Q: I’m planning to make some charitable donations toward year-end and wanted some thoughts on how to locate charities to support, and also how to make sure I’m being tax-wise with how I donate. Can you help??
A: The giving season is upon us and there are certainly many good organizations to support, with impact both locally and nationally, for those in need in our LGBTQ+ community and beyond. This should help get you started.
Wondering if you’re best prepared for the upcoming giving season? The holidays will be here before you know it, and in order to minimize stress and maximize your gifting abilities, it’s important to keep in mind a few details that you may or may not be aware of.
If you’re not sure how your finances match up with your upcoming year-end giving strategy, now is the time to prepare yourself by making your lists and checking them twice. Organization is key in order to properly give this holiday season. Follow the five tips below to maximize your charitable giving strategy
this year.
1. Do Your Research
By using sites such as Guidestar or the Better Business Bureau’s Wise Giving Alliance, you can learn more about the groups you’re interested in offering donations to. You can search these sites for organizations by city/state (enter LGBTQ+ to find those supporting our community specifically, if desired).
The organization you’re involved with should also be able to provide registration information, including 501(c)(3) status and tax identification number. You may also use the tax-exempt organization search tool available on the IRS website to obtain more specific information about the organization.
2. Bundle Your Donations
As deductions have increased over the years, you may choose to save money over time and donate every few years as opposed to consecutively each year. By doing this, you may receive your itemized deductions over the limit one year and take the standard deduction the next.
If you’re interested in accomplishing this, you might consider a donor-advised fund, which allows you to make a charitable donation and immediately receive a tax break. You’ll then receive recommended grants from the fund to your preferred charities over time.
3. Donate Appreciated Stock
By donating stocks or other appreciated assets, such as artwork or antiques, you might reduce capital gains taxes on investments.1
In particular, high-income earners might consider a non-cash donation specifically because of the tax advantages they may be awarded. Even those who have what they might consider to be small holdings could benefit by making a donation of appreciated investments this holiday season.
4. Utilize Your IRA
If you’re a retiree over the age of 70½, you might consider transferring money from your IRA to a qualifying charity. These distributions can be a tax-efficient way of meeting any required minimum distribution. Additionally, there’s no need to itemize your deductions in order to benefit.
You may distribute up to $100,000 per year, per taxpayer. This increases to an acceptable $200,000 for married couples if they both have IRAs.2 Although this strategy has existed for some time, it only recently became a part of the permanent tax code.
5. Monitor and Evaluate Your Portfolio
No matter the size of your seasonal contributions, it’s always important to keep up with your portfolio in order to give properly and confidently. Staying up to date on newsletters, annual reports and CEO updates can be an important factor when it comes to understanding the operations of various organizations.
It’s important to set personal reminders, at least annually, to re-evaluate your financial and personal priorities and update them if need be. Your interests and priorities are bound to change over time and so will the causes you choose to support. Being aware of these fluctuations is key, and maintaining a thoughtful attitude is what makes the holidays meaningful.
Sources:
1https://www.irs.gov/publications/p526
2https://www.investopedia.com/articles/financial-advisors/032116/how-use-qcd-rule-reduce-your-taxes.asp
Jeremy R. Gussick is a Certified Financial Planner™ professional affiliated with LPL Financial, the nation’s largest independent broker-dealer.* Jeremy specializes in the financial planning and retirement income needs of the LGBTQ+ community and was recently named a 2022 FIVE STAR Wealth Manager as mentioned in Philadelphia Magazine.** He is active with several LGBTQ+ organizations in the Philadelphia region, including DVLF (Delaware Valley Legacy Fund) and the Independence Business Alliance (IBA), the Philadelphia Region’s LGBT Chamber of Commerce. OutMoney appears monthly. If you have a question for Jeremy, you can contact him via email at [email protected].
This content is developed from sources believed to be providing accurate information and provided with the assistance of Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Jeremy R. Gussick is a Registered Representative with, and securities and advisory services are offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.
*As reported by Financial Planning magazine, June 1996-2022, based on total revenues.
**Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2022 Five Star Wealth Managers.