Maximizing Charitable Donations Under the New Tax Law

December 28, 2017

Many people will no longer be able to itemize under the new Tax Cuts and Jobs Act, which means that charitable donations won’t be as valuable from a tax perspective.

Here are some ways to maximize your charitable giving and still receive some tax benefit:

1. Accelerate your 2018 donations into 2017. By doubling up on your dontions before year end, you will increase your deductions for the 2017 tax year. If you will have itemized deductions close to the standard deduction in future years, consider doubling up on your donations every 2-3 years; this may boost your itemized deductions enough to get you over the standard deduction amount.

2. For taxpayers age 70 1/2 or older, you can contribute directly from your IRA to a qualified charity. Donations made directly from your IRA to a qualified charity are deducted directly from your taxable income, giving you the tax benefit even if you don’t itemize your deductions.

3. Consider using a donor-advised fund. With a donor advised fund, you can contribute cash or appreciated investments to an account, take the deduction on your taxes, and distribute the donations to charities at a later date or over multiple years. This can be helpful if you want the tax deduction now, but don’t know who you want to donate to or if you want to be able to spread the donations out. Donor advised funds are available from brokers such as Vanguard, Schwab and Fidelity and usually have a minimum of $5,000-25,000.

The deadline to make donations for the 2017 tax year is December 31, 2017.

Kristine McKinley is a Kansas City CFP and CPA.  Kristine provides retirement planning, tax preparation and planning, investment reviews and comprehensive financial planning on a fee-only, as needed basis.  To schedule your complimentary introduction meeting, please contact Kristine at kristine@beacon-advisor.com.

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Kristine McKinley, CFP®, CPA, is the founding principal of Beacon Financial Advisors, LLC, an independent, fee-only financial planning firm located in Lee’s Summit, Missouri and serving the greater Kansas City area.

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In the News

Investment News – Kristine McKinley discusses the 0% Social Security COLA (for 2016) in No Social Security cost-of-living adjustment in 2016.

Kiplinger Magazine/NAPFA – Kristine McKinley answered reader’s tax questions during the 2013 Jump Start Your Retirement Plan Days sponsored by Kiplinger magazine and the NAPFA Consumer Education Foundation.