It’s Giving Tuesday today and what better topic to explore than charitable giving! Charitable giving is a great way to alleviate some of your taxable burden while supporting organizations you’re interested in. There are several methods so let’s jump in.

Let’s Make the Most of Charitable Giving

The most common method of charitable giving is cash/check/card, plain and simple and straight to the point. As with all charitable gifts, make sure you retain proper documentation, usually in the form of a letter from the organization. The letter indicates the date the gift was received, the amount, and that no goods or services were provided in exchange for the gift. (The fair market value of Rick Steve’s Italy guidebook will reduce your deductible contribution!)

Explore a donor-advised fund (DAF)

A DAF is a charitable investment vehicle. Like cash donations, you receive a 100% charitable deduction when you put money in. But unlike cash donations, you maintain some control. You can make recommendations on investments and where to donate. The fund sponsors will issue grants to the recommended organizations. This is a great way to increase your itemized deductions with large gifts that can be spread over many years.

Gift appreciated stocks and skip the tax

When you gift stock –

• You don’t pay income taxes, and
• You deduct the appreciated stock value as a charitable gift

E.g. You paid $5,000 for Allen + Koe stock and the market value is $10,000. If you sell at the 20% tax rate, you’ll pay $1,000 in taxes, reducing a potential gift to $9,000. But if you donate the stock, you’ll avoid taxes, receive a $10,000 itemized charitable deduction on your taxes, and your charity will receive more!

Turn taxable RMDs into tax-free charitable distributions

If –

1. You are taking required minimum distributions (RMD) from your IRA or will in the future, and
2. You donate or want to donate to a charitable organization

Consider Qualified Charitable Distributions (QCD). QCDs allow you to direct your IRA distributions to a charity. You can meet your RMD requirements without paying taxes while benefiting your charities!

Cars, boats, airplanes, other ______.

This one is trickier, but don’t leave unused vehicles lying around taking up space and leaving stains. Charities will often tow them away, handle the paperwork, and you’ll get a letter indicating the fair market value you can deduct on your taxes. Be sure to ask for a 1098-C otherwise the fair market value is capped at $500.

So, if you’re planning a big gift or looking to cut your taxes before the year end, consider the alternative charitable giving ideas and it could be a win-win for you and your charity.

And while you’re here, be sure to check us out.