For most people, giving to charity is simply a matter of goodwill and generosity. But there are tax benefits, and they can be significant. Texas Land Conservancy appreciates your continued support and would like to share a few ways that you can take advantage of your end of year contributions.
CONSIDER AN IRA CHARITABLE ROLLOVER
Individuals who are 70 ½ or older can make a qualified charitable distribution of up to $100,000 each year from their Individual Retirement Account (IRA). In addition to avoiding income taxes on the distribution, you may also lower your overall estate and future estate taxes. Just keep in mind that money must be from a qualified retirement account to a charity that meets IRS regulations.
GIVE APPRECIATED SECURITIES
Consider donating securities instead of cash. If you sell a profitable investment, such as publicly traded stock, you will be subject to an approximately 25 percent capital gains tax. If you transfer the stock to a charity instead, you may avoid capital gains taxes on the appreciation and pocket a tax deduction based on the fair market value of the investment on the date of the donation.
BE AWARE OF CHARITABLE DEDUCTION LIMITS
The 2018 Tax Cuts and Jobs Act, which took effect Jan. 1, 2018, included a change in the deduction limit for cash gifts. Before the act, cash gifts to public charities or public foundations were limited to 50 percent of an individual’s adjusted gross income. The new law increases this limit to 60 percent of adjusted gross income, meaning you can give more and deduct more annually. The charitable deduction limits for gifts of stock remained the same at 30 percent. You can still carry forward deductions for five years.
MAKE A GIFT THAT COSTS NOTHING NOW
Many gifts, such as making a bequest in your will or naming a charity as beneficiary of your IRA, cost you nothing now. These gifts may lower your estate taxes and reduce the tax burden on your heirs.
REMEMBER THE DEADLINE
The deadline for charitable giving is Dec. 31, 2018. Many folks make their year-end contributions in December by credit card. When using a credit card, it is important to note that contributions you charge are deductible in the year you make the charge, not when the bill is paid.
Keep in mind that gifts of stocks or other securities may take two to three weeks to process at year-end.
Please note: Nothing in this blog is intended as legal or tax advice, and Texas Land Conservancy recommends that you consult with your personal tax adviser regarding charitable deductions, as your tax circumstances may be different.