Maximizing Your Charitable Giving

When it comes to giving back, there are a few tax-efficient strategies to make the most of your contributions and maximize your impact on the organization.

1️⃣ Qualified Charitable Distributions (QCDs): If you’re over 70½, the IRS allows tax-free IRA distributions directly to charity, reducing your tax burden and required minimum distributions!

2️⃣ Gifting Appreciated Stock: Instead of selling highly appreciated stock and paying capital gains, donate it directly! The charity pays no taxes, and you avoid capital gains, amplifying your impact.

Additionally, if you’re an Ohio resident, learn about the dollar-for-dollar Ohio SGO tax credit to directly support educational institutions here.

“When it comes to charitable giving, sometimes it can be something that kind of gets put on the wayside in terms of different things you can do in order to maximize your charitable giving. We have lots of clients that are charitably inclined and what we’re able to do is just maximize that gift by employing different strategies.

One of the strategies is called qualified charitable distributions. If you’re over 70 and 1/2, the IRS actually allows you to make tax-free distributions from your IRA to charitable organizations. And what this does is when you’ve been saving into your IRA, you’ve always been deferring those taxes so when you make this charitable distribution, you actually never pay taxes on it yourself and the charity never pays taxes on it. It’s a way that you could marginally increase the way that you’re giving. Another benefit to using qualified charitable distributions is that it this can ultimately lower your RMS your required minimum distribution. The more you get out of that IRA tax free and the more money giving from your IRA is lowering the required minimum distributions and ultimately lowering the amount of taxes you’ll pay on those dollars.

Another way to give charitably while maximizing tax efficiencies, is giving appreciated stock. A lot of organizations these days are able to take charitable donations in cash, but also in appreciated securities. What can happen is you’ve been gifted, maybe some really appreciated stock some legacy stock from grandparents or parents or maybe you bought stock years and years ago and you’ve never sold it and it’s been growing all these years. Now there’s a lot of built up capital gains in that fund, where if you were to sell it you, pay capital gains tax versus if you gift that share to charity, they receive it and do not pay taxes on it and you also have never paid taxes on that appreciation.”