Hopefully each of you makes at least modest donations to charity.  Of course, your main motivation for doing so is that you care about the organization and those it supports.  Still, that tax deduction was always appealing too.  No doubt, you recently finished sorting through the barrage of year-end giving requests.  Well it’s the new year, and the worthy causes will keep on asking, believe me.

Most of you are probably losing the ability to itemize your deductions, including charitable contributions, under the new tax law. So be it. I’ve stumbled upon a few ways that you may still be able to make contributions in a tax-advantaged way, so I’d like to pass these along:

If you’re over age 70 ½ and have an IRA or other retirement plan subject to Required Minimum Distributions, you’re all set.  Whether it’s $25 or $25,000 that you’d like to give, make your contribution directly from the retirement plan to the charity and it doesn’t ever show up as income, even if you aren’t able to itemize.

If you try to give a decent, but not humongous amount each year, setting up what’s called a Giving Fund might make sense.  Ours start at $5,000.  In this example, say you typically give $1,000 annually.  If you put $5,000 in a Giving Fund account this year, this might be enough to get you to itemize.  You’d get the full tax advantage now.  Then, you’d give out of this account every year to the charities of your choice, just as you’ve always done.  The funds would be invested in the meantime, and in the long run might be expected to grow in value.  Of course, once you’ve contributed to such account, you can’t pull the money back out for your own use.

Maybe grandma gave you a few shares of Standard Oil she bought 60 years ago for $100, and now the Exxon shares are worth $10,000.  As much as you’d love to dump Exxon, you’d be looking at $9,900 in capital gains, and can’t bear the thought of paying those taxes.  If you give the stock to a charity, in little bits or all at once, they can sell it without paying any taxes, and everybody wins.

Of course, you should check with your tax advisor about whether any of these strategies would benefit you.  The needs are their though, and the tax law change will pinch each and every charitable organization.  Whether taxed advantaged or not, my advice is simple:  give what you can.

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Ken Jacobs CFP®, AIF®, CLU and Renee Morgan are investment advisor representatives of First Affirmative Financial Network (“First Affirmative”). Ken and Renee own an entity called Sustainable World Financial Advisors (SWFA) which is not affiliated with First Affirmative nor is it a registered entity. SWFA does not offer investment services, those services are offered by First Affirmative which is a Registered Investment Advisor (SEC File #801-56587). SWFA is a “doing business as” (DBA) name for use in its operations and should not be considered a registered entity offering investment services. The credentials CFP® & AIF® listed above bear trademarks. FAFN-Logo-(1)
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