Charitable Planning
Optimizing Charitable Contributions: Tax-Efficient Giving Strategies
​
Understanding tax-efficient giving strategies can help maximize your charitable impact while minimizing your tax burden. As you cultivate a lifestyle of generosity, consider these approaches to align your giving with current standard deductions and contribution limits.
Key Strategies:
1. Donate Appreciated Assets:
- Avoid capital gains tax by donating stocks to a donor-advised fund.
- Maximize generosity while reducing tax liability.
2. Non-cash Asset Donations for Itemizers:
- Donate capital assets (stocks, cryptocurrency, real estate, business interests) to a donor-advised fund.
- Claim fair market value as a charitable contribution deduction, enhancing tax benefits.
3. Contribution Bunching:
- Concentrate two years' worth of donations into a single year.
- Alternate between itemizing deductions and taking the standard deduction to optimize tax benefits.
4. Leverage Retirement Assets:
- Utilize Qualified Charitable Distributions (QCDs) from IRAs for individuals 70½ and older.
- Direct up to $105,000 tax-free annually to eligible charities.
- Satisfy Required Minimum Distribution (RMD) requirements while potentially reducing future RMDs and taxable estate value.
Note: Donor-advised funds are not eligible for QCDs. Consider alternative giving methods like designated funds for specific charities.
By implementing these strategies, you can enhance your charitable impact while optimizing your tax position. Consult with a financial advisor or tax professional to tailor these approaches to your specific circumstances and giving goals.