Better Than To Receive
The Victoria Bach Festival recently concluded its 49th season, marking another year of exceptional music. As the current President of this enduring organization, I am filled with pride as we prepare for our 50th season next year—a milestone that coincides with my 10th year on the board. Contributing to a cause greater than oneself is a profoundly rewarding experience, and I am grateful to be part of a firm that encourages community volunteering. Through my time volunteering, I have never ceased to be amazed by how generous the people of Victoria can be. While it is noble to give without the expectation of anything in return, your charitable acts may have an even greater impact when done tax-efficiently. Here are some strategies to consider for your next charitable contribution:
Donate Appreciated Stock
They say giving is better than receiving, especially when you can give away a tax bill at the same time! If you have an appreciated security, you can donate the investment directly to a charity. By doing this, you can effectively wipe out the imbedded capital gains tax bill that would have been owed upon the sale. The charity benefits from the full value of the donation, and you may still be eligible for a deduction if you itemize.
Give your RMD
Required Minimum Distributions (RMDs) from IRAs have been a moving target with recent legislative changes. The SECURE Act of 2020 and SECURE Act 2.0 have shifted the beginning RMD age, but the age for Qualified Charitable Distributions (QCDs) from IRAs remains at 70½. A QCD allows individuals to donate directly from their IRA to a charity without incurring tax on the distribution. This is a fantastic way to support a cause and reduce your taxes, provided the funds go directly to the charity and you are 70½ or older (not just reaching 70½ sometime in the year) at the time of the transaction.
Leave your bequest from your IRA
Instead of leaving a charitable bequest in your will, designate a charity as a beneficiary of your IRA. While your heirs would owe taxes on IRA distributions, charities do not. This simple update can reduce potential tax liabilities for your heirs.
Bunching Donations
The Tax Cuts and Jobs Act (TCJA) doubled the standard deduction, which now stands at $14,600 for single filers and $29,200 for married couples filing jointly in 2024. This change made fewer people able to itemize deductions. One effective strategy is to “bunch” donations, making two years’ worth of contributions in one year to surpass the itemization threshold. For instance, donate in January and December of the same year. This strategy may push you over the threshold to itemize every other year, and still receive the standard deduction in the years you are not itemizing.
The Joy of Giving
Beyond the tax benefits, the act of giving has been shown to enrich the giver’s life with joy, improved health, and a stronger sense of purpose. While these strategies may enhance the impact of your donations, the true reward lies in the act of giving itself. For personalized advice, consult a CERTIFIED FINANCIAL PLANNER™ professional who can help you plan efficient and impactful giving.
Published in the Victoria Advocate.
David Faskas CFA, CFP® is the Chief Investment Officer, Chief Financial Planning Officer, and a managing member of Keller Wealth Advisors.
