News & Articles

How the Current Tax Law Affects Charitable Giving from IRAs

Posted on Mon, Mar 04, 2019

For charitable donors, the Tax Cuts and Jobs Act (TCJA) provided some tax breaks and took away others. Here's what charity-minded individuals need to know.

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Tags: IRA Distributions, Charitable Giving, Charitable Donations, Charitable Contributions, IRA

Ensure You Qualify for Charitable Donation Deductions

Posted on Thu, Jul 12, 2018

Giving to charity can provide you with a warm feeling as well as a nice tax break. But you've got to itemize deductions on your tax return. And, like most tax breaks, charitable deductions come with a number of rules you must follow to actually claim the write-off. Here are the details.

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Tags: Charitable Giving, IRS, Charitable Donations

Maximize the Tax Deductions Available for Your Generosity

Posted on Mon, Oct 23, 2017

The reporting requirements for claiming charitable contributions of cash on your tax return can be strict. If you don't follow them, your deductions may be disallowed by the IRS. You should also be aware that stringent rules also apply to donations of non-cash property.

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Tags: Individual Taxes, Gifts, Deductions, Charitable Donations

IRS Guidance on Leave-Sharing Programs to Help Hurricane Harvey Victims

Posted on Mon, Sep 11, 2017

The IRS recently announced special tax relief for leave-based donation programs set up by employers to assist victims of Hurricane Harvey and Tropical Storm Harvey.

Basics of Employer Programs

Under a leave-based donation program, an employer can allow its employees to forgo their vacation, sick, or personal time off in exchange for cash payments made by the employer to charitable organizations. Under IRS regulations, leave-based charitable donations are ordinarily included in the donating employee's income. In addition, the opportunity to elect such contributions raises the concern that eligible employees might be taxed on income that could have been donated because the ability to make the contribution triggers "constructive receipt."

IRS Relief

The new IRS guidance addresses both concerns:

  • Cash payments that employers make to qualified tax-exempt organizations in exchange for vacation, sick, or personal leave that their employees elect to give up won't constitute income to the employees if the payments are made before January 1, 2019, for the relief of victims of Hurricane Harvey or Tropical Storm Harvey.

    Such payments don't need to be included in Box 1, 3, or 5 of the employee's Form W-2.
  • The opportunity to make a leave donation won't result in constructive receipt of income. Employees who participate in these programs can't deduct the value of the donated leave on their income tax returns. Reason: Such deductions would involve "double-dipping" because the donated time off already would have been excluded from their incomes.

    Employers cannot claim a charitable deduction for the value of the forgone leave. However, they will be permitted to deduct the contributions as trade or business expenses without regard to the charitable contribution restrictions under the tax code.

This guidance closely resembles the relief for leave-based donation programs that the IRS has issued after other recent disasters, including last year's severe storms and flooding in Louisiana and Hurricane Matthew.

If you need more information about leave-based donation programs, consult with your EHTC Tax Advisor or employee benefits advisor.

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Tags: Employers, IRS, Charitable Donations

Save on Taxes While Doing Good

Posted on Wed, Jun 28, 2017

If you own assets that have appreciated significantly over the years, you may be able to profit more by giving them away than by selling them.

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Tags: Charitable Giving, Charitable Donations, Charitable Contributions, Trusts, Beneficiary Designations

It's Time to Review Your Financial Planning Options

Posted on Mon, Aug 29, 2016
Fall is a good time to pause and review your financial planning strategy. A lot can happen in a year. If your personal life, market conditions or tax laws have changed, you may need to revise your long-term financial plans. Here are some retirement and estate planning considerations that may be worthwhile.

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Tags: Roth IRA, Traditional IRA, Gifts, Charitable Giving, Charitable Donations, Roth IRA Conversion

7 Tax-Savvy Ways to Give to Charity

Posted on Wed, Aug 03, 2016

Charitable giving is on the rise. And the momentum is expected to continue, given the natural disasters and human tragedies that have happened in recent months.

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Tags: Charitable Donations, Charitable Contributions, Volunteer

Last-Minute Tax Savings: Hurry Before Time Runs Out

Posted on Mon, Dec 07, 2015

Another tax year is drawing to a close. But there's still time for individual taxpayers to trim their tax liabilities for 2015 and beyond, before the New Year begins. Here are 10 eleventh-hour moves that you can still make before the clock strikes midnight on January 1.

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Tags: Tax, Roth IRA, Charitable Donations, College Expenses, RMD

Are You Ready to Play the Charitable Giving Game?

Posted on Sun, Oct 19, 2014

Are you looking for a way to lower your 2014 tax bill? Qualified charitable contributions may help lower taxable income -- and, as an added bonus, allow you to support worthwhile causes. Approximately 40 percent of charitable giving occurs from Thanksgiving to New Year's Eve, according to the not-for-profit watchdog Charity Navigator. So now is a good time to review giving trends and the IRS substantiation requirements.

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Tags: EHTC Article, Charitable Donations, Newsletter, Articles, Charitable Contributions, Taxes

A Cautionary Tale about Charitable Donations

Posted on Fri, Aug 22, 2014

If you want to support a favorite charity -- and collect hefty tax deductions -- consider giving away appreciated assets that you've owned for more than a year. You'll avoid capital gains tax and get a tax deduction for your generosity.

If you're giving away a substantial amount, you need to choose your charity and make your donation carefully.

For example, let's say you want to give $10,000 worth of stock or mutual fund shares. You purchased the shares a few years ago for $4,000. You get a deduction for the fair market value of $10,000 and you avoid the long-term capital gains tax. The charity can sell the shares for $10,000 and also not owe any tax. If you held the shares and sold them, they'd be worth only $9,100 to you after paying the 15 percent tax on the $6,000 long-term gain.

But many taxpayers don't know that all charities aren't created equal. Make sure you donate appreciated assets to "50 percent charities," which include religious groups, schools, hospitals, and public charities. There are also "30 percent charities," such as veterans' organizations, domestic fraternal societies and some private foundations.

Although the IRS calls them 50 percent charities, you can deduct only as much as 30 percent of your adjusted gross income (AGI) in the year of the gift when you contribute appreciated securities. If your AGI is $100,000 and you give $40,000 in stock to your alma mater, you can only deduct $30,000. The remaining $10,000 must be carried forward to another year.

If you donate cash to these charities, however, you can deduct as much as 50 percent of your AGI. With a 30 percent charity, you can give as much as 30 percent of your AGI in cash, but only 20 percent in appreciated assets. If you want to make a large donation, give away appreciated securities but keep it to 20 percent of your AGI. Don't give away any other stock gifts in the same year to avoid confusion.

The Bottom Line: Keep it Simple

  • Give modest cash gifts to 30 percent charities.

  • Save your appreciated stock gifts for 50 percent charities, and keep them to no more than 30 percent of your AGI in any one tax year.

You don't have to worry about all these rules if you're simply writing a $25 check. But the rules are complicated when making very large charitable contributions. To be sure you're on sound footing, check with your tax professional.

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Tags: EHTC Article, Charitable Donations, Newsletter, Articles, Charitable Contributions, Appreciated Assets, Long-Term Capital Gains