1 minute read
Put That Checkbook Away! 3 Smarter Ways to Support Your Charities
“That’s nice you gave to charity, but it doesn’t help on your taxes” - Every accountant when you don’t itemize
With the standard deduction at nearly $14,000 per person, it makes sense why nearly 70% of people don’t itemize their taxes. However, that means most people lose an important tax benefit if they donate to charity. Fear not, tax-avoiders: Here are three tax-advantaged strategies you can use to support your nonprofits.
Advertisement
1. Most people don’t realize charities can often accept appreciated stock or real estate. Giving assets allows you to avoid capital gains tax on the appreciation, take a deduction for the full market value, and reduce concentrated positions in your portfolio. You may want to give multiple years’ worth of donations in a single year, to take a larger deduction by itemizing your taxes.
2. If you’re 73 or older, odds are you’re taking an annual required distribution from your retirement accounts, which
BY RENEE MICHEL, MBA, AND JOE SWEENEY, CFP ® , FINANCIAL ADVISORS AT SWEENEY & MICHEL, LLC
adds to your taxable income. This presents an opportunity for a shadow deduction. You can use what’s called a QCD (a Qualified Charitable Distribution) to direct some of that required distribution directly to a charity. You’ll avoid the income tax from the distribution while preserving your standard deduction.
3. How would you like to take a big tax deduction this year, but maintain the control to grant money to recipients down the road? Donor Advised Funds are popular tools for just such an occasion. If you’ve got a windfall income (e.g., a bonus, a settlement, or the sale of highly appreciated assets) and need a big deduction to offset, you may want to consider a DAF. The best part? DAFs can be invested for income to maximize their grant-making ability over time.
This is not specific tax advice, and your situation may vary. If you’ve got questions about your charitable giving, or anything financial planning related, give us a call at 530-487-1777. We’re here to help.
