Giving During the Holiday Season

Photo_116711_20180905Of course, many donors also look to both help others and help minimize their overall tax burden. With that in mind, we thought we’d share some thoughts about where individuals may be able to make the most of this year’s charitable giving.

Now that Thanksgiving is a happy memory and the refrigerator is without leftovers, nonprofits are entering the busiest time of the year with annual fundraising campaigns wrapping up and end-of-the-year giving ramping up. This is the time of year that many employees and donors start thinking about their charitable giving, says the Lebanon Democrat in the article A few thoughts on charitable giving, taxes.”

Let’s look at a few ways that your generosity can benefit you and your charity of choice:

Bundle your itemized deductions, if you can. If you can time the payment of qualifying deductible expenses, including charitable donations, do so in alternate years. This increases the chances that you’ll be able to itemize your deductions. You may want to notify the charity that your giving this year is a larger gift, because it will be covering a two-year period.

Select the right assets to contribute to a charity. For outright gifts made in your lifetime, consider using highly appreciated assets, like stocks. This will allow you to bypass owing capital gains taxes on the appreciation and claim the entire value of the assets, as a charitable contribution.

If you make a donation using this method to fund an income-returning gift or a charitable gift annuity or charitable remainder trust, you delay the recognition of the capital gain. In most cases, you can pay this in smaller amounts, over a period of years.

What if you want to make a gift that also generates income? Use a charitable gift annuity or a charitable remainder trust. These gifts typically require significantly higher values, so you may be able to itemize in the year they are funded. However, only a portion of the contribution is deductible. That is because the donor receives income for life or for a certain amount of time. These gifts are usually funded with stock, cash or real estate.

Taxpayers who are 70½ years old or older and required to take minimum distributions from retirement accounts, may have distributions made directly from their account to a qualified charity. If this transaction is done properly, the amount of the distribution is not added to taxable income. You will not receive a charitable deduction using this method, but you can lower your taxable income for the year and give your charity of choice a much-needed donation.

Lastly, consider adding bequests and beneficiary designations in your end-of-life planning. Part of your legacy can include charitable gifts. There are a few ways to do this: designate a percentage of your estate to be donated to charity, specify a charitable organization as the full or partial beneficiary of a life insurance policy, an investment or bank account or any account that transfers by designation or leave a dollar amount or property to a charity.

Speak with your estate planning attorney about making charitable giving part of your overall estate plan and maximizing the impact that your giving can have on your tax burden. It’s a win-win for you and the causes that matter to you. 

Reference: Lebanon Democrat (Nov. 21, 2018) “A few thoughts on charitable giving, taxes”

Scroll to Top

Your Monthly Estate Planning Resource

Sign Up For Our Monthly E-Newsletter

We NEVER share your personal information with any third parties.

Ready to Start Planning?

Contact Us Today:

Want more information and helpful tips for planning and protecting your loved ones? Leave us your email here.

We NEVER share your personal information with any third parties.