Year-End Tax Tips
Congress is working to reform our tax code for the first time in decades, and at the same time, many of us are making important decisions about our 2017 taxes. If the proposed increase in the standard deduction is enacted in 2018, many more of us will be weighing the standard deduction against itemized deductions.
Here to help us is University of Missouri-Kansas City School of Law professor Chris Hoyt, an expert in federal tax and charitable organizations. Below, Professor Hoyt shares some insight and strategies for your year-end tax planning.
1. Establish or Add to a Donor-Advised Fund to Lock in a Deduction
One way to get an income tax deduction in the year 2017 for gifts that a charity will not receive until 2018 or later years is to contribute to a donor-advised fund in the year 2017. Establish or contribute to the fund in 2017, and then recommend grants from the fund to charities in the future years.
2. Accelerate Charitable Gifts Into 2017
If you will itemize your deductions in 2017 but will not itemize in 2018, accelerate your charitable gifts into the year 2017. If you made a multi-year pledge, pay the amounts scheduled for future years in the year 2017. See whether your favorite charity will give you credit in the year 2018 for a larger amount that you pre-pay in 2017.
3. Give Up to the Annual Charitable Deduction Limitation in 2017
The annual deduction limitation for charitable gifts of appreciated stock is 30 percent of adjusted gross income (AGI). For gifts of cash, the limit is 50 percent of AGI.
4. Making Charitable Gifts from an IRA
The House and Senate tax bills make no change to the popular law that permits individuals over age 70 ½ to make tax-free charitable gifts from their IRAs. This will be very attractive in the year 2018 and in later years. (Contact the Community Foundation for the types of funds that qualify.)
DISCLAIMER: The opinions expressed in this message are those of the author and do not necessarily reflect the views of the University of Missouri. The statements apply to a general discussion of legal issues and do not constitute legal advice or a legal opinion.
Establishing a donor-advised fund or contributing to your charitable giving account before the year is over will allow you to take advantage of current tax laws. Be sure to consult your tax advisor to discuss your options further. The staff at the Community Foundation is happy to help you with your year-end giving, including any last-minute donations to your donor-advised fund or distributing grant checks to nonprofits.
To help you maximize your charitable giving, our office will be open until 5 p.m. on Friday, December 29. The IRS requires that all 2017 contributions be postmarked on or before Sunday, December 31. Be sure to allow extra mailing time as many local post offices have limited weekend hours. Please allow additional time for stock and other complex gifts.
If you have any questions about year-end contributions, please contact our Donor Services team at 816.842.7444 or at firstname.lastname@example.org.
Authored by: Ashley Hawkins, Content Specialist