Year-End Planning

Some Tax Planning Questions to Consider Before December 31

Now that the Tax Cuts and Jobs Act has been approved by Congress, there are a few questions that you should consider before the end of the calendar year: 

Will I continue to itemize? If your  total of mortgage interest, allowable medical expense, $10,000 of state and local taxes, and charitable contributions don’t add up to more than $12,000 (individual) or $24,000 (married filing jointly), you probably will not be itemizing next year and the years after. Under the new tax law starting in 2018, the standard deduction will be $12,000 for individuals and $24,000 for married couples filing jointly.

What can I do before December 31? Consider accelerating deductions before year-end, such as making additional charitable contributions, especially if they won’t provide a tax benefit next year.  If you expect your overall tax bill to go down next year (for example: your top tax rate goes down), it also may make sense to accelerate charitable contributions before year-end.

What’s the best way to pay for the donation? If you have stock or other securities that have appreciated in value, it probably makes sense to contribute these assets to charities such as the federation rather than making a cash gift. You may be able to take a deduction for the full-market value of the stock and you will avoid any capital gains tax on any accumulated appreciation by donated the asset. 

Do donor-advised funds make sense? Yes, these funds are easy to establish with a federation or Jewish community foundation and the contributions can be tax deductible this year, even if the funds are granted to another charity next year or later. And the funds can be invested and will grow tax-free until granted.

Do IRA charitable rollovers still make sense? For those who have IRAs and are over age 70 ½, the IRA charitable rollover can be another easy way to give directly to a public charity such as the federation. But keep in mind that donor-advised funds are not a qualified recipient of IRA rollover contributions.  
This document is for informational purposes only and should not be construed as legal, tax or financial advice. When considering gift planning strategies, you should always consult with your own legal and tax advisors.  

For information about gifting stock, or opening a donor advised fund, please contact Michelle Everett.

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