End of Year Giving Options

For many, the holidays are a time to reflect on their blessings over the past year and look for opportunities to help others who may need a helping hand. And, although it may not be as heart-warming (no offense to all our banking, finance and tax advisor friends), a call or visit with your financial advisor may reveal some new opportunities to help you do even more good this year.

(This information should not be construed as legal, regulatory, or tax advice. Please discuss with your financial advisor before taking any action.)

1. 2018 Lower Tax Rates: The tax cuts enacted last December lowered taxes for all beginning in the 2018 calendar year. High net worth individuals could expect to save $5,000, $10,000 or even $50,000 or more this year in taxes depending on their overall income levels. This gives us the opportunity to direct those dollars back at a local level to helping individuals in our community in need. Lifting our local communities is an excellent way to use the tax savings with less red tape and waste.

2. Appreciated Stock Donation:  The stock market has been on an incredible run over the last 10 years. Many individuals have stocks purchased long ago that are sitting with sizable capital gains. These appreciated stock positions make a PERFECT way to make charitable donations.  By donating stock instead of cash, there is no capital gains tax due and you can actually make a larger donation than with cash. For example, if you bought a stock long ago that has very little cost basis, you can peel out shares worth $10,000 for a Tocqueville Society donation. If you sold those shares and paid 23.8% in capital gains tax, the net proceeds would be somewhere between $7,000 -8,000. So donating stock can increase the amount of your gift and save the tax.  

3. Charitable Gift Bunching: Part of the tax package increased the standard deduction for individuals to $24,000 for a married couple. This means many more people will take the standard deduction this year instead of itemizing. So, a smaller charitable contribution each year of $2,500 may no longer be deductible if you take the standard deduction. Other items like Mortgage Interest and Real Estate Taxes will also not be deductible if you no longer itemize and instead take the standard deduction.  This is where tax planning with your CPA is important. You can pick a year, like 2018, and bunch all of your charitable gifts for the next four years. That would put you above the standard deduction level and you can itemize to deduct $10,000 in charitable gifts, along with mortgage interest, real estate and other taxes. Then in the subsequent three years you can take the standard deduction and not itemize or make a charitable gift. This would maximize the tax efficiency of your charitable giving.

4. IRA Charitable Distribution: The Pension Protection Act of 2006 introduced the Qualified Charitable Distribution provision for Traditional and Roth IRA owners (or beneficiary after the death of the owner) who are age 70 ½  or older to make charitable contributions of up to $100,000 every year directly from their IRAs to an eligible organization without incurring any adverse federal income tax consequences. The distribution counts for the purpose of the Required Minimum Distribution from IRAs but is not included in calculating the individual taxpayers limitation on charitable deduction in the year the donation was made.