Charitable Giving
Charitable Giving – What’s in Your Tool Bag? By: Eric Gritter of Strategic Financial Group
Winter is finally in the rearview mirror (all 10 school snow days with it), summer is around the corner, the lake beckons, and… Tax Day is finally behind us. The Tax Cuts and Jobs Act of 2017 (TCJA) brought many changes to individual and corporate tax rates, personal exemptions and deductions, as well as the estate tax and much more. One of the most widely-felt effects of the TCJA was the nearly doubling of the standard deduction. So, what does all this have to do with charitable giving? In short, there are two ways to file your taxes – you can take a standard deduction, or you can itemize if the total amount of those deductions (such as charitable giving) is higher. When the TCJA increased the standard deduction from $6,350 to $12,000 for individuals and $12,700 to $24,000 for married couples, the result was many more people taking the standard deduction. Here are three distinct tools to consider having in your charitable giving tool bag in light of these tax changes. Tool #1: Qualified Charitable Distribution (QCD). If you are 70 ½ or older and have assets in an IRA that requires you to take minimum distributions every year, you might consider making a direct gift from your IRA to the charity of your choice through a QCD (up to $100,000 per year). This not only satisfies your RMDs for the current tax year, but it also allows you to reduce your taxable income even if you are no longer able to itemize your taxes due to the higher standard deduction. Tool #2: Donor Advised Funds (DAF). For anyone of any age, if you are on the border of itemizing this year, you could consider “pre-funding” your giving for next year into a DAF account. Any contributions to a DAF count toward your charitable giving for the current tax year. However, you maintain control over the amount and timing of dispersing those funds to your preferred charitable organizations. Tool #3: Highly Appreciated Assets. Equity markets have risen substantially over the last decade. If you hold stocks or mutual funds, many charitable organizations such as ZCS will accept those assets in-kind. The value of the asset would count toward your itemized deductions, but you would avoid paying the capital gains tax by gifting the asset directly (as opposed to selling and giving the cash). Hopefully this provided a few additional tools for you to consider using as you build out the charitable giving room in your financial dream house. If this piece created more questions than answers for you regarding your charitable goals, please don’t hesitate to reach out to myself or Peter Jenkins for more information as to how Zeeland Christian can be a part of those goals. As always, you should consult your tax professional before making any specific tax-related decisions. Eric Gritter is an investment advisor representative of, with advisory services and securities offered through USA Financial Securities. Member FINRA/SIPC. A Registered Investment Advisor located at 6020 E. Fulton St., Ada, MI 49301. Strategic Financial Group is not affiliated with USA Financial Securities.
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