Taxes and Giving: Our Perspective
The new tax law signed into effect at the end of 2017 caused a great deal of discussion (and some concern) about its effect on charitable giving.
At the heart of the matter was the increase in the standard deduction. In 2018 and beyond, itemizing charitable gifts will be a non-issue for any individual who anticipates having less than $12,700 in deductions (or $24,000 for married couples). But several strategies quickly emerged in response:
If your annual giving is typically less than the standard deduction, consider giving an amount that exceeds the standard deduction one year, and “saving up” the alternate year. If you’re worried about how this will affect your favorite charity’s cash flow, a donor-advised fund can be an ideal solution. These funds allow you deduct the full amount of your donation in the year it is made, and then have grants in amounts of your choosing paid over any number of following years. As a bonus, any undistributed funds can be invested for growth, further benefiting the eventual recipient(s).
Organize your giving
While $12,700 may sound like a lot of money, when you consider all the smaller gifts you make throughout the year, you may find you are coming closer than you realize. The problem lies in collecting all those receipts. Again, a donor-advised fund (DAF) can help. By establishing a DAF to serve as a ready source of funds for gift requests, you can simplify your giving and eliminate any tax-season scramble for gift receipts (required for any gift over $250).
Give through your business
If you are a business owner, remember that charitable gifts made by your company are still deductible. An easy way to give as a business–and thank customers at the same time–is with Giving Cards. Similar to gift cards, Giving Cards can be purchased in any denomination and even branded with your corporate logo. The recipient can then use them to support any charity of their choosing.
Find other ways to give
Other donations still qualify as charitable gifts. For example, if you are at least 70 ½ you can make a Qualified Charitable Distribution from your IRA of up to $100,000 directly to a charity without those distributions being recognized as income, and gifts of appreciated assets, such stocks, can still result in significant tax benefits. And of course, you can always give your time. Volunteering is a great way to find the organizations that mean the most to you, and help you make informed choices about any financial support.
Remember why you give
Ultimately, the reasons and rewards for giving extend far beyond tax implications. While YouthBridge is here to work with you and your financial advisor to find strategies that can be most advantageous, you are your own best guide as to why charitable giving is important to you.
A final note: new legislation has also increased the deduction for cash donations to donor-advised funds from 50% to 60% of AGI.
Note: The information provided herein is for informational purposes only and should not be interpreted to constitute legal and/or tax advice. Donors should consult their legal and tax advisors regarding their specific situations.