6 considerations for giving in an age of (potential) tax reform

In recent weeks, both houses of Congress have passed major tax reform bills. While the House and Senate plans differ in many respects, they share several provisions in common that are likely to become law later this year with the signature of President Trump, and some of those provisions would have an impact on the tax benefits of charitable giving.

Some of our donors have asked whether they should make gifts in this calendar year under the current tax law that they had planned on making in future years. If you have similar questions, perhaps these thoughts will be helpful to you.

Six considerations for charitable giving in preparation of (potential) tax reform:

  1. Don’t panic! Let’s see what Congress actually passes and President Trump signs into law.
  2. Consult your financial advisor. If you’re working with a CPA or financial advisor, give that person a call to discuss how potential tax changes might affect your personal decision-making. Remember that the devil is in the details.
  3. Consider making a charitable gift before 2017 ends. Both houses of Congress have proposed increasing the standard tax deduction to be as high as $24,000. If that change becomes law, many taxpayers will no longer itemize their deductions, losing the chance to deduct charitable gifts. If you think you’ll be in that camp, consider accelerating gifts into 2017 to take advantage of the itemized deduction this year.
  4. Start thinking about your philanthropic priorities. If it turns out that accelerating gifts into 2017 makes sense for you, be ready with some ideas about the charitable gifts you’d like to make.
  5. Explore a donor-advised fund. If you are considering accelerating significant gifts into 2017 for tax reasons, you may want to establish a donor advised fund at your local community foundation or with a national financial institution such as Fidelity or Vanguard.  A donor advised fund would allow you to make tax-deductible gifts in one year, and put off the decision about which nonprofits will benefit from your gifts until a later year.
  6. If you are age 70 ½ years or older, remember the charitable IRA rollover gift option. This provision has not been a major point of discussion in the tax reform debate, but it bears noting here nonetheless! This technique allows a taxpayer to direct up to $100,000 each year from an IRA to a charity. This transfer satisfies the taxpayer’s required minimum distribution and the amount rolled-over will not be included in the taxpayer’s adjusted gross income for the year (potentially lowering Medicare premiums and making other tax-breaks more available).

Duke University Office of Gift Planning encourages you to discuss this matter with your financial advisor. Please contact a member of our team  if we can be of assistance in any way.

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Gift Planning

giftplanning@duke.edu

Duke University’s Office of Gift Planning specializes in charitable gift planning for estates, charitable trusts and annuities, and other complex current and future gift plans.

For more information, please contact the Duke University Office of Gift Planning.