Charitable giving fills a need in our society and betters it as a whole. And until recently, donating to nonprofits helped people receive attractive deductions on their tax bills. With the recent tax law change, it’s important to understand how your charitable contributions will affect your next tax return. We want to make sure that you continue to get the biggest tax benefit possible when giving to your favorite charities. So in this episode, we discuss a strategy to help you find the best tax solutions for your charitable gifting going forward.
How charitable giving has been reshaped
The newest update to the tax law could limit charitable giving due to the increase in the standard deduction. For many, it may be challenging to find ways receive a similar tax benefits for giving they were already doing. But there are solutions out there. The first is to do nothing. With the 2018 tax law changes, most will no longer receive the same benefit for giving to their favorite non-profits. Your second option is to give the same amount to your favorite charities and lump your contributions so that you give a larger amount every other year rather than annually. This will allow a bigger tax benefit biannually this way. The downside to gifting directly to the charity is the disruption in annual cash flow for their regular operations. Nonprofits often rely on yearly contributions to stay afloat and this strategy could lead to financial problems for the charity.
What is a donor-advised fund?
A donor-advised fund may be one of the best tax solutions for the newest tax law changes. You can set up a donor-advised fund with Fidelity, Vanguard, or Charles Schwab. This is an account where you can contribute the same amount that you usually do each year and realize the biggest tax savings over a period of time. This way the charity can still receive the same amount that you would normally give within the same timeframe. You can then distribute smaller amounts throughout the year to smooth your charitable contributions, so operations of the charity are not affected. A Donor-Advised fund can receive many kinds of capital and turn your investment into cash for your favorite nonprofits to use.
Related: How to Rollover Your 401k
What are the best strategies for giving to a donor-advised fund?
It is best to start planning your tax year in November. With a donor-advised fund, you can give to your favorite nonprofit in many different ways, whether it be stocks, private equity, hedge fund interest, real estate, or cash. Your donor-advised fund will then give your favorite charity cash that they can use. You are able to set up your charitable donation to be gifted whenever you choose, whether it is weekly, monthly, quarterly, or yearly. Using a donor-advised fund is a great long-term tax strategy to use as part of the changing laws’ tax solutions.
Most Read IRIS Articles of the Week: December 10-14
It’s the Most Wonderful Time of the Year, to Review Your Story
The Two Character Differentials to Propel Yourself into the Future
Becoming Your Future You: Now!
5 Leadership Books You Must Read in 2019
Retirement Plans Disappear When Parents And The Kids Return Home
The Workplace Is No Place for Inappropriate Touching
Holiday Gifts for the Sales Rockstar in Your Life
6 Questions Business Owners Should Answer Before Selling Their Business
Behind Every Shaper, There’s a Hero
Equities1 day ago
How Do Bitcoin Futures Affect the Price?
Development1 day ago
Advisors: Break Out of Your Echo Chamber
Development1 day ago
The Power of Thoughtful Client Gifts
Equities2 days ago
These Oil Stocks Are Ticking Time Bombs
Building Smarter Portfolios2 days ago
The Market’s Wild Ride
Human Performance2 days ago
5 Simple Ways to Improve Your Productivity At Work
Equities3 days ago
Bubble, Meet Pin; It’s Just the Beginning of the Downslide
Market Strategist3 days ago
Don’t Be Boxed Into Style Boxes