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06/28/2019
Pride Month: 5 Tax Tips For Giving
During Pride month, we highlight common questions about tax & estate planning posed by LGBT families.
Q: My partner and I plan to make a large donation to our favorite charity, but we’re not sure how this will impact our taxes with the new tax laws in place. We are a married same-sex couple, but we file our taxes separately.
A: Pride Month is the perfect time to show support and celebrate diversity and inclusion through giving. According to federal law, legally married same-sex couples can receive the same benefits as heterosexual married couples, and this applies to tax breaks on charitable gifts, whether you file separately or jointly. The Tax Cuts and Jobs Act (TCJA) of 2017 makes it harder to see a tax benefit from charitable giving, but here five ideas to get a bigger bang for your charitable dollar.Here are 5 tips to consider as you plan your charitable giving:
The TCJA increased the standard deduction to $12,000 per taxpayer ($24,000 per married couple), making it harder to see a tax benefit from charitable giving. Here are some ideas to get better results for your charitable dollar:
1. Bundle your contributions
Small gifts annually are more likely to stay under the threshold for itemized deductions. Instead of making small gifts annually, consider making several years’ worth of giving at once. With good planning, you can time large donations to fall in a tax year when you anticipate more taxable income.
2. Have a required minimum distribution from your IRA? Make a charitable distribution
This is one of the best strategies to benefit from your charitable giving for those over age 70½. A charitable gift transferred directly from your IRA will be excluded from your taxable income.
3. Donate appreciated stocks
Did you make a smart investment 10 years ago but dread the capital gains tax due when you sell? Donating appreciated stock, held more than one year, to a qualified charity lets you get a deduction for the full fair market value without realizing the gain on your tax return.
4. Set up a donor-advised fund
A donor-advised fund (DAF) is a great strategy for people who want to make a large charitable gift in the current tax year but also want flexibility in the timing or recipient of the charitable giving. Contribution to a DAF will provide a deduction in the year of gift with few restrictions on how and when the money will be distributed to charities down the road.
5. Charitable trusts: the path to long-term legacy building
If charitable giving with a lasting impact is part of your planning goal, charitable trusts are a great option to share your wealth among charitable and non-charitable beneficiaries. Depending on the structure, a charitable trust can provide a substantial income tax deduction or serve to reduce your total taxable estate for estate and gift tax purposes.
Subject matter expertise
Lawrence Lipoff
CPA, TEP, CEBS, Director, Trusts & Estates Tax Services
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Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.