4 Tips for Tax Beneficial Charitable Giving with John Madison, Ep #96

Charitable giving in a tax beneficial way has gotten a bit more complicated with the new tax law. Of course, we donate to charities to help those less fortunate, but it helps when we receive tax benefits as well. CPA, John Madison, joins me to discuss how to reap the most tax benefits from your charitable giving under the Tax Cuts and Jobs Act which took effect in 2018. Learn how you can make your charitable giving beneficial for taxes again by listening to John’s expert advice.

CPA, John Madison, joins me to discuss how to reap the most #TaxBenefits from your #CharitableGiving under the Tax Cuts and Jobs Act @60MinuteFinance Click To Tweet

Outline of This Episode

[2:12] John felt that he had something more to give the world after he retired
[4:35] How has charitable giving changed with the new tax laws?
[8:50] 4 tips to making charitable contributions beneficial for taxes again
[23:12] Learn more about John Madison and Dayspring Financial Ministry

How did John Madison create Dayspring Financial Ministry?

John Madison started Dayspring Financial Ministry after he retired. He knew that he still had more to give the world after retirement. After wandering through the early months of retirement with no real purpose he felt called to counsel others. He knew that his expertise as a CPA could help others. He began financial counseling toward the end of his career and knew he could continue to do so by volunteering his time after retirement. He created the Dayspring Financial Ministry to teach others more about personal finance.

John Madison, CPA created the Dayspring Financial Ministry to teach others more about #PersonalFinance. @60MinuteFinance Click To Tweet

How has charitable giving changed with the Tax Cuts and Jobs Act?

The new tax law was enacted this year and have changed the standard deduction for giving. Many people were accustomed to deducting their charitable giving on their taxes. The Tax Cuts and Jobs Act has, in essence, doubled the standard deduction and removed many ways to itemize deductions. There are only a handful of itemized deductions left which include charitable contributions, state and local taxes, and mortgage interest. Now only about 5% of people can claim a deduction for giving charitably under the new tax law. Most people are left using the standard deduction which is about $12,000 for a single person or about $24,000 for married filing jointly. Were you able to itemize deductions this year?

There are strategies you can use to help you make your #CharitableDonations beneficial for taxes. Listen to this episode of #RetirementStartsToday with John Madison @60MinuteFinance to hear what they are. Click To Tweet

4 tips to making charitable contributions beneficial for taxes

Although it has become more difficult to itemize deductions, there are strategies you can use to help you make your charitable giving beneficial for taxes.

Donate appreciated investments. If you have investments that have appreciated a bit you can donate them directly to the charity of your choice. This way you avoid long-term capital gains and you can itemize the deduction if it qualifies. You must donate the shares directly which means that you must use a trustee and the charity must use their trustee as well.
Use donor-advised funds. Donor-advised funds have been around for a while and they are a great way to donate cash or appreciated securities. Donor-advised funds are flexible and you can specify where the money goes and how often you wish to donate from the fund. This is a great way to offset an inheritance or a sale of a business. You can also use a donor-advised fund to itemize deductions every few years or every other year.
Use qualified charitable distributions. At age 70 ½ you have to take the required minimum distribution (RMD) from your tax-deferred accounts. Qualified charitable distributions can come directly from your IRA to a charity of your choice and you are able to exclude that amount from your reported income. This is a way to take your RMD and reap other tax benefits as well.
Gifting at death. Most people don’t need to worry about the estate tax since they will leave less than $11 million to their heirs, but there are ways you can improve your heirs’ tax situation. If you would like to allocate part of your estate to charity be sure to use a pretax asset like an IRA or 401K. This way your beneficiaries don’t have to pay taxes on those assets.

Listen to this informative interview with John Madison to hear his tax strategies for charitable giving and learn more about Dayspring Financial Ministry.