Home Career Here’s how to get a charitable tax break on Giving Tuesday

Here’s how to get a charitable tax break on Giving Tuesday


Ariel Skelly | Getty Images

To claim a charitable deduction, you must “itemize.”

When you file a return, you reduce your taxable income by deducting the greater of either the standard deduction or your total itemized deductions, which may include charitable donations.

Signed in 2017, former president Donald TrumpThe subscription tax overhaul nearly doubled the standard deduction, making subscribers less likely to itemize.

In 2022, the standard deduction is $12,950 for individual filers, or $25,900 for married couples filing jointly. And if you take the standard deduction in 2022, you can’t claim an itemized deduction for charitable gifts.

Aim to provide profitable assets

If you plan to itemize deductions, your charitable deduction depends on the type of asset you’re donating.

Juan Ross, CFP at Forum Financial Management in Thousand Oaks, Calif., said that income investing in a taxable brokerage account “is generally the best type of asset.”

Here’s why: By donating an appreciated asset, you’ll get a charitable deduction equal to the fair market value while avoiding the capital gains taxes you’d otherwise have to collect on the sale, he said.

Consider a charitable transfer from your individual retirement account

If you’re 70½ or older, donating directly from a traditional individual retirement account “is usually the best way to donate,” said Mitchell Krause, CFP and owner of Capital Intelligence Associates in Santa Monica, California.

A strategy known as “qualified charitable distribution,” or QCD, involves a direct transfer from an IRA to an acceptable charity. You can give up to $100,000 a year and it can be considered yours minimum distribution required if you transfer money at age 72.

Because the donation isn’t reported as income, you’ll still get a tax break even if you don’t itemize deductions, Kraus said. Reducing your adjusted gross income can help avoid other tax problems, such as higher Medicare Part B and Part D premiums.

Source link

Previous articleConsideration of the dynamics of oxygen accumulation in three-way catalysts — ScienceDaily
Next articleAmtrak route will return to the Gulf Coast