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“A checklist to help you increase impact and reduce taxes…
1. Determine how tax benefits can help you support your goals or increase your impact.
An important first step in creating a year-end giving plan is to review the basic tax benefits or incentives available to you. The first benefit is the charitable deduction, which can reduce your taxable income if you itemize…
Your instinct may be to donate cash, but donations of appreciated non-cash assets held more than one year can help you give even more to charity in two ways:
First, regardless of whether you itemize deductions or take the standard deduction, you potentially eliminate the capital gains tax you would incur if you sold the asset first and donated the proceeds. This may increase your amount available for charity by up to 20%.
Second, you may generally claim a charitable deduction for the fair market value of the asset, if you itemize, and may choose to pass on that income tax savings in the form of more giving…
Finally, if you are age 70½ and older and have a traditional IRA, you can consider a special tax benefit available with your account: directing up to $100,000 of Qualified Charitable Distributions (QCDs) in 2023 to operating charities (excluding donor-advised funds) tax-free. While withdrawals from traditional IRAs are taxable income, QCDs are not…
2. Consider bunching gifts to hurdle the 2023 standard deduction…
Another important consideration is whether you plan to itemize or take the standard deduction.
For 2023, the standard deduction is $13,850 for single filers and $27,700 for married couples filing jointly. There also is an additional standard deduction for being age 65 or older or blind: $1,850 if your filing status is single, and $1,500 per person if your status is married filing jointly.
If your total itemized deductions are below those amounts, you may find it beneficial to ‘bunch’ your 2023 and 2024 charitable donations together in 2023 to exceed your 2023 standard deduction. You could then itemize deductions on your 2023 tax return and take the standard deduction for 2024 taxes.”
We’re easing into the home stretch of the (tax) year, and a good time to consider charitable giving strategies. This was a good practical list of actionable strategies and benefits to consider.
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