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Plan Your Charitable Giving

By Paulette C. Pasquale CFP®

The last few years have brought a lot of changes for charities and their donors.  In 2018, income tax standard deductions increased, eliminating an incentive for donors to make charitable contributions. With the continued crisis triggered by COVID-19 as well as natural and humanitarian disasters over the past two years, demand for immediate relief is pressing. Today, donors should also consider the support many nonprofits need to thrive. They should also ensure that their charitable dollars remain aligned with their individual values or family missions.

While donors may have lost the ability to deduct charitable gifts, there are still many opportunities secure tax benefits while carrying out your charitable goals.

Cash gifts:  The Coronavirus Aid, Relief and Economic Security Act created the opportunity to deduct up to 100% of adjusted gross income (AGI) for cash gifts made directly to public charities. This window is closing in 2021, so now may be the time to make such gifts, if desired

Qualified charitable distributions: A QCD is a tax-efficient way to make charitable contributions without having to itemize deductions.  While there are no charitable deductions available for the QCD, the amount distributed as a QCD is not subject to income taxes. Individuals over age 70½ can donate up to $100,000 from their individual retirement accounts, but the gift must go directly to the charity. This satisfies the required minimum distribution (RMD) requirement for those over age 72 and can exceed the RMD.

Contribution of appreciated stock: Donors can also help themselves—while helping others—by making charitable gifts in another tax-efficient way. Donors will receive a charitable income tax deduction for the gift of stock, subject to AGI limitations, while permanently avoiding embedded capital gains that may otherwise trigger costly tax liabilities in the future.

Charitable bequests: Uncertainty around income tax reform extends to the estate tax landscape as well, and many wealthy donors are in the process of revisiting their estate plan with their professional advisors. This presents an important opportunity for donors to evaluate how their charitable goals, and the organizations they support, may fit into their lasting legacy.

Bunching multiple gifts into a single year can increase the tax benefit of charitable contributions. Grouping charitable contributions every other year may allow individuals to itemize deductions in some tax years. Donors who may have an unusually high income or gains this year could fund a DAF (donor-advised fund). This allows donors to contribute assets to a tax-free investment account, from which they can direct gifts to the charities of their choice.

Start Planning Now

For those who are charitably inclined, planning your philanthropic donations can increase the benefits to the donor as well as the charities.  We recommend working with your professional financial and tax advisors to maximize your gifts.

11/12/21, 10:56 AM How to Make the Most of Year-End Charitable Giving

https://www.wealthmanagement.com/print/139308 3/5

Fee-Based Planning offered through W3 Wealth Advisors, LLC – a State Registered Investment Advisor – Third Party Money Management offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor – Securities offered through Valmark Securities, Inc. Member FINRA, SIPC – 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431 * 1-800-765-5201 – W3 Wealth Management, LLC and W3 Wealth Advisors, LLC are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc.

The example(s) given are hypothetical and are for illustrative purposes. Actual results may vary from those illustrated

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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