By: Jeff Bullock
Winston Churchill is quoted as saying, “We make a living by what we get, but we make a life by what we give.”
The holiday season is marked with fun events, festive traditions, and a greater emphasis on kindness and giving. Many studies show that over 30% of annual giving occurs in December. If you find yourself giving to any causes this year, take a minute to make sure you are doing it in a way that helps both your charity and yourself.
Three ideas to make charitable giving more flexible and efficient:
- Donor Advised Fund: Using a Donor Advised Fund (DAF) can give you flexibility and convenience. With a DAF you can contribute now, but donate later, which may make sense for your tax situation. Also, a DAF provides ultimate convenience if you give to multiple causes because all of your donation documents are recorded and consolidated in one spot. Flexible and convenient.
- Low-Cost Securities: Forget cash, donate investment securities that have embedded gains to your charitable causes. As long as you’ve held the position for over a year, you can receive the full tax benefit of donating plus you never take a realized gain on the position. If you liked the security you donated, simply buy it again and you’ve reset your cost basis with no tax consequence.
- Required Minimum Distributions: If you are currently being forced to take Required Minimum Distributions (RMDs) from your IRA, but don’t need the money, earmark this money for your charitable causes and avoid the tax hit. Even if you don’t itemize your deductions, this may help bypass the distribution counting as income.
There are good ways to donate to your causes and passions and there are great ways. Before you pull out your checkbook or donate online via your checking account, take a minute to see if there is a better way. Be efficient; maintain flexibility. Don’t pay unnecessary taxes if there is a better way.
Happy Holidays!
