The new annual standard deduction of $12,200 to $24,400 has made it more tax wise to combine years of charitable donations. A client who is on the borderline, caught between the choices of either taking a standard deduction or itemizing deductions, can bunch gifts and itemize deductions in 2019 and use the standard deduction in 2020, says Shier. “Those who take [required minimum distributions] from traditional retirement accounts can make a direct distribution of up to $100,000 to a qualified charity tax-free,” she says.

“If a client normally donates $5,000 per year and cash flow is not a problem, a donation of $15,000 can be made in one year and then funds can be distributed to various organizations over three years,” says Robert Seltzer, a CPA at Seltzer Business Management in Los Angeles.

“Beware of making non-cash charitable contributions that don’t allow for a fair-market value deduction,” says Brian Schultz, a partner in Plante Moran’s wealth management tax practice in Southfield, Mich. For example, be careful donating publicly traded stocks or other marketable securities that have been held less than one year (for which the deduction is generally limited to your cost basis), or making most donations of inventory from a taxpayer’s small business.

Gifting

High-net-worth individuals should confirm that they have sufficient assets for their lifetime. Once that’s done, they can take advantage of gifting opportunities, Shier says. “The annual gift tax exclusion in 2019 is $15,000 and is a use-it-or-lose-it exclusion,” she notes. She also says that grantor retained annuity trusts are an attractive gifting strategy since there has been a decrease in the interest rate used to value gifts (the rate set by Section 7520 of the Internal Revenue Code).

The last months of the year are the time to look at recent gifts, advises Daniel Morris, a senior partner at Morris + D’Angelo CPAs in San Jose, Calif. “Did an elderly parent gift an appreciating asset, and is that elderly parent now facing a shorter life span? Consider opportunities to return the gift. Allow the elderly parent to ladder up a basis adjustment at time of death and save heirs future capital gains.”

Withholdings And Compensation

Many taxpayers got a nasty surprise last April when they found they hadn’t withheld enough, and they got a big tax bill. David Markle, in collaboration with Pamela Batch, a CPA with Batch & Company in Allentown, Pa., came up with the following recommendations:

• Make sure that withholding and estimated tax payments are enough to avoid penalties and interest to the IRS. Do that by covering 110% of your previous year’s income tax liability and 90% of your current-year liability.

• Actively manage your executive compensation to pay the lowest income tax over a two- or three-year period. This includes qualified and non-qualified stock options, deferred compensation and bonus payouts.