In order to minimize stress and maximize your gifting abilities, it’s important to keep in mind a few details that you may or may not be aware of. If you’re not sure how your finances match up with your giving strategy, follow the five tips below to organize and maximize your giving strategy.
1. Do Your Research
By using sites such as Guidestar or the Better Business Bureau’s Wise Giving Alliance, you can learn more about the groups you’re interested in offering donations to.
The organization you’re involved with should also be able to provide registration information including 501(c)(3). You may also use the tax-exempt organization search tool available on the IRS website to obtain specific information as well.
2. Bundle Your Donations
As deductions have increased over the years, you may choose to save money over time and donate every few years as opposed to each year, consecutively. By doing this, you may receive your itemized deductions over the limit one year and take the standard deduction the next.
If you’re interested in accomplishing this, you might consider a donor-advised fund, which allows you to make a charitable donation and immediately receive a tax break. You’ll then receive recommended grants from the fund to your preferred charities over time.
3. Donate Appreciated Stock
By donating stocks or other appreciated assets, such as artwork or antiques, you might reduce capital gains tax on investments.1
In particular, high-income earners might consider a non-cash donation specifically because of the tax advantages they may be awarded. Even those who have what they might consider to be small holdings could benefit by making a donation of appreciated investments.
4. Utilize Your IRA
If you’re a retiree over the age of 72, you might consider a Qualified Charitable Distribution from your IRA to a qualifying charity. These distributions can be a tax-efficient way of meeting any required minimum distribution. Additionally, there’s no need to itemize your deductions in order to benefit.
According to the National Association of Enrolled Agents, you may distribute up to $100,000 per year per taxpayer. This increases to an acceptable $200,000 for married couples if they both have IRAs.2 Although this strategy has existed for some time, it only recently became a part of the permanent tax code.
Consult your tax professional and financial adviser to ensure the distribution is processed correctly.
To learn more about the ways you can maximize your giving strategies, contact us to schedule a free consultation.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
This is not a recommendation and is not intended to be taken as a recommendation. This material was prepared for general distribution and is not directed to a specific individual.
LPWM LLC does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisers.