Giving to Caesar and to God
With a little strategy, you can maximize giving while minimizing your tax burden
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A few times a year in this little column, I’ll ask for your financial support.
This is not one of those times, although I do want to talk about the subject of charitable giving.
The 2017 Tax Cuts and Jobs Act (TCJA) increased taxpayers’ standard deduction, which, for many, had the effect of limiting the deductibility of charitable donations.
For most of us, the largest share of our giving goes to our churches in the form of tithes and offerings. That giving usually comes from our paychecks.
The TCJA changed other categories of deductions—not just charitable contributions—making it less likely that taxpayers would itemize. Indeed, the number of middle-income taxpayers who itemized deductions appears to have fallen to about one-third of the pre-TCJA number.
Many worried—I confess, I was among them—that the changes in the TCJA would limit the amount Christians give to their churches and other ministries. While I’m confessing: As a closet CPA, part of my joy in giving was the appeal of reducing my tax burden every time I tithed.
I’m kidding, mostly.
And it looks like my worry was overblown: Giving to churches may have decreased slightly in 2018, but it didn’t drop as precipitously as many of us worried it would.
It is certainly true that we cannot worship both God and mammon, but doing our best to reduce our taxes in order more fully to support our churches and Christian ministry is part of our stewardship of the resources God has given us.
At least that’s what the CPA in me thinks.
It turns out there are giving-related, tax-reducing strategies for Christians at all income levels. Based on WORLD’s experience, many of you already have discovered donor-advised funds, which provide some tax advantages when used effectively.
For those who are nearing retirement, the options increase. From making donations out of retirement accounts, to gifting unnecessary life-insurance policies, to giving a portion of a business or real estate ahead of the sale, there are a variety of giving strategies you may not have considered that utilize the tax code and increase your ability to give more to ministry.
You may not be thinking about these things, but somebody is: the National Christian Foundation (ncfgiving.com); denominational foundations like the PCA Foundation (pcafoundation.com), Southern Baptist Foundation (sbfdn.org), and LCMS Foundation (lcmsfoundation.org); along with many local and regional organizations, offer donor-advised funds and, more importantly, good advice to anyone who wants to maximize his giving by minimizing his tax burden. I urge you to talk to someone at one of these organizations.
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