Giving Tuesday is NOVEMBER 27th this year. Each year at this time, I post 10 practical financial planning considerations for your charitable endeavors updated from years’ past.
- New tax law means it’s time to revisit your plan. It is estimated that 57% fewer Americans will be itemizing this year and going forward (Source: Brookings Institution). Read below for ideas on how to maximize tax reduction if you’re not able to itemize.
- Qualified Charitable Distribution for the win. Qualified Charitable Distributions (QCD) continue to be popular amongst retirees. If you are over age 70.5 and subject to Required Minimum Distributions (RMD) in your IRA, you can replace your gifts out of cash with a gift of your distribution directly to a charitable organization. The results? This income is not reportable as taxable income like a normal RMD. Make sure to keep track of your records, make your gift in accordance with QCD rules, and report your qualified gift to your tax professional.
- Get on a first name basis with organizations that matter to you. Charities appreciate your gifts and dollars. They also enjoy hearing from you about what the organization means to you and the impact that you hope your gifts will have. Getting involved and building relationships is valuable for the organization and can also be rewarding to you.
- Spread the word or give in groups. Giving Tuesday is a social phenomenon for good. Sharing your own charitable endeavors can create communication and encourage generous behavior within your network. So hashtag away! #GivingTuesday
- Take advantage of your corporate match. If you work for a company who provides a match to donations, your time for making it count this calendar year is fleeting. Decide how you would like your match to be utilized and make sure to dot your i’s and cross your t’s with the appropriate paperwork or process to get the money into the right hands.
- Gift appreciated stock for a double-tax plus. What’s better than a charitable gift that multiplies its power with a current tax deduction and reduced future tax liability? If you gift appreciated assets like stocks in taxable accounts that have grown over time, you’re doing just that. You would potentially get a charitable deduction and take away future tax liability on realized capital gains. Not sure how to make this happen? We would be happy to coordinate with you and the organization you want to help to take care of the details at your instruction.
- Do holiday shopping and help the organization you love. Services like Amazon Smiles allow you to shop and also provide a percent of sales to your preferred organization. Other non-profits provide charitable gifts that also support their mission. This year, my favorite is the BuildBox from Build Institute.
- Establish or add to a Donor Advised Fund. A donor advised fund allows you to combine the opportunity for gifts of appreciated stock (see #6 above) as well as taking an immediate deduction and spreading out your gift over time if you prefer. This may become more relevant if new tax legislation is passed this year. Also, in peak earning years with presumed lower earnings in the future (read, near retirement), you can preload future gifting in a year that may be very impactful for your finances.
- Make your donations generational. Shared philanthropy projects can help to introduce younger children to important money topics or provide governance practice for adult children. You can see how family dynamics work and teach about money with less self-interest. Plus, donating time, effort, and money just plain feels good. Call it family bonding.
- Cost of living adjustment. Inflation is real, and it might be growing over the coming years. If you’ve kept your gifts static, it might be time to review things and give them a boost so they keep up with the value of today’s dollar.
Philanthropy and charitable giving are deeply personal. #GivingTuesday is a great opportunity to review and upgrade your game plan. Looking for the optimal financial results? Coordinate with your trusted advisors to plan and execute for maximum impact for you and the organizations that matter to you and your family.
Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Donors are urged to consult their attorneys, accountants or tax advisors with respect to questions relating to the deductibility of various types of contributions to a Donor-Advised Fund for federal and state tax purposes. To learn more about the potential risks and benefits of Donor Advised Funds, please contact us.
Melissa Joy, CFP®, CDFA® is President and Wealth Advisor at Pearl Planning. Reach out for a call today at 734.274.6744.