Strategic Giving for the Greater Good
Year-end is a great time to think about how you’d like to support the charities you care about, but also how you can maximize the tax benefits of those gifts. The larger standard deduction we’ve had for several years now due to the Tax Cuts and Jobs Act means that deducting those gifts requires more planning – but these five gifting strategies will remain relevant under any tax scenario:
Bunching Up
Combining smaller, annual donations into larger ones every other year lets you take the standard deduction one year and itemize the next, ultimately giving you more in deductions.
Donating Stock
Directly donating long-term appreciated stock can be beneficial, as you avoid selling the stock and incurring a tax bill. Once the charity sells the stock, neither you nor they recognize the gain.
Creating a Donor-Advised Fund (DAF)
Using a bunching strategy with a donor-advised fund gives you the full tax benefit of the gift today while giving you time to decide which charities those gifts will go to.
Making Qualified Charitable Distributions
At age 70 ½, qualified charitable distributions (QCDs) let you donate pre-tax IRA holdings. At age 73, you can begin counting those QCDs toward your required minimum distribution, avoiding tax. Just transfer the funds directly to the charity, and it won’t be reported as taxable income. In 2024, the maximum you can contribute to a QCD is $105,000.
Funding a Charitable Remainder Trust
This trust provides an income stream for you or another beneficiary for a set term or lifetime. Afterward, the remaining assets go to charity. You’ll get an immediate charitable deduction based on the present value of the interest that will eventually go to charity.
Access Our Year-End Resources
Looking to reap the benefits of a Roth conversion? First, answer these three important questions.
The income tax implications we can expect to see if the Tax Cuts and Jobs Act sunset occurs – and how you can prepare today.
Want to make gifts to your loved ones without incurring a large tax bill? These strategies could likely benefit you.
How can you finish out 2024 to make sure you get a strong start to 2025?