Tax Tips to Multiply Your Impact

Many people give to the Lord’s work out of joyful generosity and to make an impact for Christ, but the Lord also teaches us to be wise with the resources He has entrusted to us.  With the new Tax Cut and Jobs Act of 2017, there are opportunities in 2018 to be strategic in our giving.

The standard deduction has now been increased to $12,000 for singles and $24,000 for married couples and Congress has eliminated many itemized deductions.  Some of the few itemized deductions that remain are:

  1. State and local income tax and property tax up to $10,000
  2. Mortgage interest up to $750,000
  3. Charitable gifts deductions up to 60% of adjusted gross income

For higher income taxpayers, the Pease Rule has also been suspended through 2025 which caused higher income taxpayers to lose up to 80% of their itemized deductions.

For givers who want to be strategic in their giving and maximize their deductions, here are four charitable strategies to multiply your impact.

  1. Front-load Your Giving

If your cumulative deductions will not exceed the standard deduction, you could (resources permitting) front-load your giving for multiple years to the ministries you support or to a Donor-Advised Fund.  With a Donor-Advised Fund, you would get a full charitable deduction in the year you make the contribution, and then distribute your grants as you decided over multiple years.  Donor-Advised Fund, sometimes referred to as a “charitable bank account,” can be set up through the Forest Home Foundation.

  1. Give Appreciated Assets

One of the biggest tax advantages is the double benefit you receive when donating appreciated assets instead of cash.  By giving appreciated assets, like stock, held for more than a year, you get a charitable tax deduction for the fair market value and avoid all capital gains taxes.  Also, many people may not realize that because of the new tax law changes, their effective capital gains tax rates have increased.  In prior years, you could deduct state capital gains taxes from your federal return.  Now state and local income taxes and property tax deductions cannot exceed $10,000.  Therefore, making gifts of appreciated assets are even more tax advantageous.  When you contribute capital gain property to Forest Home, you can deduct up to 30% of your adjusted gross income and carry over any unused deduction in each of the next five years.

  1. Make a Gift that Pays You Income

Interested in a gift that benefits you and invests in changed lives at Forest Home? If you are age 60 or older, a life income gift is a gift that gives back to you. It can provide you with an immediate charitable tax deduction and pay you income for life. You can also donate appreciated assets. Those assets can be sold, and the full amount reinvested without incurring capital gains tax at the time of the transfer. Click here, to learn more about a Forest Home Charitable Gift Annuity.

  1. Charitable IRA Rollover

If you are 70½ or older, you can make a tax-free distribution directly from your IRA custodian to Forest Home.  You can give up to $100,000 each year without incurring taxable income on your withdrawal and satisfy your required minimum distribution. For those who will not itemize, a Charitable IRA Rollover can be a tax-wise strategy to support Forest Home.

God’s Word teaches us that everything we have is from the Lord. Jesus taught us in the parable of the wise steward (Matthew 25:14-30) that when Jesus is our Lord and we live for His Kingdom, we are asked to be prudent managers of all that He has entrusted to us. If we are faithful to invest our lives for Him, we will hear Him say, “Well done, good and faithful servant!”

For more information about tax-wise giving, please contact David Carlson, MBA, ChFC®, CLU®, CLPF, President of the Forest Home Foundation, at 909-389-4430 or davidc@foresthomefoundation.org today.

We strongly urge that you consult with your attorney, financial advisor, insurance agent and/or tax advisor. This information in no way constitutes legal or tax advice. It is intended to be broadly educational in nature without reference to your situation. We will gladly work with your independent advisors to assist in any way.

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