Even though it's too late to give charitably for the 2018 tax year, now is a great time to begin planning your 2019 giving. Here are some ways and strategies that you can give to charity and put yourself in a tax-advantageous position.
- Consider a Qualified Charitable Distribution
One efficient way to give is called a qualified charitable distribution. This is when an IRA owner gives straight from his or her Traditional IRA to a church or charity. If you are age 70 ½ you can transfer funds directly from your IRA to charity. Qualified charitable distributions also count towards your required minimum distribution (RMD). The limit for one year for qualified charitable distributions is $100,000.
- Consider "bunching" into a Donor Advised Fund
The second way to efficiently give is called "bunching". With the new standard deduction being $24,000 for married couples, a lot of charitable givers who once itemized will no longer do so. Bunching allows you to contribute multiple years’ worth of donations in one year to a Donor Advised Fund. Donor Advised Funds allow you take the deduction in one year and slowly give it over the course of 2 years. If a tax filer were to donate 2 years’ worth of giving in one year they would then take the standard deduction every other year. By giving 2, 3, or 4 years’ worth of giving in one year, a tax filer is more likely to itemize in the year they give, thus saving even more on their taxes.
If you need help building a tax-advantageous giving plan for 2019, please, give us a call at 320.222.4236 to schedule your no-cost meeting.
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