Tax friendly giving strategies

Experts are worried that changes to the tax laws will hurt charitable giving. Even though we know our donors give from the heart, everyone likes a smaller tax bill. Here are several giving strategies that are still tax friendly:

Donate stock. The capital gains tax remains unchanged so gifts of appreciated stock are an advantageous way to make a charitable donation.  This type of gift usually enables donors to give more money to the charity than they would if they sold the stocks on their own, paid taxes on the gains, and then donated the cash to the organization.

Consider a starting a Donor Advised Fund. Donors can make a larger than normal contribution to their Fund in one year that exceeds the standard-deduction limit ($12,000 for single people and $24, 000 for couples, under the new rules). Then gift from the fund to charities that they support over several years.  The tax deduction will apply in the year you give to the fund.  Local foundations that can help are the Coastal Community Foundation and the Community Foundation of the Lowcountry.

Charitable Stacking Instead of giving $10,000 per year over five years to a charity, you would give $50,000 in one year, taking you above the new $24,000 standard deduction and thus providing a tax benefit for your contribution. Consider stacking your entire Schedule A. In other words, make charitable contributions in years when you have significant medical expenses.

IRA Distributions. People over 70 1/2 are required to take a minimum distribution from their retirement accounts and pay income tax on the distribution. If you donate directly from your account to a charity (up to $100,000) it’s tax-free — and your gifts still count toward your minimum distributions.

Please consult your financial adviser and/or tax professional for more information.


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