3 Tax-Smart Ways to Give Back this Year
By: Jenny Papageorge, Director of Development
Have you talked to your advisor about bunching, or “bundling,” gifts to nonprofits? The ripple effects of tax reform have meant that just 10% of taxpayers now itemize deductions, down from 30%. A smart strategy to help you maximize deductions under the new tax laws is to make two or more years’ worth of charitable contributions in a single year. A Donor Advised Fund is an effective tool to achieve this goal. It allows you to set aside enough to bring you over the itemizing threshold. You receive an immediate tax deduction and can distribute gifts to nonprofits over time.
If you are over 70 ½, the IRA charitable rollover allows you to use your IRA to make tax-free charitable gifts directly from the account to eligible charities. Currently, the provision allows you to make qualified charitable IRA distributions at $100,000 per person per year. The provision excludes the funding of gift annuities and similar life income plans, as well as Donor Advised Funds.
3.) Give Appreciated Securities to Avoid Capital Gains
If you have long-term appreciated assets, such as stocks and mutual fund shares, you have an opportunity to maximize your deduction. When you donate these types of assets directly to a nonprofit, you may not have to pay capital gains and you may take an income tax deduction in the amount of the full fair-market value. You can give directly to organizations, or you can set up a Donor Advised Fund, allowing your donation to grow and providing you with the flexibility as to the timing of your gifts.
As we launch into the season of giving, we hope these tips help you get in the spirit of giving and giving more!
The Community Foundation does not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors.