As December 31st quickly approaches, we face numerous deadlines on items we planned to accomplish during the year. For many, charitable giving becomes an important part of our busy holiday “to-do” list, but it can sometimes seem overwhelming as we consider how best to approach the season of giving. Today I want to offer a few tips that can help you maximize the tax benefits of your year-end gifts to charity, while also relieving a bit of the stress that can come along with the holiday season.
Consider giving appreciated stock
Giving stock directly to a nonprofit represents one of the easiest and best ways to give more to the charities you care about most. If you have held appreciated stock for more than one year, you may take a charitable tax deduction for the fair market value of the stock. One of the primary benefits of this type of gift is that neither you nor the charity you give the stock to has to pay capital-gains taxes when the stock is sold. Many charities have the capabilities to accept these types of gifts, but you may also want to contact your local community foundation to help facilitate the conversion of your gifted stock into charitable dollars for ultimate distribution to the charities of your choice.
Utilize tax-free distributions from your IRA
For those who are 70½ or older, you can transfer up to $100,000 from an individual IRA to a qualifying charity, without that amount being included in your income. Additionally, the transfer can count toward your annual required minimum distribution. While the transfer is not deductible, it isn’t included in your income and, as such, won’t increase your adjusted gross income. There are some special rules that apply to qualified charitable distributions, so make sure you talk to your professional advisor or IRA custodian to see if it makes sense for you to take advantage of this special opportunity.
Look into establishing a Charitable Checkbook® or other charitable account
By establishing a charitable account, you are eligible for a tax deduction upon receipt of your donation into your account, yet you have the flexibility to decide the timing of your distributions to charity. This is a particularly beneficial year-end strategy because you can make a year-end gift and take the tax deduction immediately. Since there is no requirement to make a distribution in any given year, you can take your time in determining the details of your distributions. Charitable accounts can be very useful as a tool to offset unexpected earnings or tax implications of year-end bonuses.
A Charitable Checkbook® at the Omaha Community Foundation can be established with as little as $1,000, and it allows you the flexibility and convenience of a charitable account without any administrative fees.
Explore matching opportunities to make your gifts go further
Many local employers offer matching gift programs as a benefit to their employees. This is a wonderful way to multiply your personal gifts to charity, without straining your personal pocketbook. Make sure to contact your HR or Community Relations Department to see if your employer has an existing matching gift program to leverage charitable gifts you might have already made this year or plan to make in the coming weeks.
Also, the Omaha Community Foundation currently has a special opportunity to match donations into newly established accounts. When you open a new charitable account between now and December 30th, we’ll match 10% of the initial donation, up to a maximum of $1,000, while funds last.