Maximize Year-End Giving with Tax Benefits

If you’re looking to make your giving go further, here are actionable steps to ensure your contributions offer the greatest impact and tax advantages.

1. Choose the Right Type of Gift

Not all donations are created equal when it comes to tax benefits. Consider these options to maximize your year-end contribution impact.

Cash Donations

• Why They Work: Simple and straightforward, cash donations are eligible for deductions up to 60% of your adjusted gross income (AGI).
• Pro Tip: Always keep a receipt or acknowledgment letter from the charity for your records.

Appreciated Assets (Stocks and Securities)

• Why They Work: Donating long-term appreciated stocks or securities allows you to avoid capital gains tax while claiming deductions for their fair market value.
• Pro Tip: Ensure the assets have been held for over a year to qualify for these benefits.

Donor-Advised Funds (DAFs)

• Why They Work: A DAF lets you make donations today, claim an immediate tax deduction, and direct the funds to charities over time.
• Pro Tip: This is an excellent option if you’re not sure which charities to support just yet.

Tangible Assets (Art, Real Estate, and More)

• Why They Work: High-value items like artwork or real estate can offer significant tax advantages, but they must align with the charity’s mission to qualify for full-market-value deductions.
• Pro Tip: Work with a tax professional or appraiser to understand the rules.

2. Understand IRS Rules and Guidelines

Tax compliance is critical to ensure your donations are eligible for deductions. Pay attention to these IRS guidelines.

• Eligible Organizations: Donations must be made to IRS-qualified 501(c)(3) organizations. Use the IRS Exempt Organization Search tool to verify a charity’s status.
• Document Everything: Keep thorough records of your contributions, including acknowledgment letters for donations over $250. For non-cash contributions, a professional appraisal may be required.
• Standard vs. Itemized Deduction: You must itemize deductions on your tax return to claim charitable contributions.

Did You Know?

If you’re ineligible for itemized deductions, the CARES Act allows taxpayers to deduct up to $300 per individual ($600 for married couples) for cash donations made in 2023, even if you claim the standard deduction.

3. Plan Giving Around Taxable Income

Your charitable contributions can help reduce taxable income, especially in a high-income year. Be strategic about timing and amounts to yield the greatest tax savings.

Ways to align giving with taxable income include:

• Bunching Donations: Combine multiple years’ worth of charitable contributions into one tax year to exceed the standard deduction threshold.
• RMD Charitable Contributions (For Those 70½+): Directly transfer required minimum distributions (RMDs) from your IRA to a qualified charity. This effectively reduces your taxable income.

4. Evaluate Charities for Maximum Impact

Your generosity deserves a strong return—both socially and financially. Ensure your chosen charities are credible and efficient by checking resources such as Charity Navigator or GuideStar.

• Check Impact Reports: Review the organization’s financial transparency and effectiveness.
• Ensure Alignment: Match your giving priorities with charities that share your mission and goals.

5. Leverage Corporate Matching Programs

Corporate philanthropists and employees alike should explore company matching programs to amplify their donations. Many companies match employee contributions dollar for dollar, effectively doubling the impact.

• Check Deadlines: Some corporate matching requests must be submitted by specific dates to qualify.
• Track Matching Policies: Ensure your chosen charity is eligible for your company’s program.

6. Collaborate with Financial Professionals

Strategic giving often requires expert insight. Don’t hesitate to work with financial advisors or accountants for tailored advice and to ensure compliance with legal requirements.

• Plan with Advisors: A professional can identify which giving methods align best with your financial goals and tax situation.
• Avoid Mistakes: Incorrect or rushed donations could lead to missed deductions or other legal complications.

The Bigger Picture of Year-End Giving

While the tax benefits of charitable contributions are significant, the emotional satisfaction and social impact are equally rewarding. Your year-end giving allows nonprofits to continue their essential work and fuels positive change in the community.

At SD Mayer, we believe in aligning smart giving with financial empowerment. We’re not just here to crunch numbers; we’re here to guide you toward philanthropic choices that make a difference. Whether you’re a business owner exploring corporate giving strategies or an individual donor researching tax-efficient contributions, we can help you make the most of your generosity.

Make Every Dollar Count

This holiday season, why not give smarter? Maximize your year-end giving by combining your passion for philanthropy with strategic financial decisions. Want personalized advice on how to plan your charitable contributions? Speak with one of our financial experts to set yourself up for a rewarding and impactful giving season.