People tend to think about charities for year-end donations. Even events like hurricanes or natural disasters prompt people to consider how they can give. Charitable donations is one item on our year-end tax planning checklist. Be sure to download your copy!
Let’s talk through the number of options you have.
- Cash: Give cash directly
- Check: Write a check to the charity
- ACH: Have the funds pulled directly from your bank account
- Credit Card: For a recurring payment
- Stock: Stock with large gains can be good for donating so you do not have to recognize the gain
- RMDs or QCD: If you don’t need your RMD you can donate that money up to $100,000 per year
- Household Items
These are typically things you donate to the Salvation Army or Goodwill. With these items be sure to keep a receipt. If you’re donating things that are worth over $5,000 you need to get an appraisal. This is required by the IRS. For example, you may be remodeling your kitchen and giving away all the cabinets or appliances to Habitat For Humanity.
Donor Advised Fund:
Another strategy that can allow you to give cash or stocks when you don’t know which charitable organization you want to give to can be using a Donor Advised Fund or Charitable Trust. You donate or contribute money into this account. The gift is irrevocable meaning that it can’t be undone. In the year you make the contributions you get the tax deduction. Then when you decide to make gifts to one or more organizations over time you can do so. The funds can be invested so it can be growing year by year too.
When would a Donor Advised Fund make sense to use?
- If you don’t know which organizations you want to give to, but still want to get the tax deduction in this year.
- If you have a high income year. Whether you have a large bonus or extra earned income.
Download our year-end tax planning checklist. If planning for charitable donations are important to you this may be a great option. We’re happy to help you set this up.
Ready to find out more?
Contact us today for a free 30-minute consultation!
The important question in the investment world is: Is inflation transitory or not? Whether inflation ends up running hot or cold can make a big difference in how markets perform. Read about our thoughts regarding this all-important question.
Investors are piling into stocks at a record pace in the first half of 2021. See how remarkable the first half of the year has been, and hear our thoughts about the dangers of chasing the crowd.
Steve enjoys getting to know clients and hear their unique stories and the lessons learned which has brought them where they are today. One of the reasons he enjoys what he does is the ability to show the outcome that can be achieved with different choices. He also enjoys continually learning.