As the festive season unfolds, so does the spirit of giving, prompting many of us to reflect on how we can make a meaningful impact in the lives of others. If you’re considering channeling your generosity through charitable contributions, it’s time to delve into the world of “giving with intent.” In this guide, we’ll explore strategic actions you can take to not only support causes close to your heart but also optimize your tax benefits.

  1. Unlock the Power of Tax Benefits: Begin your charitable journey by understanding the tax incentives available to you. One key benefit is the charitable deduction, a powerful tool that can trim your taxable income. Donating appreciated non-cash assets held for more than a year not only allows you to potentially eliminate capital gains taxes but also offers a charitable deduction based on the fair market value of the asset. For those aged 70½ and older with traditional IRAs, Qualified Charitable Distributions (QCDs) present a unique opportunity to contribute up to $100,000 tax-free to operating charities.
  2. Bunching for Impact: Considering the 2023 standard deduction? Bunching your charitable donations for 2023 and 2024 could be the key to exceeding the standard deduction. This clever strategy involves consolidating two years of contributions into one, allowing you to itemize deductions in the higher-impact year. Donor-advised fund accounts can further enhance this approach, facilitating the donation of appreciated non-cash assets and potentially eliminating capital gains taxes.
  3. High-Impact and Tax-Smart Donations: Take a closer look at the assets you possess that have appreciated in value. Collaborate with a financial or tax advisor to discern non-cash assets such as publicly traded securities, equity compensation awards, real estate, or even cryptocurrency that could be strategically donated.
  1. Align Donations with Taxable Events: To further optimize your giving strategy, prioritize donations based on your largest taxable events in 2023. If you experience unexpected income from a bonus or the sale of assets, charitable giving can help mitigate the tax impact. Additionally, when rebalancing your investment portfolio or making retirement account withdrawals, consider donating appreciated assets to charities to potentially eliminate capital gains taxes. These strategic moves not only reduce your tax liability but also maximize support for causes close to your heart.
  2. Timing is Everything: Craft your giving plan with a dual focus on the present and the future. Giving now allows you to witness the immediate impact of your philanthropy while potentially enjoying an immediate charitable deduction. Alternatively, giving later through strategies like charitable gift annuities or trusts enables you to retain control over assets during your lifetime while securing a charitable legacy for the future.
  3. Seek Professional Guidance: When it comes to charitable giving, knowledge is power. To truly give with intent, it’s crucial to comprehend the intricacies of tax benefits, strategic donation methods, and the diverse assets at your disposal. Consider partnering with a seasoned financial advisor who can provide insights tailored to your unique financial situation. The expertise of a professional ensures that your generosity is wielded with precision, maximizing both your philanthropic impact and financial well-being.

 

As the year draws to a close, the deadline for 2023 tax deductions looms on December 31. Seize the opportunity to amplify your charitable impact and optimize your tax benefits by implementing these strategic actions. And of course, feel free to get in touch to see how the team at 83rd Street might help you maximize the impact of your charitable gifts this year.

 

This information is not intended to be relied upon as forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions are derived from proprietary and nonproprietary sources deemed by 83rd St. Wealth Management, LLC to be reliable. Please consult with 83rd St. Wealth Management, LLC financial advisor to ensure that any contemplated transaction in any securities or investment strategy, if mentioned, align with your overall investment goals, objectives, and tolerance for risk. Additional information about 83rd St. Wealth Management, LLC is available in its current disclosure documents, Form ADV and Form ADV Part 2A Brochure, which are accessible online via the SEC’s investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using CRD # 172115. 83rd St. Wealth Management, LLC is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice.