How charitable giving in 2017 may help you prepare for tax reform.
Hi, I’m Kim Laughton, and welcome to Schwab Charitable’s monthly video series that gives me the opportunity to speak to you about philanthropy.
Many of us are in the midst of filing our 2016 tax returns and have realized that the bill is higher than we might have hoped it would be.
Charitable giving could be one of the easiest and most flexible ways to lower your 2017 tax bill while also supporting causes that are important to you.
And giving appreciated investments that have been held for a year or more is the most effective way to give. That’s because in addition to allowing you to take a current year tax deduction, you can generally avoid paying capital gains tax on the sale of the asset. This can allow you to give up to 20% more to your favorite charities and pay less in taxes. Because we have had very strong equity markets, with the S&P 500 up 60% over the past 5 years, and 20% over the past year, this could be a particularly good year to give.
In addition, individual tax reform is on the legislative agenda, and likely changes could reduce the value of the charitable deduction in future years, either because tax rates may go down or the deductions could be capped. Giving now before such changes could take place—as early as 2018—could ensure that you maximize the value of your charitable tax deduction.
A little forethought and planning can help us all to reduce taxes and meet our philanthropic goals. Thanks for watching, and I’ll see you next month.