Charitable Contribution Limits
Jul 3, 2019
Among the big changes in the 2017 Tax Cuts and Jobs Act (TCJA) were new limits on standard and itemized deductions. These limits and restrictions created new hurdles when planning deductions with tax advantages in mind. An exception was charitable deduction, which remains an option for high-income individuals looking to create a donation for the charity of their choice.
When making a charitable donation, two avenues to consider are donor-advised funds (DAFs) and private foundations (PFs).
Donor-Advised Funds and Private Foundations.
Public charities establish DAFs as a philanthropic vehicle; the donor can allow the donation to potentially grow over time and advise on grants from the fund (assuming compliance approval), all while having an immediate tax benefit for that initial contribution. Private foundations offer total control in terms of the grants you’ve made and their distribution.
In contrast, a private foundation tends to be larger in size (sometimes in the millions of dollars) in comparison to DAFs (which can be set up with as little as $5,000) and generally represent a larger and less-flexible method of charitable giving.
How much can you give?
There are different tax considerations to keep in mind. Your limit in contributing to a private foundation is 30% of your adjusted gross income (AGI) in the year you make that donation. On the other hand, the same limit for a DAF is up to 60% of your AGI.
What about long-term appreciated marketable securities? Your limit to a private foundation is 20% of AGI for the year of the donation. For a DAF, it’s 30% of AGI.
Advantages to Consider.
There are advantages to both private foundations and donor-advised funds, both in terms of tax deductions and the control that you may exercise over the use of the funds.
However, you should also be aware that the I.R.S. is on the lookout for those who may use the flexibility of donor-advised funds to create improper distributions, which may, for instance, directly benefit a donor’s family. For this reason, among others, it’s best to have several conversations with a tax and financial professional, who can both assist you in the creation of any such entity as well as help you manage your charitable giving. Our team of trusted financial advisors in Charlotte, NC would be happy to discuss details further with you today.
Tags: Certified Financial Advisor Charlotte NC, Tax Advantages
More Insights
Oct 7, 2024
Whether you’re seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility — many types of trusts exist, each designed for a specific purpose. Although trust law is complex and establishing … Continue reading “Trust Basics”
Oct 4, 2024
I’d like for you to meet my friend, Hugh. He’s a retired film stuntman who, after a long career, is enjoying his retirement. Some of what he’s enjoying about his retirement is sharing part of his accumulated wealth with his family, specifically his wife and two sons. Like many Americans, Hugh likes to make sure … Continue reading “The Gift Tax”
Sep 30, 2024
Birthdays may seem less important as you grow older. They may not offer the impact of watershed moments such as getting a driver’s license at 16 and voting at 18. But beginning at age 50, there are several key birthdays that can affect your tax situation, health-care eligibility, and retirement benefits.
Sep 27, 2024
You started early and have saved hard in your 401(k). You’ve also paid close attention to your investing strategy over the years. And you definitely understand the benefits of tax-deferred compounding over the long term and the potential for growth. Heck, you’ve even remembered to change your account password every 90 days. Maybe now it’s … Continue reading “Pay It Forward”
Sep 25, 2024
Are you concerned about the inheritance taxes your heirs may have to pay? Then you may want to consider creating charitable lead trusts.
Top of Page
Services
Epic Capital provides the following comprehensive financial planning and investment management services: Learn More >
Find us on:
Copyright © 2024 Epic Capital Wealth Management. All Rights Reserved.
Securities offered through LPL Financial. Member FINRA/SIPC.
The LPL Financial representative associated with this website may discuss and/or transact securities business only with residents of the following states: CA, CO, DC, DE, FL, GA, IN, LA, MD, MO, MS, NC, NJ, NY, PA, SC, TN, TX, VA, VT, WA.