One way to surpass the new standard deduction of $12,000 for single filers and $24,000 for married couples is to save money over time and donate every two or three years instead of every year, being mindful that total itemized deductions still need to exceed the standard deduction for your filing status in order to get a benefit.  One popular way to do this is to donate to a Donor-Advised Fund.  Contributing to a DAF qualifies you to receive tax benefits now, enables your donation to grow tax-free and gives you the ability to decide later how you wish to make grants from that fund to qualified charities.

Taxpayers aged 70.5 or older make a qualified charitable distribution (QCD) from their IRA directly to a charity in lieu of taking a required minimum distribution (RMD) from that IRA each year.  Using a QCD enables one to reduce his or her taxable income by the amount donated, up to 50% of one’s adjusted gross income.  Making a QCD may also enable some taxpayers to lower or eliminate capital gains taxes they would otherwise pay if the RMD from their IRA would have moved them into a higher tax bracket.

The limit on charitable deductions has increased from 50 percent to 60 percent of a taxpayer’s adjusted gross income.  While donating more than half of your income to charity might not work for most people, charities will certainly appreciate that level of generosity.  And what about if you used to contribute to your college or university to buy tickets to sporting events (PSU Football, anyone?) so you can entertain clients?  You can still do this, but these payments will no longer qualify as a business entertainment expense.

So now that you have some IRS intel about charitable giving, it’s important to make sure that the organization that you are giving your hard-earned money to is a qualified tax-exempt organization.  One way to check is to use the tax-exempt organization search tool available at www.irs.gov.  Charity Navigator is another great resource for learning about a charity’s financial health, accountability and financial transparency.  Charity Navigator provides independent evaluations of more than 9,000 charitable organizations.  They also provide lists of specific charities working to provide aid to those impacted by natural disasters.

And of course, if you have any questions about your charitable giving, call us, we are always happy to hear from you!

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