Ways you can give more AND save more on your taxes!

Given the new tax law, many Bridgercare donors have asked how they can stretch their dollars to make the biggest impact. First off, we commend you for your selfless and fiscally savvy attitude! Secondly, here are four ways to give to Bridgercare that may save you money on your taxes:

1. Give appreciated securities. When you give appreciated investment securities, you forego paying tax on the appreciation (current value less your cost basis) while still receiving a tax deduction for the fair market value of the securities on the date of the gift.  Note - the securities must have been held by you for at least 12 months.  As a result, the tax benefit is two-fold: full fair market value for the deduction and avoidance of capital gains tax on the appreciation.
2. Consider a Qualified Charitable Distribution (QCD) from your Individual Retirement Account (IRA).  Individuals over 70 ½ are required to withdraw a certain amount of dollars from any IRA on an annual basis.  For most, this must be done on or before December 31 each year.  Consider working with your IRA custodian to distribute all or part of this required payment directly to an organization.  Any required minimum distributions that are distributed directly will not be included in taxable income and may reduce your overall income tax burden.  The maximum amount allowable as a QCD is $100,000 per person per year!  Note - spouses are treated as separate persons; and private foundations and donor-advised funds do not qualify under this special provision.
3. “Bunch” large annual contributions.  For large donors, it may make sense to combine several years of annual giving into one year in order to overcome the standard deduction hurdle ($12,000 for single taxpayers/$24,000 for married taxpayers).  For example, if you typically give $8,000 annually, you may no longer itemize your deductions in any one year.  Alternatively, if you were to give $24,000 in year 1, you would then exceed the standard deduction, and receive a greater tax benefit in that year.  In years 2 and 3, you would still be eligible for the increased standard deduction available under the new tax law.  These gifts can be made directly to a nonprofit or you may consider giving to a Donor Advised Fund.
4. Consider a gift to a qualified endowment.  Montana is one of few states that allow a credit (i.e. a dollar-for-dollar Montana income tax reduction) on certain gifts to qualified charitable endowments.  The Montana Endowment Tax Credit allows a credit of 40% of a qualifying planned gift’s federal charitable deduction, up to a maximum of $10,000 per year, per individual.

*Bridgercare does not provide tax, legal, or accounting advice.  This material has been prepared for informational purposes only.  Please consult your tax advisor regarding your individual tax situation.