Charitable gifting laws for tax deductions

[street]

How has the laws changed for tax deductions when giving to a charity organization?

[kaneohe]

Depending on your individual circumstances , it might be harder to deduct a charitable contribution since the std deduction was increased.

I have no mortgage, a low property tax, and state income taxes. The SALT limitation of 10K caps the deductible property/state income taxes at 10K and the std deduction for MFJ is 24K+. Unless I contribute more than 14K+ , I won't be able to deduct the contributions.

Might be easier if single since std deduction is 12K but depends on what other
deductions you have.

If over70.5 y.o. the QCD from IRA works better for those charitable gifts.

[Dash man]

We should be able to deduct most of our charitable giving this year. We’ll easily hit the max on SALT. Add in high health care premiums and coinsurance easily surpassing 10% of our income, we should pass $24k.

[street]

Thanks for explaining how it works.

[kaneohe]

for completeness .....add 1.3K to std deduction if single (over 65) or
2.6K to std deduction if MFJ (over 65)

[Souschef]

Quote:

Originally Posted by kaneohe Depending on your individual circumstances , it might be harder to deduct a charitable contribution since the std deduction was increased. I have no mortgage, a low property tax, and state income taxes. The SALT limitation of 10K caps the deductible property/state income taxes at 10K and the std deduction for MFJ is 24K+. Unless I contribute more than 14K+ , I won't be able to deduct the contributions. Might be easier if single since std deduction is 12K but depends on what other deductions you have. If over70.5 y.o. the QCD from IRA works better for those charitable gifts.

Absolutely! I have been doing it for a number of years.

[donheff]

I have itemized forever but with mortgages gone and limited out of pocket medical expenses I will be using the standard deduction this year. In the future I can pay my charities from a QCD

[kaneohe]

Some important info re: QCDs
The check from IRA trustee must be made out to the charity. The trustee can send it directly to charity or to you to send to charity. The example at the bottom is very useful for tax filing.

https://taxmap.irs.gov/taxmap/pubs/p...m#TXMP71b225fb

"Qualified charitable distributions.(p13)
rule
A qualified charitable distribution (QCD) is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax deductible contributions. You must be at least age 701/2 when the distribution was made. Also, you must have the same type of acknowledgment of your contribution that you would need to claim a deduction for a charitable contribution. See Records To Keep in Pub. 526.
The maximum annual exclusion for QCDs is $100,000. Any QCD in excess of the $100,000 exclusion limit is included in income as any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $100,000. The amount of the QCD is limited to the amount of the distribution that would otherwise be included in income. If your IRA includes nondeductible contributions, the distribution is first considered to be paid out of otherwise taxable income.
Deposit
A QCD will count towards your required minimum distribution, discussed earlier.
EIC
You can't claim a charitable contribution deduction for any QCD not included in your income.

Example.(p13)
On December 23, 2017, Jeff, age 75, directed the trustee of his IRA to make a distribution of $25,000 directly to a qualified 501(c)(3) organization (a charitable organization eligible to receive tax-deductible contributions). The total value of Jeff's IRA is $30,000 and consists of $20,000 of deductible contributions and earnings and $10,000 of nondeductible contributions (basis). Since Jeff is at least age 701/2 and the distribution is made directly by the trustee to a qualified organization, the part of the distribution that would otherwise be includible in Jeff's income ($20,000) is a QCD.
In this case, Jeff has made a QCD of $20,000 (his deductible contributions and earnings). Because Jeff made a distribution of nondeductible contributions from his IRA, he must file Form 8606 with his return. Jeff includes the total distribution ($25,000) on line 15a of Form 1040. He completes Form 8606 to determine the amount to enter on line 15b of Form 1040 and the remaining basis in his IRA. Jeff enters -0- on line 15b. This is Jeff's only IRA and he took no other distributions in 2017. He also enters "QCD" next to line 15b to indicate a qualified charitable distribution.
After the distribution, his basis in his IRA is $5,000. If Jeff itemizes deductions and files Schedule A with Form 1040, the $5,000 portion of the distribution attributable to the nondeductible contributions can be deducted as a charitable contribution, subject to AGI limits. He can't take the charitable contribution deduction for the $20,000 portion of the distribution that wasn't included in his income.SS"

[RetireBy90]

last year we established a charitable trust through Fidelity. It was very simple and we funded it with appreciated stock from non-tax advantaged accounts (not IRA nor 401K).
Got the deduction at the higher tax rates so saved some taxes doing that. They allowed us to contribute the equities, so there was no tax on capital appreciation.


We plan to put appreciated equities in as we can over next few years to bunch contributions into one year so we can get a deduction (if we need to).

[JoeWras]

Yep. Bunching by years is our future strategy. We are using a Donor Advised Fund to do the bunching. Distributing from it can occur on a non-bunched basis.

[scrabbler1]

For the last few years, my itemized deduction has been between the old standard deduction and the new one starting in 2018. This means, barring a large medical expense (like I had in 2015 when I was in the hospital), I will be taking the SD from now on.


Knowing this was going to happen before the end of 2017, I made a chartable donation of some old clothes last December while I could still gain some tax benefit from it. I bet charities saw a spike in donations late last year, as I couldn't be the only person in this situation.