Editor’s Note: JB+A  is pleased to feature our friend and colleague William McMorran, Senior Partner and Planned Giving Consultant with Green Oak Consulting Group, which provides tailored planned giving solutions for nonprofit organizations, individuals and retirement communities.  Bill believes donors, and the charities that they believe in, deserve a committed and trusted partner to create and support meaningful planned gifts. For more than two decades, Bill has provided fund development, endowment, planned giving and management services, including investment and administrative support, to charitable organizations. He is widely published expert and a featured speaker in planned giving and tax and health policy.  Bill believes a donor’s goals and objectives are the most important part of the planned giving process. We’re happy to share some sage advice from Bill about end-of-year planned giving and tax strategies.

William McMorran
JB+A Guest Contributor

As we head into the final month of the calendar year, fundraisers know it’s not just a time to focus on holiday celebrations and gift lists:  it’s a great time to look at recent revisions to the tax law and make sure donors are aware of what’s taking place, so they can make educated decisions.

Lower Tax Rates – Consider Your Withholding/Estimated Tax. The new tax law reduced the tax rates in each income tax bracket. This could be good or bad depending on your current bracket. You may actually find yourself in a higher bracket this year. The new law also increased the standard deduction, it may make a difference in whether you itemize or not.

It’s important to look at your withholding or your final quarterly payment now. With the changes and the uncertain withholding patterns this year, make sure that you are still on target to pay your potential liability. The IRS already is worried that taxpayers will under withhold and has issued an alert on this.

Some Itemized Deductions Eliminated – Be Careful. The new tax law eliminated many itemized deductions. The itemized deductions that remain available are:

  • State and local sales, income and property taxes are now capped, up to $10,000 for married taxpayers filing jointly, and up to $5,000 for single filers
  • Medical and dental expenses—if they are more than 7.5% of your adjusted gross income
  • Home mortgages, lower ceilings for new buyers
  • Charitable gifts

IRA Charitable Transfers Unchanged – A Great Strategy. If you are over 70.5 and have an IRA, you can avoid paying taxes on your required minimum distribution (RMD) by having your IRA Custodian transfer that amount (it can also be higher or lower) to the charity(ies) of your choice, using a Qualified Charitable Distribution (QCD). This not only saves you from paying taxes on your RMD but lowers your overall income, potentially saving you even more tax dollars.

Look for Savings – Harvest Gains and Losses. Take a look at your investment portfolio, are there gains or losses you can realize? Ideally, you can reduce your tax exposure by taking advantage of any investment losses this year, losses that could offset gains.

Summary: There’s a lot going on for your 2018 income tax return. Look at your withholding/quarterly payments, talk to your advisors and plan while you still can make a difference!

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