Year End Tax Planning

As the end of the year approaches, how well do you know your personal “tax landscape?”

From income changes to changes in family size; from growth in capital gains to the potential impact of alternative minimum tax; from the annual hunt for additional tax deductions and the proverbial “shoebox” of unorganized receipts, how well you are prepared can directly impact how well you are able to engage in smart year end tax planning.

Charitable Giving & Tax Planning

A recent article in Forbes touched upon charitable contributions as one way to engage in smarter tax planning.

Donor advised funds (DAFs) are a tool that can serve your tax reduction needs in the following ways:

  • You can receive an immediate income tax deduction in the year you contribute to your donor advised fund. Since a DAF is administered by a public charity, contributions immediately qualify for maximum income tax benefits. The IRS does mandate some limitations, depending upon the adjusted gross income (AGI) of the donor:
    • Deduction for cash – up to 50 % of AGI.
    • Deduction for securities and other appreciated assets – up to 30 % of AGI.
    • There is a five-year carry-forward for unused deductions.
  • You will incur no capital gains tax on gifts of appreciated assets held longer than one year (i.e. securities, real estate, other illiquid assets.)
  • A donor advised fund will not be subject to estate taxes.
  • The investments in a DAF can appreciate tax-free.

If you are subject to alternative minimum tax (AMT), your contribution into a DAF will reduce your AMT impact. Certain assets, such as closely-held stock and real estate, can allow a donor to enjoy the full-market value of the assets as a deduction (subject to the AGI limitations mentioned previously.)

Regardless of your situation, contact us at Okojie & Associates and learn more about how a donor advised fund may prove to be the right tool for your year end tax planning.

2018-11-05T18:51:03+00:00 July 10th, 2017|Financial, Taxes|0 Comments

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