The holidays are fast approaching! Time to deck the halls AND embrace the “season of giving!” And while giving for the sake of giving is a noble gesture, over the years many Americans have counted on tax-deductible charitable donations to help “shave” money off their tax bills.
While the charitable deduction was left unchanged in the 2017 Tax Cuts and Jobs Act, as of January 1st, 2018, the standard deduction has nearly doubled to $12,000 for single taxpayers and $24,000 for married couples filing jointly. Given this change, your ability to gain tax benefits from charitable contributions will depend on whether you have other deductions that can push you over the threshold of the standard deduction.
If that’s the case, gifts of cash are now deductible up to 60% of adjusted gross income (up from 50%), while gifts of stock remain deductible up to 30% of income.
If you are not able to justify itemization over the standard deduction, there are some strategies you may be able to utilize to satisfy your altruistic side while still making good fiscal sense.
BUNDLING or BUNCHING. Giving larger gifts “every other year” instead of annually to surpass the standard deduction threshold.
GIVING APPRECIATED INVESTMENTS. Donating items such as stock shares to deduct the investments full market value (within certain limits) without having to pay capital gains tax on the appreciation.
CONTRIBUTING THROUGH IRAs. Having direct asset contributions of up to $100,000 applied toward required yearly Individual Retirement Account distributions. Available to taxpayers 70-½ or older, these distributions will not be included in taxable income.
Just a few thoughts as we embrace this “season of giving.” A tax professional can offer more detailed advice and strategize based on your individual situation. If you choose to take part in the year-end charitable giving season, you may already have a cause that speaks to your soul. Perhaps it’s feeding the hungry, finding a cure, taking care of the environment, helping animals, building homes or something else. No matter your passion, you can find a wide range of top-rated charitable organizations at www.charitynavigator.org or www.charitywatch.org. Please remember you must make your giving decision by December 31st, 2018 to qualify for a tax deduction for the current calendar year.
At Tax Savings Professionals, we’ve worked with thousands of clients over the past 18 years and can answer questions you may regarding charitable giving and taxes as well as financial strategies. Wishing you a Happy Holiday Season and a Prosperous New Year, give us a call at (772)257-7888 or click on our contact form today.