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From the Desk of Erin Clemons, president & CEO: Year-End Giving Advice from Flynn & Co.

Posted on: December 19, 2017

Thanks to our friends at Flynn & Company, we have provided you with some information about year-end charitable giving options. We are thrilled to continue our partnership with Rick Flynn, President & CEO of Flynn & Company, Inc.  Since our establishment in 1999, Flynn & Company has been alongside us as we serve our communities, striving to be a leader in philanthropy and to meet the evolving needs in the area. Our goal is to anticipate those needs, and build a sustainable source of funding through endowment to support organizations and programs that work to address the identified needs – now and in the future.

Things to Consider When Making a Charitable Gift This Year

With recent trends in the stock market and projected changes under the Tax Cuts & Jobs Act, you may be wondering what the financial implications might be of making a year-end charitable gift this year. How will these changes affect your plans to make charitable gifts?

The Community Foundation of West Chester/Liberty has reached out to Flynn & Company, Inc. CPA’s and Business Consultants to share some insights on this topic. Flynn & Company, Inc. specializes in working with businesses, individuals and nonprofits to create innovative and practical solutions to help their clients achieve greater bottom line profits. The firm has been providing comprehensive CPA services for over 24 years to clients in the Greater Cincinnati region.

  • Impact of the Stock Market

The stock market has recently hit a record high. If you are looking to sell highly appreciated assets, you may be subject to capital gains tax. There are many ways to be tax efficient when making charitable gifts. For example, donating appreciated stock could make sense in order to avoid paying capital gains taxes. Further, if you are in a higher tax bracket this year than you might be next year, it could be beneficial to accelerate next year’s gifts to this year. If the numbers are large enough, you might even consider a private foundation or donor advised fund for your charitable giving. Estate planning should be carefully interwoven with your charitable giving plans.

  • IRA Distributions to Charity

The IRS regulations allows IRA owners who are 70-1/2 or older to direct up to $100,000 of their IRA distributions to charity. The money given to the charity counts toward the donor's required minimum distribution, but doesn't increase the donor's adjusted gross income or generate a tax bill. Keeping the donation out of the donor's AGI is important because doing so:

(1)    helps the donor qualify for other tax breaks (for example, having a lower AGI can reduce the threshold for deducting medical expenses, which are only deductible to the extent they exceed 7.5% of AGI (10% of AGI for people under age 65 and for everyone after 2016);

(2)    reduces taxes on the donor's Social Security benefits; and

(3)    helps the donor avoid a high-income surcharge for Medicare Part B and Part D premiums (which kick in if AGI is over certain levels).

  • 2018 Tax Planning Considerations

For contributions made in tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the 50% limitation for cash contributions to public charities and certain private foundations is increased to 60%. Contributions exceeding the 60% limitation are generally allowed to be carried forward and deducted for up to five years, subject to the later year's ceiling.

With the changes projected under the Tax Cuts & Jobs Act, the standard deduction will be nearly double for individuals. For some families, this will make the charitable contributions deduction go away because their other allowable itemized deductions will not exceed the standard deduction. In order to be able to take the charitable contributions, pushing planned 2018 charitable contributions into December 2017 will allow for a tax break that may not be allowed due to your personal situation in 2018.

 

About the Community Foundation of West Chester/Liberty

The Community Foundation of West Chester/Liberty connects the passions of donors with the purposes of nonprofits to create a stronger, more vibrant community. We provide a variety of charitable funds and gift options to help our partners achieve their philanthropic goals. By bringing together donors, professional advisors, and nonprofit agencies, the Community Foundation of West Chester/Liberty is a powerful catalyst for building charitable giving and effecting positive change in our area.