You’ve worked hard for your money, but you also know there are so many worthy causes that could use your help. Plus, the holiday season is a great time to support causes that mean a lot to you. Here are some ways you can maximize the impact of your charitable giving before the year comes to a close.

5 Strategies for Giving

1. Monetary Donations: The most straightforward way to donate is through cash, checks, or credit card payments. Ensure the charity is qualified by the IRS to make your contribution tax-deductible. Keep receipts or bank records to substantiate your donations.

2. Stock Donations: Donating stocks or securities can be more tax-efficient than giving cash. If you've held the stocks for more than a year, you can avoid capital gains tax and potentially deduct the market value of the stock. Gifting highly appreciated stock may make sense for some investors.

3. Donor-Advised Funds (DAFs): These funds allow you to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. It's an effective way to manage your charitable giving.

4. IRA Charitable Rollover (qualified charitable distribution or QCD): For those over 70½ years old, donating directly from an IRA can count towards the required minimum distribution and not be considered taxable income.

5. Bunching Donations: If your total itemized deductions are just below the standard deduction threshold, consider 'bunching' multiple years' worth of donations into one year to surpass the standard deduction limit, thus making your contributions deductible.

Worth Mentioning

In addition to the above ways-to-give list, investors may consider establishing a charitable trust, using non-cash donations (i.e., clothing, vehicles, and household goods), expensing travel and supplies while volunteering, or even adding the charity as a beneficiary to their life insurance policy. Always consult with a tax advisor or your financial planner to understand the implications of your charitable contributions and ensure compliance with IRS rules.

Timing Tax Liabilities

Your charitable giving means a lot to those who need it. At the same time, no one said giving can’t benefit you as well, so remember to take advantage of financial benefits like tax deductions. Most charitable giving you make to qualified organizations is tax-deductible.

Remember to use this deduction in the year that you give money, not when you pledge or promise to make a contribution. So, sending your charitable gift before January comes around means you can use your tax-deduction for the current calendar year.

Here to Help

Want to learn more and discuss your personal approach to charitable giving? Reach out to us directly with any questions or comments, or to schedule a one-on-one meeting. We’re here to help.

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