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Charity Begins at Home

January 14, 2020

If there’s one distinct characteristic to life in Napa Valley, other than superb wine, it would be the extraordinary generosity of its residents. In fact, having lived in four world renown cities prior to making my way to Napa in 2002, I would say the communities of the valley are THE most generous collection of individuals I have ever encountered. Just ask any retiree and they’ll tell you they are far busier with volunteering and helping various organizations than they ever were during their work careers!

Financially speaking, many NV residents also like to give philanthropically, in addition to volunteering. Charitable giving is done for a variety of reasons. Some give because they feel attached to a cause (eg providing for the working poor or indigent among us). Others give because they or a loved one have been touched by a disease, like cancer. Still others give because they feel a fondness for an organization and its work, like the Kiwanis Club of Napa Foundation, that gives scholarship grants to Napa’s high school students. Regardless of the motivation, charitable giving has an immensely satisfying effect on one’s psyche and also can have significant financial benefits for the giver, as well.

Under the new tax law, you are now permitted to deduct up to 60% of your Adjusted Gross Income with cash donations, up from 50% previously. If you have appreciated stock you can gift the fair market value to charity, get a tax deduction for it and avoid having to claim the capital gains on your tax return. For those who are 70 and over, there is also the Qualified Charitable Distribution that can be done directly from one’s IRA to a charity that helps meet your Required Minimum Distribution (RMD) requirement and avoids having that distribution impact your tax return.

Since tax reform resulted in a married couple’s standard deduction rising from $12,700 to $24,000 and State and Local tax deductions are now capped at $10,000, many people who formerly itemized their deductions will probably simply claim the standard deduction. However, charitable deductions are deductible only if one itemizes so it is more important than ever to think strategically about how you are giving, and when. For example, instead of continuing to give to charities a little at a time on an annual basis it may make sense to bunch several years of intended charitable giving into a single large donation- one that is large enough to provide a larger tax deduction through itemizing than by taking the standard deduction. Another strategy might be to consider using a Donor Advised Fund to make a single large tax-deductible contribution to a fund that the Donor still retains some control over. This allows the Donor to continue to make annual donations to charities of their choice but to also reap the tax benefit of the single large Donor Advised Fund contribution.

Remember, too, that by gifting directly from your IRA to a charity (age 70 ½ and over) or by gifting highly appreciated stock instead of cash, you may avoid increasing your taxable income, as reported on your tax return, and therefore keep other related taxes, like Medicare Part B and D premiums, lower than they might otherwise be.

However you choose to give, it’s important to know that your gift will make a difference and actually better the lives of people around you. For this reason, it’s always a good idea to check your charitable organization out on

Rich Jacobson is a Registered Principal Offering Securities and Investment Services through United Planners Financial Services, Member: FINRA, SIPC. The views expressed are those of the presenter and may not reflect the views of United Planners Financial Services. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Individual needs vary and require consideration of your unique objectives and financial situation.