You need to read this!
The new tax law introduced a $25,000 standard deduction. This means in order for you to actually benefit any further from being able to deduct charitable contributions, they must exceed $25,000. Most people don’t reach that level.
However, if you are older than 70 ½, there is a little known secret that can give you the same benefit as a deduction.
As you know, or soon will, if you are over 70 ½ and have a 401(k), IRA, 403(b), and etc. account, you MUST start making Required Minimum Distributions (RMD) this year. If you were in, say a 25% federal tax bracket, a $1,000 required
distribution would create $250 in federal taxes in addition to state income taxes. However, if you take advantage of this little secret, you can save those taxes.
The secret is called a Qualified Charitable Distribution (QCD). If you already make, let’s say a $1,000 contribution to a charity, like the Foundation, you can make it as a QCD. This is done by notifying your account custodian (bank, investment co., mutual fund, and etc.) that a portion of your Required Minimum Distribution this year should be a QCD and should be paid directly to the Cheboygan County Community Foundation, or some other charity. The custodian makes the check payable directly to the charity. You have now satisfied that portion of your RMD and owe no taxes on it. You just saved $250 plus state income taxes. Larger contributions save even more.
Can you think of one reason not to do this? Call your investment advisor now.
The new tax law makes it more difficult for you to take charitable deductions. As everyone visits with their tax advisor, we expect to see some donors change the timing of their annual donations and make two annual contributions once every other year. This gives donors double the deduction every other year and gets them closer to being able to take the deduction.
To assist our donors in this regard, we are now allowing our donors to make pledges and make the actual donation at a later date. For example: someone who regularly gives $1,000 per year might want to pledge $1,000 for 2018 and $1,000 for 2019, then write a check for $2,000 in 2019. They give the same amount, continue their Admiralty membership and increase their likelihood of actually being able to take a deduction.
You should visit with your tax advisor regarding this.