INDUSTRY INSIGHT
Financial Focus
SpoNSoReD CoNTeNT
You Can Still Gain Tax Benefits
from Charitable Donations
L
ike most people, you probably know several
organizations worthy of your philanthropy, and you
may well have contributed to them, perhaps on an
annual basis. In the past, when you’ve made charitable
donations, it’s been a win-win: You were able to provide
support to a worthy organization and you received some
valuable tax benefits. But with the passage of the new tax
laws, things may have changed considerably for many
people. Are there still tax benefits to making a charitable
donation?
Here’s some background: Previously, you may have been
able to deduct your charitable donations if you itemized
deductions on your income tax return. So, for example, if
you were in the 25 percent tax bracket and you gave $1,000
to a qualified charity, you may have been able to deduct
$250.
But under the new tax laws, the standard deduction is
almost doubled for 2018, to $24,000 for joint filers, and
$12,000 for single filers. As a result, far fewer people are
likely to itemize their deductions. If you’re in this group,
you may find that you have less incentive, at least for tax
reasons, to make charitable gifts.
Even if you aren’t 70 ½ yet, you might still gain some tax
benefits from certain types of charitable donations. When
you itemized, and you donated appreciated stocks, you
were generally allowed a charitable deduction for the full
fair market value of the stocks on the date of the transfer,
even if your original cost was only a fraction of that value.
Now, if you don’t itemize, that charitable contribution is not
deductible, but you can still avoid the capital gains taxes
you’d have to pay if you sold the securities, rather than
donating them.
Finally, you could name a qualified charity as a
beneficiary of your IRA or 401(k). This can allow the assets to
pass free of income tax to the charitable group.
Given the increased standard deduction resulting from
the new tax laws, many charitable groups are worried
about the potential loss of contributions. Nonetheless, as
we’ve seen, you can still find ways to get some tax benefits
from your own charitable gifts. And you’ll still get the same
satisfaction from supporting a good cause.
This article was written by Edward Jones for use by your local
Edward Jones Financial Advisor.
Edward Jones, its employees and financial advisors cannot
provide tax or legal advice. You should consult your attorney or
qualified tax advisor regarding your situation.
However, receiving a tax deduction is not the only
tax benefit of making a charitable gift. If you own an IRA
and you’re 70½ or older, you generally must start taking
withdrawals – technically called required minimum
distributions, or RMDs – from your traditional IRA. (Roth
IRAs are not subject to RMDs until after the death of the
owner.) If instead of withdrawing the money, the IRA
owner decides to transfer the funds directly to a qualified
charity, the distributed amount can be excluded from the
IRA owner’s income. So, in effect, you can get a sizable tax
benefit from your generosity. In fact, you may be able to
move up to $100,000 from your IRA per year to an eligible
charity and have it count as your RMDs, even if the amount
donated is more than the required minimum withdrawal.
Matt
Dudkowski,
AAMS®
Matt
Dudkowski,
AAMS® | Financial
Advisor | 1007 Mt Royal Blvd. Pittsburgh, PA 15223 | 412.487.3300
Financial Advisor
[email protected] om
| www.edwardjones.com
.
Matt
Dudkowski
has been
1007
Mt Royal
Blvd a financial advisor with Edward Jones since 2002, serving individual investors in
the
Pittsburgh area
from
his Shaler Township office. In January of 2015, Dudkowski accepted an invitation
Pittsburgh,
PA
15223
to 412-487-3300
become a limited partner with the firm.
Since joining Edward Jones, Dudkowski has obtained the professional designation of AAMS®. Prior to Edward
Jones, Dudkowski, as a CPA, worked at the H.J. Heinz Company, and at Ernst & Young LLP.
He currently serves on the board of directors for Keystone Wellness Programs, a local nonprofit organization.
A native of Butler County and a graduate of the University
of Notre Dame, Dudkowski resides in Gibsonia with his wife,
two sons and daughter.
Matt Dudkowski has been a financial advisor with Edward Jones since
2002, serving individual investors in the Pittsburgh area from his Shaler
Township office. In January of 2015, Dudkowski accepted an invitation to
PINE-RICHLAND
❘
FALL 2018
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