Time to give back

With the passing of the new U.S. budget, government spending cuts to nonprofits and various federal programs are very real. And, with the doubling of the standard deduction, far fewer taxpayers will benefit from making charitable contributions. Tax breaks shouldn’t be the only reason to give back to the community, but it’s been traditionally a large motivator. There are strategies, however, that can make your charitable giving mutually beneficial.

If you know you’re taking the standard deduction this year, there are still ways to benefit from charitable giving. You can lump your giving into a single year, known as accelerated gifting. The larger contribution could bring you to itemize when you otherwise couldn't. Itemizing your return is the only way to take the deduction against your income.

If you’re an investor benefiting from the bull market you can donate appreciated stock to the charity of choice. This would remove the capital gain from your portfolio and the charity can sell the stock tax-free. Betterment, an investment platform, automates the giving strategy using technology. It can donate the shares with the highest embedded gain while allowing you to repurchase the same shares at the same time. It’s as if you’re making a cash contribution to the charity but through your portfolio instead.

Another strategy is to set up a charitable remainder trust. You could gift a large asset to the trust and take the deduction right away. This could be your house, where it’s possible to remain there until death before it transfers to the charity.

Reasons to give should be more than just expecting a tax break. Nonprofits are there to serve the greater good and rely on donations from the public, now more than ever. The recent tax changes are the most significant in 30 years. If you’re going to benefit from the new tax rules and don’t agree with its conception, you can donate your tax savings to a nonprofit that you believe would make a difference.

At Eureka Wealth Management, I help my clients with their charitable giving. Your tax, estate, and beneficiary planning are all connected and I help design a holistic picture of what you’re trying to accomplish and what you intend to leave behind. Call me at (760) 537-0791 or visit eurekawealthmanagement.com.