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End of Year Giving For the Tax Benefits? You Bet

(No Shame Here …  If You Know These 4 Tips)

Dec. 21, 2018
Family Investment Center
3805 Beck Road
St. Joseph, Missouri 64508
(816) 233-4100
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(ST. JOSEPH, MO) Let’s cut to the chase – people give for tax benefits. This is Ok. If you’re one of them, read on for some useful tips to help you maximize your end of year giving because things are a little bit different this year. (You may get a little bit of that warm fuzzy feeling, too).

Almost everyone considers charitable contributions each December. Partly because the holidays inspire us to help others. There’s a practical reason too: December is the tax-year’s last month. Gifts given this month bring a direct impact to next April’s tax return. However, there are a few differences to note for this year.

· For one, the new tax law and new tax forms will eliminate the itemized deduction for many taxpayers. It’s still a charitable deduction, technically, but the new higher standardized deduction ($24,000 for couples, $12,000 for singles) means most filers will skip itemized deductions on the old Schedule A form. No worries, it’s like the government is giving you credit for multiple deductions even if you don’t actually use them!

· A donor-advised charitable fund can be a nice tool in this environment. These funds allow you to donate now and give later. Here’s an example: You can donate $12,000 to your fund in 2018 and earn a genuine tax deduction. In January, you can request a $6,000 donation from that fund directly to your church. You can do that again in January 2020. The church gets the money in 2019 and 2020, but you receive the whole deduction in 2018. The main benefit to this is that you can potentially “double-up” contributions so that you have enough to itemize for your 2018 tax return.

· Another benefit is that you can donate stock or other appreciated assets to the account. Maybe you’ve owned 1,000 shares of Coca Cola (KO) since 2012. Let’s say you purchased them for $37.50 and they are worth $49.50 today. You could sell them and give the proceeds to charity, but you would owe capital gains tax on $12,000 (probably $2,400, but maybe $1,200). Instead, you can donate the 1,000 shares to your donor-advised charitable account. The account will sell the shares – no capital gains tax to you – and you receive the full $49,500 as a charitable deduction this year. Also, you can send the entire proceeds or part to your favorite charity this year, next year, or any other time you choose.

· To summarize, you take the deduction in the tax year you donate, but the actual gift to charity could be some future tax year. You can give cash or appreciated assets to make your donation. With the new higher standardized deduction, you may want to stack several years of donations into a single tax year to maximize your deduction.

Obviously, the tax implications merely enhance the giving spirit. Give because you care about a group or a cause. The tax benefits are an added bonus, and a donor-advised charitable account can make that easier and more rewarding.

Most major firms offer donor-advised accounts. They have professionals on staff to help you set up and operate an account. Start with a conversation with your tax preparer or your trusted investment advisor or planner. (An attorney could be another good resource, but you won’t need one to get started. The forms are easy to use and understand).

Now, here’s to that warm giving feeling – combined with informed decisions on how to maximize that gift.

About Dan Danford and Family Investment Center:

Reflecting an unconventional approach to investing and financial planning, Family Investment Center invites clients to “plan for some serious freedom.” Now in its third decade of service, Dan Danford is Founder/CEO of Family Investment Center, a pioneer among commission-free investment advisory firms. Richard C. Salmen serves as President of Family Investment Center. Salmen also serves as the 2018 Chairman of the CFP Board national board of directors. 

With a team of professionals at offices in St. Joseph, Mo., and Lenexa, Kan., Family Investment Center brings a client-focused philosophy to individuals and families in the Kansas City area and across the country.

Media sources who have interviewed or quoted the Family Investment Center team include The Wall Street Journal, The New York Times, CBNC, Barron’s, InvestmentNews, BusinessWeek, Forbes, U.S. News & World Report, The Kansas City Star, the Chicago Tribune and others.

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