[et_pb_section fb_built=”1″ admin_label=”Section” _builder_version=”3.22.3″ da_disable_devices=”off|off|off” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row admin_label=”Row” _builder_version=”3.25″][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_image src=”https:\/\/www.gunderwealth.com\/wp-content\/uploads\/2021\/06\/Untitled-design.png” alt=”Charitable Giving” title_text=”Untitled design” align=”center” force_fullwidth=”on” align_tablet=”center” align_phone=”” align_last_edited=”on|phone” _builder_version=”4.9.7″ max_height=”800px”][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”3.25″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” collapsed=”off”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.9.7″ ul_line_height=”1.7em” header_line_height=”1.5em” header_3_line_height=”1.5em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ sticky_enabled=”0″]<\/p>\n
If you\u2019re charitably inclined, let\u2019s make sure you\u2019re tax-efficient in the process. Until the SALT $10K cap is repealed, you may not be reaping the full benefit of your charitable gifts.<\/p>\n
On the other hand, it\u2019s not advisable to gift to charity only<\/em> for the tax benefit. We\u2019ve summarized a handful of strategies to consider given current tax legislation \u2013 let us help you through the process!<\/p>\n With the increase in the standard deduction from the TCJA of 2017 to $25,100 for married couples in 2021, you can maximize your tax benefits from a charitable contribution if you itemize your deductions. \u00a0What does this mean?\u00a0 With \u201cbunching,\u201d you accelerate or group your charitable giving in a single year to surpass the standard deduction. \u00a0It\u2019s not a matter of marginally exceeding the threshold \u2013 the more you exceed the standard deduction, the greater the benefit.<\/p>\n If you take the standard deduction (i.e., don\u2019t itemize), you can take up to a $600 above-the-line deduction if you\u2019re married filing jointly in 2021 (up from $300 in 2020). Qualifying donations include cash or cash equivalents.\u00a0 However, contributions to a Donor-Advised Fund (see below) do not qualify.<\/p>\n If you do itemize, the limit increased to 100% (up from 60%) of an individual\u2019s AGI through 2021 for cash contributions to certain public charities.\u00a0 Any amount gifted beyond the 100% limitation may be carried over and used in the next five years with the previous 60% AGI limitation.<\/p>\n A DAF is like a charitable investment account \u2013 the assets continue to grow tax-free while invested in the account. DAFs have low administrative fees, and you can recommend grants to any IRS-public charity. A DAF typically accepts cash, appreciated securities, and sometimes alternative or private investments. You can also provide instructions as to how you want the money distributed. Example: Donate $40K to receive an immediate tax deduction but add instructions to distribute $10K each year for 4 years.<\/p>\n A CRT is an irrevocable trust that generates an income stream for you (as the donor) or a specified beneficiary (must be 28 or older). The remaining donated assets go to a specified charity or charities. \u00a0This is considered a \u201csplit-interest\u201d vehicle and is eligible for a partial tax deduction. The type of trust, term, projected income payments, and assumed rate of return (as determined by the IRS) determine the deduction. The income stream for the non-charity beneficiary can be for life or a term of years (no more than 20). Whatever is left goes directly to charity tax-free.\u00a0 You can also structure this to provide income for two generations.\u00a0 However, this is not advisable if you are subject to estate tax as you lose the estate tax marital deduction. There are two types of CRTs:<\/p>\nBunching<\/strong><\/h3>\n
CARES Act<\/strong><\/h3>\n
Donor-Advised Fund (\u201cDAF\u201d)<\/strong><\/h3>\n
Charitable Remainder Trust (\u201cCRT\u201d)<\/strong><\/h3>\n