Written by: Glenmede | Glenmede.com
As we approach the year-end giving season, consider more effective and powerful options for supporting charitable causes. Here are a few ways to assess your giving strategy for greater impact.
1. Take a closer look at your tax return
As a result of the Tax Cuts and Jobs Act of 2017, Americans derive no Federal income tax benefit from charitable giving unless their gifts, in combination with their other itemized deductions, exceed $24,000 in any taxable year for a married couple ($12,000 for a single taxpayer). Check your 2018 income tax return to see if you were able to itemize your deductions. If not, there may be options for this year to achieve your philanthropic objectives and receive additional tax benefits.
2. Bunch your charitable contributions
You may be able to benefit from a technique known as “bunching” or making several years’ worth of charitable contributions in one year to take advantage of itemizing your income tax deductions. You can bunch your contributions directly to charity or to a donor-advised fund (DAF). A DAF makes it possible to contribute a larger amount in one year to take advantage of the charitable income tax deduction while supporting charities of your choice over multiple years.
3. Streamline your giving with a donor-advised fund (DAF)
Chances are you are giving to many charities each year. Perhaps you write checks once a year or periodically send contributions throughout the year. The IRS requires that you receive and maintain written acknowledgment for all contributions of $250 or more. Keeping track of this documentation can be a daunting task at tax time. By contributing to a donor-advised fund, which can make grants to multiple charities throughout the year, you only need to retain one written acknowledgment. No further tracking is required.
4. Maximize the impact of your IRA
If you have an IRA and are at least 70 ½, you have the ability to distribute up to $100,000 annually to one or more qualifying charities and avoid paying federal income taxes on that income. This technique is often referred to as the “Charitable IRA Rollover.” There are multiple ways to make qualified charitable distributions from your IRA, including outright distributions to charities, designated funds, field of interest funds, and scholarship funds. Distributions may count toward your required minimum distribution and may reduce other taxes.
5. Analyze your Investments
With the financial markets experiencing unprecedented growth over the past ten years, it may make sense to evaluate your investment portfolio and determine if you have securities that have appreciated significantly. If you have highly appreciated securities or other assets, consider gifting them directly to charity. Gifting appreciated assets may avoid long-term capital gains tax, provide an income tax deduction, and avoid the inconvenience of selling the assets. Conversely, if you have assets that have decreased in value, it may be beneficial to sell the asset, take the loss and donate the proceeds to charity.
When considering any of the above techniques, individual circumstances must be taken into consideration and it is important to seek the advice of your financial, tax and legal advisors.
Related: Charitable Planning Can Be a Win-Win-Win