Bunching your charitable donations may help you exceed the charitable deduction and save on taxes. The standard deduction has nearly doubled for 2018 so whether you can claim the charitable contribution deduction for your annual gifts this year may depend on whether you have enough other itemized deductions to exceed the standard deduction. If you have the financial flexibility, you may want to frontload your donor advised fund in a particular year with enough to cover contributions to your favorite charities for several years. This approach may help you claim the deduction on the itemized tax return that year. You’ll get the tax deduction for the large contribution to the donor advised fund (DAF) one year and then you can distribute the funds to your favorite charities over multiple years. For example, instead of giving $10,000 per year to various charities, you could contribute $50,000 to a DAF in 2018, claim the deduction on the 2018 itemized tax return, and then recommend both the amounts and charitable recipients of grants from that fund over the next five years. Cash gifts to a public charity (including DAFs) are now deductible up to 60% of Adjusted Gross Income (AGI), and any contributions exceeding the AGI limits can still be carried forward five years.
When making your year‐end gifts, appreciated stocks can help you give more while costing you less. By design, investment portfolios fluctuate through the years. If you opt to sell any investments that are worth more than what you originally paid for them, you must pay capital gains tax. HawaiiCommunityFoundation.org
Consider another option to boost your personal finances: Use those securities to create a brighter future for Hawai‘i through your donor advised fund. Take a look at the chart below to see how a direct gift of securities compares with making a cash gift or a gift of the proceeds from the sale of your stock. Save More With a Gift of Securities
Give $10,000
Sell $10,000 in
Give $10,000 in
Cash to your
Appreciated
Appreciated
HCF donor
Property and
Property
advised fund
Give Cash to HCF
Directly to your
donor advised
HCF donor
fund
advised fund
Fair market value of gift
$10,000
$10,000
$10,000
Cost basis
N/A
$2,000
$2,000
Long‐term capital gain
N/A
$8,000
$8,000
Long‐term capital gains tax
N/A
($1,200) due to
$1,200
IRS
eliminated
($8,000 x 15%) Income tax savings ($10,000 x 33%)
$3,300
$3,300
$3,300
Total tax savings
$3,300
$2,100
$4,500
Net cost of gift
$6,700
$7,900
$5,500
Get the Most Out of Giving Contact your HCF fund manager or Kevin Rapp (ph: 808‐566‐5552 or krapp@hcf‐hawaii.org) if you’d like to learn more about this type of gift. Together with your advisor, we can help you invest in our community’s future and avoid market woes and tax consequences. The information in this email is not intended as legal or tax advice. For such advice, please consult an attorney or tax advisor. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes include federal taxes only. State income/estate taxes or state law may impact your results.
HawaiiCommunityFoundation.org