Tax-Saving Opportunities from Your Charitable Gifts

We recently reviewed your financial situation and uncovered an opportunity that could help you save money on taxes while supporting causes you care about. Taxpayers who make charitable contributions have options for how to make donations, and working with a tax-intelligent financial professional can help maximize the impact of your generosity.

Strategies like charity bunching across years, establishing a donor-advised fund or making qualified charitable distributions (QCDs) from individual retirement accounts (IRAs) can reduce the tax paid on gift amounts.

For example, here’s how QCDs works:

• If you’re age 72 or older, you should be taking required minimum distributions (RMDs) from your tax-deferred IRAs.
• You can make non-deductible donations to qualified charities directly from IRAs to satisfy your required amount and reduce your taxable income.
• Although RMDs count as income, qualified charitable distributions do not – meaning if you take your annual RMD and, at some point, give a cash donation to your church, for example, you’ve paid unnecessary tax on that gift. You could have sent $3,000 from your IRA directly to your church and only paid tax on the remaining RMD amount.

QCDs can help you (and the charities you support) get more bang for your buck, but we should evaluate together which solutions fit best in your financial plan.

Please call our office at your earliest convenience. We look forward to helping you design a tax-intelligent charitable giving strategy.

Best Regards,

Eric Cooper