As the year draws to a close, many individuals are contemplating their charitable giving strategies to make a positive impact before the calendar turns. Year-end giving is not only a generous way to support causes close to your heart but can also offer potential tax benefits. Here are some effective strategies for maximizing your charitable contributions in the final months of the year.
Firstly, consider a donor-advised fund (DAF). Establishing a DAF allows you to make a charitable contribution, receive an immediate tax deduction, and then recommend grants from the fund over time. This approach enables you to consolidate your giving, plan strategically, and potentially lower your taxable income in the current year.
Another impactful strategy is to donate appreciated securities. If you own stocks, mutual funds, or other investments that have appreciated in value, consider gifting them directly to a charity. This not only supports the organization but also provides you with a charitable deduction for the fair market value of the securities while avoiding capital gains tax.
Take advantage of employer matching programs. Many companies offer matching gift programs, doubling or even tripling the impact of your donation. Check with your employer to see if they have such a program and make sure to submit the necessary paperwork to maximize your contribution.
Additionally, be mindful of the timing of your contributions. To claim a deduction on your current year’s taxes, ensure that your donations are made by the December 31 deadline. Online donations are a quick and convenient way to meet this deadline, but be sure to check the processing times of the platform you choose. Checks sent in the mail must be postmarked December 31 or sooner.
Lastly, explore the option of qualified charitable distributions (QCDs) if you are 70½ or older. QCDs allow you to directly transfer funds from your individual retirement account (IRA) to a qualified charity, satisfying your required minimum distribution while minimizing your taxable income. Your financial advisor can help you with a QCD.
In conclusion, adopting these year-end strategies for charitable giving not only benefits the organizations you support but also provides you with potential tax advantages. By being thoughtful and strategic in your approach, you can make a meaningful impact on the causes that matter most to you as the year comes to a close.
To learn more about support Lumina, contact our Community Engagement & Donor Relations Coordinator, Holly.