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October 2019

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Thanks-Giving Strategies

Aaron Evans Aaron Evans | Articles

Read Time: 2:00 min

Harvest Table

As you ponder philanthropy amidst your turkey, stuffing and possible awkward family interactions this November, here are a few tax-efficient giving strategies to consider.

With the holidays the horizon, gift-giving is a discussion topic likely to make its way to your Thanksgiving table.  “What do you want this year” “What are you going to get crazy uncle…fill in the blank”  Also high on many year-end checklists is charitable giving.  In fact “Giving Tuesday” now precedes “Black Friday” and “Cyber Monday” as a reminder to think charitably amidst the shopping craze.  So, as you ponder philanthropy amidst your turkey, stuffing and possible awkward family interactions, here are a few tax-efficient giving strategies to consider.

Appreciated Securities

Utilizing investments with long-term unrealized capital gains rather than cash is a popular tax-efficient way to give.  A stock or fund donation can be claimed as an itemized deduction, with the added benefit of taxable gains being passed on to a non-taxable entity.  The higher the gain, the more the tax benefit.  Check with your charitable organization on specifics regarding making a securities gift.

QCD

If you are over 70½ and taking required minimum distributions (RMDs) from an IRA, you are eligible to utilize those RMDs to make tax-efficient charitable donations.  These qualified charitable distributions (QCDs) can be made directly to not-for-profit organizations gross of any income tax liability, with the full amount being applied towards your annual RMD.  This strategy is a great option to minimize income taxes while still maintaining full use of the higher standard tax deductions implemented in 2018.

DAF

Donor-advised funds (DAF) are giving vehicles that provide donors lots of flexibility.  Appreciated securities or cash can be contributed to a DAF, allowing for a tax deduction in the year they are made.  From there, donors can decide on amounts, timing and the target charities for distributions over time.   This is a great strategy to be employed in a year of high earnings or if you are uncertain about your current charitable intent.  Additionally, this strategy may allow for itemization of deductions above the new standard amounts by making larger donations to the DAF every few years, while still directing charitable gifts annually.

Before employing any of these strategies be sure to consult your tax professional, legal counsel or financial advisor.

Submit questions or topics of interest to aevans@investstrategic.com

 

Original content provided by Aaron R. Evans, CFA, CFP® a Senior Advisor at Strategic Financial Services. 

About Strategic

Founded in 1979, Strategic is a leading investment and wealth management firm managing and advising on client assets over $1.3 billion.

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