Giving strategies to maximize charitable impact and minimize taxes

Research shows that adults are more likely to give to charity if their parents also gave to charity and we encourage you to share stories of giving at your holiday table. Below are a few questions to get you started. We recommend that each person at the table be given a chance to respond to the questions:

• What is your earliest memory of giving?
• When is a time that someone else showed generosity to you?
• If you could solve a world problem, what would it be? 

Additionally, the end of the year is a great time to leverage charitable gifts for tax efficiency. Below are three giving strategies to maximize charitable impact and minimize taxes that you should discuss with your tax advisor.

Bunching 

Bunching is grouping charitable gifts one intends to make over a future period into a single year. If you expect that the total of your itemized deductions will be less than the standard deduction for 2024 (generally $14,600 for single filers or $29,200 for married couples filing jointly), it could be tax advantageous to bunch your 2024 and 2025 charitable deductions into this year. You could then itemize deductions on your 2024 tax return and take the standard deduction in 2025. The Tax Cuts and Jobs Act is set to expire in 2025 so this is a great time to take advantage of charitable bunching.

Additionally, you may choose to pair a charitable bunching strategy with a Donor Advised Fund (DAF). If you typically give $10,000 a year to charity, consider gifting $20,000 into a DAF this year. Assets in a DAF grow tax-free and you can itemize your taxes in 2024 but make charitable grant distributions in 2024, 2025 and into the future.

Assets over Cash 

Gifting highly appreciated assets rather than cash is something to consider. If you have held appreciated stock for more than a year, consider making a gift of stock rather than cash. You may generally be able to deduct the fair market value of the stock, while also avoiding the capital gains tax you would otherwise need to pay if you sold the stock outright.

Qualified Charitable Distribution 

It may be advantageous to use a Qualified Charitable Distribution (QCD) to satisfy your IRA Required Minimum Distribution (RMD). Any individual over the age of 70 ½ can direct up to $105,000 annually to a qualified nonprofit organization. The amount donated is excluded from your taxable income which may positively impact certain tax credits and deductions, the taxable portion of your Social Security, and your Medicare premiums. It also counts toward your RMD.