Tis the season for giving, not just to family and friends, but also to causes you care about.
Do good, but be mindful of scammers and taxes. Thanks to tax reform, there are changes that impact charitable giving.
If you want to get a tax deduction for 2018, make contributions by Dec. 31. Here’s more to think about.
Tax reform doubled the standard deduction, (now $12,000 for individuals and $24,000 for married couples filing jointly). What does this mean?
“If you give the same amount to charity as in prior years, you may not do better with itemizing the deduction, and therefore not get the tax break,” says Brian Cohen, principal and investment adviser with Landmark Wealth Management in Melville.
In light of this; think about “bunching.” For instance, instead of giving $5,000 a year to charity, do three years of the donations in one shot, make it $15,000. Itemize in that year, and the next two years take the standard deduction, he says.
Use a tax savings calculator and talk to your financial adviser to see how this strategy could work for you.
Explore a donor-advised fund
A donor-advised fund — a kind of dedicated charitable investment account — can help you avoid the scramble and simplify the end-of-year giving process.
“You can make a single donation of cash, stock or many other assets to be eligible for an immediate tax deduction,” says Amy Pirozzolo, head of donor engagement at Fidelity Charitable in Raleigh, North Carolina. The funds can be used to support charities over time and invested for tax-free growth potential while you decide where you’d like to direct your money.
Keep your guard up
Scammers prey on do-gooders this time of year. Be leery of any calls or emails you get from an organization with a name that sounds familiar, but isn’t quite what you recognize.
Use the IRS Tax Exempt Organization’s search function, https://apps.irs.gov/app/eos/, to confirm the charitable status of an organization.
“Never hesitate to say no or ask to be sent more information," says Rick Cohen, chief communications officer of the National Council of Nonprofits in Washington. "Don’t feel pressure to give immediately. Make sure the organization is reputable and that their mission aligns with what you care about.”