As one does in a new year, we reflect on the prior year. What we liked, what we disliked, what we are set out to change to make the next 12 months better.

With the book closed on 2020, I think it’s clear what made us all hit the dislike button. The pandemic jolted everyone across the world in the most unwelcome way.

Today, instead of focusing on all the negative, because, after all, it is a new year and I’ve resolved to be more positive, I thought it would be fitting to spend time discussing giving back.

As you start to think through how or perhaps how much you want to give to those organizations that are important to you, I’d like to share a few planning strategies that could help maximize your gifting.

First, for folks with mutual funds or stocks that have nicely appreciated over the years, making a gift in the form of a security is one method to lock in the value of the investment without having to pay tax on any of the gain.

Another option, for folks over 70 1/2, utilizing your individual retirement account to make Qualified Charitable Distributions. These distributions are exempt from being reported as taxable income on your return  as long as they are made directly to a qualifying charity. This is a great strategy for utilizing pre tax dollars to fund your gifting.

Lastly, a concept that has gained attention in recent years, “charitable bunching.” 2018 tax law changes eliminated or restricted certain itemized deductions, while also increasing the amount of the standard deduction.  It’s estimated that nearly 90% of taxpayers are now taking the standard deduction versus itemizing. As the name suggests, this strategy is accomplished by “bunching” your gifts in one year allowing you to take advantage of a larger itemized deduction amount, and then taking the standard deduction in subsequent years. Rinse. Repeat. When applied thoughtfully, this results in additional deductions being harvested along the way.

Not all planning is one size fits all. It’s important to consult your financial and tax advisor to ensure the most valuable strategies are being incorporated into your specific plan.

If you have more financial questions, don’t hesitate to ask your Family CFO.  We do more so you can too.

The opinions voiced in this material are for general information only and are not intended to provide specific advice for any individual. Examples contained herein are for illustrative purposes only based on generic assumptions.  This is not an offer to buy or sell securities, nor does it represent a specific recommendation.  Please speak with a qualified tax, legal or investment professional before making any changes to your personal situation.