Taxes: Planning Ahead for Charitable Giving in 2019
DCC exists today because of 150 years of dedicated volunteer service and consistent financial support from people like you. With the 2018 income tax season winding down, you likely know more about how recent federal tax code changes affected your budget and capacity to give. Most of 2019 is ahead, so this is a good time to consider how tax-advantaged charitable giving allows you to focus on your most important values. Income tax law is nuanced in so many aspects, so consulting a qualified tax advisor who understands your values and budget will help you meet your generosity goals. Implementing tax-advantaged strategies recommended by your tax advisor this spring allows you to reap the benefits this tax year.
Here are some ideas to discuss with them:
- Itemizing deductions have long been used to reduce taxes on charitable contributions. Your tax advisor can help you determine if itemizing deductions under the new federal tax code is beneficial.
- Taking the now-doubled standard deduction every other year may be helpful. In years you do itemize, perhaps triggered by large medical and dental expenses, consider paying a year and a half of property taxes and ramping up your charitable contributions.
- If you are older than 70 ½, you can make contributions directly from your IRA or other fully taxable retirement funds. This Qualified Charitable Distribution (QCD) is technically an adjustment to income rather than a deduction, so those who don’t itemize still get the tax advantages. QCDs may also count as part of your required minimum distribution.
- Donating appreciated securities directly to charity, including DCC, may avoid payment of the capital gains tax and increase your giving power.
- One way to simplify tax-deductible charitable contributions is to invest in a donor-advised fund (DAF) with a financial firm or the Presbyterian Foundation. You then direct your DAF to make contributions in your name at any time now or in the future. A DAF is especially convenient when you contribute to many different charities since you do not need to collect letters of acknowledgment from each one. Contributions of appreciated securities to a DAF may be deducted at their current value and leads to tax savings during years that you itemize.
- The DCC Legacy Committee encourages you to prayerfully consider an inheritance plan that takes advantage of tax savings. An easy-to-do strategy names DCC or other charities as the beneficiary of your IRA or other taxable retirement funds. Meanwhile, bequeath tax-advantaged assets such as stocks and real estate to your heirs.
- If you have significant financial blessings, please consider charitable gift annuities, charitable remainder trusts, or even setting up a foundation to manage estate assets to fund your values.
Please contact Maria Rodriguez or any member of the DCC Legacy Committee to discuss giving to the church, and work with your tax advisor with questions regarding tax-advantaged charitable giving.
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