As you grow your wealth, you may find the desire to give back. That’s where charitable giving comes in. Charitable giving can allow you to support causes and organizations you believe in while reducing your income tax, capital gains, and estate taxes. Here are several ways to incorporate charitable giving into your overall financial plan:
There are so many well-deserving causes out there. Take the time to figure out which ones are most important to you and your family. You might choose to support the environment and refugees or medical research, social justice, and the arts. Think about what motivates you and how donating to specific causes reflects your values.
You can deduct charitable gifts on your tax return whether you make a cash gift or donate goods or services. To do so, however, you’ll need to choose a 501c3 tax-exempt organization. Please consult a tax advisor to determine the limits to how much you can deduct and whether it makes sense for you to itemize and lock in the deduction.
Use life insurance to gift by naming a charity as the beneficiary. Often, the strategies you use to transfer wealth, which organizations you want to donate to, and the length of time you want your assets to last is simplified by using life insurance.
If you’re 70 1/2 years of age or older, you can use a qualified charitable distribution or QCD to donate directly from your IRA to the charity of your choice. Even though the gift amount won’t qualify for a charitable deduction, it won’t count as taxable income and will allow you to simultaneously reduce your taxable income and give back.
With DAFs, you can immediately donate cash or other assets to a charitable investment account and claim a tax deduction. Since a DAF will grow tax-free, you may choose the fund distributions over time to organizations and causes that mean the most to you. If you time your contributions to coincide with high-income years, you’ll reap the benefits of a larger deduction.
You may want to bunch your donations in one year instead of skipping one or several years to maximize potential tax deductions. This option is worth considering if your total itemized deductions for a single year fall below the standard deduction. Your itemized deductions may exceed the standard deduction and lower your overall tax burden.
SWG2306340-0722b The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website.
At Perennial Pride we discovered how to align with the core principles of the Prosperity Economics Movement. Therefore, I created Perennial Pride to help educate people on the truth of money. So you, too, can take advantage of alternative approaches outside typical financial planning. In conclusion, contact us today to understand how you can align your finances with the prosperity economics movement.