Tax Day, April 15, 2025, is right around the corner. For those who have already filed their taxes, the die is cast for 2024. For those who have not yet filed, aside from possibly being able to make a 2024 contribution to an IRA, tax-savvy giving options are slim. Either way, though, thoughtfully reviewing your tax return may reveal new options for the future, especially regarding charitable giving.
Is There a Better Way to Make Charitable Gifts? A thoughtful comparison of the benefits of giving assets other than cash may be an eye-opener. For instance, if you give appreciated stock you have held for more than a year, not only can you deduct the full fair-market value, but you also avoid tax on any gain. On the other hand, if you give stock that has dropped in value, you can actually leave money on the table. Why? Taking a loss can offset taxable gain that would be realized on the sale of other stock. Or, if your loss exceeds your gain, the excess can be used to offset up to $3,000 of other income. Lesson learned: sell the stock and give the proceeds.
Itemizing May Not Be Out of Reach. The majority of taxpayers do not itemize when filing their taxes because their total deductions are less than the standard deduction. If, however, your return tells you your deductions are close to the threshold, you may be able to realize the additional tax savings from itemizing by strategic timing of how much you give and when. You may choose to make larger gifts in one year that will enable you to pass the threshold for itemizing then suspend your giving the next year. Pick the timing that works best for you—perhaps giving larger gifts in two out of three years. Even though you give the same total over this time, you will pay less total tax because you pay no more than you otherwise would have in the years you use the standard deduction but less in the years you are able to itemize.
Special Opportunity for Older Donors. A review of your return will show if you missed an opportunity available to donors aged 70½ or older. You can make your charitable gifts directly from your IRA without having to pay tax on the distribution. This qualified charitable distribution (QCD) must go directly to the charitable organization to realize this benefit. Better yet, if you have reached the age at which you must start taking required minimum distributions from your IRA—currently 73—a QCD counts toward that obligation and reduces the taxable amount. Under current law you can make QCDs up to a total of $108,000 per year.
We Are Here to Help. Choosing the best way to give requires careful planning. We would be happy to be part of your team as you plan. Please feel free to contact our office to arrange a time for us to connect.
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The discussion herein is general in nature and may not apply to all individuals. Prospective donors are urged to consult their personal tax and financial advisors concerning the specific consequences of making gifts to Colgate. We would be pleased to discuss, in confidence, ways in which you may support Colgate. These measures may also have an impact on your estate planning.
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