Did you know that you can donate appreciated stock to the Regional Parks Foundation? With the end of the year in sight, it’s time to review your year-end tax planning opportunities as some of them may not be available in 2018. This may be important to:
- Investors holding highly-appreciated securities outside of tax-deferred accounts
- Investors currently holding securities with an unrealized loss outside of tax-deferred accounts
- IRA owners age 70½ or older and subject to taking required minimum distributions (RMDs)
- Charitable donors who itemize their deductions
Holders of highly-appreciated securities outside of tax-deferred accounts The tax reform bill includes provisions that would require the use of first-in-first-out (FIFO) reporting on sales of securities, as opposed to the use of specific lot identification. This is important for investors who like to manage their amount of tax liability. Investors holding shares with a large unrealized gain should consider identifying the shares with the largest gains and making a charitable gift of those securities before year end, if FIFO becomes the rule in 2018.
Holders of securities with an unrealized capital loss outside of tax-deferred accounts Investors who own securities of a company in which a portion of those shares are being held at a loss can identify and sell the specific shares with the loss in 2017. By doing so, that loss can be harvested to offset current year realized gains, or carried forward to offset future realized gains.
IRA owners who are 70½ or older, required to take Required Minimum Distributions Investors with IRAs who are age 70½ or older who are subject to Required Minimum Distributions (RMDs) have the option of designating up to $100,000 from their IRA as a charitable gift.
This is important as your gift counts toward fulfilling your RMD requirement. While you won’t receive an itemized deduction for the gift, it also means that you don’t count the distribution in your income. Often, this is preferable to talking the distribution, paying the tax, and making the donation. Taking the distribution increases your adjusted gross income, which can have a ripple effect in many areas including future Medicare premiums, limitations on itemized deductions, and increased tax liability.
Charitable donors who itemize deductions The combination of the increase in the standard deduction coupled with the reduced (or lost) ability to deduct various itemized deductions may mean that the taxpayer can no longer write off their donations in 2018 and beyond. In situations like these, you may want to consider making a larger than normal gift in 2017 to gain the benefit of the itemized deduction. Summing it all up
Many provisions of the tax overhaul are still being analyzed; however proactive year-end tax planning is a good practice. With December 31st only a few days away, it is important to review your options and to take appropriate actions before the opportunity is gone.
If you would like to donate appreciated securities to the Regional Parks Foundation, please check out this
handy donation guide.