Even if you don’t itemize, here are some strategies to make gifts to charity and still receive tax benefits:
- Make gifts of appreciated property such as publicly-traded securities to charity. The new law will still allow you to make gifts of appreciated assets you have owned for at least one year without triggering capital gain tax. If you itemize your deductions, you will get the double tax benefit of an income tax charitable deduction based on the full value of your appreciated assets in addition to complete capital gain tax avoidance.
- Make gifts to charity using the charitable IRA rollover. If you are over 70 and a half, you can make a direct transfer from your traditional IRA or Roth IRA to charity of up to $100,000. You will avoid all income tax on your withdrawal, even if you don’t itemize after the new law!
- You can make larger gifts to charity. Your total deductions may put you close to the threshold where itemizing your deductions offers greater tax benefits than taking the standard deduction. In this case, you might consider making a larger charitable gift so that you can enjoy the additional tax savings that itemizing would offer.
- Include a gift for charity from your estate. The new tax law retains current law and does not impose limits on estate tax charitable deductions. If you have sufficient assets and may be subject to estate tax, you might consider a gift to charity from your will, trust, or other estate planning documents. Such a gift will reduce your estate tax burden.
- Make a gift to charity from all or a portion of what’s left in your retirement plan. Assets in your IRA, 401(k), or other qualified retirement plan may be subject to income tax when distributed to heirs. Making a charity a beneficiary of a portion or all of your retirement plan will avoid the income tax that might otherwise be due from your heirs. This is an extremely tax efficient way for you to make gifts to charity that costs your heirs less than giving other kinds of assets.