As many of you may know, there was a sweeping overhaul of the US tax legislation signed into law in 2017. This legislation represented the most significant tax changes in the United States in more than 30 years. Among the modifications in the law were those that affected tax deductions; the standard deduction for single taxpayers and married taxpayers filing separately rose to $12,000 and the standard deduction for married taxpayers filing jointly rose to $24,000.
For many people, this increase meant that it could be more financially beneficial to take the standard deduction rather than to itemize deductions for federal income taxes.
While clearly an individual choice, this change in deductions can have an effect on charitable giving and the causes people care about the most. Kavod and other nonprofits that depend on your annual investments hope you will continue to donate regardless of tax deductions.
Tax experts also recommend that prospective donors look into other creative ways of giving, such as the following:
- Giving appreciated investments, such as stock shares. Giving stock allows you to deduct the investments’ full market value (subject to certain limits) without having to pay capital gains tax on the appreciation.
- Donate the RMD from your IRA. That is a lot of abbreviations, but basically what this means is that if you are age 70 ½, you are required to take the Required Minimum Deduction (RMD) from your IRA. One way to avoid paying tax on the distribution is to donate it to a charity. Kavod Senior Life is a qualified IRS Charity and you can donate up to $100,000. This is a great way to help yourself and help Kavod at the same time. Your donation must occur via a trustee-to-trustee transfer. In other words, the company that administers your IRA transfers your donation directly to the Kavod, without it ever touching your hands. This is the only way to ensure you will not be taxed on the entire amount.
- Alternate your giving. You may wish to alternate years, giving little or nothing for one year and making large gifts the next.
As the end of the year approaches, we hope you’ll consider a gift to the award-winning programs here at Kavod Senior Life. With your help, we can continue to ensure that our older adults can live their best lives possible and remain a vital and active part of our city and community.