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Here is an opportunity to save money on your 2017 taxes. With the news of the Republican Senate tax bill, I am taking action on a personal basis before year-end so that Cindy and I can get tax deductions for our giving to First Unitarian for the next 10 years. I am not a tax professional so think of this as “food for thought” for you to make your own financial decisions in the few remaining days in 2017. If you have funds available, particularly appreciated stock/mutual funds, this may be a good strategy for you as well.
Under the proposed tax bill, the standard deduction will be increased to $24,000 for couples and $12,000 for single filers, reducing the number of taxpayers who will itemize. Under this tax bill, it will be difficult for us to be able to itemize deductions starting in 2018 since as retirees we no longer have mortgage interest payments and our property taxes + charitable giving will be under $24,000 a year.
The actions we are taking now are:
1) Charitable Trust: we are following the lead of several church members by setting up a Charitable trust thru our online Mutual Fund company. It only took 15 minutes to do this. We then donated appreciated investments to the trust with enough money to fund our pledges to First U for the coming decade. Note: Charitable Trusts have special rules which you need to read carefully. It is quite different from a mutual fund account.
2) Pre-Pay Pledges: An alternative to the Charitable Trust is to pre-pay future year pledges now. Back in February, Cindy and I pre-paid our 2017 & 2018 pledge amounts with appreciated stock so that we would get the larger charitable deduction this year. I know of members who have already paid their pledge for 3 years in advance. If you pay future year pledges in December, you get to take the charitable deduction on this year’s tax return. If you have assets in the stock market, you have already benefitted from big gains this year. Consider donating this gain to our Church by donating some of your stock or mutual funds.
3) Required Minimum Distributions (RMDs): If you have pre-tax retirement savings and you are at least 70.5 years old by 12/31/2017, you must take RMDs which increase your taxable income leading to higher tax payments for 2017. If you donate some or all of the RMDs from your IRA directly to First U, the donated money is no longer taxed. This direct transfer only applies to IRAs and not to 401k or 403b accounts. Do this by Dec 15 to ensure it gets done this tax year. Cindy and I will use this strategy when we reach this age.
If you have any questions, please email me at

Best Wishes,
Steve Cohen, Treasurer