A savvy way you can give more to charity, and pay less in taxes

A savvy way you can give more to charity, and pay less in taxes

Under the Tax Cuts and Jobs Act of 2017 (TCJA), the standard deduction available to taxpayers increased substantially. However, for taxpayers who choose to itemize their deductions, TCJA limited or discontinued certain previously deductible expenses, such as state and local income, sales, property taxes, and charitable deductions. One workaround is to accelerate your charitable giving using a donor-advised fund.

Potential advantages of using a donor-advised fund

This hypothetical example assumes that the persons involved are single; that they take the standard deduction for federal income taxes, except in the first year for the person who donates $50,000 to a donor-advised fund; and that the money in the donor-advised fund grows at a projected rate of 6% a year.1 Each person then makes a $10,000 charitable donation a year for the first four years. However, the person who initially contributed to the donor-advised fund makes a $16,753 charitable donation in the fifth year as a result of the fund’s capital appreciation. (Any taxes saved on capital gains realized by donating appreciated securities or property are in addition to any tax savings shown below.)

* Each year.
1 The assumed 6% rate of return is not guaranteed. It is an illustrative example of a long-term average return on a balanced investment of stocks and bonds. Market returns are not constant and will fluctuate annually. Lower tax rates on dividends and capital gains may make the taxable investment more favorable and the difference between taxable and tax-deferred ending balances less. Any future changes in the tax treatment of investment earnings or a rate of return that is lower than the assumed rate of return may further affect the comparison. Consider your time horizon and current and expected future tax rates before making an investment decision. You should consult a tax or financial advisor about your individual situation.

Detalus and its affiliates do not provide tax, legal, or accounting advise. You should consult with your tax, legal, or accounting advisor before engaging in these types of transactions.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.