COLORADO SPRINGS – Under the new tax law many more filers will be taking the standard deduction instead of itemizing.
Carl Carlson, CEO of Carlson Financial explained how this will impact charitable contributions you’ve made.
With standard deductions jumping to $12,000 for single filers and $24,000 for married couples, using charitable contributions to your advantage is going to be a little tricky.
Carlson said, “If they were itemizing and when they’re itemized deductions added up to $15,000, $18,000, now that’s not going to do them any good because it’s $24,000 standard.”
Carlson said, first off, don’t just stop giving to charities.
“One thing you could do, let’s say you usually give in December, so you write a big check to your church or whatever it might be in December. Now what you might consider doing is wait and write that check in January and then write your normal one that following year in December, and get them both in the same year.”
If that brings you past the $12,000 or $24,000 mark Carlson said, “Now you get a benefit for that charitable giving so lumping them together in one year is a way to possibly take advantage of the charitable giving.”
If you can’t swing two big donations there’s other options to consider.
“Give highly appreciated stocks…you get credit for the actual value of it, the market value of it.”
You won’t have to pay taxes on it and neither will the charity on the capital gain.
Carlson said if you’re over the age of 70 and you’re not able to take advantage of a contribution you can use a QCD or Qualified Charitable Distribution. You can make a donation directly from your IRA.
While these tricks may not be to your advantage this tax season, Carlson said they will be in the coming years.
Carlson Financial is a sponsor of Financial Focus.