Dear Friends:

 

It’s time (it’s always time) to think about and make arrangements regarding charitable contributions in general, and your pledge, as well as any other contributions, to the Federation in particular.  Please consider the following:

 

  • Tax planning in general, and making contributions in particular, have taken on particular interest and concern because of changes brought about by the 2017 Tax Act.

 

  • Charitable contributions are tax deductible.  This assumes you itemize.  Thus, contributions to the Federation may reduce your tax bill.  Big contributions will create big reductions in your tax bill.

 

  • As a “bonus”, charitable contributions are not an AMT addback – thus, are “truly” deductible.

 

Contribute stock – contributing stock can be particularly tax attractive.  If you have stock that has appreciated in value, and that you’ve held for more than one year, contributing it to the Federation can be an extremely tax effective move.  Assume for the moment you are going to contribute $10,000 to the Federation and you have stock that is worth $10,000 but only cost you $3,000, and you’ve held it for more than one year.   Instead of cutting a check for $10,000, you can contribute the $10,000 of stock.   You get the same $10,000 deduction – but you avoid having to recognize the built-in $7,000 gain on that stock.  If you want to maintain your position in that stock, you can use the same $10,000 that you would have laid out as a charitable contribution, but now instead repurchase that stock, stepping up your basis in same.  Truly a win-win situation.

 

If you are over age 70 ½, the 2017 Tax Act may be of particular interest to you.  You may be able to save thousands of dollars in taxes by contributing directly from your IRA – rather than taking a distribution and then contributing same – to satisfy your required minimum distribution (RMD).  This is subject to a $100,000 limit, and is potentially a big deal.

 

Keep in mind that your Federation needs the money, and it is put to excellent use for Jewish charities – locally, in Israel, and otherwise internationally.

 

Not necessarily relevant to the Federation, but as a general suggestion, if you are going to contribute non-monetary items (such as clothing, furniture, or a car), there are certain rules to follow.  Make a list of what you are giving away and get a receipt from the charity.  It is your responsibility to estimate the value of what you are contributing.  Also, take a picture of what you are giving away and put that picture in your tax file.  There are other rules, especially when the amount is of substance.

 

For contributions to be deductible in any year, they need to be made by the end of that year.  You need to either mail a check before December 31st, or you can charge your contributions before December 31st (where applicable), or, transfer stock (not simply direct there be a transfer – but actually transfer) before December 31st.

 

As to charitable contributions and the tax ramifications of same, the above is not intended to be tax advice.  Consult with your CPA, tax advisor, financial planner, or whoever is appropriate for you.

 

Remember that the Federation is here to help you do good – there are many people who are in desperate need of our help.  By and large, we are fortunate, and we have an obligation to help others who are less fortunate.

 

Very truly yours,

 Kalman A. Barson, CPA

Past President of the Jewish Federation of SHAW                                                                                                                                                                                                                                                                                                                

 

Kal Barson,CPA is the founder of The Barson Group located at 60 East Main Street in Somerville, NJ. He is a past president of The Jewish Federation of Somerset, Hunterdon, and Warren where he currently serves on the Board of Directors.

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