The Tax Cuts and Jobs Act, signed into law on December 22nd, includes several changes that will affect charitable giving. Among these are:
Here are some charitable giving strategies to consider:
1. Qualified charitable distributions (QCDs) from IRAs are advantageous for eligible donors. Although no charitable deduction is available, the income tax that is normally owed on withdrawals is avoided. In addition, because QCDs can satisfy required minimum distributions, income tax savings can be realized. QCD rules:
2. Life-income gifts such as charitable remainder trusts and charitable gift annuities offer several advantages to satisfy philanthropic goals. Because deductions for remainder trusts and gift annuities tend to be larger, donors may be able to itemize in the year a gift is arranged. Payments from life-income gifts may be attractive to donors who would normally make bequests to charity through a will or living trust, providing income tax, and possibly capital gains tax, savings.
3. Making gifts of highly appreciated assets allows donors to avoid the capital gains tax that would be due if the assets were sold, offering tax savings even if the taxpayer uses the standard deduction.
4. Those with donor advised funds can direct gifts to public charities. A donor may be able to itemize by making a larger gift to a donor advised fund, from which annual gifts can be made over several years. Contributing appreciated securities to a donor advised fund provides added tax savings.
IRA Qualified Charitable Distributions
IRA owners ages 70½ and older may make charitable gifts directly from their IRAs of up to $100,000 annually. Income tax deductions are not available for IRA “qualified charitable distributions” but donors may save taxes anyway, where gifts take the place of required minimum distributions, which are generally 100% taxable. IRA gifts may be especially attractive to donors who do not itemize deductions on their income taxes. Note: It’s important that you coordinate IRA contributions with our office. We will need to provide you and your IRA custodian with important information and ensure that you receive appropriate tax receipts.
Copyright © R&R Newkirk. All rights reserved.