Many people are wondering how the Tax Cuts and Jobs Act of 2017 (TCJA) will affect their ability to deduct charitable contributions and what, if any, changes they should make to their charitable giving strategies.
Because everyone has different charitable giving goals and tax situations, SVdPUSA recommends that you discuss the TCJA changes with your tax advisor to pick an approach that makes sense for you!
Are you 70 ½ and the IRS requires you to take money out of your Traditional IRA as a Required Minimum Distribution (RMD)? As our previous article outlines, your financial advisor can help you make this distribution as a Qualified Charitable Distribution (QCD) directly to your favorite charity and avoid paying taxes on your annual RMD.
Do you have publically traded stock that you have owned more than one year that has increased in value? While this is great news, the bad news is if you sell it you will pay capital gains tax on this increase in value. Appreciated stock is actually a great charitable giving opportunity! If you donate the appreciated stock directly to your favorite charity, do not sell it first. Not only can you avoid paying tax on the capital gain, but if you can itemize under the new rules you also deduct the fair market value as an itemized deduction!
What if you have no qualifying RMD or appreciated stock to donate, and you are not sure you can put together enough itemized deductions for itemizing to make sense under the new rules? Consider bunching charitable deductions that you normally make over a period of years into one tax year so you can reach the higher itemized deduction threshold. If this makes sense for you, the new tax law increases the annual deduction ceiling for cash gifts from 50 percent to 60 percent of your adjusted gross income (AGI).
Finally, a simple bequest allows us to continue to do the work you love for years.
Navigating the changes can be tricky, so make sure that you are talking to your advisors and us about supporting SVdPUSA through the best giving vehicles for you!