency transactions on their overall financial position. For example, accounting for cryptocurrency holdings as assets on a balance sheet can provide a more accurate picture of an individual’s or business’s net worth. Talk to a Better Accounting expert to ensure you are compliant with tax laws and regulations today to get started.