Top Tips for Charitable Giving Under New Tax Law
By Alan Olsen
One of the best ways to save on taxes, no matter which earnings class you’re in, is to donate money to charity. This has been a long-standing way to not only do good, but to also lower your tax bill. However, thanks to the Tax Cut and Jobs Act, things have changed. Charitable giving is not the same as it used to be.
No More Itemizing
For starters, most people who donate to charities will no longer receive a tax benefit. That’s becausein order to countthose donations you have to itemize. You could still itemize, but because the standard deduction has nearly doubled this year, itemizing won’t make sense for most taxpayers.
Still Beneficial to Wealthy Donors
However, if you make significant donations, then you could still reap the tax deduction benefits. But in most cases, this will apply to wealthy individuals who have more to give. Giving to a good cause is still a noble thing to do, but if you did it for the tax break, then that benefit is likely athing of the past.
There Are Still Benefits for Donating
But not all hope is lost. There are still ways to reap some benefits from giving to charity. Here’s why. Charitablegiving hasmany forms. Yes, most people simply write a check and give it to an organization. But there are other ways to add charitable giving to your financial plan, including your estate planning. It takes some shifting of sorts, but many of the typical charitable giving approaches can still be used for personal benefits.
One option is to name a charity, or charities, as a contingency beneficiary. This money might not end up going to charity, but it can be a nice tax deduction. For example, if you have a beneficiary that might not live long enough to receivehis or her inheritance, then you could bequeath the money that would have gone to him or her to a charity, in the event your beneficiary dies before you do.
Give to Charity After You Both Die
Most married couples give everything to the other spouse whenthe first one dies. This way, your spouse is protected until he or she passes away. If you don’t have any children or beneficiaries, you could bequeath your assets to charity upon the death of the second spouse. This can save you on estate taxes when the first spouse dies and more money goes to the charity when the second spouse dies.
Give a Remainder Interest in Your Home
You can receive a charitable contribution deduction by donating interest in your home or farm that only applies in the future. You get to claim an income tax deduction while you’re alive without setting up a trust. That means you can donate your home or property to charity but you still get to live in it for the rest of your life.But keep in mind that the gift of your home has to be irrevocable.
It’s Still Good to Give
While the Tax Cut and Jobs Act has changed things for charitable donations, there are still ways you can give and save on your taxes. Plus, it’s always nice to give to good cause.