– Tax Benefits for Charitable Giving

Did you know?
You can get tax benefits from charitable gifts whether or not you itemize deductions?

You can save taxes by:
1. Giving appreciated securities
2. Giving from your IRA
3. Timing your gifts strategically

If your itemized deductions exceed the standard income-tax deduction, you will continue to itemize and realize tax savings from your gifts to Saint Francis Service Dogs and other charities. However, if you are among the estimated 90 percent of individuals who will not itemize because of the higher standard deduction implemented by the Tax Cuts and Jobs Act of 2017, there are several ways you may still realize tax savings from your gifts.

 

1.  GIVING APPRECIATED SECURITIES
Consider giving appreciated securities that you planned to sell instead of giving cash. This would eliminate the tax on the capital gain you would otherwise pay as well as provide you with a charitable deduction for the fair market value of the securities. You can then use the cash you set aside for a gift to purchase other securities.

 

2. GIVING FROM YOUR IRA
If you have a regular IRA and are age 70.5 or older, you have an annual minimum distribution requirement. Once received, this entire distribution is added to your taxable income. Instead of receiving the entire distribution, consider instructing the administrator of your IRA to transfer directly to Saint Francis Service Dogs – a strategy known as a Qualified Charitable Distribution. This amount would still count as your mandatory annual distribution requirement but not be added to your income. When you complete your tax return, you can claim the standard deduction-reducing your taxable income, as well as reduce your taxable income by the charitable gift amount.

 

3. TIMING YOUR GIFTS STRATEGICALLY

Depending on the amount of your gift, by timing them strategically, you may still be able to deduct most of your gifts. If you typically make a $10,000 charitable gift in December of each year, you can shift the timing of your gift to the first of January of next year and your next gift in December 2020. Then, in 2020, your deductions including both gifts would total $35,000 ($15,000 of other deductions plus two gifts to Saint Francis Service Dogs of $10,000 each). You can itemize because the total exceeds the standard deduction, reducing your taxes. On your 2019 return you claim the standard deduction as planned.

You can time your gifts so that on alternate years both deductions fall in the same calendar year. You itemize every other year, and that reduces your taxes over a two-year period. From our standpoint, the gifts are spaced essentially as before.

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