As we’re nearing year-end, it is important to give some thought into how your charitable giving can also benefit you from a tax perspective.
If you itemize, you can deduct charitable giving to qualified 501(c)(3) organizations. These gifts may be limited to your adjusted gross income, depending on the type of gifts.
- 60% of adjusted gross income for cash gifts
- 50% of adjusted gross income for non-cash gifts
- 30% of adjusted gross income for long-term appreciated assets (stocks and property)
You can strategize to “bunch” your charitable contributions for two years into one year to push your giving over the standard deduction threshold to receive the benefit of the larger itemized deduction.
Additionally, you could consider creating a donor-advised fund (DAF). You will receive a deduction based on the date you contribute to the donor-advised fund but can select the type of charity you would like to donate to at a date in the future.
One of the best ways to give to your favorite charitable organization is to gift appreciated stocks. If you gift long term stocks, you as the donor will be able to deduct the fair market value of the asset as a charitable deduction and prevent paying capital gains tax on that asset.
If you are over 70 ½ , a great strategy is to use a Qualified Charitable Distribution (QCD) as a charitable planning tool. The QCD will directly reduce the taxable amount of your distribution and will benefit you even if you are taking the standard deduction. This is done directly through your IRA. You are eligible to do this for up to $105,000 per individual in 2024. Also, a QCD can be used to satisfy your required minimum distributions.
The gifts must be made by December 31st of the tax year you would like the deduction. Don’t hesitate to start preparing and planning for your charitable giving this holiday season.
Please reach out to one of our team members for more information.
