Personal Finance

Tax Reform Planning: Charitable Contributions

Senior Estate Planner, Mike Repak, provides important topics to consider for year-end tax planning.

As 2017 draws to a close, Congress is putting the finishing touches on a substantial tax reform bill. While there are still unknown details, some aspects of the new law are becoming clear. Because the proposed law is likely to be effective in just a few days, taxpayers should consider the opportunities that are available with the current tax law in place.

For those who support charities or certain philanthropic causes, one area of particular interest is the tax benefits that are received for these charitable efforts. The new law will likely increase the standard deduction (the amount that is automatically deducted). As a result, some taxpayers may consider compressing several years’ worth of charitable giving into one year (a year in which they itemize) and rely on the standard deduction in other years. An alternative: Rather than simply doubling or tripling your contribution to your favorite causes in one year, you may consider opening a Donor- Advised Fund (DAF) as a vehicle through which charitable activities may be directed.

A Donor-Advised Fund is an agreement between a donor and a host organization (the fund) that gives the donor the right to advise the fund on how the donor’s contributions will be invested and how grants to charities (grantees) will be made. Deposits must remain in the fund until a grant from the fund is made, but the donor can recommend to the fund when and to which cause those distributions are made (within IRS guidelines, of course). The fund, in turn, can follow the donor’s recommendation whenever it is appropriate to do so. DAFs are not suitable for all investors and there are disadvantages to consider, such as the irrevocability of contributions, limited investment options, and the inability to direct assets to heirs once a contribution is made to the fund.

The tax rules related to charitable giving are very complicated, and there are limits to how much can be given in any year, as well as how gifts which exceed these limits should be reported. If you would like to learn more about Donor-Advised Funds, you should consult a qualified tax advisor who can analyze and advise you on your particular tax situation. You can contact us to learn about how we can help you set up a Donor-Advised Fund quickly and simply.

Janney Montgomery Scott LLC Financial Advisors are available to discuss the suitability and risks involved with various products and strategies presented. We will be happy to provide a prospectus, when available, and other information upon request. Please note that the information provided includes reference to concepts that have legal, accounting, and tax implications. It is not to be construed as legal, accounting, or tax advice, and is provided as general information to you to assist in understanding the issues discussed. Neither Janney Montgomery Scott LLC nor its Financial Advisors (in their capacity as Financial Advisors) give tax, legal, or accounting advice. We would urge you to consult with your own attorney and/or accountant regarding the application of the information contained in this letter to the facts and circumstances of your particular situation. Janney Montgomery Scott LLC is a full-service investment firm that is a member of the NYSE, FINRA, and SIPC.

Michael Repak, CPA/PFS, JD, LLM
Vice President/Senior Estate Planner

Mike provides advice and guidance in all aspects of financial, tax, and estate planning issues. He earned his Bachelor’s degree from William Paterson University in Wayne, New Jersey, and has a Master’s degree from the University of Wisconsin in Madison, Wisconsin. He has a CPA/PFS credential, and Series 7 and 66 securities licenses. He received his J.D. from the University of Florida and his LL.M. in Tax Law from NYU. 

He has been an adjunct professor in the MBA program at Temple University and is a sought-after speaker for professional conferences and events. He is also frequently featured as a Money Doctor on, the public education site of the American Institute of Certified Public Accountants. Mr. Repak has served on several non-profit and civic boards, is a graduate of Leadership Philadelphia, and a member of the Union League of Philadelphia.

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