Ray Hawkins, one of AEPG’s Senior Financial Planners, was quoted in U.S. News & World Report in the article “Give the Gift of Stocks This Holiday Season” by Dawn Reiss.
The article discusses tax planning options for those who are charitably inclined and are looking for alternative ways for gifting and charitable contributions to minimize taxes. It is likely that the ability of some to deduct charitable contributions under the proposed tax bills that Congress is working to reconcile. Ray was quoted as saying, “This could be your last year to take advantage of that tax move. Two tax bills that Congress is working to reconcile call for nearly doubling the standard deduction while eliminating many other deductions. The final bill will likely reduce the number of people who itemize and take advantage of the charitable deductions. Donors who believe they might be affected by this scenario next year should consider increasing their charitable gifts this year.”
Ray goes on to say, selling appreciated stocks and donating the proceeds to charity is not the most efficient form of giving. Instead, it’s more tax-efficient to donate appreciated securities directly to charity. Conversely, investors should avoid donating shares with a loss.
For investors who are 70 1/2 and older and subject to Required Minimum Distributions (RMDs) from their individual retirement accounts, another option is to donate the RMDs by making a qualified charitable distribution, which is a direct transfer of the funds to a qualified charity.
Other tax planning considerations include taking advantage of the annual gift tax exclusion. In 2017 up to $14,000 can be gifted to each individual. The gift can be in the form of investible assets and like charitable giving, it is more advantageous to gift securities that have appreciated in value (low cost basis). This is a great strategy for individuals who are in a higher tax bracket giving to individuals in a lower tax bracket.
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At AEPG® we work with our clients CPA’s to identify tax planning strategies that can minimize their tax bill. Don’t hesitate to contact your AEPG Financial Life Planner to discuss a strategy for your charitable and other giving.