Tax Reform and Your Charitable Giving Plans

As we near giving season, many individuals throughout our community who have a long history of philanthropy will find themselves in unchartered territory.

After the passage of the Tax Cuts and Jobs Act late last year, the standard deduction rose significantly—nearly doubling to $12,000 for individuals and $24,000 for married couples.  Many predicted that this change will significantly impact charitable giving; according to the Tax Policy Center, a nonpartisan think tank, predicts that because of the new tax law, only 11% of households will continue to itemize tax deductions, down from over a quarter under the previous law.

Below we’ve offered some tips and strategies that can help you navigate the new reform, while still making the most impact with your philanthropic giving this year.  Top on our list is a new tactic for tax-savvy givers called “bunching” which could help philanthropically-minded donors

Consider “Bunching” Your Charitable Gifts This Year

Bunching is a giving strategy that allows individuals to contribute several years’ worth of charitable contributions into a Donor Advised Fund at the Foundation in one calendar year. Bunching ensures a donor will have enough charitable donations to exceed the increased standard deduction threshold, and still receive the maximum tax benefits. Donors can then grant the dollars in their fund to nonprofit organizations at the time and year that they choose, while maintaining a similar level of giving and timing as in previous years.

At the Omaha Community Foundation, we can help you take advantage of charitable bunching, and ensure it aligns to your personal giving strategy. We work with donors of all levels to ensure their philanthropy is as meaningful and impactful as possible.

Take Advantage of the IRA Charitable Rollover

While standard deductions changed significantly under the new law, many philanthropic giving tools remain intact and offer attractive opportunities for charitable giving. The IRA Charitable Rollover allows individuals 70.5 and older to transfer up to $100,000 from an IRA to a fund at the Community Foundation without triggering federal income taxes today, or estate tax in the future. If married, each spouse is eligible for the tax-free IRA transfer. Not all fund types are eligible for receipt of assets from an IRA, so if you are considering this option, please reach out to a member of our Donor Services team to ensure this solution works for you.

Giving Real Estate, Stock, or other Assets

Giving stock remains one of the easiest ways to give. If you have held appreciated stock for more than a year, you can take a charitable tax deduction for the fair market value of the stock, and neither you or the nonprofit will pay capital gains taxes upon its sale. At the Foundation, we can help facilitate the conversion of your gifted stock into charitable dollars, and help distribute it to multiple nonprofit organizations on your behalf.

With each of these strategies, the Omaha Community Foundation is committed to partnering with donors to maximize your philanthropic impact, while helping to make your charitable giving seamless.

For more information on taking full advantage of your tax benefits with bunching, or to learn more about opening a charitable giving fund at the Foundation, please contact us at giving@omahafoundation.org or at 402-342-3458.

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