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Two ways charitable giving impacts your taxes

As you consider estate planning, you decide that one of your main goals is to leave much of your money to charity. It's always been important to you, and you want to leave behind a legacy you can be proud of.

At the same time, your goal is to reduce the amount of taxes you pay as much as possible. You want to do this legally, but you're interested in simple tactics to reduce the government's take.

Fortunately for you, you may be able to do both things at the same time.

First off, if you leave money to charity, the amounts that you leave do not count toward your taxable estate. You can deduct them. You may even be able to give away enough that your total estate value falls below the limit.

This year, the limit for federal estate taxes is $5.6 million. That's per person, so a couple has a limit of $11.2 million.

You may also want to start making charitable donations right away. Giving away money now maximizes the savings on your yearly income tax payments. This preserves more of your estate every year. When you pass away, you can then leave a larger remainder to the charities of your choice. Remember, you do not have to wait to start giving, and anything you do immediately can have an eventual impact on your estate plan.

These are just two of the ways that giving to charity impacts your taxes. Make sure you really take the time to look into all of your options and the steps you will need to take.

Source: Investment News, "7 tips on achieving zero-tax estate planning through charitable giving," Robert Karon, accessed June 07, 2018

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