Tax Strategies for Charitable Giving
Donors may need to bunch their donations into a single year to itemize deductions.
Can I still get a tax break for donating to charity in 2018? I know the new tax law changed the rules. - T.W., Mountain City, Tenn.
You still get a tax break for charitable donations if you itemize deductions on your tax return. But the new tax law nearly doubled the standard deduction, meaning fewer people will itemize. You’ll come out ahead by itemizing if your charitable gifts plus other deductions total more than the standard deduction, which in 2018 is $12,000 for individuals or $24,000 for married couples filing jointly (plus an extra $1,600 for singles 65 or older or $2,600 for joint filers if both are 65 or older).
Making two or three years’ worth of charitable contributions at once could put you across the threshold to take the deduction. One good way to do that is by contributing to a donor-advised fund (available at brokerage firms and community foundations). You can take a tax break for the year you contribute, but you’ll have unlimited time to decide which charities you want to support.
You can also continue to get a tax break for donating shares of appreciated stock, mutual funds and real estate to charity. As long as you’ve held the investment for longer than a year, you’ll avoid capital-gains taxes on the profits.
And if you’re 70½ or older, you can give up to $100,000 tax-free from a traditional IRA to charity each year, which counts toward your required minimum distribution but isn’t included in your adjusted gross income. The money must go directly to a charity, not to a donor-advised fund.