Charitable Giving Under New Tax Laws

Taxpayers are learning what the new tax law really means.

Many who itemized in 2017 may not itemize for 2018 as a result of the doubling of the standard deduction. The standard deduction increased for joint filers to $24,000 from $12,700. Nearly 90% of filers will now be better off taking the new standard deduction[1].

That means for many, charitable giving won’t be as helpful when it comes time to settling up with Uncle Sam. Here are a few ways to maximize the tax benefits of your giving if you fall in this category:

  1. Donate appreciated stock. Giving securities with a low-cost basis can eliminate a hefty tax bill you may incur from selling the security.

  2. Make charitable gifts directly from your IRA. Qualified charitable distributions benefit donors who are required to start minimum distributions (RMD) at age 70.5. You may give up to $100,000 of gifts from your IRA to qualified charities. This allows you to meet your RMD without generating taxable income.

  3. Open a donor-advised fund. Lumping several years’ worth of gifts into one year could help you exceed the standard deduction the year you contribute to the fund. Once money is in the fund, you can make the gifts over time as you otherwise would.

Some of these strategies could be combined – for example, one could contribute appreciated securities, including stock, bonds, and mutual funds, to a donor-advised fund. Compared with donating cash or selling your appreciated securities and contributing the after-tax proceeds, you could increase your donation and tax deduction.

If your tax situation has changed, it is worth rethinking your giving strategies. We are here to help evaluate your options.


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