- Vet any significant donation with your CPA first. Not all good causes are the same. Your CPA can verify that the gift you intend to make to a particular organization will qualify for a tax deduction and, if not, may be able to suggest an alternate path. If you have different types of entities, which one you use to make the gift also may make a difference come tax time.
- Make charitable donations in appreciated stock. Many charitable organizations are equipped to handle all kinds of assets as donations, not just cash. When you donate in the form of appreciated stock, you’ll get a deduction for the gift's full value and won’t have to pay tax on the capital gain. (Don’t worry. The charity isn’t hit with the capital gain either.)
- Consider creating a donor-advised fund. This is like setting up your own private foundation, just with less work. You’ll make irrevocable contributions to a specific account maintained and operated by a 501(c)(3) organization. You’ll get an immediate tax deduction on your donations, but the account can grow over time while you determine when you wish to make grants from the fund. Do some research and speak with your CPA to see if this strategy makes sense for you.
Maximizing the tax benefits of your charitable giving isn’t selfish. When you reduce your taxes, you’ll have more money to give to a good cause.
Not sure how to start? Book a call with the team at TFW Advisors® today! Our team would love to help.