COVID-19 Update

Alliant Wealth Advisors is an "essential business" under Virginia state law and we remain fully operational during the COVID-19 crisis.

To keep our clients, staff and colleagues safe we are currently holding all meetings via video conferencing. And we are alternating a small number of staff in our office while the majority serve you from their home.

Speaking of our office. Our headquarters in Prince William will relocate to the Signal Hill Professional Center at 9161 Liberia Avenue, Suite 100, Manassas, VA 20110 effective Monday, April 20, 2020.

Whether we are virtual or in person, we are here for you. Please keep safe.

Best Regards,

John Frisch, CPA/PFS, CFP®, AIF®, PPC®


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Donor Advised Funds

December 7, 2018 - In my last article, I described how the 2017 Tax Cuts and Jobs Act (TCJA) effectively eliminated the ability for most taxpayers to get a tax break on annual charitable contributions. I also shared a strategy for making tax-advantaged charitable contributions with a Qualified Charitable Donation (QCD).

Unfortunately, QCDs are only available if you’re at least 70½ years old. Today, let’s explore a strategy available to all taxpayers: the Donor Advised Fund (DAF).

The TCJA essentially doubled the standard deduction to $12,000/$24,000 for individuals/married couples. It also capped the itemized deduction for various state taxes ($10,000 max), and eliminated Miscellaneous Itemized Deductions. The result: Most Americans will be taking the standard deduction, which effectively eliminates tax-advantaged annual giving.

So, instead of giving some every year, you could give more in a single year – enough to itemize – and then hold off for a while. There’s a catch. While establishing “fat” and “lean” giving years may be a good tax strategy, it may be hard on your recipients who are counting on a regular income stream.

Enter, the DAF. A DAF is a charity, so when you fund it, it’s a charitable donation. Your donation is typically invested per your guidance, and you advise the DAF on which charities should benefit … and when.

Say you and your spouse incurred at least $10,000 in state taxes and $7,000 in mortgage interest, and you plan to donate $6,000 at year-end, for $23,000 total. Since your standard deduction is $24,000, it’s not worth itemizing. Instead, you could donate $30,000 to a DAF before year-end, and then advise your DAF to grant $6,000 annually to your favorite charities.

In year one, your itemizable deductions are now $47,000 total, which you can itemize. Expect a tax savings of at least $7,000, thanks to your charitable giving. Your future annual tax-deductible contributions will be $0 (since you took the entire deduction up front), but that’s ok. You’ll take the standard deduction for the next four years.

As a bonus tip, consider donating appreciated stock instead of cash, to eliminate some capital gains taxes while you’re at it. And do read the fine print when choosing a DAF. They aren’t all identical.

Written by John A. Frisch, CPA/PFS, CFP®, AIF®, PPC®

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