Proposed legislation known as the Charitable Act is gaining momentum. The bill calls for making a “below the line” deduction available to taxpayers who do not itemize on their tax returns. This proposed deduction is slated to reach up to one third of the standard deduction (around $4,500 for an individual filer and around $9,000 for married joint filers). In addition to providing an overall boost to charitable giving, the intent is that enabling all taxpayers to benefit from the charitable deduction might help reverse the decline in recent years in the number of households giving to charity each year.

Qualified Charitable Distributions (QCDs) are having a moment, thanks to new laws passed late last year that expand this unique charitable giving opportunity for those who are 70.5 or older. Watch out, though, for potential pitfalls. A recent legal analysis points out, “the devil is in the details.” This is particularly true regarding the new “Legacy IRA” provisions allowing eligible taxpayers to make a one-time QCD to a charitable remainder trust or charitable gift annuity.

A recent private letter ruling reinforced once again that the IRS takes the concept of “private inurement” very seriously for nonprofits. As in, if you do it, you are out. Most nonprofits are well aware that they will be putting their 501(c)(3) exemption status at risk if they play fast and loose with the rules preventing undue benefit to a private person. After all, charities are established for the public good. Public good and private profit do not mix.

Our team at KZCF is happy to serve as a sounding board as you advise your clients. We understand the philanthropic sector and can offer assistance as you manage the primary relationship with your clients.