Updates from Truman Heartland's President & CEO | Tis the Season

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President's Blog

News and Updates from President & CEO Phil Hanson

Updates from Truman Heartland's President & CEO


Phil Hanson shares information on charitable giving trends and how the Truman Heartland Community Foundation is partnering with individuals and organizations across the region to benefit the Eastern Jackson County community.

Tis the Season for Taxes and Then Allergies

I think it’s fitting that tax season occurs around allergy season since many people seem to have an allergic reaction to taxes; with a good number waiting until the very last minute to file. This year the deadline to file falls on Tuesday, April 17, due to the regular deadline of Monday, April 16, falling on a public holiday in Washington D.C.

Although you may feel disdain in dealing with both your taxes and your allergies, my advice is to take a proactive approach to avoid a future headache. You’ll have to see your doctor about how to deal with your allergies, but the prescription for the headache tax-season causes is simple: proactive tax-planning. With all your tax information readily available and at your fingertips you should be getting your plan in place for 2018. And due to the changes in the “Tax Cuts and Jobs Act”, it is more important than ever to be prepared.

My January Column discussed several provisions in the new tax code that are very positive for charitable giving including the continuation of Qualified Charitable Distributions (QCDs) from IRA’s of those older than 70 ½  (with RMDs) and the increase to 60% for the maximum adjusted gross income allowed to be deducted for charitable contributions. In addition, the Pease limitations that gave a haircut to the itemized charitable deductions of high-income earners were repealed with the new tax law.

Another important topic I touched on in my January Column is the concern expressed by many in the nonprofit community about the doubling of the standard deduction to $12,000 for an individual and $24,000 for a couple. I still maintain my alternative outlook and do not believe this change will negatively impact charitable giving.

There is an important tax planning tool that a number of charities provide (including your local Community Foundation, Truman Heartland) that can assist you with obtaining the most tax savings in light of the higher standard deduction. That tool is a Donor Advised Fund, your charitable giving savings account.

A Donor Advised Fund is an efficient way to create your own Family Foundation.  It is much more cost effective that creating a private foundation and can be established with an initial gift of $5,000 or more (minimum at THCF). When you make contributions into your Donor Advised Fund you receive a charitable contribution immediately and then you can make grants to nonprofits out of your fund at a later time.  It can be used as an important tax planning tool for a charitable couple who may not have itemized deductions exceeding $24,000 each year. By bunching two or three years’ worth of contributions in one calendar year they may be able to exceed the standard deduction and receive the charitable deduction.

For example, let’s take a couple who have deductions of state and property taxes and mortgage interest deduction that total $15,000 per year. They are currently making charitable contributions of $7,000, and their total itemized deductions total $22,000. Since the standard deduction is $24,000 they cannot itemize. However, if they put three years’ worth of contributions or $21,000 into their Donor Advised Fund (charitable giving savings account) they would then have $36,000 in itemized deductions and could itemize and receive the tax savings.

Then over the next 3 years, they could make their typical $7,000 in contributions each year to their favorite charities from their donor advised fund. And in the following 2 years they would take the $24,000 standard deduction. By utilizing their Donor Advised Fund, they can benefit from a larger charitable deduction by bunching their 3 years’ worth of contributions into their fund and then make grants out over the 3-year period.

I know tax planning can cause a headache all its own, but with the help of professionals like those at THCF your charitable giving plan doesn’t have to be difficult. If you procrastinate and wait until the last minute, you may not get the full tax advantage of this approach. My advice to everyone is to take your medicine now and be strategic about your plans for the future.  Do some tax planning so you ensure you have the most tax effective approach, minimize your 2018 taxes, and enhance your charitable giving.

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