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Writing for Morningstar, Natalie Choate Examines the Income Tax System

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04.17.2018 | Article

Natalie Choate, a member of Nutter’s Private Client Department, wrote an article that examines the income tax system and how to properly file taxes when withdrawing from a Roth IRA in Morningstar. In the article, “Avoid the Income Funnel Trap,” Natalie outlines how one should fill out the top lines of a tax return to maximize deductions. According to Natalie, “Note how the ‘top of the funnel’ affects the end of the funnel: A Roth distribution that is kept out of gross income not only is a good tax-free bit of income itself, it also reduces AGI (compared to a taxable traditional IRA distribution), which may lower Medicare premiums two years out, lower net investment income tax, and/or increase the medical expense deduction. A charitable contribution paid by means of a ‘qualified charitable distribution’ from the IRA can have the same effects--and/or it may enable the IRA owner to use the standard deduction while also in effect getting a 100% ‘charitable deduction’ to offset against his IRA distribution that (because it went directly to charity in the form of a QCD) and never entered the top of the funnel.”

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