Even though the countdown to 2025 is officially underway, there is still time to implement some powerful charitable planning strategies that could generate tax savings on 2024 tax returns. While not all may apply to everyone, here are a few of the top tax-planning strategies that are available to many who are charitably minded:

Give appreciated stock instead of cash. The past year has been a banner year for many stock investors. When selling appreciated stock held for more than one year, a taxable long-term capital gain is generated. By donating that stock instead of cash and itemizing deductions on a tax return, donors will be able to deduct the full fair-market value of the stock plus not have to pay any tax on the long-term capital gain. Even if they don’t itemize, they will still benefit from avoiding tax on any long-term gain they would have realized on a sale.

“Bunch” deductions to benefit from itemizing. Most taxpayers find there is a gap between the amount of their itemized deductions and the standard deduction they can use. In that situation, donors may be able to “jump” that gap by adjusting the timing of charitable contributions. Assume, for example, this year’s itemized deductions will fall $2,000 short of the standard deduction even though a donor made his or her regular $10,000 annual gift to us. However, if that donor were to make both this year’s and next year’s gift before the end of this year, the itemized deductions would exceed the standard deduction by $8,000—saving as much as $2,960 in federal income tax, depending on the donor’s marginal tax bracket. Next year, even though they skip making a gift, their taxes will not go up because they will use the standard deduction.

Use an IRA qualified charitable distribution to fulfill charitable objectives. If donors have an IRA and have reached a certain age, they must take a required minimum distribution (RMD) each year—the entire amount of which is generally taxable. Instead of receiving a distribution personally, if they direct their IRA managers to send some or all of their RMD—up to $105,000 in 2024—as a qualified charitable distribution directly to a charitable organization like ours to fulfill their philanthropic goals, they will not be taxed on the amount of the QCD whether they itemize deductions or not.

Note: Donors can start making QCDs from their IRAs at the age of 70½ and don’t have to wait until they are required to take distributions.

These are just a few of the ways charitable planning can produce tax benefits. If you have questions about these or other planning options, please contact our office. We would love to help you have a happy new year.