Advisors’ 2021 Year-End Checklist for Charitable Giving
The end of 2021 is drawing near, and that means that year-end planning conversations with clients are on the rise. A great way to set yourself apart is to provide…
Read MoreFilter Posts
The end of 2021 is drawing near, and that means that year-end planning conversations with clients are on the rise. A great way to set yourself apart is to provide…
Read MoreIt happens time and again. While most owners have 80-90% of their assets locked up inside of their business, it’s remarkable how unprepared many of them are at the point of…
Read MoreSummer is drawing to a close. With fall around the corner, the prospect of cooler temperatures, autumn colors, and pumpkin spice everything, the year-end giving season is also upon us.…
Read MoreWhen it comes to charitable giving, it often seems like the world’s wealthiest individuals have it figured out. With so many assets to manage, these donors know how to support charitable causes while capitalizing on the tax benefits of the giving process, right? Unfortunately, not all get it right. In July, an article in Forbes announced that Warren Buffett is donating $3.6 billion of his Berkshire Hathaway stock to charity. It also offered advice on how other donors could maximize their giving by following in Buffett’s footsteps. The problem? Buffett is primarily giving the stock to private foundations. Consequently, he is missing out on significant tax benefits he could receive if he utilized a donor advised fund (DAF) instead. There are important differences, when it comes to tax benefits, that all donors and advisors should consider.
Read MoreHappy Spring! I love this time of year because the weather is getting warmer, lots of good basketball games, and it is tax time. Yes, I get excited about tax season because we finally find out how year-end tax planning strategies worked. This is especially true because the 2018 tax year applied the new 2017 tax reform laws. Based on the phone calls I have received this Spring, a lot of people are feeling the effects of the changes. Below is a recap of these conversations and some potential solutions moving forward: Doubled Standard Deduction. Only about 10% of all households in the U.S. will itemize their tax deductions for the 2018 tax year. The standard deduction (increased to $24,000 for married and $12,000 for individual), meant that many households that itemized deductions, including charitable giving, will no longer need to itemize. Unfortunately, several households left tax savings on the table, because they failed to plan properly. SALT Deduction Capped. State and local taxes (SALT) used to be fully deductible, but now SALT deductions are now capped at $10,000. This has affected several middle-income earners. Charitable Deduction Increases. Taxpayers that itemize may now deduct up to 60% of their adjusted gross income each year in charitable contributions; a 10% increase from 2017. Taxpayers may carry forward any amount that exceeds this limit up to five years after the gift is made. Taxpayers may still deduct up to 30% of their AGI using gifts non-cash assets to charity. The most noticeable effect of the 2017 tax reform, from a charitable giving standpoint, most households will not receive a tax benefit (in the form of a deduction) from their charitable gifts in 2018. In my opinion, this has occurred because of the increased standard deduction and the cap on the SALT deduction. For 2019, make sure that your clients consider two easy tax-saving strategies: Bunching charitable gifts one year using a donor advised fund. By combining multiple years of charitable giving in 2019, clients will be able to itemize their deductions for 2019. In the subsequent years, the client could give to charity from their DAF and then take the standard deduction for those years. Click here to learn more about bunching. Give assets! While several itemized deductions have been eliminated, the charitable deduction remained intact, including donating capital assets (assets that would be subject to long-term capital gains tax). When capital assets are given the donor receives a fair market value income tax deduction for the donation, and the capital gains that would have been paid will likely be avoided entirely by the charity. The vast majority of all charitable giving in the U.S. are cash gifts, but the real tax benefit is by donating capital assets! Make sure your clients do it!
Read MoreThe new tax reform laws that were passed December 2017 essentially got rid of the tax incentive to give to charity, at least for the majority of middle- and low-income…
Read MorePeople continue to sort out implications of the new tax law. What are the opportunities and challenges particularly as it relates to charitable giving? Opportunities 1) The law allows for people…
Read MoreWhat would you do? In 2012, Hobby Lobby faced a critical, company-ending decision. They could either face fines of $1.3 million per day or provide abortion-inducing prescriptions as part of…
Read MoreAs Congress works to implement tax reform, much of the focus has been on business and personal income tax relief and on simplifying the code. But in the flurry of…
Read More