This is the time of year when many people traditionally give to the causes they care most about, and use tax deductions to offset the costs of donating. As you consider your end of year giving, we wanted to share with you some opportunities that may provide you with the ability to deduct or increase your deductions this year, as the tax laws recently changed with the Tax Cut Jobs Act of 2017.
Because the standard deduction has been doubled, many taxpayers may find that it makes more sense to take the standard deduction rather than itemize, as they might have done in the past. While the incentives for giving may be less for some individuals, nonprofits, including REEF, depend on the support of members and donors like you to help support the good work we do every day.
Below are two giving options that may help you maximize your taxable benefits while still helping to support the nonprofits you care about.
Donor Advised Funds
One method of receiving a tax deduction for charitable giving is to set up a donor-advised fund (DAF), which utilizes a concentrated giving strategy. Establishing a DAF as a charitable giving vehicle allows you to make a charitable donation, receive an immediate tax deduction, and then recommend where those donations should be granted over time.
With a DAF, you can make a single large donation and then grant the funds to your favorite charities over a period of several years. While you’re waiting to disburse your donation, you can invest the gift, potentially allowing it to grow tax free and increasing the amount of your donation down the road.
Donating Appreciated Securities
With the new tax changes, you may make a bigger impact by donating long-term appreciated securities, including stock, bonds, and mutual funds, directly to your favorite charity. This method allows you to automatically increase your gift and your tax deduction compared to donating cash, or selling your appreciated securities and contributing the after-tax proceeds.
Taxpayers who are facing long-term capital gains taxes on appreciated stock that they have held for more than a year, can realize a much more favorable income tax result and charitable impact by making a timely donation of the appreciated stock directly to charity. If a donor sells the stock first and then donates the cash proceeds to charity, the donor may be subject to capital gains taxes on the proceeds from the sale of the stock. But if a donor contributes appreciated stock held for more than one year directly to a public charity, the donor can potentially eliminate capital gains on the sale and deduct the fair market value (FMV) of the donation, if the donor itemizes.
It’s simple and easy to donate stock. When you donate stock to your favorite charity, you’ll generally take a tax deduction for the full fair market value. If you prefer, bonds or mutual funds may be donated and the same benefits apply.
We have many more ways in which you can plan your charitable giving to REEF, including naming opportunities, wills and trusts, donations of property, insurance plans, and restricted gifts. If you’re interested, please talk with Bonnie Barnes, our Development Manager, by calling (305) 852-0030, or visit REEF's Planned Giving page for more information.
This information is intended to provide general gift planning information. Our organization is not qualified to provide specific legal, tax or investment advice, and this information should not be looked to or relied upon as a source for such advice. Consult with your own legal and financial advisors before making any gift.