`The New Tax Law and Charitable Giving
As we move closer to the end of the year, more people will start to think about how their charitable giving will be impacted by the Tax Cuts and Jobs Act. The new tax law nearly doubles the standard deduction in 2018 to $12,000 for singles and $24,000 for joint filers younger than age 65, while capping or eliminating other deductions. That means it will no longer make sense for many taxpayers to itemize. The Tax Policy Center estimates the number of households itemizing deductions for charitable giving will fall from about 37 million to about 16 million.
If you still want to support organizations like ours while also deriving as much benefit as possible,Kiplinger has a number of suggestions, several of which are highlighted here:
Consider donating shares of appreciated stock or mutual funds. You can deduct the current value of the investment as a charitable contribution if you itemize, and you'll avoid paying capital gains taxes on the profits. Plus, the charity receives the full value of your investment.
If you're 70½ or older, you can transfer up to $100,000 from a traditional IRA tax-free to charity each year. It will count as your required minimum distribution (RMD) without being added to your adjusted gross income. Your charitable gift won't be taxed, as it would be if you were to take a distribution and then donate the cash to charity. Plus, keeping your RMD out of your adjusted gross income could help keep your income below the threshold for being subject to the high-income surcharge for Medicare parts B and D, as well as hold down the percentage of your Social Security benefits that are subject to taxes.
You can also name a charity as the beneficiary of your IRA. That way, neither your heirs nor your estate will pay income taxes on the assets, and the charity will receive the full value.
This material is intended to be informative, not tax advice. These are only some of the options available. You should consult a tax adviser for specific information.