Elder Law News

Charitable Giving Options Under the New Tax Law

The new tax law makes it harder to claim a tax deduction for charitable contributions. While charitable giving should not be only about getting a tax break, if you want to get a tax benefit from your contributions, there are a couple of options. 

The new tax law makes it harder to claim a tax deduction for charitable contributions. While charitable giving should not be only about getting a tax break, if you want to get a tax benefit from your contributions, there are a couple of options. 

The Tax Cut and Jobs Act, enacted in December 2017, nearly doubled the standard deduction to $12,000 for individuals and $24,000 for couples. This means that if your charitable contributions along with any other itemized deductions are less than $12,000 a year, the standard deduction will lower your tax bill more than itemizing your deductions. For most people, the standard deduction will be the better option. 

If you still want to maximize the tax benefits of charitable giving and you have the financial means, one option is to double your charitable donations in one year and then skip the donation the following year. For example, instead of giving $10,000 a year to charity, you could give $20,000 every other year and itemize your deductions in that year. 

Another way to concentrate charitable giving is to establish a donor-advised fund (DAF) through a public charity. A DAF allows you to make a charitable donation to the fund and receive the tax benefit immediately. The money is placed in an account where it can be invested and grow tax-free. You can then make donations to charities from the account at any time, in addition to adding to the account. As with any investment, you need to do research before establishing a DAF. Make sure you understand the fees involved and whether there are any limits on the charitable contributions you can make. You should consult with your financial advisor before taking any steps. 

If you are taking required minimum distributions from an IRA, another option is to donate those distributions directly to charity through a qualified charitable donation. The distributions won't be included in your gross income, which means lower taxes overall. The donation must be made directly from the IRA to the charity and different IRAs have different rules about how to make the distributions. 

For more information on how to maximize your charitable giving under the new tax law, click here.

About the author

Michele Ungvarsky

Michele graduated from law school in December of 1994. She practiced law in Albuquerque until 2009 when she relocated to the Las Cruces area. Michele has a unique understanding of issues facing families during disability and health crises because her mother and father (who was suffering from advanced Alzheimer’s) moved in with her. The family struggled with the health issues related to the costs and challenges of her father’s Alzheimer’s Dementia. That is why, Michele is committed to helping families “PLAN IT FORWARD” so there are comprehensive plans in place in the case of disability or death.