Best Kept Tax Tips

Oct 13, 2021

Higher taxes on your mind?
Consider these simple ways to support our Jewish community and reduce your tax burden.

Use appreciated assets, like stock, to make a charitable gift in 2021. With a strong stock market and a proposed retroactive increase in capital gains tax rates, charitable donations of appreciated stock are more valuable than ever, providing not only a deduction but also the potential to avoid a higher capital gains tax in 2022.

Consider creating a Donor Advised Fund (DAF) this year for maximum flexibility. If you are considering making a significant donation to charity over time but want a deduction today, a DAF provides such flexibility. It can be especially beneficial to donate appreciated property because by doing so such property escapes capital gains taxation forever. JEWISHcolorado operates easy-to-use DAFs through which you can support any 501(c)(3) organization.

Look into an IRA charitable rollover. The IRA charitable rollover is an attractive option for those 70½ and older because it can satisfy the Required Minimum Distribution requirement without incurring income tax, even if you don’t itemize your deductions.

Charitable donations of cash may be useful if your goal is to offset a large portion of taxable income. This tax year will likely be the last in which you can use a charitable donation of cash to offset more than 60% of your adjusted gross income. Please note that this does not apply to giving to a DAF.

Determine if—and how much—the proposed ordinary income rate increase will affect you. Congress is considering a 3% surtax for high earners, as well as an increase of the top ordinary income rate to 39.6%. Making charitable contributions this year and deferring deductions to 2022 and beyond may be beneficial.

JEWISHcolorado does not provide individual tax advice. Please consult a professional tax advisor before taking any action.

For more information, please contact Steven Baker at sbaker@jewishcolorado.org or (303) 951-0273.

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