Investing with Faith / Elisa Smith

Answers to what the new tax act means to charitable giving

It has been said that the Tax Cuts and Jobs Act of 2017 is the most significant overhaul of the federal tax system since the Tax Reform Act of 1986.

This column will address questions we are receiving from donors regarding what the new tax law means for charitable giving.
 

Q. Can I still itemize my deductions this year?

A. For 2018, the basic standard deduction will be $24,000 for joint filers, $12,000 for single filers and $18,000 for heads of household. If your itemized deductions for the tax year are greater than your standard deduction amount, you may be able to itemize.
 

Q. What is the charitable deduction limit for 2018?

A. The tax act created a new 60 percent charitable deduction limit which applies strictly for cash contributions to public charities—not real property or appreciated assets or other noncash gifts. Donors can now deduct up to 60 percent of adjusted gross income (AGI), up from 50 percent. If cash donations exceed that limit, you can carry forward any unused deductions for five years.
 

Q. What is meant by “bunching” charitable contributions?

A. “Bunching” is a strategy whereby donors make larger charitable contributions in some years and smaller or no gifts in other years. In doing so, taxpayers can still itemize deductions for those years in which they are making larger charitable contributions, and then can take the standard deduction for years in which they make little or no gifts.
 

Q. What is a donor-advised fund?

A. A donor-advised fund allows the donor to make a large charitable contribution to a fund, receive an immediate tax deduction for the donation, and then recommend grants from the fund to charities over time. Donor-advised funds can be established with the archdiocesan Catholic Community Foundation.
 

Q. What are other ways I can give to charity to save taxes?

A. Donating shares of appreciated securities is a way to avoid paying capital gains tax on the appreciation. In addition, if you itemize, you can deduct the fair market value of the asset as a charitable contribution. The deduction for contributing stocks to a public charity or donor-advised fund is limited to 30 percent of AGI. Again, you can carry forward unused deductions.

It is important to note that although the new tax law may impact when and how people make charitable contributions so as to receive maximum tax benefits, people will not stop giving to charities. Most people give because they want to support their charitable organization, express gratitude to God as an act of stewardship, or leave a legacy.

You may contact the Catholic Community Foundation at 800-382-9836, ext. 1482, or ccf@archindy.org to learn more. Or visit our website, www.archindy.org/CCF.
 

(Elisa Smith is director of the archdiocesan Catholic Community Foundation. Tax information or legal information provided herein is not intended as tax or legal advice and cannot be relied on to avoid statutory penalties. Always check with your legal, tax and financial advisors before implementing any gift plan.) †