By Michael Freeman
The Salvation Army NEO
America is a generous country. Over 67 percent of American households give to charity.
While some people give for tax reasons, many — if not the majority — open their wallets because they are convinced that the work of their favorite charity is vital.
With the passage of the Tax Cuts and Jobs Act in December 2017, the philanthropic community is standing back to see if this is true. Do Americans give for personal tax savings or from a place of true charity?
The new tax law has doubled the standard deduction — the preset amount all taxpayers are allowed to lop off their taxable income — from $6,500 to $12,000. This will reduce the number of taxpayers who itemize deductions on their tax return from 47 million to 19 million. Simply put, very few of us will now deduct our charitable contributions.
Options remain, however, that can make us tax-savvy stewards. Consider this: Rather than cash, donate appreciated stocks. With the fervor of the current market, your investment may have seen handsome growth.
Here’s the catch: When you sell that stock, you are responsible to pay a capital gain tax. If however, you have owned that stock for over a year, it can be donated to charity and the gift passes to the charity without any tax due. For itemizers, the full amount of the stock’s value on the day it was donated qualifies as a charitable deduction.
For future “planned giving” — which means giving after you have died — there is a plethora of ideas that enable you to make an impact from beyond the grave. My father had a friend who had been financially successful in the trucking business. At his death, I asked my dad how much the man had left behind....