Year-End Charitable Giving Strategies

Your comprehensive guide provides various strategies for charitable giving before the year’s end, focusing on both maximizing impact and optimizing tax benefits. Let’s summarize each method:

  1. Donor-Advised Fund (DAF):
  • A DAF streamlines giving by allowing tax-deductible contributions to a single account, from which you can distribute grants to charities over time.
  • It offers flexibility, investment options, and the ability to donate appreciated assets.
  1. Donating Appreciated Assets:
  • Donating assets like stocks or bonds that have appreciated in value allows you to avoid capital gains tax and receive a tax deduction for the asset’s full fair market value.
  1. Bunching Donations:
  • Bunching donations involves making larger charitable contributions in a single year to itemize deductions, then taking the standard deduction in subsequent years.
  1. Utilizing State Tax Credits:
  • Some states offer tax credits for donations to specific charities, providing additional incentives for giving.
  1. Selling Depreciated Securities to Donate Cash:
  • Selling assets that have decreased in value can offset capital gains and provide a tax deduction for the cash donation to charity.
  1. Making Qualified Charitable Distributions (QCDs):
  • Individuals over 70.5 years old with IRAs can make QCDs directly to charities, satisfying RMDs and excluding the distribution from taxable income.
  1. Consulting with a Professional:
  • Before implementing any strategy, it’s essential to seek advice from a tax professional or financial advisor to ensure it aligns with your overall financial plan and goals.

By utilizing these methods, individuals can make the most of their charitable giving while optimizing their financial situation and potentially reducing their tax liability.

Year-End Charitable Giving Strategies

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