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.

Get Your Charitable Donations Lined Up Before The Holidays

December 1, 2008

There’s a special sinking feeling as you approach Dec. 31 and realize you’ve done no tax planning whatsoever. That includes big issues like end-of-the-year investment decisions, and the smaller ones – like that stuff you no longer use piling up in the basement.

Charitable giving is an important part of tax planning at year-end, so let’s look at the cash and noncash aspects of giving. It makes sense to contact a tax expert or financial planner to talk about what giving makes sense for you:

You have to itemize: Only individual taxpayers who itemize their deductions on Schedule A can claim a deduction for charitable contributions. This deduction is not available to people who choose the standard deduction, including anyone who files a short form (1040A or 1040EZ).  However, there has been talk about allowing “above the line” charitable deductions, so I’m hopeful that this tax law will change soon.

Get out the checkbook: Uncle Sam likes a record. To deduct any charitable donation of money, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution – and it definitely helps to have both. Bank records mean canceled checks, bank or credit union statements and credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date. For payroll deductions, the taxpayer should retain a pay stub, Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity. If you remember the IRS being satisfied with personal bank registers or scribbled notes to document the donation, they’re not anymore.

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About Us

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.

Kristine focuses on providing fee-only financial planning, investment advice, and tax preparation to individuals and families from all income levels.  About Us

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.