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Year-End Giving Guidelines

December 17, 2019

Now is the time to donate to charity! Your donations can provide you with valuable tax savings. Learn more.

Giving to charity this time of year is a smart move – not only will you be benefiting those less fortunate around the holidays, but your donations can provide you with valuable tax deductions. Here’s what you should know as we approach December 31.

Reduce taxes for 2020

  1. Give long term appreciated securities instead of cash- Before you write that check or dip into your wallet, think about contributing stocks, bonds or mutual funds instead. Generally appreciated publicly traded securities can be donated to charity with the added benefit of not paying tax on the gains if it was otherwise sold. You can claim the fair market value (FMV) as an itemized deduction on your tax return.

  2. Think about establishing a donor advised fund (DAF)- Check out our blog, Did the TCJA Impact Donor Advised Funds? A donor advised fund (DAF) also known as a charitable gift fund or philanthropic fund allows the donor to make a tax-deductible contribution to the fund and then recommend grants from the fund to a specific public charity. This is great for year-end tax planning if you’re not yet sure which charities you would like to support but want to get the tax deduction before year end.

  3. Consider bunching your donations – If your itemized deductions are close to the standard deduction each year, consider bunching your donations into one year. Under this strategy, you contribute in year one what you would have contributed over the next three or four years. This can provide a better bang for your buck and ensure you don’t lose some of the benefit of your charitable tax deduction because you fall under the standard deduction.

  4. Consider a qualified charitable distribution from an IRA- Are you 70 ½ or older and have an IRA? Another consideration is making a qualified charitable distribution from an IRA. Check out our blog, Tax Saving Strategy: Qualified Charitable Distributions (QCDs). A QCD can help you lower your taxable income and benefit the charities of your choice, because it does not have to be included in your income. It is considered an “above the line deduction” meaning that it is a reduction to your gross income as opposed to a potentially limited itemized deduction.

Discuss the various charitable giving options with your tax advisor in order to maximize tax savings. We can help.

The TCJA…So Many Changes, So Many Questions…we can help you navigate this huge tax overhaul! Visit our Tax Reform Center for everything you and your business need to know, now.

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