While the heart of charitable giving lies in supporting causes we care about, there are smart ways to maximize the impact of your generosity. By understanding a few key strategies, you can make your donations work harder for both your chosen charities and your tax returns.
One savvy approach is timing your contributions strategically. Rather than making small donations throughout the year, consider "bundling" your charitable gifts into a single year. This technique can help push you over the standard deduction threshold, potentially leading to larger tax savings over time.
For those with investments, donating appreciated stock offers a win-win opportunity. Not only can you deduct the full market value of the shares, but you'll also avoid paying capital gains tax on the appreciation. Better yet, the charity can sell the stock tax-free, maximizing the value of your gift.
A Donor Advised Fund (DAF) provides another flexible option for strategic giving. Think of it as a charitable savings account – you can contribute a larger sum now for the immediate tax deduction, then distribute the funds to various charities over time. This approach is particularly beneficial during high-income years when tax deductions are most valuable.
For retirees taking Required Minimum Distributions (RMDs), Qualified Charitable Distributions offer a unique advantage. By directing funds straight from your retirement account to charity, you can satisfy your RMD requirements while reducing taxable income – a double benefit that standard charitable giving doesn't provide.
Remember, while these strategies can enhance the financial impact of your giving, the most rewarding aspect remains supporting the causes close to your heart. Consider consulting with a CPA or financial advisor to determine which approach aligns best with your charitable goals and overall financial picture.
A local business owner, DJ Scheidt brings passion and precision to his work as Managing Partner at Hungeling-Grace CPAs. After honing his skills at Deloitte, he now focuses on empowering other local business owners and individuals with expert tax planning guidance. When he's not helping clients navigate their financial journeys, DJ can be found cheering on his boys in various activities and serving his community through The Church of the Apostles.
Hungeling-Grace CPAs
29 Lenox Pointe NE
Atlanta, GA 30324
(404) 633-4600
www.hungelingcpa.com