Benefits of year-end charitable planning

Despite the global pandemic, charitable giving is at an all-time high. For example, data from Giving USA estimates that US-based donors gave a whopping $471.44 billion (yes, that’s a billion with a “B”) in 2020. Although the 2021 numbers are not yet out, it’s believed that this year’s donation levels could be similar. If you’re among those who want to give back, and you’re interested in learning how year-end charitable planning can help reduce your tax liability, below are just a few of the tips you can utilize.

Remember- you don’t have to give cash

If you have non-cash assets (such as restricted stock and publicly traded securities, among others) that you’ve held for more than a year, and you’re thinking about selling those assets and donating the proceeds, you don’t need to sell them to give them. Why is this important? Because when you sell your non-cash assets, you’ll need to pay capital gains taxes.  Donating them as they are will not only save you money, it will also help maximize your tax deduction.

Don’t forget to request a receipt

If you donate more than $250 in cash or goods to a charitable organization, be sure to get a receipt. If you don’t have a receipt, and you get audited, this could get you into trouble.  Also, worth mentioning, is that if you plan on donating property that’s worth $5,000 or more, such as cars, real estate, jewelry, furniture, or other high-ticket items, be sure to get an independent appraisal before you donate it. This can also help ensure you can maximize your deduction.

Remember to itemize your deductions

Lastly, if you plan on donating cash, non-tax assets, or property to a charitable organization this year, be sure to talk to your CPA about how to itemize your deductions.  If you realize that your itemized total is below the standard deduction, you may want to consider “bunching” what you think you’ll give in 2022. For example, if you plan on donating $5,000 to charity in 2022, and you can bunch that donation with your 2021 donation before the end of the year, this will likely benefit your current year’s tax planning. For more information about how to maximize your charitable giving, and the strategies you can use to reduce your 2021 tax liability, call our office today to speak with an expert.