Ask the CFP: How do I maximize the tax benefits of charitable gifts?



Hello everyone and welcome to this month’s Ask the CFP segment. This month’s question is, “How do I maximize the tax benefits of charitable gifts?” If you’re charitably inclined, you’re already doing a wonderful thing by helping the causes you care about. Now let’s talk about how you can help yourself at the same time by utilizing various tax strategies too. There are too many to list in this video, so I’ll cover a few common strategies.

First, after the standard deduction nearly doubled in 2018, many American found themselves no longer itemizing deductions on their tax return. If you’re no longer itemizing, you may not be receiving a tax benefit from charitable gifts. In this case, you might consider something called a Donor Advised Fund. With a Donor Advised Fund, you can donate money to receive a potential tax benefit without giving it to the charity yet. You can also invest the funds from a menu of investment options. Let’s say you usually give $5,000 of cash each year to a local charity. You might consider placing 5 years’ worth of gifts in your Donor Advised Fund, or $25,000. Depending on your tax situation, you may enjoy a single-year deduction of $25,000 and still be able to donate $5,000 per year to a qualified 501(c)(3) charity.

Second, if you have appreciated securities, such as stocks, mutual funds or ETFs that are at a long-term capital gain, instead of gifting cash, you may be able to gift shares of appreciated stock. Depending on your tax situation, you may be able to deduct the value of the gift without any long-term capital gains taxes. I’ve seen many people miss this strategy because they think it’s complicated, but I can assure you, for professionals that deal with this regularly, it isn’t. You may also be able to donate appreciated securities to a Donor Advised Fund.

Lastly, if you’re age 72 or over, you may be forced to take a Required Minimum Distribution or RMD from your pre-tax retirement accounts. Law changes from the SECURE Act and the CARES Act have complicated this strategy, but in general, taxpayers can use up to $100,000 of their RMD to donate directly to a charity. This means instead of taking an RMD, paying the taxes and then donating to a charity, you may choose to send all or part of your RMD directly to the 501(c)(3) charity instead without any tax due on the donated amount. This is called a Qualified Charitable Distribution and doesn’t require someone to itemize their taxes.

Overall, if you’re supporting charities, it’s a wonderful act. Don’t forget to think about yourself too as you donate to worth causes. If you have a question about this topic or have a question for next month’s video, please send it to Thanks for watching and we’ll see you next month.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please speak with a qualified tax or legal professional before making any changes to your personal situation.

© 2020 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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