November is here. As soon as the election is over, the content of our mailboxes and voicemails will switch from political solicitations to requests for charitable gifts. Before you reach for your wallet, make a year-end giving plan, especially if you want the tax benefits of donating appreciated assets. Consider these ideas to make your giving more tax-effective, and to maximize the value of your year-end contributions.
Donate appreciated assets — To maximize the benefit of your generosity, giving appreciated assets can go much farther than a simple cash donation. Appreciated stocks, bonds and mutual funds owned more than a year are easy to donate, and may entitle you to a tax deduction for their full value, regardless of the price you paid. By donating these assets, you can also avoid capital gains. Real estate donations and privately held business interests also can be attractive vehicles for charitable giving — but they require more planning. If you are considering donating them, contact the charitable organizations you’d like to receive them right away.
Remember the charitable IRA rollover — People age 70½ or older can donate up to $100,000 per year from their IRAs without being taxed on the distributions, and they can satisfy their required minimum distributions at the same time. Married couples with separate IRAs can each give up to $100,000 per year. This is a great option for anyone contemplating substantial year-end giving, including the creation of a permanent endowment or gifts to capital campaigns. To get this benefit, your IRA rollover must go directly to the charities and not to you; be sure your IRA administrator understands your charitable intent.
Create an income stream and a deduction with the same charitable gift — With charitable gift annuities, you make a gift of cash or property. In return, you or a loved one receive regular, fixed payments for life. Depending on your gift, some of those payments may even be tax-free. And you receive a charitable deduction in the year that you set up your charitable gift annuity. This can be an especially nice way to convert non-income producing assets into a secure income stream.
Consider a donor-advised fund with the Jewish Community Foundation — You donate to your fund when it’s best for you, take a tax deduction in the year you donate, and recommend grants to nonprofits whenever you like. You can even recommend grants from your donor-advised fund online. These flexible, cost-efficient tools enable you to direct all your charitable giving through one convenient account. Instead of tracking your charitable receipts throughout the year, you get a single receipt from the Foundation. Plus, your donor advised fund is invested by the Foundation, so your giving ability grows as your fund grows. A donor-advised fund is especially attractive if you seek a bigger-than-usual charitable tax deduction in 2018, but prefer to spread your giving into 2019 and beyond.
Consider the effects of the new federal tax laws — Deductions for charitable gifts have not changed in 2018, but other tax law changes could affect whether you itemize your taxes. Under the new law, the standard deduction rises to $12,000 for individuals and $24,000 for married couples. That means people whose total itemized deductions are below the cutoff may no longer see tax savings from their charitable giving.
A donor-advised fund with the Jewish Community Foundation can preserve your charitable deduction if you would otherwise not itemize. You can “bundle” two or more years’ worth of charitable giving into a donor-advised fund, take your deduction in the year of the gift and then make charitable gifts from your donor-advised fund over time. With this strategy, the funds you donate this year can be contributed to the organizations you support next year and beyond.
Contributions are deductible in the year made, so be sure to get your gifts in by Dec. 31. If you are donating stock, bonds, mutual funds, real estate or privately held business interests, contact the Foundation as soon as possible, so we can help ensure the gift is received by Dec. 31. Checks should be written in 2018, and credit card payments should be processed in 2018, even if the bill is not paid until 2019.
For a confidential meeting or for more information, call the Jewish Community Foundation of Greater Phoenix at 480-699-1717 or visit jcfphoenix.org. JN
Richard Kasper is the president and chief executive officer of the Jewish Community Foundation of Greater Phoenix, which owns and publishes Jewish News.