Here are a few tips for giving in the smartest ways possible.
First, donate appreciated assets like stock and digital currency. Donating appreciating assets is always best because it allows you to not pay tax on the gains, giving you the deduction for the full value. While stocks or mutual funds have typically been the go-to for this kind of donation, digital currency works great too if it is part of your portfolio.
Second, consider using a Donor-Advised Fund. Donor-Advised Funds are like a holding place for your donations. They manage your donations until you decide on how you will give, allowing you to get the deduction this year while spreading out your giving over time.
Third, get the timing right. Donating simple assets like cash is much easier for year-end giving. If you're sending a check, all you have to do is make sure the envelope is postmarked by December 31st. If you’re using a card, it needs to be charged before the end of the year, even if the organization doesn't receive it until later. More complex assets like stock, real estate, and digital currency may take a bit more time, so it's essential to get that done ASAP.
Fourth, utilize your IRA distribution. If you're over the age of 70½, you can take advantage of the Charitable IRA Rollover, which enables you to avoid income tax on your minimum distribution while also gaining a deduction.
Fifth, discuss with an advisor. You should feel comfortable reaching out to your tax advisor whenever you have questions like these. In fact, a good advisor will proactively reach out to discuss these strategies.
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