The New Tax Law and Charitable Giving

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Chances are, you’re wondering about the effects of the new tax law or how the stock market will do next year.

One thing is for sure: Things are going to be different in 2018.

If the passage of the new tax law has inspired you to adjust or accelerate your year-end giving before 2018, here are some tax planning questions to consider before December 31:

    • Will I continue to itemize? If your total mortgage interest, allowable medical expenses, $10,000 of state and local taxes and charitable contributions don’t add up to more than $12,000 (individual) or $24,000 (married filing jointly), you probably will not be itemizing next year and the years after. Under the new tax law starting in 2018, the standard deduction will be $12,000 for individuals and $24,000 for married couples filing jointly.

 

    • What can I do before December 31? Consider accelerating deductions before year-end, such as making additional charitable contributions, especially if they won’t provide a tax benefit next year. If you expect your overall tax bill to go down next year (for example, your top tax rate goes down), it also may make sense to accelerate charitable contributions before year-end.

     

    • What’s the best way to make a donation? If you have stock or other securities that have appreciated in value, it probably makes sense to contribute these assets rather than making a cash gift. This year’s strong stock market performance offers a great opportunity to secure a higher value for your donation. You may be able to take a deduction for the full-market value of the stock and you will avoid any capital gains tax on any accumulated appreciation by donating the asset.If you don’t have appreciated stock, you can make a secure donation online or call Federation’s Donor Relations team at (301) 230-7239, or send a check to The Jewish Federation of Greater Washington, 6101 Executive Blvd., Suite 100, North Bethesda, MD 20852.

     

    • Do Donor Advised Funds (DAFs) make sense? Yes, these funds are easy to establish with Federation’s UJEF and the contributions can be tax deductible this year, even if the funds are granted to another charity next year or later. And the funds can be invested and will grow tax-free until granted. To learn more about setting up a DAF, visit shalomdc.org/donoradvisedfund, or contact Elizabeth Goldstein at elizabeth.goldstein@shalomdc.org or 301-230-7228.

 

    • Do IRA charitable rollovers still make sense? For those who have IRAs and are over age 70 ½, the IRA charitable rollover can be another easy way to give directly to Federation. But keep in mind that DAFs are not a qualified recipient of IRA rollover contributions.

 

We also invite you to explore this summary analysis from The Jewish Federations of North America of the major provisions that would affect donors and charitable organizations.

We are grateful to be your partners in philanthropy, and look forward to continued collaboration in 2018.

Important Note: this letter is for informational purposes only and should not be construed as legal, tax or financial advice. When considering gift planning strategies, you should always consult with your own legal and tax advisors.