B&E’s Vice President Laura Maksymkow provides three tips on charitable giving relevant to the tax law changes and with your best interest in mind.
It is important to be a good steward of our time, money and resources. Having the means to improve the lives of others is a real privilege. Many folks do this by supporting the charitable organizations that are near and dear to them.
I’m Laura Maksymkow, Vice President at Business & Estate Advisers. Today I’d like to share a few charitable giving strategies.
The Tax Cuts and Jobs Act of 2017 brought significant changes to the tax code. With the higher standard deduction limits, taxpayers are now facing new financial decisions in order to claim charitable contributions as an itemized deduction.
While you can always write checks to charities, this may not be the most tax effective way to give.
- One option to consider is contributing long-term appreciated securities and illiquid assets directly to a charity.
- Most often, you receive a charitable deduction for the fair market value of the donated asset.
- This direct gifting, saves you from paying capital gains tax on the growth that occurred.
- A solution for some may be to “bunch” contributions. Whether you give cash or appreciated securities, only giving every 2 or 3 years, but to a higher amount, allows folks to exceed the new higher standard deduction limit and then allows the charitable contribution to be itemized.
- Now, if you are blessed with a year of having higher than normal income, this would be an ideal year. Because getting a larger deduction to offset higher income makes a lot of sense.
- But what if you don’t want your Charity(s) to only receive funds every 2 or 3 years? Then establishing a Donor Advised Fund might make more sense.
- Here, the year you make the donation to the DAF, is the year you claim the tax deduction.
- The DAF can be invested and has the opportunity for growth, which in turn, could mean more funds to give to your charity(s).
- Granting the funds to the charity(s) is ultimately up to you: Which charity(s), for the amounts you wish, at any time in the future.
- A final tax-saving option is available for those over age 70½. This is the age when the IRS mandates Required Minimum Distributions (RMDs) be taken from all pre-tax retirement accounts. Because taxes were not paid on these funds when the contributions were originally made, taxes will be due when withdrawals are eventually taken.
- Current law allows you to send up to $100,000 per year directly to qualified charities. Doing this allows you to subtract the gifted amount from taxable income, thus lowering your total income which is subject to tax.
Each person has a unique set of circumstances, values, and priorities. At B&E, we look at each client individually to consider their tax-saving options. We help allocate the resources you have to achieve your goals and get the best return on your life.
BE Life Savvy.
Securities offered through Valmark Securities, Inc. Member FINRA/SIPC. Investment Advisory Services offered through B&E Investment Advisers, Inc. a State Registered Investment Adviser that is a separate entity from Valmark Securities Inc.
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