Annunciation Stewardship Tax Strategies

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Annunciation Stewardship Tax Strategies: How charitable contributions may help you receive maximum tax advantages

According to the report Giving USA , U.S. families and individuals give an average of more than $1 billion to charity every day—a major force for addressing important needs in our communities. The value of giving is also recognized by the U.S. tax code, which provides a variety of tax incentives. Please consult your tax-advisor to see if you may benefit from any of these strategies.

Three tax strategies to consider:

Many people know they can deduct donations to charity from their income taxes but increasing your knowledge of tax planning strategies can maximize your giving impact

1. Gifting Long-term Appreciated Assets: If you donate long-term appreciated assets like bonds, stocks or real estate to charity, you generally don’t have to pay capital gains, and you can take an income tax deduction for the full fair-market value. If you would like to gift appreciated assets to the church, please contact the Church Office to obtain information about how to transfer those holdings into Annunciation’s brokerage account.  By transferring the asset itself, you may be able to deduct the full value of the asset on the date of transfer, and then the church can sell the asset without being subject to capital gains tax (as a tax-exempt organization). This can be a particularly helpful strategy if you have holdings that have appreciated a great deal since purchase. Donating Capital Gains Property

2. Combine multi-year deductions into one year: Many taxpayers won’t qualify for the necessary deductions to surpass the standard deduction threshold established by tax reform in 2017. However, you can still receive a tax benefit by “bunching” multiple years’ worth of charitable giving in one year to surpass the itemization threshold. In off-years, you take the standard deduction. A Donor-Advised Fund could help you with this strategy. 

3. Qualified Charitable Distributions from an IRA account: If you are age 70.5 or older, you are eligible to make a Qualified Charitable Distribution (QCD) from your IRA.  A QCD is a direct transfer of funds from your IRA custodian, payable to a qualified charity. QCDs can be counted toward satisfying your required minimum distributions (RMDs) for the year, as long as certain rules are met. In addition to the benefits of giving to charity, a QCD excludes the amount donated from taxable income, which is unlike regular withdrawals from an IRA, meaning that the amount you transfer to the Church is not subject to income taxes. Rather than sending a portion of your IRA distribution to the IRS, you can gift the full amount to the Church. 

Also, QCDs don't require that you itemize on your tax return, which due to the recent tax law changes, means you may decide to take advantage of the higher standard deduction, but still use a QCD for charitable giving. For more information on this strategy, please visit: Seniors Can Reduce their Tax Burden By Donating to Charity through their IRA


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