You Can Still Gain Tax Benefits from Charitable Donations

Submitted by Edward JonesPrint Story | Email Story

Like most people, you probably know several organizations worthy of your philanthropy, and you may well have contributed to them, perhaps on an annual basis. In the past, when you've made charitable donations, it's been a win-win: You were able to provide support to a worthy organization and you received some valuable tax benefits.

But with the passage of the new tax laws, things may have changed considerably for many people. Are there still tax benefits to making a charitable donation?

Here's some background: Previously, you may have been able to deduct your charitable donations if you itemized deductions on your income tax return. So, for example, if you were in the 25 percent tax bracket and you gave $1,000 to a qualified charity, you may have been able to deduct $250.

But under the new tax laws, the standard deduction is almost doubled for 2018, to $24,000 for joint filers, and $12,000 for single filers. As a result, far fewer people are likely to itemize their deductions. If you're in this group, you may find that you have less incentive, at least for tax reasons, to make charitable gifts.


However, receiving a tax deduction is not the only tax benefit of making a charitable gift. If you own an IRA and you're 70 1/2 or older, you generally must start taking withdrawals – technically called required minimum distributions, or RMDs – from your traditional IRA. (Roth IRAs are not subject to RMDs until after the death of the owner.) If instead of withdrawing the money, the IRA owner decides to transfer the funds directly to a qualified charity, the distributed amount can be excluded from the IRA owner's income. So, in effect, you can get a sizable tax benefit from your generosity. In fact, you may be able to move up to $100,000 from your IRA per year to an eligible charity and have it count as your RMDs, even if the amount donated is more than the required minimum withdrawal.

Even if you aren't 70 1/2 yet, you might still gain some tax benefits from certain types of charitable donations. When you itemized, and you donated appreciated stocks, you were generally allowed a charitable deduction for the full fair market value of the stocks on the date of the transfer, even if your original cost was only a fraction of that value. Now, if you don’t itemize, that charitable contribution is not deductible, but you can still avoid the capital gains taxes you’d have to pay if you sold the securities, rather than donating them.

Finally, you could name a qualified charity as a beneficiary of your IRA or 401(k). This can allow the assets to pass free of income tax to the charitable group.

Given the increased standard deduction resulting from the new tax laws, many charitable groups are worried about the potential loss of contributions. Nonetheless, as we’ve seen, you can still find ways to get some tax benefits from your own charitable gifts. And you’ll still get the same satisfaction from supporting a good cause.

This article was written by Edward Jones for use by your local Edward Jones financial advisor. Courtesy of Rob Adams, 71 Main Street, North Adams, MA 01247, 413-664-9253.. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation. For more information, see EdwardJones.com.

 


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Macksey Updates on Eagle Street Demo and Myriad City Projects

By Tammy DanielsiBerkshires Staff

The back of Moderne Studio in late January. The mayor said the city had begun planning for its removal if the owner could not address the problems. 
NORTH ADAMS, Mass. — The Moderne Studio building is coming down brick by brick on Eagle Street on the city's dime. 
 
Concerns over the failing structure's proximity to its neighbor — just a few feet — means the demolition underway is taking far longer than usual. It's also been delayed somewhat because of recent high winds and weather. 
 
The city had been making plans for the demolition a month ago because of the deterioration of the building, Mayor Jennifer Macksey told the City Council on Tuesday. The project was accelerated after the back of the 150-year-old structure collapsed on March 5
 
Initial estimates for demolition had been $190,000 to $210,000 and included asbestos removal. Those concerns have since been set aside after testing and the mayor believes that the demolition will be lower because it is not a hazardous site.
 
"We also had a lot of contractors who came to look at it for us to not want to touch it because of the proximity to the next building," she said. "Unfortunately time ran out on that property and we did have the building failure. 
 
"And it's an unfortunate situation. I think most of us who have lived here our whole lives and had our pictures taken there and remember being in the window so, you know, we were really hoping the building could be safe."
 
Macksey said the city had tried working with the owner, who could not find a contractor to demolish the building, "so we found one for him."
 
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