If you made, or are planning to make, a charitable donation in 2018, you may want to tune into new tax regulations before you bank on a full tax write-off.
Senior CFP Board Ambassador Jill Schlesinger, CFP® shares the following tips to navigate end-of-year contributions amid the changes in the tax law:
Bundle Contributions. One benefit of the change in the tax law, as it pertains to charitable donations, is the opportunity to review how you want to incorporate your donations into your overall financial plan. It may be smart to "bunch" future years' charitable contributions in order to qualify for deductions.
Gift Appreciated Securities. Making a gift of appreciated securities from a taxable investment account allows you to write off the current market value (not just what you paid) and escape taxes on the accumulated gains.
Make Any Payments Before 12/31. If you are planning to send a check, your payments must be postmarked by midnight December 31. Just writing "December 31" on the check does not automatically qualify you for a deduction; and pledges aren't deductible until paid. Donations made with a credit card are deductible as of the date the account is charged.
Consider a QCD. For those who are 70½ and older and need to withdraw money from an Individual Retirement Account (IRA), a Qualified Charitable Distribution (QCD) allows you to direct your Required Minimum Distribution (RMD) to a public charity. QCDs don't qualify as an itemized charitable deduction, but you're not taxed on the money and are able to minimize your Adjusted Gross Income (AGI), as well as a number of benefits like Medicare premiums.