There are may great ways to leverage your contributions for meaningful causes by updating the way you give. One of the least efficient way to give to a charity is to give cash. Using a combination of tax smart giving strategies, you can stretch your donation to go farther and experience the joy of giving in more meaningful ways.
Wouldn’t it be exciting to give more by giving smart? Below are three strategies (among many more), that you might be able to utilize to give an additional 10%, 20%, or 30% by virtue of the tax savings.
Consider donating stock directly to the charity or through a giving account. If you own appreciated stocks or mutual funds in a taxable account, you likely have a significant opportunity to pay less tax, give more, improve your personal cash flow and simplify your giving especially if you give through a charitable fund which may simplify the accounting for the donor. Here’s how it could work:
Determine the amount you want to give and ask your financial advisor to recommend stocks with appreciated value to gift.
Receive an income tax deduction for your contribution
Use cash to buy back the amount of stock you have gifted to if you so choose with a new tax basis which means zero capital gains to start.
Give to your favorite charities tax free or tax efficiently.
Consider giving more with the extra money you saved.
Utilize Qualified Charitable Distributions (QCD). QCD is a transfer of funds from your IRA custodian made payable to a qualified charity. You must be 70 ½ or older and certain rules and requirements need to be met.
QCD can be counted toward satisfying the Required Minimum Distribution (RMD), but now it may be even more enticing to some givers.
QCD is reported as non-taxable income on the federal tax return. This may have two benefits: the QCD does not increase AGI and the QCD is not an itemized deduction thus an additional benefit to both itemizers and those taking the increased standard deduction.
Leverage Charitable Lumping and Clumping. This strategy leverages front-loading giving into one year, itemizing in that year, and claiming the increased standard deduction in the following years. For example, contribute a lump sum of two, three, four, or even five years’ worth of contributions to your charity of choice to allow you to take advantage of itemizing that amount in one tax year.
In future, before you reach for your checkbook to support your preferred charity, consider the many tax smart giving strategies that could increase the benefit to both you and the charity.
We at Crown Wealth Management are passionate about helping our clients find purpose as they strive to “Live Abundantly. Give Generously.” As wealth managers, we strive to create innovative giving solutions customized for each family. Please call us at for your complimentary first appointment.
The tax smart giving strategies presented are examples based on current tax law and do not reflect a specific taxpayer situation. Tax benefits may differ from strategies presented. Please consult with your tax or financial advisor regarding your specific situation. Securities America, Inc. a Registered Broker Dealer, Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc., a SEC Registered Investment Advisory Firm. Crown Wealth Management, Inc., Christian Business Professional Directory CBPD and the Securities America companies are unaffiliated. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. The following information is hypothetical in nature, provided for illustrative purposes only and does not reflect the performance of an actual investment or investment strategy.