Page 12 - aruba-today-20221206

A12 BUSINESS
Tuesday 6 december 2022
Make the most of new rules for

charitable giving

By LIZ WESTON
of NerdWallet
Most people no longer get
a tax deduction when they
donate to charity. That
shouldn’t keep you from
making donations, but you
may want to change your
approach.
Typically, only taxpayers
who itemize deductions
can write off charitable
contributions. The vast ma-
jority of taxpayers instead
take the standard deduc-
tion, which was nearly dou-
bled by the Tax Cuts and
Jobs Act of 2017. (Tempo- This undated file photo provided by NerdWallet shows Liz Weston,
a columnist for personal finance website NerdWallet.com.
rary provisions in pandemic Associated Press
relief legislation allowed
taxpayers to deduct $300 January 2023 mortgage FER ‘A DOUBLE TAX BENEFIT’
of their donations in 2020 payment in December or A stock that soared in val-
and 2021 without itemizing, make two years’ worth of ue since you bought it can
but those provisions have charitable donations. create a big tax bill when
expired.) One way to bunch de- you sell. You can avoid
It has never made sense ductions is to use a donor- that bill if you give the
to donate solely to get a advised fund, an account stock to a qualified charity
deduction. If you’re in the that allows you to contrib- or to your donor-advised
22% federal tax bracket, for ute a lump sum in one year fund. If you’re able to item-
example, you save only 22 and then parcel out the ize deductions, you also
cents in taxes for each dol- money in future years to can take a deduction for
lar you give away. If you’re the charities of your choice, the stock’s current price on
charitably minded, howev- says financial adviser Mark the day of your donation.
er, there may still be ways Astrinos, a certified public Astrinos uses the example
to get a tax break for your accountant and personal of someone who invested
generosity with some plan- financial specialist in the $10,000 in shares that are
ning, or you could recon- San Francisco Bay Area. now worth $100,000. Selling
sider how you give money Donor-advised funds are the stock would create a
away. offered by major invest- $90,000 capital gain, while
DONOR-ADVISED FUNDS ment companies as well donating it would create
AREN’T JUST FOR THE RICH as universities, community a $100,000 deduction and
Tax experts recommend foundations and various avoid capital gains tax.
“bunching” deductions charities. If the client nor- “It’s a double tax benefit,”
when people’s itemized mally gives about $5,000 Astrinos says.
deductions are close to a year to charity, Astrinos CONSIDER GIVING FROM
the standard deduction might encourage that YOUR IRA AFTER AGE 70
limits, which in 2023 will be person to contribute three Qualified charitable dis-
$13,850 for single filers and years’ worth of donations, tributions allow people
$27,700 for married couples or $15,000, to a donor-ad- 70½ and older to donate
filing jointly. Bunching al- vised fund. The donation money directly from their
lows taxpayers to take the would allow the client to individual retirement ac-
standard deduction one exceed the standard de- counts, or IRAs, to charity.
year while moving as many duction for a single filer and There is no tax deduction,
itemized expenses as pos- potentially make other ex- but the money isn’t includ-
sible into another year. If penses, such as mortgage ed in their income, either.
you’re maximizing deduc- interest and property taxes, Qualified charitable dis-
tions for this year, for ex- deductible again. tributions often appeal to
ample, you might pay your DONATING STOCK MAY OF- people facing required
minimum distributions from
their retirement accounts
but who don’t need the in-
come, Astrinos says.
(The IRS requires people
to withdraw minimum
amounts from most retire-
ment accounts — and pay
taxes on that income —
starting at age 72.) q