Tax Law Impacts On Giving

With the new tax law, many taxpayers may be better off taking the standard deduction rather than itemizing their deductions – including charitable gifts. Do not fret! There are still ways to give that allow some tax benefits!

  • If you own appreciated stock, you can donate that instead of cash. Capital gains tax will not be collected (from you or Laura Baker Services Association) if you transfer the stock directly to a charity.
  • Those 70 1/2 or older who are taking mandatory distributions from a traditional IRA (Individual Retirement Account) are required to count those dollars in your income for the year, as they were deposited pre-tax. If you direct your IRA custodian to send your distribution – or some portion of it – directly to Laura Baker Services Association, it won’t be counted in your income for that year since you don’t actually receive it.
  • Set up a Donor Advised Fund (DAF). Many financial institutions offer Donor Advised Funds which allow you to deposit a large amount in one tax year, and then direct gifts to charities, as you normally would, for many years afterward. There are some limitations to DAFs, however – an important one being that you cannot use those funds to pay off pledges since, technically, you no longer control those dollars.

Recently, the Department of Revenue announced that taxpayers who take the standard deduction at the federal level will still be able to itemize their 2018 Minnesota state income tax returns. Consult with your own financial adviser to ensure these tactics will work for you. He or she may have other tax-efficient ways for you to make your gifts to LBSA this year.

2017 Standard Deduction

$6,350: Individual | $12,700: Married, filing jointly

2018 Standard Deduction

$12,000: Individual | $24,000 Married, filing jointly

Why Do You Give?

We understand that you may be disappointed if you won’t be able to take a tax deduction for your charitable gifts this year. This brings up the question of why we give. Is a tax deduction the reason behind your giving? Probably not. Of course the deduction is nice, but more than likely – and more importantly – you value the work Laura Baker Services Association does and you want to be a part of ensuring it continues. LBSA still needs you. We hope you can continue to support LBSA this year and into the future.