The new tax law has given charities, donors and professional advisors much to contemplate for 2019. James Daniels, Of Counsel at Davidson, Fox & Company, LLP, and a Community Foundation board member, has shared the following with us for this newsletter:
Considerations for Charitable Giving Under the New Tax Law
• Lifetime Estate and Gift exemptions increased to $11.2 million for an individual and $22.4 million for a married couple (for tax years 2018 through 2025).
Note:
Beware of state limits as they are often much less.
•
Personal exemptions were eliminated.
•
The standard deduction is now $12,000 for single individuals and $24,000 for married couples who file jointly.
Note:
Beware of the new limitation of $10,000 on income tax and real estate tax deductions.
•
Gifts of cash are now deductible up to 60% of adjusted gross income.
•
Consider bunching or bundling charitable deductions in alternate years to take advantage of itemizing deductions.
•
Consider making large contributions to donor advised funds. If the gift is large enough, you may be able to itemize. In subsequent years you can instruct the plan administrator to make distributions to your favorite charities.
•
Choose the right assets to contribute to charity. Consider using highly appreciated assets such as stock. Doing this allows you to avoid paying capital gains tax on the appreciation while receiving a charitable deduction for the full value of the gift.
•
Consider qualified charitable distributions. Taxpayers 70½ years old can instruct plan administrators to make distributions from their IRA directly to a charity. In this manner you do not pay tax on the distribution. You do not, however, receive a deduction for the contribution. This distribution can qualify toward your required minimum distribution.
