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2018-05-04 digital edition
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The Jewish Press of Tampa and the Jewish Press of Pinellas County are Independently- owned biweekly Jewish community newspapers published in cooperation with and supported by the Tampa JCC & Federation and the Jewish Federation of Pinellas & Pasco Counties, respectively. Copyright © 2009-2018 The Jewish Press Group of Tampa Bay, Inc., All Rights Reserved. 


 

May 4, 2018  RSS feed
Organizations

Text: T T T

Bunching: A way to take advantage of new tax law

With the tax overhaul, the Tampa Orlando Jewish Foundation (TOP) has experienced a spike in interest in creating or adding to a donor-advised fund for charitable giving and the use of what is known as “bunching.”

Generally, people think of different fruits or vegetables when they think of “bunching.” But recently, with tax reform, financial advisors have recommended the idea of “bunching” your charitable donations.

One of the most significant provisions of the 2017 tax act impacting individuals is the dramatic increase in the standard deduction. Because the standard deduction has almost doubled, it is anticipated that only a small percentage of taxpayers will continue to itemize and thus receive any tax benefit from specific tax deductions, such as charitable deductions.

In order to continue taking advantage of the charitable deduction, some taxpayers may want to consider strategically structuring their charitable gifts by “bunching” their donations into one year where they would be able to exceed the standard deductions amount of $12,000 for singles and $24,000 for married couples filing jointly.

This bunching strategy makes sense when combined with a contribution to a new or existing donor advised fund or DAF. With a DAF, the donor receives a tax deduction immediately when contributing to the fund, then the investments in the fund grow tax-free. In some cases, donors may decide to alternate years in which they contribute to their donor advised funds and receive the tax benefit while continuing to recommend grants to their favorite charities each year.

Donors can reap even more favorable tax benefits if they donate long-term appreciated securities to their funds than if they contribute cash as capital gains taxes are eliminated. TOP also accepts more complex gifts such as private stock, real estate and limited partnership interests.

The minimum to establish a donor-advised fund at TOP is $10,000 for donors 40 years and older. To encourage younger philanthropists, TOP’s minimum to start a fund is $5,000 for 21 to 39-year-olds.

“DAF donors may designate family members to make grant recommendations from their fund, which is a great way to encourage family communications and to teach the next generation philanthropic values. TOP’s DAFs encourage fund holders to appoint successor recommenders, which creates a vehicle for multi-generational giving,” said Ellen Weiss, TOP’s executive director.

Many families also are realizing the ease and lower cost of establishing and operating a donor-advised fund compared to a private family foundation.

“We have seen an increased interest in migrating existing private family foundations when families realize the simplicity of operating a donor-advised fund. Another plus is that DAFs do not have an annual distribution minimum whereas family foundations are required to distribute 5 percent of their assets annually,” said Michael Schwartz, an estate planning attorney and TOP Board member.

With all of these factors in play, the increased interest in DAFs bodes well for TOP and for the Jewish and greater communities that they substantially impact through distributions, said Weiss.

For more information on TOP and its DAF program, contact ellen@topjewishfoundation.org


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